The political and economic landscape in the United States is being reshaped by a fierce debate over energy prices, climate policy, and the growing influence of artificial intelligence data centers on the nation’s power grid. Recent elections and legislative efforts have brought these issues to the forefront, setting the stage for a pivotal year ahead as Americans grapple with rising costs and policymakers clash over the future of energy in the country.
On November 5, 2025, Democrats scored significant victories in key gubernatorial races in Virginia and New Jersey, campaigning on promises to restrain the surge in electricity prices that has hit many households hard. Abigail Spanberger’s win in Virginia and Mikie Sherrill’s triumph in New Jersey were widely seen as endorsements of their pledges to tackle energy affordability—a concern that resonated deeply with voters across the political spectrum. According to POLITICO, these results have set the stage for political battles in 2026, with energy costs and infrastructure likely to dominate the conversation in the upcoming slate of gubernatorial and midterm congressional races.
Spanberger, in her acceptance speech, drew a direct line between energy supply and household costs, declaring, “We are going to lower costs, and we’re going to do it by producing more energy in Virginia.” Sherrill, meanwhile, promised, “I’m going to declare a state of emergency on Day 1 to drive down your utility costs,” signaling her intent to freeze utility rates and double down on support for cleaner power sources. These pledges underscored a broader Democratic strategy to link energy affordability with the expansion of renewable energy and infrastructure upgrades.
But the electoral victories also highlighted the complex web of factors driving up energy prices. Government data cited by POLITICO showed that electricity prices rose 5.1 percent nationwide over the past year, while the natural gas consumer price index jumped 11.7 percent in the twelve months ending September 2025—four times the overall inflation rate. The causes, however, are highly regional, with the mix of energy resources in states like California differing dramatically from those in Illinois, Pennsylvania, or Georgia.
At the heart of the affordability debate is the explosive growth of AI data centers, particularly in states that are part of the PJM Interconnection—the nation’s largest regional power grid. Wholesale electricity prices in PJM soared 41 percent from the first half of 2024 to the same period in 2025, a spike attributed almost entirely to massive new data center loads, according to Monitoring Analytics, PJM’s independent market auditor. The boom has left policymakers scrambling to ensure that the costs of infrastructure upgrades are not unfairly passed on to ordinary ratepayers. As Spanberger put it during her campaign, there is a growing need to ensure data centers “pay their fair share” and do not “drive up energy costs for everyone else in Virginia.”
The political salience of data centers has never been greater. In Virginia, home to the world’s largest concentration of such facilities, lawmakers introduced a flurry of bills this year to regulate their energy demands. Democratic candidates like John McAuliff made data center costs a centerpiece of their campaigns, with McAuliff narrowly defeating a Republican incumbent in the House of Delegates. Meanwhile, in Georgia, Democrats Peter Hubbard and Alicia Johnson won seats on the Public Service Commission—marking the first statewide Democratic wins in nearly two decades—after campaigning on promises to rein in utility costs and modernize the grid.
President Donald Trump, in the wake of the Democratic wins, doubled down on his “drill, baby drill” approach, vowing to expand coal, gas, and nuclear output while rejecting wind and solar in favor of what he called “affordability.” “AFFORDABILITY is a Republican Stronghold,” Trump wrote on Truth Social, seeking to reclaim the populist mantle as food and housing prices continue to climb. His former strategist Steve Bannon urged Republicans to embrace a more aggressive domestic agenda focused on both affordability and job creation.
Yet, the debate over energy policy is far from settled. While Democrats have campaigned on lowering costs through clean energy and regulatory reforms, some analysts warn that the party could struggle to unify around a national message, given the diversity of interests within its coalition. Jane Kleeb, president of the Association of State Democratic Committees, told POLITICO that 2026 candidates are likely to focus on cost reduction and energy diversification as the “two pillars” of their platforms, though the extent to which they link these to climate change will vary by state and candidate.
Meanwhile, the impact of federal policy looms large. On November 6, 2025, Senator Jeff Merkley of Oregon and Congressman Jared Huffman of California reintroduced the Sustainable International Financial Institutions Act of 2025, seeking to end American taxpayer funding for fossil fuel projects through international financial institutions. The move coincided with the start of the United Nations Climate Change Conference (COP30) in Brazil—a gathering the United States will not attend, continuing the policy stance initiated by President Trump. Merkley condemned the administration’s climate approach as “a betrayal of our planet and future,” criticizing the withdrawal from the Paris Agreement and the cancellation of clean energy projects.
The legislation, endorsed by groups like the Sierra Club and Friends of the Earth US, would require U.S. representatives at international financial institutions to oppose new fossil fuel investments and redirect funding toward sustainable development. “The cost of fossil fuels is way too high—on our pocketbooks, our markets, and our planet,” Huffman said, arguing for a shift to “cheap, clean energy that people can depend on.” The bill also proposes measures to phase out funding for internal combustion engines and prohibit U.S. foreign assistance for fossil fuel infrastructure projects.
Advocates say such measures are essential to tackling both climate change and energy affordability. “Investments from major financial institutions are driving the climate crisis and environmental injustice worldwide,” said Mahyar Sorour, Director of Beyond Fossil Fuels Policy at the Sierra Club. Kayla Mohammed of Friends of the Earth US added, “By directing our investments and policies toward clean energy and away from fossil fuels, we can help accelerate the global transition to a sustainable economy while protecting vulnerable communities from the worst impacts of climate change.”
Yet, as Barry Rabe, professor emeritus of environmental policy at the University of Michigan, pointed out to POLITICO, many factors affecting energy prices are beyond the control of governors or even Congress. The rules governing interstate wholesale electricity markets, the pace of AI data center expansion, and the volatility of global fuel markets all play a role. Even as state leaders and federal lawmakers propose bold reforms, the challenge remains: how to balance economic growth, energy affordability, and climate responsibility in an era of rapid technological and political change.
The coming year promises no shortage of debate, as voters, policymakers, and industry leaders wrestle with the high stakes—and higher costs—of powering America’s future.
