Healthcare and housing costs have dominated voters’ concerns for decades, and soaring food prices under former President Joe Biden added to the burden. But new polling and the recent election results in New Jersey and Virginia show that electricity prices have emerged as another potent political issue. Democrats, eager to deflect blame, have settled on a new villain: data centers.
The problem with this argument is that data centers are not the primary cause of rising electricity prices, as a cursory review of local electricity markets shows. The real problem is Democratic energy policies that drive up electricity costs the fastest in states controlled by Democrats.
In an October survey, 2 in 5 consumers reported that electricity prices were a “major” source of financial stress. That is fewer than those who cite grocery prices, but is comparable with those pointing to housing and healthcare.
In the two high-profile statewide contests of 2025, Democrats prevailed while making the cost of electricity a defining campaign theme. In New Jersey, Gov.-elect Mikie Sherrill (D-NJ) pledged to declare a “state of emergency on utility costs,” halt rate hikes, and impose tighter regulation on utilities. In Virginia, Gov.-elect Abigail Spanberger (D-VA) blamed rising bills on data centers and promised stricter rules on their construction and the rates they’re charged.
Absent from both these campaigns was any discussion of the Regional Greenhouse Gas Initiative, which has pushed electricity prices higher across the Northeast. The initiative is a multistate program backed by Democratic governors that intentionally increases the cost of carbon-intensive electricity generation as a way to discourage emissions.
The program works by establishing a regional emissions cap and requiring power producers to buy allowances for every ton of carbon they emit. Because the cap declines over time, the price of allowances rises. Utilities then incorporate their new costs into the prices that electricity users, which is almost everybody, must pay. Because wholesale electricity markets set prices based on the highest-cost plant needed to meet demand, higher costs for gas and coal generators due to the regional initiative lift prices for all power on the grid.
Both New Jersey and Virginia are part of the RGGI, although Gov. Glenn Youngkin (R-VA) tried to remove his state from it after the Virginia State Corporation Commission concluded that it would add $2.39 billion to consumer electricity bills. Youngkin’s efforts, unfortunately, were reversed by a state judge, and Spanberger has enthusiastically pledged to rejoin the agreement. Virginians are already paying the price.
In no state have electricity prices risen higher and faster in the past five years than in California, which is also one of the leading states for data center construction. But while it is tempting for Democrats to blame data centers for high and rising electricity prices, their propagandistic deflection from their own blame does not add up. Texas demonstrates why. The Lone Star State has added more data centers than California has, and yet it has below-average electricity prices that are rising more slowly than the national average.
That is because it has a better government and fewer regulations. Texas’s formula for absorbing data center growth without triggering crippling rises in electricity prices is straightforward: avoid the costly climate policies adopted in California and under the Regional Greenhouse Gas Initiative. California not only imposes its own carbon cap, but it also requires utilities to sign long-term renewable contracts, often at above-market prices, forces them to buy rooftop solar power at inflated rates that shift costs onto traditional customers, and simultaneously drives up electricity demand through electric vehicle, appliance, and building electrification mandates.
WHEN WILL NEWSOM’S SPENDING BUBBLE BURST?
It is these climate policies, not data centers, that explain why California has the highest electricity prices in the country.
Sherrill and Spanberger will try to tax and regulate their way out of rising energy costs, even though it will mean slowing economic growth because it will limit data center construction. Republican-governed states such as Texas, in contrast, will keep drilling for gas and oil, build refineries and pipelines, and expand solar farms, transmission lines, and data centers that rely on them. By 2028, voters should have a clear record to judge which model works.