Here’s why your energy bills are going up

Election season is heating up, and while fewer candidates are mentioning climate change, everyone seems to be talking about energy affordability.

The topic defined the contests for governor in Virginia and New Jersey, and the usually sleepy election for utility regulators in Georgia. In all those cases, Democrats won.

Since then, the cost of energy has only become more salient. Oil prices are up around 60% since the start of the year, due to disruptions to the flow of Middle Eastern oil stemming from the war with Iran. Diesel prices have risen even further.

Americans are also seeing record-high power bills. Utilities so far this year have asked for more than $18 billion in rate increases, according to a survey by the consumer advocacy group PowerLines, setting up 2026 to potentially beat 2025 for the most utility rate requests on record.

Political candidates this fall have taken note and started talking more about energy costs. But often, they frame the issue in politically expedient terms — blaming the opposing party or data centers — that fail to grapple with the root causes, which are complex and nuanced. To help you navigate election-season talking points, here’s a rundown of the causes of — and some promising solutions to — the energy affordability crisis.

The energy crisis began before Trump took office

To hear some critics tell it, skyrocketing energy bills begin and end with the man in the White House. The problem with this account is that energy costs have been rising steadily for years in response to structural problems unrelated to the executive branch.

“Frankly, this is an issue that’s been impacting a significant chunk of the American population long before it entered the broader national media and political discourse,” Charles Hua, executive director of PowerLines, said in a recent virtual discussion on the topic hosted by Canary Media and Covering Climate Now.

Key among them, the physical grid infrastructure to deliver electricity needs major upkeep pretty much everywhere. Additionally, Hua noted, natural disasters like fires, hurricanes, and winter storms (many of which are attributable to climate change) are threatening the grid in increasingly devastating ways.

On top of that, the rise in interest rates since the early 2020s has made it more expensive to finance new grid infrastructure. And key pieces of equipment have gotten harder to obtain, like the high-voltage transformers needed for large power plants and transmission upgrades. That drives up construction timelines and costs.

But Trump keeps doing things that drive up the cost of energy today

Structural issues aside, the president’s policies do impact energy bills. Let’s start with fuel prices.

Trump’s war with Iran has throttled the flow of oil and gas through the Strait of Hormuz. The average price of a gallon of gasoline has jumped to $4.36 from around $3 at the start of the year. Diesel surged to an all-time high of $6.53 per gallon in late September. This has hit Hawaii particularly hard, because most of that state’s electricity comes from burning oil.

“Something that a lot of folks don’t know is that when fuel prices spike, oftentimes those costs are actually directly passed on to utility customers,” Hua said. ​“Utility companies don’t make a profit; they don’t make a loss. That just gets straight passed through.”

On the mainland, more power comes from natural gas than any other source, and domestic supplies of that commodity haven’t surged like oil did. On the other hand, oil-derivative heating fuel is on track to financially punish the nearly 5 million households that need it to keep their homes warm once winter arrives.

Before Trump launched the war, his 2025 budget law stripped consumer tax credits that could have helped people avoid higher fuel costs by switching to electric vehicles or electric heat pumps, and to save on their electric bills by installing rooftop solar. The administration also froze billions of dollars previously appropriated by Congress to install clean energy in low-income communities.

Furthermore, the president’s sweeping global tariffs have made numerous materials needed for the U.S. energy system — like copper, steel, and batteries — more expensive.

And by asserting emergency powers, Trump’s Department of Energy has forced seven coal plants to stay open past their planned retirement dates. The orders put the cost of the coal plant extensions onto consumers in the grid regions served by those plants, which in some cases were physically unable to produce power. A court recently ruled that the first of these orders was illegal.

Trump’s actions will raise the future cost of energy

It’s impossible to know how long the Iran war will constrain global energy supplies. But Trump has made several other decisions that will push up domestic energy costs for years to come.

His administration has attempted to block all new offshore wind development and succeeded in paying off several developers to abandon projects on the Atlantic Coast and commit to fossil-fuel plants instead. This executive-branch interference in the energy market will deprive the Eastern Seaboard of significant fuel-free power production for many years to come; that densely populated region has few ready alternatives for large-scale power plant construction.

Onshore wind and solar installers have maintained a healthy cadence thus far into the presidency, reflecting the industry’s strong outlook several years ago. Some 93% of new power plant capacity built this year will come from solar, batteries, and wind.

But the current administration has jeopardized the future pipeline by holding up permits for projects that touch on public lands or require sign-off from the Pentagon. Onshore wind and solar are the cheapest sources of generation on an unsubsidized basis, per an analysis by Lazard, so holding up those projects deprives customers of more affordable sources of electricity.

The right climate policies can tackle affordability

Strong decarbonization measures don’t always make energy affordable.

Policy researcher Leah Stokes recounted in a recent Atlantic article how carbon pricing, long favored by economists as an elegant way to reduce emissions, ​“proved to be a political disaster” in nations that enacted it. ​“Voters turn out not to like policies designed to make energy more expensive,” she noted.

Other policies more effectively tackle climate and affordability. Energy-efficiency measures reduce customer cost and emissions, often with favorable return on investment. But many states fund these with extra charges on utility bills, and even some Democratic-led states have targeted these surcharges to score quick political points.

The clean energy tax credits passed by President Joe Biden avoided bloating energy bills by subsidizing clean energy construction from the federal tax code. But Trump eliminated many of those incentives, and restoring them at the federal level is not realistic for the time being.

The current political environment puts the onus on climate hawk politicians to champion policies that cut carbon and bills at the same time.

Not coincidentally, the most successful climate policy trend this year has been the legalization of plug-in solar, which empowers customers to simply connect their own solar panels to their wall sockets, lowering their utility bills while expanding clean energy production. Nine states enacted laws this year to codify the rules for plug-in solar, up from just Utah last year.

Can plug-in solar decarbonize the whole economy? No. Plug-in installations generally are too small to cover a typical American household’s energy usage. Still, it’s climate policy that lets consumers take tangible action to protect themselves from utility bill inflation.

At the federal level, a bipartisan permitting reform bill could be on the verge of passing — for the umpteenth time. Such a policy could make it faster and cheaper to build transmission lines that carry renewable production from ideal, often remote spots to the places where energy gets consumed.

Unchecked data center growth can raise costs; strong consumer protections can lower them

Americans of all political persuasions are finding common ground in their antipathy to new AI data center construction. Politicians are scrambling to get on the right side of this populist uprising, and one way to do that is by preventing data centers from passing on energy costs to regular consumers.

Typically, when monopoly utilities build wires and power plants, they charge the capital costs to their customers, with an added margin kept for corporate profits. Utilities now have the chance to build a lot more of that infrastructure as data center developers rush to connect to the grid. That alone could pile more costs on consumers, but the AI boom poses a deeper threat: If an AI company walks away early or goes out of business, the general public could be stuck paying for the new power plants built for it.

Some utility leaders handle this tension by negotiating with AI titans in secret, to cut deals without public scrutiny. But there are ways to make sure consumers are protected from extra costs.

Some states and utilities have required that data center companies pay for new clean energy construction before they can hook up to the grid. Oregonian customers are getting a free grid battery from Aligned Data Centers. Minnesotans will receive a vast clean energy portfolio courtesy of Google. Michigan’s largest utility will fulfill its energy-storage target thanks to batteries paid for by Oracle, which is outfitting a massive data center in Saline Township on behalf of the Stargate consortium.

Those investments were designed to ensure new data centers do not overwhelm local grids at times of peak demand. Outside peak hours, the data centers will buy a ton of electricity, paying into the shared infrastructure that has already been built. That dynamic could lead to lower rates for regular customers — indeed, Michigan utility DTE promised a two-year reprieve from rate increases if it gets the revenue it expects from the Stargate project.

A blanket ban on data centers could minimize the costs that they impose on voters. But carefully crafted data center deals could tap the immense spending of the biggest AI companies for grid investment that benefits consumers.

Disclosure: Charles Hua is a member of Canary Media’s board of directors. The board has no influence over Canary Media’s reporting.