As data centers drive the first major surge in electricity demand in decades, tens of millions of utility customers, particularly in PJM, are already seeing higher bills. But a new report from The Brattle Group suggests that load growth could actually help lower rates — if utilities prioritize technologies that free up grid capacity without building new poles and wires.
Those technologies include distributed energy resources like batteries, electric vehicles, smart thermostats, HVACs and other home devices that can quickly shift their power use. Large loads like data centers can also be a flexible asset, the report highlighted, either by bringing their own on-site power or agreeing to curtail electricity use during times of grid stress.
The Brattle Group found that if a typical mid-size U.S. utility met one gigawatt of new load growth with a mix of flexible data centers and DERs, electricity rates would be 4.8% less compared to a “status quo” scenario of just investing in new transmission, distribution, and generation infrastructure. Over a decade, that increase in grid utilization could add up to more than $110 billion in customer savings nationwide.
The study was commissioned by GridLab and the Utilize Coalition, the latter of which launched last week to advance grid utilization bills at the state level. The nonpartisan group supported first-of-its-kind legislation in Virginia that would direct state energy regulators and utilities to quantify and reduce waste on the grid. The bill awaits Gov. Abigail Spanberger’s signature.
The push for data center flexibility and grid utilization has gotten new attention in the last year, following Duke University research released early 2025 that found the grid operated at 53% of its capacity across 22 regional systems. Across the U.S., the researchers found, there may be more than 100 gigawatts to spare.
‘Proof of concept,’ not policy
Ryan Hledik, a principal at Brattle Group and co-author of the study, said the findings are “proof of concept” that grid utilization could benefit both consumers and utilities. But it’s not a comprehensive analysis of market conditions; states considering the idea would have to conduct their own research, he said.
The study has several limitations. For one, researchers focused exclusively on how load growth impacts electricity rates. But many factors affect rates, such as the price of oil and gas and especially, as highlighted by a Lawrence Berkeley National Lab report last year on why electricity prices are going up, replacing aging grid infrastructure.
Rate design can also be an effective way to make sure ordinary customers don’t foot the bill for much larger users, like data centers. Utilities set different rates for different customers based on their electricity use and the cost to serve them — typically broken out by residential, commercial, and industrial.
Brattle’s research assumed that under the “status quo” scenario, a hypothetical utility earned a national average electricity rate of 14 cents per kilowatt hour — insufficient to fully recover the cost from serving new load growth. Therefore, rates would go up by 1.4%.
Between 2024 and 2025, at least 25 utilities put data-center specific rates on the books, or else are waiting regulatory approval for their tariffs, according to a Latitude Intelligence analysis. Those rates are aimed at ensuring data centers pay their fair share for energy costs.
Those affordability protections don’t cover most of the country, however. And as Latitude Intelligence analyst Nick Zenkin emphasized in an article, none of the rates specifically encourage data center flexibility.
For now, despite the Brattle Group report’s findings, that’s not particularly surprising. The concept is still niche and utilities remain financially incentivized to build more, not to use what they have more efficiently. There’s also concern that flexible grid assets aren’t a reliable source of capacity, compared with a new gas plant, for example.
Hledik said greater grid utilization requires “new regulatory models” that reward utilities for paying their customers to use less power.
“Improving grid utilization can reduce, but doesn’t eliminate, the need to invest in new infrastructure,” he said. “That means utilities can still grow their earnings, and with supporting regulatory incentives, also increase their profit margins.”
