On her first day in office, Texas Democratic Gov.-elect Gina Hinojosa says she plans to freeze residential electricity rates as the state confronts what she calls an affordability crisis.
“On Day One as governor, I’ll freeze residential electricity rates and make corporations finally pay their fair share,” Hinojosa said in an interview with a local energy data group.
She repeated the proposal in an interview with the Texas Tribune, saying, “Within an hour of taking the oath of office, I will declare a high-cost emergency in the state of Texas and issue an emergency executive order to … freeze electricity rates.”
The proposal is already prompting concerns that a rate freeze could conflict with Texas’ uniquely competitive energy market, which is built largely around consumer choice and free-market principles. Critics also warn that preventing suppliers from adjusting prices could contribute to energy shortages.
Nick Loris, president of C3 Solutions, a conservative coalition focused on climate, energy, environmental and agricultural policy, shares those concerns.
Loris expects energy providers to mount almost immediate legal challenges to any emergency declaration. He specifically questioned whether the governor would have the authority to declare such an emergency.
“The Texas Disaster Act lets the governor declare disasters and suspend the regulatory laws and statutes that are in existence. But I think there is a high degree of skepticism, both from courts but also from state policymakers, that this warrants such a claim — and that it is such a disaster,” Loris told Fox News Digital.
“I would imagine if there were legal challenges, it would come from those affected parties,” he added.
Loris said Texas has developed one of the most competitive electricity markets in the country.
In 1999, the state passed Senate Bill 7, legislation that opened most of Texas to retail electricity choice. Beginning in 2002, customers were allowed to select their preferred retail electric providers, known as REPs.
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“The legislature finds that the production and sale of electricity is not a monopoly warranting regulation of rates, operations, and services and that the public interest in competitive electric markets requires that, except for transmission and distribution services and for the recovery of stranded costs, electric services and their prices should be determined by customer choices and the normal forces of competition,” the Texas Legislature wrote in the law.
Under the law, Texas largely operates its own independent power grid and maintains an energy-only wholesale market, where generators are paid primarily for the electricity they produce rather than for maintaining available capacity.
Consumers in Texas can choose from more than 100 REPs, with providers competing directly for their business.
For Loris, that broad selection gives consumers a significant degree of flexibility.
“It’s like shopping at a grocery store for cereal for your retail electricity. There’s so much choice that you can enter into. Short-term contracts, long-term contracts, use different fuel sources,” Loris said.
However, he cautioned that a utility rate freeze could weaken that competitive system by forcing providers to absorb fluctuations in supply costs.
“If the electricity suppliers are not covering the costs that they incur, that’s going to leave them worse off and make it more vulnerable for them to adequately provide that power,” Loris said.
“Price signals really kind of act like a traffic light. They tell people when to speed up, when to slow down, or when to come to a full stop,” he added.
After winning the Nov. 3 gubernatorial election, Hinojosa is scheduled to take the oath of office on Jan. 19, 2027.
Her office did not immediately respond to requests for comment about how she would respond if the rate freeze contributed to an energy shortage.
