Gov. Greg Abbott is taking aim at CPS Energy, San Antonio’s electric and gas provider.
Sam Owens/San Antonio Express-News
Smokestacks at CPS Energy’s J.K. Spruce Power Station are seen south of Eolian Energy’s Padua Complex battery storage facility in December. Business leaders in San Antonio say Gov. Greg Abbott’s proposal to de-monopolize CPS would make it more difficult to persuade companies to invest and expand in San Antonio.
Marvin Pfeiffer/San Antonio Express-News
Gov. Greg Abbott said Tuesday he wants to open “city monopolies to retail electric competition” and prevent municipally-owned utilities from providing revenue for cities’ budgets.
Kelsey Brown/San Antonio Express-News
Gov. Greg Abbott’s sudden push to break up CPS Energy’s monopoly in San Antonio has rattled the city’s economic development leaders, who say the utility is a key reason many companies and government agencies have chosen to come here.
City-owned CPS’ relatively inexpensive and reliable electricity, strong financial footing and industry discounts have attracted manufacturers, data center operators, hospital systems, military installations, theme parks and other businesses that use large amounts of energy.
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Take Toyota, one of San Antonio’s greatest prizes.
When the Japanese automaker was deciding where to build a pickup plant in the early 2000s, it graded potential sites on whether they could deliver ample, lower-cost electricity to power its production lines. In San Antonio, CPS pledged to build a substation close to the plant site and contribute connection equipment and other infrastructure as part of a package of perks that state and local officials offered to Toyota.
“The deal simply would not have happened if CPS hadn’t been at the table, hadn’t been an aggressive partner in crafting an energy proposal that would work long-term for Toyota and for their suppliers, and with rates that were competitive,” said David Marquez, Bexar County’s former economic development director, who played a major role in landing Toyota in 2003.
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The automaker’s decision improved San Antonio’s fortunes and reshaped the South Side.
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Toyota and many of its suppliers, who set up operations near the Tundra and Sequoia plant, brought the automotive industry to the city and paved the way for other major manufacturers, such as International Motors LLC and JCB.
And Toyota is set to expand its San Antonio plant, with another assist from CPS. The utility recently offered $16.2 million in rate reductions as part of a $181 million package that helped persuade Toyota to bring Tacoma production back to the plant. The company is expected to spend $3.6 billion on the expansion.
Marquez is worried the governor’s push to open municipally owned utilities to competition could result in CPS being less of a force in attracting out-of-town companies to San Antonio.
Abbott caught locals by surprise Tuesday when he announced he wanted to “end the monopoly control that cities like Austin and San Antonio have over electricity services” and give customers a choice of power providers. He said introducing competition could save San Antonians up to 13% on their monthly electricity bills, though he didn’t say how he arrived at that percentage.
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He also wants to stop utilities from transferring revenue to cities’ coffers. CPS sends 14% of its annual gross revenue to the city. This year, that money makes up nearly 30%, or $504 million, of San Antonio’s $1.7 billion general fund, which pays for services such as emergency first-responders, street repairs and senior centers.
Abbott said he will ask lawmakers to take up his proposal in the 2027 Texas Legislature.
It’s unclear how serious the governor is about advancing his plan, which comes as he’s running for reelection and taking heat for the proliferation of data centers across the state.
But it alarmed CPS leaders, city officials and business executives, who said opening the utility to competition and ending revenue transfers to the general fund could threaten the city’s finances and hinder its ability to attract companies and jobs.
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The thinking is that if CPS has to fight for customers in the San Antonio area — and potentially loses market share and revenue even as its debt load and many of its fixed costs remain the same — it would be less able to cut deals like the one that helped win Toyota.
CPS said in a statement that “any threat to the not-for-profit municipal model is a threat to all customers,” while City Manager Erik Walsh said that model has benefited San Antonio and Texas by supporting the statewide electrical grid — in addition to contributing to city services.
The city and CPS will demonstrate “the benefits to our community and the city’s responsible stewardship of our utility” ahead of the legislative session, Walsh said.
The Texas Public Power Association, a trade group representing community-owned electric utilities, said Abbott’s plan could actually increase customers’ bills and reduce the quality of CPS’ service. Rates charged by municipally owned utilities are usually below the state average and lower than or on par with prices in deregulated areas, the association said.
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CPS says data shows its residential customers’ average monthly bills for electricity and natural gas, at $191.77, were lower than what ratepayers were paying in Dallas, Austin, Houston, El Paso, Corpus Christi and Houston in the 12-month period ending April 31.
Comparisons for business customers were not immediately available.
Bracing for what’s next
Industry trade groups said Abbott’s plan, if it becomes state law, would be a blow to their members, who include local manufacturers, theme parks, hospital systems and retailers.
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“Reliable, affordable energy is critical to manufacturers and the region’s economic competitiveness,” particularly as companies are facing steeper costs stemming from inflation and tariffs, said Dan Yoxall, CEO of the San Antonio Manufacturers Association, which represents Toyota and other companies.
“CPS’ costs to manufacturers are stable and competitive — important factors as businesses plan their budgets,” he added. “It is consistently charging the lowest combined electric and gas rates of any major Texas city.”
Securing facilities that bring thousands of jobs to San Antonio depends on offering affordable, reliable electricity, which CPS is motivated to provide because it’s accountable to the public, said Ron Nirenberg, who sat on CPS’ board of trustees when he was mayor from 2017 to 2025 and is currently running for Bexar County judge.
“It is as fundamental a part of the business recruitment, expansion and retention equation as the availability of talent and quality of life,” Nirenberg said.
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Ed Kelley, a former CEO of USAA Real Estate who served on CPS’ board from 2011 to early 2022, said the utility has historically outperformed others in the industry with its prices and customer satisfaction ratings. CPS’ contribution to the city’s budget also means that San Antonio doesn’t have to resort to increasing property taxes to make up for that revenue, Kelley said.
“There is always a danger when you have a service like CPS that’s not competing — there’s always the risk that will get out of hand and customers will suffer,” Kelley said. “But that has never happened at CPS.”
CPS is one of the largest municipally owned electric utilities in the U.S., with assets totaling $18 billion. The utility said in a recent financial report that it brought in income of $195 million on revenue of $4.1 billion in the 12-month period ending in April.
Private-sector electricity providers who answer to shareholders are motivated to drive up profit margins and pay out dividends. They are primarily interested in their most power-hungry customers because that’s who generates the most money, whereas CPS “serves everyone’s needs, from the large corporate user to the person who’s really struggling to keep the lights on,” Marquez said.
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But former CPS trustee John Steen, who served on the utility’s board from 2016 to early 2026, said Abbott’s proposal is worth considering.
The utility holds about $10 billion in debt. It passes the costs of borrowing money to customers. That means it “lacks the profit-driven pressure to cut waste” because ratepayers can pick up the tab, Steen said.
While serving on CPS’ board, Steen tried to push the utility to operate more like a business. If it did that, it likely wouldn’t prioritize its energy-efficiency program, which offers rebates and other perks in efforts to reduce power use and harmful emissions, Steen said. It also might not need to offer payment programs for customers struggling with their bills if it was more focused on controlling costs.
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“Governor Abbott is looking to shake things up by introducing competition, and with the goal of reducing the financial burden on CPS customers. That’s a good thing,” Steen said. “I look forward to seeing what he comes up with.”