One day after Gov. Greg Abbott announced a moratorium on new data centers until an audit of their strain on natural resources is completed, he pitched another part of his Keep Texas Affordable agenda: that municipally owned utilities in Texas should be opened up to market competition. He called Austin Energy and San Antonio’s CPS Energy “monopolies that drive up costs for Texas families and small businesses,” and argued that customers could “save more than 10%” if they could shop around the retail electricity market. But would deregulating Austin Energy really reduce Austinites’ monthly bills?
“It’s a reach to say categorically that customers are going to save energy through competition,” said Kaiba White, a member of the city’s Electric Utility Commission and climate policy and outreach specialist for Public Citizen, a consumer advocate nonprofit. She explained that although retail electric providers often offer short-term deals at a fixed rate, they typically raise rates later, requiring customers to be market savvy and shop around for the lowest rate. “You have to be willing to pretty consistently be on top of that, and that does not describe your average consumer when it comes to electric bills or anything else. Even if the rate goes up, even if they are dissatisfied by it, they just don’t have the time and the bandwidth [to switch].”
Austin Energy’s residential bills are around $60 less per month than the statewide average, according to AE spokesperson Matt Mitchell. This is largely due to energy efficiency and green building programs that reduce customers’ usage, and AE’s ownership of profitable generation resources. And if customers have a problem with their bill, they can pursue accountability through political channels. “Our customers are the owners of the utility, and they have direct access to the board of directors, which is the City Council,” said Roger Duncan, former Austin Energy general manager and City Council member. “And there are citizens’ committees like the Electric Utility Commission and the Resource Management Commission that focus on programs to lower customers’ electric bills. A private utility will not be providing you programs to lower your electric consumption. It’s against their interest.”
So who would benefit from deregulation? In his statement, Abbott conceded that “small businesses” would see “even greater savings” than residents would. But Duncan said “the only winners in this situation are the large industrial customers [who] can afford to be shopping the market regularly.” White agreed: “The larger the customer, the more staff they’re going to have dedicated to managing their energy procurement.”
If large customers leave, AE’s revenue will go down, which will affect the already-tight city budget. Around 13% of the FY 2026-27 budget comes from the General Fund transfer, wherein AE and Austin Water transfer a set percentage of their revenues toward services like EMS, fire, libraries, and parks. If the utility provider is deregulated, that transfer would certainly be lower, causing the city to raise taxes or cut services. Council has asked for the maximum tax rate increase of 3.5% in the last two budget cycles (and voters rejected the city’s proposal for more, Prop Q, last fall). “So it’s definitely something for the City Council to be worried about,” said White. In a statement to the Statesman, Mayor Kirk Watson said the deregulation process would “cost over a billion dollars that would be paid by customers.”
Changing the structure of AE could also affect Austin’s climate plan, which relies heavily on AE’s Resource Generation and Climate Protection Plan to 2035. Duncan fears “the climate plan would be gone. It’s based on the fact that we own our generation resources and can plan on generation. It would be extremely hard for Austin, in my opinion, to continue with their climate protection plan under a deregulated utility.”
White said the resource plan might change, but “whether or not that would be positive or negative for the environment, I’m not 100% sure.” She posits that AE would have less incentive to make investments like their recent gas peaker plan, which they justified as a stopgap measure to support large projected load growth. White said if the industrial customers that drive that growth leave AE, “they’re probably going to have to rethink that type of gamble.”
In the FY 26-27 budget that passed earlier this month, Austin Energy raised its rates due to increased operating costs. Along with water, trash, and other city fees, that amounts to an increase of $14.34 per month or $172.08 per year on the average utility bill. White said, by approving these rate increases without requiring AE to go through the rigorous rate case process, Council is failing to regulate the public utility. “I don’t think that’s doing customers any favors,” she explained. “And frankly, it doesn’t help now when we’re entering into this conversation with the Legislature.”
Still, she said, “that doesn’t mean that they need to be open to competition.” Even with her critiques of the local provider, White said, “as an Austin Energy customer, I’d rather have my money going into my local city government than to some investor wherever.” Most importantly, she thinks it’s still the best deal around: “I don’t think that, for residential customers, there’s a lot of better long-term options.”
This article appears in August 28 • 2026.