Energy affordability has become one of the most pressing and complex challenges facing utilities and regulators. Across the United States, rising energy costs, driven by aging infrastructure, fuel price volatility, and rapid load growth, are placing increasing pressure on customer bills. At the same time, utilities must continue investing in generation, reliability, resilience and energy efficiency.
At TRC, we acknowledge the complexity of energy affordability as a system-level challenge, and we approach this challenge by collaborating with our clients to identify possible solutions. Based on our work across energy program implementation, research and advisory services, we identify two broad opportunities for pursuing affordability strategies:
- Mitigating the drivers of rising energy costs
- Helping customers adapt to and manage those costs
In this article we discuss these strategies and the ways that utilities, implementers, regulators and other energy industry organizations can pursue meaningful and sustained affordability outcomes for their customers.
Strategy 1: Mitigating the Drivers of Rising Costs
As our colleagues wrote earlier this year in “2026 Megatrends Powering the Shift in the Utility Landscape,” U.S. utilities currently are confronting forces – and demand-related opportunities – unlike any we’ve seen in modern history: the electrification of everything, reshoring of manufacturing, unprecedented data center and AI-driven load growth and tightening grid constraints, alongside growing resiliency risks. This inflection point is putting pressure on many utilities to raise rates, to levels that are financially burdensome to an increasing percentage of customers. How can utilities mitigate these rate increases?
Planning for Large Loads
As new large loads, particularly data centers, connect to the grid, utilities are increasingly using targeted rate design to prevent cost shifting to other customers.
An example of this strategy comes from Missouri, where tariffs have been in place since 2025 requiring utilities to adopt rates for large-load customers like data centers. The goal of these tariffs is to ensure that the new investments needed to serve incoming high-demand users are not broadly distributed across the rate base, protecting residential and small business customers from cost increases. Many other examples of large-load tariffs are emerging across the U.S. as a way to help plan for load growth, fairly distribute costs and benefits and support local policy objectives.
States are pursuing parallel strategies to address the cost of new energy infrastructure investments by high-load energy customers: in July 2026, the state of Virginia created a first-of-its-kind consumption tax on data centers and their energy usage. This marks a shift from some previous policies that incentivized the development of data centers as an economic upside for host communities.
Expanding Demand Response, DERs and Flexible Resources
Demand response (DR) remains one of the most cost-effective tools available to utilities for managing load growth. By reducing overall peak demand, DR programs help defer or avoid costly investments in generation, transmission and distribution.
Large-scale distributed energy resource (DER) projects like virtual power plants (VPP) are a potential pathway for utilities to manage load growth and defer costs. VPPs are aggregations of grid-connected devices such as smart appliances, building management systems, solar-plus-storage systems, and electric vehicles. When coordinated, these resources can reduce or shift demand and, in some cases, supply electricity to the grid, potentially deferring certain generation or grid investments.
Large commercial and industrial customers can contribute to grid flexibility. For example, data centers and other facilities with battery storage, backup generation, controllable equipment or schedulable workloads may be able to reduce or shift demand during constrained periods without compromising essential operations. Collaboration among utilities and large customers can help identify operationally feasible opportunities, improve load forecasting and create programs that support customer needs while reducing pressure on the broader grid.
VPP demonstrations can help utilities determine when and where flexible resources can defer capacity upgrades and reduce system costs. TRC supports clients in this first step towards assessing the feasibility of flexible resources in their portfolios.
Strategy 2: Helping Customers Manage Energy Costs
Even with cost mitigation strategies, some utility rate increases are unavoidable, due to infrastructure costs, rising fuel costs and added capacity. Utilities are placing greater emphasis on equipping customers with the information and tools they need to manage energy consumption as a mean to reduce costs. As an implementer of energy programs for utilities and energy agencies across the U.S., TRC equips customers with technical assistance and incentives to support energy-saving upgrades, along with knowledge and tools to save energy. Collaborating with our clients and industry partners, we identify variables that can increase customer control, through education, communication, access to data and behavioral change.
Communication and Education
Customers are more likely to accept rising energy costs when they understand the drivers behind them, particularly investments tied to reliability and system resilience. Transparent communication and education are key to achieving this understanding. For example, customer outreach campaigns like emails and bill inserts can explain the rationale behind rate changes, framing investments in terms of long-term system value for rate payers and providing clear, accessible messaging.
Customers are also more likely to participate in energy efficiency and other incentive programs when utilities provide dedicated outreach staff to help communicate these offerings. Recognizing that program rules may be difficult to interpret or track over time, outreach staff can help overcome this barrier to entry.
In California, for example, each investor-owned utility offers a Single Point of Contact (SPOC) service to assist multifamily property owners, residents, managers and contractors in identifying the best incentive program, rebate and financing resources to upgrade their properties. This service also offers free benchmarking to help property owners better understand energy use and prioritize money-saving upgrades. Within income-qualified properties, the SPOC service helps to ensure that eligible residents are receiving discounted energy rates.
Enabling Behavioral and Operational Change
Strategic energy management (SEM) programs focus on continuous improvement, helping customers identify no-cost, low-cost and capital-intensive opportunities to reduce energy use. Through energy coaching and behavioral changes, SEM empowers facility managers to achieve verifiable energy savings that persist over time.
An ideal customer for SEM is school districts, which typically have limited resources and can benefit from energy coaching. TRC has implemented initiatives in K–12 schools for a Southern utility that have delivered energy savings of over 10 percent. This program provides staff training and operational improvements, enabling schools to reduce costs without requiring significant upfront investment.
In addition to schools and public facilities, SEM programs consistently achieve first-year savings in the range of 10 to 15 percent for facilities in the healthcare, nonprofit and multifamily housing sectors, and for a broad range of commercial & industrial facilities – a low-cost way to reduce energy bills without significant investments.
Leveraging Rate Design Programs
Time of Use (TOU) rates provide another pathway for customers to manage energy costs. When paired with effective education, analytics and customer engagement, these programs allow customers to shift energy use away from periods of highest demand and take advantage of lower-cost electricity during off-peak hours.
Unlike a traditional flat rate, TOU pricing reflects the varying cost of supplying electricity throughout the day. Customers pay higher prices during peak demand periods, when electricity is more expensive to generate or procure, and lower prices during off-peak hours, when demand is lower and additional grid capacity is available. By shifting flexible activities such as electric vehicle charging, laundry, dishwashing or cooling to off-peak periods, customers who are willing and able to adjust their energy use can reduce their monthly bills.
At the same time, TOU programs help utilities improve grid utilization by shifting demand away from the system’s most constrained hours, potentially reducing the need for costly investments in generation and distribution infrastructure.
In our experience designing and implementing TOU programs, TRC has found that customer recruitment, personalized communications, data analytics and ongoing engagement are the key success factors in achieving measurable cost savings for customers. Not all customers are willing and able to participate in TOU programs, but for those who choose to, and with proper support from the utility, the cost savings can be significant.
The Role of Partnerships and Equity-Focused Programs
A constant value across our work at TRC is the importance of partnerships. Utility energy program implementers on their own cannot fully address affordability challenges, particularly for underserved populations who are most burdened by energy costs.
Collaboration with external stakeholders, community organizations and regional partners enables more targeted and effective solutions. For example, our work on an energy program for a state agency in Oregon has demonstrated how co-creating solutions to participation barriers can improve engagement among disadvantaged communities. We learned that engaging with paid, trusted local partners and developing culturally relevant outreach are critical to reaching these customers.
In another collaborative effort, we partnered with an Oregon Tribal organization, the local utility and a market transformation group to develop energy-efficient, affordable housing for Tribal elders. This partnership demonstrates how integrating energy-saving measures into building design can deliver tangible benefits for populations experiencing housing and energy affordability burdens.
Energy saving programs specifically designed to support income-qualified customers are another effective tool for working towards energy affordability. In California, TRC works with utilities to administer a program that provides no-cost and reduced-cost energy efficiency upgrades to affordable multifamily properties and residents. This program provides technical assistance and covers 100% of the eligible cost of qualifying energy upgrades for multifamily buildings that house income-qualified residents, for example a non-profit organization that provides housing for formerly homeless youth. These targeted programs help to share the benefits of energy efficiency more equitably within disadvantaged communities.
Reaffirming the Value of Energy Efficiency
In an environment of rising bills, the value of funding energy efficiency programs is sometimes questioned. However, TRC’s experience reinforces efficiency’s role as a cornerstone of affordability.
Energy efficiency remains one of the most cost-effective resources available, delivering multiple dollars in benefits for every dollar invested. These programs reduce energy consumption, defer infrastructure investments and lower overall system costs, bringing benefits to all customer types, including underserved households and small businesses.
Importantly, efficiency’s impact is often hidden. Customers may not see a direct reduction in their bills if rates are rising, but without these programs, costs would be significantly higher. To support clean energy and climate resilience goals, utilities are continuing to pursue electrification and decarbonization initiatives, which can lead to load growth; maintaining a strong focus on efficiency will be critical to managing this added demand.
TRC staff recently discussed this topic with Paige Knutsen, the Executive Director of the Midwest Energy Efficiency Alliance, part of a national network of regional energy efficiency organizations (REEOs) that collaborate with federal, state and local governments to drive energy policy. Paige confirmed that “we consistently see utility Integrated Resource Plans selecting energy efficiency as a go-to cost effective resource to address the rising capacity, generation and infrastructure costs impacting customer bills and overall affordability.”
At TRC, we strongly agree, and believe that demand-side management programs, including energy efficiency and demand response, remain essential to reducing overall system costs and providing long-term value to ratepayers.
Key Takeaways for Utilities and Agencies
In summary, based on our experience working with utility demand management programs across the U.S., the TRC team has identified pathways towards prioritizing energy affordability within our sector:
- Consider rate-based strategies like large load tariffs
- Invest in demand response and other flexible Distributed Energy Resources (DERs)
- Communicate clearly about the drivers of rising energy costs
- Provide customers with actionable data and tools
- Expand programs that combine education, engagement and technical support
- Leverage partnerships to reach underserved populations
- Prioritize energy efficiency as a foundational resource
Looking Ahead
Energy affordability will remain a defining issue as the clean energy transition accelerates. Rising costs, increasing demand and evolving customer expectations will require continued innovation and collaboration.
TRC is proud to work with clients and industry partners across the country to pursue affordability solutions. By combining system-level cost mitigation with program-level strategies and strong partnerships, we believe that our industry can make the benefits of the energy transition more accessible to all customers.
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