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Abbott said his Keep Texas Affordable agenda will lower electricity costs by expanding consumer choice for five million people by ending utility monopolies that drive up costs for Texas families and small businesses.

His announcement specifically targeted Austin Energy and City Public Service (CPS) of San Antonio, which comprise 60% of the municipal power customer base in the state.

Abbott said Austin residents could save more than 10% on their bills with competition, and San Antonio homes would save 13%. Commercial ratepayers would save on average nearly 22%.

Austin Energy told Magnifyi that it has lowest residential electric bills in the Electric Reliability Council of Texas (ERCOT), and its monthly bills are around $60 less compared with the statewide average.

“Forcing Austin Energy to deregulate would sharply increase costs for customers and deeply impact the benefits we provide to the community we serve,” the utility said in a statement.

Austin Texas mayor Kirk Watson said allowing competition “would be a technically challenging, multi-year process and cost over a billion dollars that would be paid by customers.”

“The governor’s proposal could actually increase Texans’ bills, while reducing the level of customer service they currently receive,” according to the Texas Public Power Association, which has around 75 member agencies.

Francine Romero, board chair of CPS Energy, disputed the governor’s claims that private retail competition would automatically lower bills or accurately mirror savings seen elsewhere in the state.

One of the biggest retail energy providers in the state, NRG Energy, told Magnifyi that “competition delivers better outcomes for customers by driving innovation, increasing choice, and helping keep energy affordable.”

“NRG supports policies that put decision making where it belongs — in the hands of consumers,” the company said.

Michael Strickland, principal at EnergyBrokerTX, explained that if the Austin Energy or CPS Energy territories open up like other parts of ERCOT, municipal customers would start seeing the same two-part bill that everyone in Dallas or Houston already sees, with an energy rate that can be shopped around to different suppliers.

“More suppliers bidding for the same customer usually reduces the energy rate,” he said.

Abbott also accused municipalities of using utility revenues for “city-wide slush funds,” a practice that he would end.

In a television interview, San Antonio Mayor Gina Ortiz Jones confirmed that 14% of CPS revenues from ratepayers are used elsewhere. Preventing that use would have a “disastrous impact on the city’s general fund,” she said.

Strickland said that municipal utilities tend to run at a lower margin than private retail electric providers, and tend to reinvest their profits locally, including by funding city budgets.

Energy and municipal officials in the state probably wish to be conciliatory toward Abbott, who has become increasingly powerful and is running for re-election to a fourth term as governor in November.

“I look forward to having thoughtful and meaningful conversations that focus on protecting the interests of our residents who rely on Austin Energy’s services,” Watson said.

The Texas Public Power Association said it looks to working with the governor’s office to accomplish real reforms in the electricity market that benefit customers across the state.

San Antonio City Manager Erik Walsh said that the city and CPS Energy will work with local leaders to communicate the benefits of local stewardship.

No legislative language has been proposed yet for Keep Texas Affordable. Abbott said he will put the weight of the governor’s office behind the idea in the 2027 legislative session, which starts in January.

Texas allows prefiling of legislation in November before a session.

A bill in the legislature failed in 2015 to allow large industrial and commercial customers within municipal utilities to petition state regulators for the right to shop alternative retail providers.

Some legislators in recent years have examined municipal utility revenue transfers.