Governor Abbott Pushes to Open CPS Energy and Other Municipal Utilities to Private Competition, Saying More Providers Could Lower Texans’ Bills
Gov. Greg Abbott is pushing a plan that could fundamentally dismantle the municipal utility model San Antonio has relied on for generations, opening CPS Energy’s territory to private electricity providers and changing how hundreds of millions of dollars flow between the utility and the city.
This push comes just days after Abbott paused new Texas data center approvals pending state audits, as concerns grow over the facilities’ impact on power demand and utility costs. The shift also comes during Abbott’s dead heat reelection race against Gina Hinojosa and amid growing resistance to data center expansion from some Republican voters, particularly in rural Texas.
Abbott has framed the proposal as an affordability measure, calling municipally owned utilities such as CPS Energy in San Antonio and Austin Energy in Austin “monopolies” that prevent customers from shopping for cheaper electricity. His broader push would open those municipal utility territories to competing retail electricity providers, much like customers already do in deregulated parts of Texas.
CPS Energy officials are pushing back — not against concerns about affordability, but against Abbott’s argument that private competition would automatically mean lower bills.
“There is so much wrong with that,” CPS Energy Board Chair Francine Romero said during Texas Public Radio’s Luminaries breakfast.
The debate comes at a particularly sensitive time for families. Home energy costs have become another pressure point in the broader cost-of-living squeeze. A Pew Research Center survey conducted in March found 75% of U.S. adults said their home energy costs had increased in recent years, including 42% who said they had gone up “a lot.”
CPS Energy Leaders Challenge Abbott’s Rate Comparison
At his Aug. 4 announcement, Abbott said electricity in San Antonio costs about 12 cents per kilowatt-hour and claimed electricity in Houston’s competitive market could be found for about 6 cents.
“In Houston, it’s available as low as 6 cents per kilowatt hour. So you could really reduce your electricity costs a whole lot,” Abbott said.
According to Romero, she explained how she searched Houston rates herself and could not find Abbott’s cited 6-cent price, saying the cheapest she found was between 12.6 and 12.9 cents per kilowatt-hour and warning that lower advertised rates may only be introductory offers.
Abbott has said introducing competition could reduce San Antonio customers’ monthly bills by more than 10%, while his reelection campaign has cited potential savings of up to 13%. The source and methodology behind that estimate have not been fully explained publicly.
CPS Energy, meanwhile, says its municipal structure already produces competitive prices. The utility says it maintains the lowest combined residential electric and natural gas rates among major Texas utilities while returning money to the community rather than private shareholders.
San Antonio Mayor Gina Ortiz Jones also defended San Antonio’s municipal utility model, arguing that locally owned utilities like CPS Energy remain competitive on price and continue to offer residents comparatively affordable electric and gas service.
Abbott Also Wants to Change Where CPS Energy Money Goes
The fight is about more than choosing an electricity company. CPS Energy transfers roughly 14% of its revenue to the City of San Antonio. That contribution totaled more than $500 million in the most recent year and represents one of the city’s largest sources of general revenue.
Abbott has attacked that arrangement as what he describes as “taxation through electricity prices,” arguing ratepayers should not be financing city programs unrelated to generating and delivering power.
He has also singled out city spending on programs such as Zumba classes while criticizing how San Antonio uses money generated through CPS Energy.
“That’s not what you’re paying your electricity bill for,” Abbott said.
CPS Energy Interim President and CEO Frank Almaraz rejected the governor’s characterization of the city transfer as a “slush fund,” explaining that the money supports “critical services for our community.”
He also argued how a private, for-profit utility would still generate money beyond the cost of supplying power, but those profits could flow to investors instead of remaining in San Antonio.
“We’re going to see whether it goes to others in the state or country or the globe as a return,” Almaraz said.
Abbott Has Received Contributions From Energy Interests
Abbott’s proposal is also drawing scrutiny because his campaign has received contributions from political action committees connected to companies in the energy industry.
According to local reports citing campaign-finance records, energy-related interests tied to companies including Vistra, NRG Energy, CenterPoint Energy, Oncor, NextEra Energy and El Paso Electric have contributed to Abbott’s campaign.
Those reported contributions include tens of thousands of dollars from several utility and energy-related PACs.
Democratic gubernatorial challenger Gina Hinojosa’s campaign has said she does not accept corporate PAC contributions, including those associated with electricity or utility companies.
What Happens to CPS Energy in the Meantime?
Despite some of the rhetoric surrounding the proposal, Abbott has not proposed eliminating CPS Energy outright.
What he is targeting is CPS Energy’s exclusive position as San Antonio’s electricity provider and the municipal business model supporting it. CPS Energy is not alone in Abbott’s sights, Austin Energy is also part of his broader push to break up municipally controlled electricity markets.
Opening the market could force CPS Energy to compete with private retail electricity companies for customers and could affect the revenue it generates for San Antonio. The exact consequences would depend on legislation that has not yet been written or approved.
That distinction matters for CPS Energy employees and customers alike. The utility would not simply disappear under the proposal, but the structure under which it has operated for decades could change dramatically.
Abbott must persuade the Texas Legislature to change state law before private electricity companies could begin competing for CPS Energy customers. Abbott has said he intends to pursue the proposal in the 2027 legislative session.
For San Antonio residents already watching grocery, housing and utility costs climb, the debate will ultimately come down to more than whether competition sounds appealing.
