Why CPS Energy Customers Can't Choose Their Electricity Provider
By the TexasPowerCost Editorial Team — independent Texas electricity analysis · Last reviewed October 18, 2026 · how we analyze plans
Last updated: October 18, 2026 · 5 min read
Most Texans can choose their electricity provider. A Houston resident can pick from 60+ competitive plans on any given day. A Dallas resident can lock in a 12-month fixed rate and switch if the market improves at renewal. But San Antonio residents cannot — they get one electricity provider, CPS Energy, whose rates are set by city government. Here is exactly why, and what San Antonio customers can do about their bills.
The Short Answer
San Antonio is served by CPS Energy (City Public Service), the largest municipally owned combined electric and gas utility in the United States. Municipal utilities were excluded from Texas electricity deregulation. San Antonio residents pay rates set by the San Antonio City Council — not market competition. No competitive electricity providers serve San Antonio ZIP codes. This was a deliberate policy choice, not an oversight.
The 1999 Law and What It Said
Texas Senate Bill 7 was the 1999 electricity deregulation law that created the competitive retail market most Texans live with today. The law required investor-owned utilities within the ERCOT grid to unbundle their operations — separating regulated poles-and-wires distribution from competitive generation and retail sales.
The law explicitly carved out two categories of utility: municipal utilities and rural electric cooperatives. Both were allowed to opt out. CPS Energy — a municipal utility jointly owned by the City of San Antonio and the San Antonio Independent School District since 1942 — exercised that opt-out. So did Austin Energy. The Houston market (served by CenterPoint, an investor-owned utility) deregulated. San Antonio (served by CPS Energy, a municipal utility) did not.
Why CPS Energy Chose to Stay Out
The decision to remain outside the competitive market was made by San Antonio's elected leadership and has been maintained ever since. The reasons are financial, operational, and political:
Revenue transfer to the city: CPS Energy transfers hundreds of millions of dollars annually to the City of San Antonio's general fund — a payment in lieu of taxes. This transfer funds city services and has been a cornerstone of San Antonio's municipal finance for decades. Deregulation would require restructuring the utility in ways that would likely reduce or eliminate this revenue stream.
SAISD ownership: The San Antonio Independent School District holds a minority ownership stake in CPS Energy and receives revenue distributions. This ownership structure is unusual nationally and would be difficult to preserve under a competitive utility model.
Scale advantages: CPS Energy serves over 900,000 electric customers — large enough to achieve meaningful economies of scale in generation procurement and capital financing. The utility can access municipal bond financing at lower rates than investor-owned utilities, contributing to competitive unit costs without requiring market competition to achieve them.
Renewable energy investments: CPS Energy has built or contracted significant renewable generation capacity. The utility's long-term energy procurement strategy would be complicated by deregulation, which would require separating generation from distribution.
What This Means in Practice
San Antonio residents pay whatever CPS Energy rate the City Council approves. That rate is currently a tiered tariff — the first kilowatt-hours of each month cost less per unit, and the rate rises as usage increases. A Fuel Adjustment Clause (FAC) rider means the actual monthly rate floats with natural gas prices, so the effective per-kWh rate changes month to month even without a formal rate change.
There is no ability to lock in a 12-month fixed energy rate, choose a competing provider, or shop when rates rise. The search tool on this site returns no results for San Antonio ZIP codes because no competitive plans exist.
CPS Energy vs. the Deregulated Market — A Comparison
| Feature | CPS Energy (San Antonio) | Deregulated Market (Houston, Dallas) |
|---|---|---|
| Can you switch providers? | No | Yes — any time |
| Who sets your rate? | San Antonio City Council | Market competition among REPs |
| Does your rate vary monthly? | Yes — fuel adjustment clause | Only on variable-rate plans |
| Can you get a fixed-rate plan? | No | Yes — 6, 12, 24, 36-month terms |
| Utility revenues go to... | City of San Antonio general fund | Private shareholders |
| Rate structure | Tiered — use less, pay less/kWh | Varies by plan type |
What CPS Energy Customers Can Do to Lower Bills
Since switching providers is not an option, bill reduction means using less energy and participating in available programs:
Efficiency rebates: CPS Energy offers rebates on insulation, air sealing, duct sealing, smart thermostats, and HVAC equipment for qualifying homes. Given San Antonio's intense summer climate (100°F+ days from June through September), HVAC-related improvements deliver the highest ROI. Visit cpsenergy.com/save for current rebate availability.
Demand response: CPS Energy runs seasonal programs where participating customers agree to modest thermostat adjustments during peak demand events (typically summer afternoons) in exchange for bill credits. These programs reduce grid stress and provide a direct bill reduction without requiring significant capital investment.
Rooftop solar: CPS Energy's residential interconnection program allows rooftop solar with buyback credit for excess generation (Value of Solar tariff). San Antonio's strong solar irradiance makes rooftop solar a viable long-term investment for homeowners. Contact CPS Energy for current interconnection requirements and buyback rates.
Affordability Discount Program (ADP): Income-eligible residential customers receive a monthly bill credit. GAPP (Gas Assistance Plus Program) provides additional weatherization and heating assistance. Contact CPS Energy at 210-353-2222 for current eligibility.
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Search Competitive Plans →Frequently Asked Questions
Why can't San Antonio residents choose their electricity provider?
Texas electricity deregulation (Senate Bill 7, 1999) created a competitive retail electricity market for areas served by investor-owned utilities within the ERCOT grid. CPS Energy is a municipal utility — it is jointly owned by the City of San Antonio and the San Antonio Independent School District, not by private investors. Municipal utilities were explicitly allowed to opt out of retail competition under the 1999 law, and CPS Energy chose to remain as a vertically integrated municipal utility outside the competitive market.
What is CPS Energy and who owns it?
CPS Energy (City Public Service) is the largest municipally owned combined electric and gas utility in the United States. It is jointly owned by the City of San Antonio (approximately 83%) and the San Antonio Independent School District (approximately 17%). CPS Energy has served San Antonio since 1860 and has been municipally owned since 1942. The San Antonio City Council sets CPS Energy rates through a formal public rate process.
Does CPS Energy contribute money to city services?
Yes. CPS Energy transfers a portion of its revenues to the City of San Antonio's general fund each year — a payment in lieu of taxes that effectively subsidizes city services including parks, libraries, and public safety. This revenue transfer was one reason San Antonio chose not to participate in deregulation: restructuring the utility would have disrupted this financial relationship with the city budget.
Could San Antonio join the deregulated market in the future?
Theoretically, the Texas Legislature could modify the deregulation law to require or allow municipal utilities to participate in retail competition — or the City of San Antonio could choose to restructure CPS Energy. As of May 2026, there is no active effort to bring CPS Energy into the competitive market. The utility's financial integration with city government and its large-scale renewable energy investments make restructuring politically and operationally complex.
What can CPS Energy customers do to lower their bills?
CPS Energy efficiency programs are the primary lever: rebates on insulation, air sealing, duct sealing, HVAC upgrades, and smart thermostats; demand response programs offering bill credits for reducing usage during summer peaks; rooftop solar through CPS Energy's residential interconnection program; and the Affordability Discount Program (ADP) for income-eligible customers. Contact CPS Energy at 210-353-2222 or visit cpsenergy.com/save for current program details.
How does CPS Energy's rate compare to competitive Texas market rates?
CPS Energy's rates have historically been broadly comparable to the Texas competitive market average. The utility's scale (over 900,000 electric customers), municipal bond financing, and diversified generation portfolio help maintain competitive unit costs. However, unlike the deregulated market where the best plan can be significantly cheaper than average, CPS Energy customers pay the same approved tariff — there is no way to find a below-average rate through shopping.
Related Guides
For a full overview of CPS Energy programs, rates, and options, see the San Antonio electricity rates guide. Austin has the same situation with Austin Energy — the why Austin Energy customers can't choose electricity guide covers the same topic for Austin. For an explanation of how Texas deregulation works and which cities are included, see the how Texas deregulation works guide. For cities where competitive shopping is available, the cheapest electricity by Texas city guide covers the competitive market.