Gina Hinojosa Wants To Freeze Electricity Rates in Texas. New Jersey Shows Why That Won't Work.
· Reason
When Democrat Gina Hinojosa is sworn in as Texas governor in January, one of her first acts, "within an hour of taking the oath of office," she recently told The Texas Tribune, will be to "declare a high-cost emergency in the state of Texas and issue an emergency executive order to: one, suspend the gas and diesel tax; and two, freeze electricity rates."
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Hinojosa—who tied increases in property taxes and electricity bills to Republican Gov. Greg Abbott's policies—promised during her campaign that if elected, she would "direct the Public Utility Commission to freeze the rates residential customers pay until we have laws to ensure that data centers and other high-load users pay for themselves."
With Texans seeing a 3.3 percent increase in the average electricity price for residential customers between August 2025 and August 2026—roughly in line with the national increase—the state's electorate clearly found Hinojosa's pledge compelling. However, it's unclear if Hinojosa actually has the power to follow through on her campaign promise.
In Texas' decentralized market, retail providers, not regulators, set electricity prices. This means Hinojosa has very little authority over residential prices, and her order would not lower costs. But as Click2Houston.com points out, Hinojosa could still impact prices; she could use her influence over the state budget "to push lawmakers toward her priorities," including forcing data centers to pay more. Of course, this would do little to address the primary cause of nationwide electricity spikes: transmission and distribution charges.
Instead of Texas imposing price controls on the free market, Hinojosa could learn from the mistakes of New Jersey Gov. Mikie Sherrill, a fellow Democrat who has failed to meaningfully lower electricity prices in her state despite signing an executive order that declared a state of emergency and froze rate hikes by the state's utilities.
Sherrill realized that even if she froze rates, it wouldn't erase the factors driving higher electricity prices, such as the supply and transmission costs providers pay. In June, to offset the increases utilities typically pass on to customers, Sherrill signed off on a budget authorization that allocates $500 million to provide ratepayers short-term relief. Yet in October, a CBS News report found that even after the rate freeze, utility costs in the Garden State remained high, with one resident remarking her electricity bill had "nearly doubled."
In July, the consulting firm E3 released a report—commissioned by Sherrill for the New Jersey Board of Public Utilities—that found that changes to state policy mainly affect distribution, which is "roughly a quarter" of the charges on residents' electricity bills, and that "no single reform or modernization option" could be presented as a standalone fix.
It's not just New Jersey that has tried (and failed) to bring down utility costs by freezing electricity rates; last July Georgia's Public Service Commission unanimously approved an agreement to freeze base power rates for at least three years. A year after the freeze was implemented, the average electricity price for residential customers in Georgia rose by 2.3 percent. Meanwhile, in October, Virginia Democratic Gov. Abigail Spanberger called for a six-year freeze on residential electricity rates as a condition for approving the proposed $67 billion merger between utilities Dominion Energy and NextEra Energy.
Regardless of where it's proposed, a rate freeze is a superficial fix for a problem that requires less government thumb on the scale, not more.
At least one Democratic governor has declined to use rate freezes as a temporary panacea for rising energy costs. In a March appearance on CBS 2's "The Point," New York Gov. Kathy Hochul was asked if she thought a "two-year moratorium or freeze on utility rates statewide" was "doable." She quickly rejected the idea, favoring an "all-of-the-above approach to find more sources of energy to help drive down [costs]."
What rate freezes like Hinojosa's miss is that states have little direct impact on electric prices. As the E3 report notes, "Most of a typical bill…is set in federal and regional markets with limited ability at the state level to influence those costs."
Still, that doesn't make the idea behind these policies—that government should interfere in the market—any less harmful.
Without the price signals they receive from electricity rates, utilities can't properly plan for upgrades, expansion, or future demand. Freezing electricity rates clearly polls well as policy, but it works better on the campaign trail than in practice.
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