Texas governor's plan to dissolve city utilities could raise rates and cut city revenues
Gov. Greg Abbott proposes ending Austin and San Antonio’s city-owned electric utilities, a move officials say would increase bills and strip municipalities of hundreds of millions in annual revenue.
Governor Greg Abbott’s latest legislative effort seeks to dismantle the municipally-owned electric utilities of Austin and San Antonio, arguing that private competition will lower consumer costs. Officials from Austin Energy and CPS Energy contend that the nonprofit structure returns all earnings to the community, supporting city services and keeping rates among the lowest in the state. They warn that the transition would be technically complex, cost more than a billion dollars, and ultimately be paid by ratepayers, while also depriving the cities of $125 million and $559.7 million in annual transfers to their budgets.
Abbott’s campaign asserts a 10% reduction in average bills, calling city utilities “cartels” that fund unnecessary social programs. One outlet's analyses, however, show public utilities usually charge about 14% less than other types, and Texas’s fully deregulated market has not prevented high rates in places like Houston. The debate unfolds amid growing deficits in both cities and a broader statewide surge of roughly 40% in electricity prices since 2020.
Why it matters
The outcome will affect electricity costs for millions of Texans and the fiscal health of two major cities.
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