Gov. Greg Abbott is calling on the Texas Legislature to break up “monopoly-run” electricity companies like CPS Energy, allowing other providers to come into the San Antonio area and compete for customers.
The move would likely mean dramatic changes for the city’s financial structure, since CPS Energy contributes 14% of its profits to the city budget in lieu of paying property taxes.
At a press conference Tuesday, Abbott suggested the change was at least in part a response to ideological disagreements over how blue cities have been spending their profits from municipally owned utilities.
In a particularly good year for CPS Energy, for example, San Antonio’s City Council famously used some of its share of the utility’s windfall to create a Reproductive Justice Fund — which the state later outlawed.
“Over a course of about four years, money that was paid into CPS went into a fund for the city of San Antonio that they used for other things,” Abbott said on Tuesday.
“Some money that was used in that fund was used for Zumba classes,” he continued. “Listen, I’m not diminishing Zumba classes, but I’m just saying, that’s not what you’re paying your electricity bill for.”
In more recent years, City Council members have looked for ways to reinvest CPS Energy profits into keeping utility costs from rising, like putting some of the money toward utility infrastructure upgrades as CPS sells energy onto the Texas grid for a profit.
On Tuesday, however, Abbott claimed his plan would lower utility prices for San Antonians by 10%-20% — while also keeping CPS Energy ratepayers who don’t live within the city from helping fund city services they don’t use.
“There’s more than 100,000 people that live outside of the city of San Antonio, and yet they’re paying CPS, and a large percentage of what goes to CPS goes beyond just providing electricity; it goes to funding the city budget,” Abbott said. “This is taxation through electricity prices without representation, and it must come to an end.”
CPS Energy contested the idea its agreement with the city unfairly punishes any of its ratepayers.
Its model consistently maintains the lowest combined electric and gas residential rates in Texas, CPS Energy spokeswoman Melissa Sorola said in a statement, and allows profits to go directly into the community instead of into the pockets of investors.
“Our returns benefit the community, with the investment going to our customers rather than private investors,” Sorola said. “… Any threat to the not-for-profit municipal model is a threat to all customers.”
Municipally owned utilities have come under fire from conservatives in the state Legislature in the past, mostly in response to frustration with Austin Energy.
But Abbott said Tuesday that he’s putting the weight of the governor’s office behind the idea when lawmakers return for the 2029 session, which starts in January.
“We’ve tried it before, and have not gotten enough votes to get it done,” he said. “…It’s time that we get it across the finish line.”
In the past, San Antonio officials have had success making the case for CPS Energy, particularly when they were able to explain how its model is different from other municipally owned utilities.
Sorola said the utility welcomes that conversation again once more details of Abbott’s plan are shared.
This story originally appeared in the San Antonio Report.