July 13, 2026
PROBLEM
Voters are increasingly anxious about rising electricity prices. Nominal residential electricity prices increased 33% from 2019 to 2025, with particularly significant impacts in California, the Northeast, and Mid-Atlantic, and one-in-six households are behind on their energy bills. While the drivers of price increases vary across states, the major drivers in 2025 are increases in costs related to fuel and wholesale supply, distribution, electricity generation, transmission, and storm recovery.
At the same time, the U.S. needs to build out enough new generation and transmission capacity to support reliable electricity that can power economic growth and electrification. Estimates suggest the US needs to add at least 100 new GW of peak capacity and more than double transmission capacity in the next decade to achieve our national goals.
The good news is that policymakers can pursue several strategies to both contain costs while expanding grid capacity. In the near term, policymakers can pursue tools that get more electricity out of grid assets – the poles and wires that carry electricity from power plants to your home or business – we have already built and paid for. To do this we need to do two things. First, we need to better utilize the capacity of the infrastructure that exists. Transmission lines (the big, tall power lines that carry electricity over long distances) are currently used at a fraction of their capacity, even though the technology exists to drastically improve their usage. Second, we need to create incentives for large customers to adjust their electricity usage from the grid so that they are less likely to draw power at moments when the broader system is under strain.
IDEA
While making long-term investments in expanding the U.S.’s grid capacity, state policymakers and grid operators should pursue reforms that get more value from existing grid infrastructure:
Grid-enhancing and advanced transmission technologies: New transmission will be needed to serve the 100+GW of new electricity demand projected in the next five years. But while reforming the tools we use to plan, permit, and pay for those power lines continues to be a high priority, states should predicate application approval on getting more out of existing systems. New grid-enhancing technologies and other advanced transmission technologies have the potential to save ratepayers billions of dollars if deployed wisely. There are several relevant tools:
- Dynamic line rating – by deploying sensors and software, grid operators are able to allow electric lines to carry more power when conditions allow, instead of using a flat, conservative rating year-round. This significantly reduces congestion (traffic) on the grid.
- Advanced power flow control technologies – by redirecting power flows from congested lines to underutilized power lines, grid operators can free up capacity on the grid.
- Topology optimization – by using software, grid operators can figure out the most efficient path for power to take across the existing network.
These tools can free up capacity to serve new demand with existing infrastructure, and can do so quickly with significant results. These technologies can sometimes be deployed in less than one year, enhancing grid capacity by 20 to 30%. PPL Electric’s DLR deployment on two congested 230-kV lines in Northeastern Pennsylvania cost less than $300,000 and avoided approximately $50 million in transmission expansion costs, generating congestion savings of roughly $20 million per year. Topology optimization software has been shown to expand effective grid capacity by 5-25%.
The federal government is encouraging utilities to evaluate these Grid Enhancing Technologies (GETs), and several states have recently passed laws mandating this (e.g., CA, MA, MN, VA).
Demand flexibility: Electricity prices are highest during periods of peak user demand, which occurs a few hours a day or a few days a year when everyone is using power simultaneously. Our electricity infrastructure is designed to ensure it can handle these peaks, but as result, at most other times the system is largely underutilized. Demand flexibility is the idea that you can reduce this “peak” demand and the need for infrastructure to serve it. This flexibility can be implemented by states at two levels:
- Requiring large new customers that require a great deal of electricity to participate in demand response programs as a condition of their grid access.
- Requiring utilities to evaluate other available sources of power that would provide more flexibility in moments of peak demand before approving distribution upgrades. The goal of both levers is to reduce the need for new infrastructure by making better use of existing assets.
Making large users of power more flexible: Large industrial customers, like data centers, represent a significant and growing share of peak electricity demand, but most operate with no obligation to respond to grid conditions. When the grid is stressed, these facilities often keep pulling the same amount of electricity as always and the grid must accommodate them.
- If states required these facilities to shift their demand, including by relying on on-site backup power to reduce what they draw from the grid, they could reduce the need to build new infrastructure. A study out of Duke University found that this sort of flexibility from data centers alone could free up enough grid capacity to power the equivalent of 10% of current US peak electricity demand without building new infrastructure. A separate Brattle Group analysis estimates that grid utilization tools could save consumers $100 billion over the next decade. While both figures represent theoretical maximums under favorable conditions, not near-term projections, they show the scope of what potentially could be accomplished.
- Several states have approved large-load tariffs, which create a new class of service for large customers meant to ensure that utilities do not overbuild to serve any individual large customer in a way that spreads costs onto rate payers. In some instances, states are contemplating tariffs that would include incentives for large customers to be flexible (e.g., Pennsylvania). Texas passed a law that requires all loads over 75MW to be interruptible (curtailable) during emergencies. And the Federal Energy Regulatory Commission (FERC) is encouraging grid operators to offer curtailable service tiers so that data centers who agree to operate flexibly can connect to the grid faster.
Making utilities consider flexible alternatives before building: Some utilities build expensive infrastructure to deal with demand that is only an issue for a few hours a year. This means utilities end up upgrading a distribution line or substation, often at significant cost, to handle peak demand that a battery, demand response program, or distributed solar panels could potentially manage at lower cost.
- Most state utility commissions do not require utilities to evaluate these flexible alternatives before approving capital spending. In most states, while utilities propose capital projects and commissions approve or trim them, there is no requirement that utilities model flexible alternatives before major expenditures to demonstrate that building is the more cost-effective strategy.
- A flexible approach makes the most sense when the upgrade is being driven by a narrow peak of just a few hours a year, rather than by steady electricity demand growth that will require new infrastructure eventually.
WHAT STATES SHOULD DO
- Require comprehensive Grid Enhancing Technologies assessment in resource planning. States should require utilities to evaluate GETs (dynamic line ratings, power flow control, topology optimization, advanced conductors) and grid utilization metrics in resource and transmission plans, and explain in writing as part of the annual filing process, if they do not use GETs and how the implementation would impact metrics. This makes utilities responsible for justifying why they are skipping a potentially cheaper option.
- Mandate or encourage implementation and reporting of use of GETs. States should require that utilities make the best use of current transmission capability before authorizing additional construction by tying reporting on GET use as a condition of permit grant or renewal, or create an incentive program that leverages financial incentives like reduced financing rates for utilities that use GETs.
EXPECTED OUTCOME
Deploying grid-enhancing technologies and demand flexibility programs will not reduce the need for new transmission and generation, but they can meaningfully reduce how much new infrastructure needs to be built, and how quickly, while longer-term investments come online.
With respect to GETs, utilities that have deployed dynamic line ratings and advanced power flow control have found 20-30% capacity gains on existing lines at a fraction of the cost of new construction. If deployed widely, these tools could defer billions of dollars in transmission investment while helping to meet new electricity demand in the next few years.
On demand flexibility, requiring large electricity users to participate in verified demand response programs as a condition of grid access would reduce peak demand and lower the infrastructure needed to serve it. Requiring utilities to evaluate flexible distributed resources before approving distribution upgrades could produce similar savings at the distribution level, where infrastructure costs are significant.
Together, these strategies can lower costs for ratepayers by reducing the amount of infrastructure being built and paid for through electricity bills, making the grid more resilient and better able to meet new demand from data centers and electrification.
TRADEOFFS
- Utility opposition. GETs are often cheaper and faster than new transmission, but utilities cannot earn a rate of return the way they do on capital investment. Consequently, utilities have limited incentives to proactively deploy these strategies, which is why state mandates and commission requirements are necessary.
- Demand flexibility potential is real but unproven at scale. The 76 and 200GW figures cited here represent theoretical maximum under favorable conditions. Most data centers and large industrial customers have not yet demonstrated sustained demand flexibility in practice. Verification and enforcement will matter as much as the requirement itself.
- These tools reduce costs but do not eliminate the need for new infrastructure. The grid needs to grow to meet new demand from data centers, electrification, and economic growth. GETs and demand flexibility can defer and reduce that investment, but cannot replace it. States that pursue these reforms should do so alongside, not instead of, longer-term transmission and generation planning and permitting reform.
POLLING*
- The States Forum polling shows that voters know that this isn’t an either/or choice between efficiency and investment. 56% of voters said utilities should study ways to make the existing grid more efficient before proposing new projects, reflecting a clear preference for getting more out of our existing system.
- Fifty-six percent of voters agree that utility companies should study ways of making existing grids more efficient before new projects.
- Voters also aren’t allergic to investment: 44% say they are willing to pay more for reliable power, and 68% say large-scale electricity users, like data centers, should proactively address the potential impacts of their demand by paying for new energy projects and infrastructure.
FAQ:
Why don’t utilities deploy these things if they are so cost-effective?
Utilities earn a return on capital investment (new lines, substations, equipment). Grid-enhancing technologies, which are often software or low-cost sensors, do not generate the same return as new large-scale infrastructure. Changing this requires either a state legislative mandate or a utility commission order directing utilities to evaluate GETs before proposing large capital projects.
Why should data centers be required to participate in demand response?
Data centers are one of the largest growing sources of electricity demand, and most are connected to the grid, which means they benefit from infrastructure subsidized by ratepayers. Requiring new loads to demonstrate demand flexibility – which can take many forms – spreads costs more fairly and reduces the need for infrastructure that ratepayers would otherwise fund. When a data center reduces its draw on the grid during peak hours, that freed-up capacity becomes available for other customers, including homes and businesses. This means demand flexibility isn’t just reducing costs of serving data centers, but makes the grid capable of serving everyone else.
Does requiring demand flexibility mean data centers have to reduce their computing capacity?
Not necessarily. Demand flexibility can mean shifting workloads to off-peak hours, relying on on-site (or off-site) backup power during peak grid stress periods, or reducing non-time-sensitive computing. Most data centers already have backup generation for reliability purposes.
Will these reforms lower my electricity bill?
The direct effect is to reduce the amount of new infrastructure that needs to be built and paid for through electricity rates. These reforms don’t produce immediate bill reductions, but they reduce how much bills would otherwise rise as the grid expands to meet new demand.
*Polling data cited from a Data for Progress survey of 1,058 U.S. likely voters conducted July 24-27, 2026. The sample was weighted to be representative of likely voters by age, gender, education, race, geography, and recalled presidential vote. The margin of error is ±3 percentage points. For more information on methodology, visit dataforprogress.org/our-methodology.