Abbott Proposes Opening Austin Energy & CPS Energy to Retail Electricity Competition

What Governor Abbott Proposed

Speaking in San Antonio on August 4, 2026, Governor Greg Abbott announced what he framed as the next step in his "Keep Texas Affordable" agenda: legislation that would end the monopoly control that cities like Austin and San Antonio have over electricity service and let those residents pick from competing retail electric providers.

According to the Governor's official statement, more than five million Texans are served by municipally owned utilities, and Abbott said opening those markets to competition could let residents in Austin and San Antonio "save more than 10% on their electricity bills, with small businesses seeing even greater savings." The proposal, his office said, would also require that utility revenues be "dedicated to providing reliable electric service rather than subsidizing unrelated local government spending."

That last point matters: municipal utilities like Austin Energy and CPS Energy transfer a portion of their revenue into their city's general fund each year — money that helps pay for parks, libraries, and public safety. Redirecting or ending that transfer is one of the central tensions in the debate.

Why Austin and San Antonio Can't Shop Today

Texas deregulated most of its electricity market under Senate Bill 7 in 1999. That law broke up the old investor-owned utility monopolies in the ERCOT grid — the ones now served by Oncor, CenterPoint, AEP Texas, and TNMP — and created the competitive retail market where roughly 85% of Texans can choose their own provider.

Municipal utilities and rural electric cooperatives were explicitly allowed to opt out, and both Austin Energy and CPS Energy chose to remain vertically integrated city-owned utilities outside competition. That is why an Austin or San Antonio household cannot switch retail providers the way a Houston or Dallas household can. We explain the background in depth here:

What Critics Say

The proposal drew immediate pushback. Cyrus Reed, legislative and conservation director at the Texas chapter of the Sierra Club, told KUT that Austin Energy already posts the lowest average residential bills on the ERCOT grid, thanks in part to its energy-efficiency programs and on-site solar. In his view, competitive-market prices in cities like Houston, Dallas, and Corpus Christi are "not typically lower" than what city-owned utilities charge.

Reed also raised a reliability concern. Municipal utilities plan long-term generation and grid investments around a stable customer base; if large numbers of customers leave for retail providers, he argued, that undermines the revenue those utilities use to invest in the broader grid — and cities could be pushed to raise property taxes to replace lost utility revenue that currently flows to the general fund.

What It Means for Your Electricity Bill

First, the practical part: nothing changes right now. This is a proposal, not a law. It would require the Texas Legislature to amend state law, and the Legislature's next regular session begins in January 2027. Austin Energy and CPS Energy customers still cannot shop for a retail plan today.

If you're served by a municipal utility (Austin Energy, CPS Energy, and many co-ops), your levers for a lower bill this year are the same as before: your utility's own rate options and efficiency, weatherization, and bill-assistance programs. It's worth following the legislation, but don't count on a competitive market before it actually passes.

If you're one of the roughly 85% of Texans already in a deregulated area (Oncor, CenterPoint, AEP Texas, or TNMP territory — Houston, Dallas–Fort Worth, Corpus Christi, the Rio Grande Valley, and most of the state), you already have the choice Abbott is proposing to extend. The honest catch is the one at the heart of this site: competition only saves you money if you compare the real effective rate at your own usage.

Abbott's "more than 10%" figure — like any savings claim — only shows up for shoppers who pick the plan that is genuinely cheapest for their home, not the one with the lowest advertised headline rate. Many plans are engineered to look cheapest at exactly 1,000 kWh (through bill credits and tiered pricing) and quietly cost more at the usage a real household actually has. We call that the 1,000 kWh illusion, and it's the single biggest reason "just switch and save" doesn't always work.

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