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 pledge 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 has sparked concerns that a rate freeze could collide with Texas’ highly competitive electricity market, which is built largely around consumer choice and free-market pricing. Critics also warn that preventing suppliers from adjusting rates could contribute to power 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 challenge the emergency declaration in court almost immediately. He questioned whether the governor would have sufficient authority to use such an order.
“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 spent decades building one of the nation’s most competitive electricity markets.
In 1999, lawmakers approved Senate Bill 7, opening most of the state to retail electricity competition. Beginning in 2002, customers were allowed to choose their preferred retail electric providers, or 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 that system, Texas largely operates its own independent power grid and maintains an energy-only wholesale market. Generators are paid primarily for the electricity they produce, rather than for maintaining reserve capacity.
Consumers in Texas can choose from more than 100 REPs, with providers competing directly for their business.
For Loris, that wide range of options gives households considerable flexibility in managing their electricity costs.
“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.
He cautioned, however, that a utility rate freeze could weaken that competitive model by forcing providers to absorb changes in supply and operating 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.
Hinojosa won the Nov. 3 gubernatorial election and is scheduled to take office on Jan. 19, 2027.
Her office did not immediately respond to a request for comment about how it would respond if the proposed electricity rate freeze led to an energy shortage.