Texas Gov.-elect Gina Hinojosa says she plans to freeze residential electricity rates on her first day in office, calling affordability a pressing concern.
“On Day One as governor, I’ll freeze residential electricity rates and make corporations finally pay their fair share,” Hinojosa said in an interview. She later said she would declare a statewide high-cost emergency and issue an executive order freezing rates within an hour of taking the oath.
The proposal has prompted questions about whether a rate freeze could conflict with Texas’ competitive electricity market. Critics also warn that preventing suppliers from adjusting prices could contribute to shortages if their costs rise.
Nick Loris, president of C3 Solutions, a conservative coalition focused on climate, energy and agriculture policy, expects electricity providers to challenge the emergency declaration in court. He also questioned whether the situation would legally qualify as an emergency.
“The Texas Disaster Act lets the governor declare disasters and suspend the regulatory laws and statutes that are in existence,” Loris said. “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.”
He said any legal challenges would likely come from parties affected by the order, including energy providers.
Texas has built one of the country’s more competitive electricity markets. A 1999 law, Senate Bill 7, opened much of the state to retail electricity choice starting in 2002, allowing customers to select their providers.
The law stated that electricity generation and sales were not a monopoly requiring regulated rates, and that prices should generally be shaped by customer choice and competition. Transmission and distribution services were among the exceptions.
Texas largely operates its own power grid and uses an energy-only wholesale market, where generators are mainly paid for the electricity they produce rather than for maintaining available capacity. Consumers can choose from more than 100 retail electricity providers.
Loris said that variety gives customers flexibility, with options such as short- or long-term contracts and plans based on different energy sources. But he warned that freezing rates could leave providers absorbing changes 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,” he said.
He compared prices to traffic signals, saying they help indicate when the market should speed up, slow down or stop.
Hinojosa won the gubernatorial election on Nov. 3 and is scheduled to take office on Jan. 19, 2027. Her office did not immediately respond to a request for comment on how it would address a potential energy shortage caused by the freeze.
