By Rayna Rose | Wed, September 2, 26
The region’s rising electricity demand, driven by rapid data center expansion in the Mid-Atlantic and electrification in the Northeast, has put a renewed focus on state policies that can deliver affordable, reliable, and efficient energy. New legislation in states across the region seeks to meet this challenge by advancing technologies and programs that maximize existing grid resources to reduce costs for consumers.
In this blog post, NEEP highlights recent laws from across the Mid-Atlantic and Northeast that call on energy efficiency and distributed energy resources to manage rising demand and protect affordability. While several states have considered or recently implemented cuts to energy efficiency budgets, many more states are using efficiency in innovative ways to lower customer bills. These laws increase access to energy efficiency programs, expand investment in Virtual Power Plants (VPPs), and ensure data center growth that prioritizes ratepayer affordability.
Expanding Access to Energy Efficiency Programs
Several new laws expand funding for and increase access to energy efficiency programs to promote long-term affordability and protect consumers.
In Maine, a new law requires the Maine Department of Energy Resources to establish the Maine Home Energy Navigator and Coaching Resource Hub. The program will support community-based energy coaching programs to help residents — particularly those in low-income, rural, and underserved communities — access residential energy efficiency and clean energy programs to improve energy affordability.
The New York FY 2027 state operations budget allocates $200 million to the EmPower+ program, which offers no-cost home energy assessments and funding for energy efficiency improvements like weatherization. This funding includes a guarantee that participating low-income customers spend less than six percent of their household income on electric utility bills. Weatherization investments from EmPower+ reduce home energy consumption, which in turn lowers grid demand and promotes affordability for all ratepayers.
New Jersey passed a law in January requiring state agencies to review the income eligibility thresholds for bill assistance and energy efficiency programs and, based on the review and public input, increase the income thresholds for low- and moderate-income residential customers if deemed necessary.
In Maryland, the 2027 budget bill includes $72.65 million for a new Residential Energy Equity Heat Pump Rebate Program to support high efficiency heat pump installation and replacement in low- and moderate-income homes, showing energy efficiency plays a vital role in ensuring affordability in Maryland. However, the Utility RELIEF Act lowers annual greenhouse gas (GHG) reduction targets that electric companies must achieve through energy efficiency and allows them to meet up to 20% of their GHG targets using community solar and other solar generation facilities.
Rhode Island’s 2027 budget preserves the state’s ability to continue funding energy efficiency programs at higher levels. In a previous version of the bill, Governor McKee proposed to cap electric and gas efficiency spending at $75 million annually between 2027 and 2029.
These laws reflect a commitment by several states to maintain and expand access to energy efficiency upgrades to improve long-term affordability, especially for low-income residents.
Deploying Virtual Power Plants and Demand Response
VPPs are networks of digitally connected distributed energy resources like batteries, electric vehicles, and smart thermostats that are coordinated to provide demand flexibility. Like traditional demand response (DR) programs, VPPs can help lower demand during times of peak energy usage, therefore reducing unnecessary grid infrastructure build-out. But with a wider scope of technologies, VPPs can build on the longstanding success of DR programs and scale them further. Policies that encourage investments in cost-effective efficiency and demand response as part of VPPs can help lower utility bills for ratepayers and help states meet affordability and clean energy goals. Several states are looking to demand response programs and VPPs as tools to lower costs for ratepayers.
Maine passed a law establishing the Maine Demand Response Program. The law requires the Efficiency Maine Trust to set up a demand response program to encourage customers to reduce electricity use during peak demand periods, with the goal of lowering bills and improving grid reliability. The Trust will run the program through FY2027–28, with discretion to extend it through its next triennial plan.
Virginia enacted a law that authorizes electric cooperatives to establish and implement VPP programs starting in 2027. Electric cooperatives will be able to offer incentives to residential customers for battery storage devices.
New Jersey Governor Sherrill issued Executive Order 2 to declare a statewide energy emergency and direct the Board of Public Utilities (BPU) to develop a VPP program. The BPU published a VPP Program Straw Proposal that includes a VPP Interim Program from 2027-2029 and a Long-Term VPP Program from 2029 onward. These VPP programs would leverage existing DR programs, prioritize ratepayer savings and equitable program design, and could build upon the Triennium energy efficiency framework. While these activities have been through executive and regulatory channels, New Jersey could see legislative action next session.
Ensuring Data Center Growth is Done Affordably
As data centers place growing demands on the electric grid, states are enacting laws to prioritize energy affordability for residents and small businesses to help mitigate cost impacts from large load customers.
New Jersey passed legislation to create a separate rate class or tariff for large load customers to protect ratepayers from rising rates. Utilities must develop voluntary demand-reduction trade programs through which data centers fund, or contract with a third party to provide, demand flexibility measures for other customers on the same electric public utility system. The legislation also instructs state regulators to incentivize large load data centers to increase energy efficiency, such as through waste heat recovery. Another recent New Jersey law requires data center owners and operators to submit semi-annual water and energy usage reports to the New Jersey Board of Public Utilities.
A new Delaware law requires large energy use facilities to produce or procure enough renewable energy to meet 100% of their energy demand to ensure they do not negatively affect grid reliability and energy affordability. The bill passed both chambers and is now awaiting Governor Meyer's action.
Investing in Thermal Energy Networks
Throughout the region there is growing interest in thermal energy networks (TENs) to heat and cool buildings efficiently while reducing emissions and costly peak demand. TENs connect multiple buildings, heat sources, and heat sinks together into one system. The system collects and distributes thermal energy between different buildings and heat sources/sinks to provide heating and cooling for indoor spaces. TENs often include geothermal bores as a heat source and can build on the efficiency of ground source heat pumps.
A couple of states enacted laws this year to study and fund TENs. In Rhode Island, a new law establishes a framework for utilities to study and potentially pilot TENs as a strategy for reducing GHG emissions, lowering energy costs, and supporting the state’s climate goals.
New York’s FY 2026-2027 Capital Projects Budget allocates $150 million for thermal energy network projects, including both utility TENs and projects at public and state-owned buildings. This funding builds on New York’s 2022 Utility Thermal Energy Network and Jobs Act, which directed the Public Service Commission (PSC) to establish a regulatory structure for utility TENs and utilities to begin piloting them. New York utilities are now working on pilot proposals in coordination with the NY PSC.
Moving Forward with Energy Efficiency for Affordability
In 2026, states are using a range of strategies to reduce demand on the grid, including expanding access to energy efficiency programs, piloting VPPs, and ensuring data center growth is done affordably and sustainably.
Across these new policies, energy efficiency emerges as a common thread. By reducing energy consumption and lowering utility bills, energy efficiency can advance both grid reliability and customer affordability. As states look ahead to 2027 and beyond, continued innovation on state energy efficiency policy will be essential to lowering bills for customers and communities while meeting growing energy demand
