Texas Democratic Governor elect Gina Hinojosa plans to freeze residential electricity rates immediately after taking office, setting up a potential legal fight over emergency authority and a direct clash with the state’s competitive energy market. Her proposal responds to what she described as an affordability crisis.

“On Day One as governor, I’ll freeze residential electricity rates and make corporations finally pay their fair share,” Hinojosa said during an interview with a local energy data group.

Hinojosa repeated the promise in an interview with the Texas Tribune. “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 raised concerns about whether a governor possesses the legal authority to impose such a freeze. Critics also warn that preventing suppliers from adjusting prices could create energy shortages by forcing providers to absorb changing supply costs.

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Nick Loris, president of C3 Solutions, is among those sounding the alarm. C3 Solutions is a conservative coalition for climate solutions that concentrates on energy, environmental, and agriculture policy.

Loris expects energy providers to bring legal challenges almost immediately if Hinojosa carries out the plan. He specifically questioned whether the affordability issue cited by Hinojosa meets the legal standard for an emergency declaration.

“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.

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The fight would unfold inside an electricity system built around competition and consumer choice. In 1999, Texas passed Senate Bill 7, opening most of the state to retail choice and allowing customers to select their preferred retail electric providers beginning in 2002.

“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.

Following that law, Texas largely operates its own independent energy grid. It also runs an energy only wholesale market in which generators are paid primarily for the electricity they produce rather than for maintaining standing capacity.

Texas consumers can choose from more than 100 retail electric providers, with each company competing for their business. Loris argued that this variety gives customers considerable flexibility when selecting electricity plans.

“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.

That competitive structure, Loris warned, could be undermined by a rate freeze that stops suppliers from responding to fluctuating costs. Providers unable to cover their expenses could become more vulnerable and less capable of delivering power adequately.

“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.

He also compared electricity prices to signals that guide behavior in a busy system. “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 race and is scheduled to be sworn in on Jan. 19, 2027. Her office did not immediately respond when asked how she would react if the planned freeze resulted in an energy shortage.

The promised action would come within Hinojosa’s first hour as governor, according to her public statement. Whether the emergency declaration survives the expected legal resistance, and how electricity providers respond to frozen residential rates, remain central questions surrounding the proposal.

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