Abbott Promises Cheaper Power By Breaking Up Two Lower-Cost Texas Utilities

AUSTIN—Gov. Greg Abbott has proposed lowering electric bills in Austin and San Antonio by dismantling the city-owned utilities that local officials say already charge some of the lowest rates in Texas. The savings will begin once customers finish paying for the dismantling.

Abbott’s campaign describes Austin Energy and CPS Energy as municipal monopolies that use ratepayers as a source of money for city programs. His proposal would introduce private retail competition and, the campaign says, reduce an average residential bill by 10 percent. Statewide residential electricity prices have risen about 40 percent since 2020, making affordability an urgent reason to reorganize the cheaper parts too.

The two utilities operate as nonprofit public companies and transfer hundreds of millions of dollars each year to their cities. Those payments support libraries, parks, police and fire services. Removing the revenue would therefore lower the utility’s contribution to government by requiring local government to replace it somewhere else.

Austin Mayor Kirk Watson said deregulating Austin Energy would be a technically difficult, multiyear project costing more than $1 billion, ultimately paid by customers. Officials in both cities said their public systems offer competitive rates because earnings return to the community rather than shareholders. The governor’s plan answers that concern by supplying different shareholders.

Texas law currently gives municipalities original jurisdiction over utility rates and operations within their boundaries. The Legislature would have to change the arrangement. Local control remains a foundational Texas principle, subject to the state finding a market it would prefer to control locally from Austin.