This article is an excerpt from FREOPP’s policy handbook, “Affording the American Dream.”

To address rising energy costs, federal policymakers should: 

Modernize and streamline permitting. The time it takes to permit, build, litigate, and connect a new project to the grid is a major factor in the cost of building new power generation. 

Codify recent nuclear reforms to create regulatory certainty. Executive policy guidance can be the baseline for new legislation to most efficiently supply the American grid.

Reform transmission cost allocation and reward utilities for cheaper upgrades. States can seek to socialize the costs of their policies onto ratepayers in other states. Congress should pair sensible interregional cost-allocation rules with an incentive for utilities to upgrade transmission.

Allow development of off-grid power generation that can compete with existing utilities for large industrial consumers. New data centers could more readily be built off-grid, addressing concerns that industrial demand will generate costs that will be socialized and passed on to ratepayers.

Energy unaffordability is hitting lower-income Americans hard. As of September 2024, 43.8 percent of adults in households earning under $25,000 were unable to pay an energy bill at least once in the preceding 12 months. An estimated 56.2 percent of Americans in this income bracket—over 15 million adults—reported that they cut out basic household necessities to pay an energy bill.¹ The poorest fifth of American households spend a median of 9.8 percent of their income on energy, compared to 1.2 percent for the top quintile of American households.² 

The average price of residential electricity rose by about 33 percent in nominal terms from 2019 to 2025, outpacing inflation.³ According to data from Federal Reserve Economic Data (FRED), electricity Consumer Price Index (CPI) rose 12 percent from January 2010 to December 2019 while broader inflation rose 19 percent.⁴ Since 2022, that relationship has flipped and household electricity inflation has outpaced all-items CPI. Electricity inflation will continue to be an issue if supply cannot meet new demand. 

Energy affordability is not a transient issue that will resolve itself over the next few years. Electricity demand forecasts have accelerated since 2022, ending a decade and a half of flat growth.⁵ Data centers, reindustrialization, and electric vehicles and heat pumps are all creating new demand for electricity.⁶ Grid planning areas file ten-year peak-demand forecasts with the Federal Energy Regulatory Commission (FERC).⁷ FREOPP analyzed these filings and found that the projected increase in demand has risen roughly sevenfold from 2022 to 2026. The filings from June 2026 forecast that an additional 151 GW of peak demand will be added to the grid by 2030. Assuming a 15 percent reserve margin, the United States would need to add net capacity at nearly twice the pace it did over the last decade.

Grid planners’ filings deserve to be scrutinized, especially when they are projecting that demand will grow far faster than in recent decades. Roughly 65 percent of the forecast growth in the 2018 to 2020 filings materialized. Assuming 65 percent of the filed 151 GW of demand materializes, the United States would still need to add over 98 GW of capacity to meet additional peak demand, plus capacity to maintain reserve margins.⁸ How much of this demand materializes is contingent upon the ability of developers to build the requisite supply. If the United States cannot build the required power generation, then many of these projects will be built abroad, creating economic opportunities and generating tax revenues elsewhere while depriving Americans of the energy they need for homes and businesses.

Americans’ utility bills rose partially because utilities needed to invest capital into expanding and maintaining existing infrastructure, without rising demand to help absorb the cost. Utilities earn a regulated return based on capital expenditure investment less depreciation. Investor-owned utilities invested $1.3 trillion (nominal) in total capital expenditures from 2015 to 2024. In grid regions with flat or declining demand, ratepayers will see their bills continue to rise as projects are placed in service and enter the rate base. Costs have also risen due to natural gas volatility and wildfire damage that likewise raised prices for ratepayers.⁹ 

New industrial demand can help spread fixed grid costs over more kilowatt-hours. If these costs rise while demand declines or stays flat, then utilities will need to raise rates on their existing customers. A larger share of these fixed costs must then fall onto households, even if their personal usage stays relatively flat. However, when a new industrial customer is added to the grid, or an existing company expands their operation, the fixed costs from these prior investments can now be shared with them. This can result in customers’ bills declining or rising slower than they otherwise would have.

The demand surge provides a unique opportunity for policymakers to deliver reforms that protect ratepayers from unnecessary costs, allow supply to grow, and release American ingenuity from the burdens of excessive bureaucracy. Higher demand will create new economic opportunities for Americans and can help finance necessary upgrades to the United States’ energy infrastructure. The policy challenge is not to figure out how to deter large load customers, but how to ensure that this investment protects ratepayers, supports investment in critical infrastructure, and raises real wages for Americans. Rising demand is only a problem if it leads to higher costs that are socialized onto households, instead of being internalized by the companies. Congress should pass reforms that will give states the opportunity to protect consumers.

Federal policies to protect ratepayers

Modernize and streamline permitting. The time it takes to permit, build, litigate, and connect a new project to the grid—whether coal, nuclear, natural gas, geothermal, or renewable—is a major factor in the cost of building new power generation. The Breakthrough Institute found that energy projects spent a median of three years in litigation between final agency approval and a final court ruling.¹⁰ Even when a project is ultimately built, years of litigation create future uncertainty that reduces investment. Legislation like the FREEDOM Act—which sets enforceable deadlines for administrative agencies, offers expedited judicial review for project sponsors, and would protect projects that have received final permits from unilateral executive actions—can serve as a bipartisan solution to ensure that rising demand leads to lower real electricity prices and greater economic opportunity for Americans.¹¹ These reforms will protect ratepayers by making it easier for private capital to invest in energy infrastructure and reducing project costs incurred by unnecessary delays.

Codify recent nuclear reforms to create regulatory certainty. Nuclear power plants can help meet rising demand and improve grid reliability because of their high capacity factor—the electricity they generate in a given year as a proportion of their maximum possible output—and their exemplary power density—the amount of power generated per unit of land area required. The United States’ nuclear reactors operated at a preliminary capacity factor of 91 percent in 2025, compared with 58 percent for combined cycle natural gas, 34 percent for wind, and 24 percent for utility-scale solar.¹² The comparatively high capacity factors of nuclear power plants enables a reliable output of large amounts of electricity. This consistency makes it easier for grid planners to ensure that there will be sufficient power to meet demand and mitigate the risks of rolling blackouts caused by extreme weather.

Nuclear power plants can generate immense power using a fraction of the land required for other sources. This quality of nuclear power makes these power plants differentiated in their ability to help a large city, like New York, to decarbonize its power production. Wind and solar power require at least an order of magnitude more land to generate the same amount of power as a nuclear power plant.¹³ In order to scale renewables to decarbonize a major city, a utility would need to build transmission lines that bring the power from distant renewable energy projects. From 2010 to 2021, it took on average over 10 years to build a transmission line in the United States.¹⁴ States that are antagonistic to natural gas power generation and want to meaningfully address reliability concerns in their cities need a federal and state regulatory environment that will accelerate the development and commercialization of new nuclear reactors.

President Trump’s 2025 executive orders and the Nuclear Regulatory Commission’s recent actions seek to accelerate investment and research and development of new nuclear reactors. Congress should build on the ADVANCE Act by codifying recent reforms to provide long-term regulatory certainty for investors and entrepreneurs.¹⁵  New legislation should: 

• Establish enforceable, predictable licensing deadlines. Require the NRC to reach a final decision on a substantially complete new reactor application within 18 months. Require the NRC to reach a final decision to continue operating an existing reactor within one year. 
• Create standardized and expedited licensing pathways for reactor designs that the Department of Energy (DOE) or Department of Defense has already tested and demonstrated operate safely. Streamline the process for repeat deployments of microreactors and modular reactors.  
• Codify DOE’s authority to approve qualified test reactors under its jurisdiction, streamline environmental reviews at federal research sites. Authorize public-private projects that deploy reactors at DOE and military sites.

Reform transmission cost allocation, and reward utilities for cheaper upgrades. All else equal, residents who purchase their power from a cost-of-service utility will face higher bills as utilities invest in new energy infrastructure. While there are existing ratepayer protections, utilities are incentivized to take on expensive capital projects that grow their rate base and increase their authorized returns. This becomes a complex issue when transmission projects serve ratepayers across multiple states, as state policy can further warp incentives as states seek to socialize the costs of their policies onto ratepayers in other states. Existing lines can be reconductored or upgraded to expand deliverable transmission capacity in a capital-efficient way.¹⁶ Congress should pair sensible interregional cost-allocation rules with an incentive for utilities to upgrade transmission when it would be more cost-effective than building new lines.

Allow development of off-grid power generation that can compete with existing utilities for large industrial consumers. In most states, companies can only purchase power directly from the grid or provide their own power. In order to create an off-grid utility, the would-be utility needs to be approved by the state public utility commission. This requirement effectively prohibits the creation of new, off-grid utilities that can provide power to multiple industrial customers with the prices negotiated directly between the utility and their customers. Travis Fisher and Glen Lyons call this innovative arrangement Consumer Regulated Electricity (CRE).¹⁷ With CRE, new data centers and manufacturing could more readily be built off-grid, addressing concerns that industrial demand will generate costs that will be socialized and passed on to ratepayers. This would help to resolve issues under certain market structures, like in the PJM Interconnection, where the capacity market does socialize costs that should be borne directly by large industrial loads.¹⁸ In January 2026, Senator Tom Cotton (R., Ark.) introduced the Decentralized Access to Technology Alternatives Act (DATA Act) to help make CRE a viable option. The DATA Act would exempt islanded off-grid utilities serving new customers from federal utility regulation that will otherwise inhibit states’ ability to experiment with CRE.¹⁹

The United States is set to spend more than one trillion dollars building infrastructure to power and support an economy that requires much more power.²⁰ This investment can spur economic growth and lead to falling real prices, or it can be undermined by ossified permitting processes and serial litigation. Without reform, American ratepayers are likely to continue to see their costs rise, especially in states whose plan to address rising demand is to encourage it and the economic opportunities that accompany it to go elsewhere. 

Congressional and state leaders need to take action to protect ratepayers by making it easier to invest in and build energy infrastructure and other capital intensive industries within the United States. If Congress punts on permitting reform and the status quo continues unabated, ratepayers will see their prices continue to rise. Inaction will lead to higher utility bills that will further erode the budgets of lower-income households.

Endnotes

1. U.S. Census Bureau, “Table 4: Household Energy Use and Spending in the Last 12 Months, by Select Characteristics,” Household Pulse Survey, Cycle 09, August 20–September 16, 2024, https://www2.census.gov/programs-surveys/demo/tables/hhp/2024/cycle09/housing4_cycle09.xlsx .
2. U.S. Census Bureau, “2024 American Community Survey: 1-Year Estimates—Public Use Microdata Sample,” https://www.census.gov/programs-surveys/acs/microdata/access/2024.html.
3. U.S. Energy Information Administration, Electric Power Monthly, table 5.3, “Average Price of Electricity to Ultimate Customers,” https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_03.
4. Federal Reserve Bank of St. Louis, Federal Reserve Economic Data, series CUSR0000SEHF01, “Consumer Price Index for All Urban Consumers: Electricity in U.S. City Average,” https://fred.stlouisfed.org/series/CUSR0000SEHF01; series CPIAUCSL, “Consumer Price Index for All Urban Consumers: All Items in U.S. City Average,” https://fred.stlouisfed.org/series/CPIAUCSL.
5. U.S. Energy Information Administration, “Electricity Data Browser: Retail Sales of Electricity,” annual U.S. all-sector sales, https://www.eia.gov/opendata/browser/electricity/retail-sales.
6. John D. Wilson et al., Power Demand Forecasts Revised Up for Third Year Running, Led by Data Centers (Washington, DC: Grid Strategies, November 2025), 3–4, https://gridstrategiesllc.com/wp-content/uploads/Grid-Strategies-National-Load-Growth-Report-2025.pdf.
7. Federal Energy Regulatory Commission, “Form No. 714—Annual Electric Balancing Authority Area and Planning Area Report,” https://www.ferc.gov/industries-data/electric/general-information/electric-industry-forms/form-no-714-annual-electric/overview.
8. Foundation for Research on Equal Opportunity, unpublished analysis of FERC Form 714 planning-area forecasts, report years 2021–2025, compiled using Public Utility Data Liberation, version 2026.8.0.
9. Ryan Wiser et al., Factors Influencing Recent Trends in Retail Electricity Prices in the United States (Berkeley, CA: Lawrence Berkeley National Laboratory and The Brattle Group, October 2025), https://eta-publications.lbl.gov/sites/default/files/2025-10/full_summary_retail_price_trends_drivers.pdf.
10. Breakthrough Institute, The Procedural Hangover: How NEPA Litigation Obstructs Critical Projects (Berkeley, CA: Breakthrough Institute, July 24, 2025), 5, https://thebreakthrough.imgix.net/A-Comprehensive-Analysis-of-NEPA-Litigation_v6.pdf.
11. Grant Dever, “The FREEDOM Act: Permitting Reform to Protect Ratepayers,” FREOPP Blog, Foundation for Research on Equal Opportunity, July 7, 2026, https://freopp.org/oppblog/the-freedom-act-permitting-reform-to-protect-ratepayers/.
12. U.S. Energy Information Administration, Electric Power Monthly, tables 6.07.A and 6.07.B.
13. Hannah Ritchie, “How Does the Land Use of Different Electricity Sources Compare?” Our World in Data, June 16, 2022, https://ourworldindata.org/land-use-per-energy-source.
14. International Energy Agency, “Average Lead Times to Build New Electricity Grid Assets in Europe and the United States, 2010–2021,” 2023, https://www.iea.org/data-and-statistics/charts/average-lead-times-to-build-new-electricity-grid-assets-in-europe-and-the-united-states-2010-2021.
15. On the ADVANCE Act and related executive directives, see U.S. Nuclear Regulatory Commission, “About the ADVANCE Act,” last updated August 11, 2026, https://www.nrc.gov/about-nrc/governing-laws/advance-act/about-advance-act; Exec. Order No. 14,299, 90 Fed. Reg. 22,581 (May 29, 2025); Exec. Order No. 14,300, 90 Fed. Reg. 22,587 (May 29, 2025); Exec. Order No. 14,301, 90 Fed. Reg. 22,591 (May 29, 2025); Exec. Order No. 14,302, 90 Fed. Reg. 22,595 (May 29, 2025); and Enabling Nuclear Energy Innovation, 42 U.S.C. § 16278 (2026), https://uscode.house.gov/view.xhtml?edition=prelim&num=0&req=granuleid%3AUSC-prelim-title42-section16278.
16. Idaho National Laboratory, Advanced Conductor Scan Report (Washington, DC: U.S. Department of Energy, 2023), 123, https://www.energy.gov/sites/default/files/2024-08/Advanced%20Conductor%20Report%20December%202023.pdf.
17. Travis Fisher and Glen Lyons, The Case for Consumer-Regulated Electricity: Private Electricity Grids Offer a Parallel Path to Energy Abundance, Cato Institute Briefing Paper no. 196 (Washington, DC: Cato Institute, February 3, 2026), https://www.cato.org/briefing-paper/case-consumer-regulated-electricity-private-electricity-grids-offer-parallel-path.
18. Monitoring Analytics, Analysis of the 2027/2028 RPM Base Residual Auction, Part A (Eagleville, PA: Monitoring Analytics, January 5, 2026), https://www.monitoringanalytics.com/reports/Reports/2026/IMM_Analysis_of_the_20272028_RPM_Base_Residual_Auction_Part_A_20260105.pdf.
19. Decentralized Access to Technology Alternatives Act of 2026, S. 3585, 119th Cong. (2026), https://www.govinfo.gov/content/pkg/BILLS-119s3585is/html/BILLS-119s3585is.htm.
20. Edison Electric Institute, EEI Industry Capital Expenditures 2015–2029, 1.