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CPS Energy is the nation’s largest municipally-owned energy utility, serving San Antonio and Bexar County. As a regulated utility, CPS offers predictable rates and per-ton heat pump rebates through their STEP (Save for Tomorrow Energy Plan) program — $100 to $275 per ton depending on SEER2 rating.
Federal 25C Tax Credit Expired December 31, 2025
There is zero federal tax credit for residential heat pump purchases in 2026. The Section 25C energy efficiency credit was eliminated by the One Big Beautiful Bill Act (signed July 4, 2025). CPS Energy’s STEP program rebates combined with San Antonio’s lowest-in-Texas installation costs still deliver strong value for homeowners.
CPS Energy’s STEP program offers heat pump rebates of $100 to $275 per ton in 2026 based on your system’s SEER2 rating. For a typical 3-ton system at SEER2 18+, you receive $825. For a 5-ton system, $1,375. San Antonio has the lowest average heat pump installation cost among major Texas metros at $5,231. Combined with CPS Energy’s low $0.125/kWh rate and on-bill financing, the economics are compelling even without the expired federal 25C tax credit. You must apply within 30 days of installation.
The STEP (Save for Tomorrow Energy Plan) program rewards higher efficiency with higher rebates. All tiers pay per ton, meaning larger systems earn proportionally more.
SEER2 15-15.9
Entry-level qualifying systems. Meets minimum SEER2 threshold for CPS Energy STEP rebate. Good for budget-conscious replacements.
SEER2 16-17.9
Mid-efficiency systems with meaningfully better performance. 75% higher rebate than base tier. Strong balance of cost and efficiency.
SEER2 18+
Highest-efficiency systems earn the maximum rebate. The rebate increase from SEER2 16 to 18+ often pays for the efficiency upgrade itself.
SEER2 18+ gives the highest rebate per ton AND the lowest operating costs over the life of the system. The rebate difference between SEER2 16 ($175/ton) and SEER2 18+ ($275/ton) is $100 per ton — for a 4-ton system, that is an extra $400 in rebate. Combined with lower monthly electricity costs, the efficiency upgrade typically pays for itself within 2–3 years.
| SEER2 Rating | Rebate/Ton | 3-Ton Rebate | 5-Ton Rebate |
|---|---|---|---|
| SEER2 15-15.9 | $100 | $300 | $500 |
| SEER2 16-17.9 | $175 | $525 | $875 |
| SEER2 18+ | $275 | $825 | $1,375 |
Program Cycle: February 2026 – January 2027
The current STEP program cycle runs from February 2026 through January 2027. Rebate amounts and availability are subject to change between program cycles.
CPS Energy is a regulated municipal utility — one provider, fixed rates, no REP choice.
Unlike most of Texas where customers choose from Retail Electric Providers (REPs), CPS Energy customers have one provider. This means stable, predictable rates without contract shopping.
San Antonio has the lowest average heat pump installation cost among all major Texas metros.
Average Heat Pump Cost (SA)
$5,231
Lowest among major TX metros
Cost Range
$2,381-$8,574
Depending on system size and brand
After CPS Rebate (3-ton, SEER2 18+)
$4,406
$5,231 - $825 rebate
After CPS Rebate (5-ton, SEER2 18+)
$3,856
$5,231 - $1,375 rebate
Annual Savings vs Gas + AC
$700-$1,000
Eliminates separate gas bill
Estimated Payback Period
4-6 years
After CPS rebate
With annual savings of $700–$1,000 versus separate gas heating and AC, the estimated payback period is 4–6 years. On-bill financing through CPS Energy can further reduce your upfront cost.
Pay through your monthly CPS Energy bill
CPS Energy offers on-bill financing for energy improvements including heat pump installations. Pay for your heat pump through your monthly CPS Energy bill with no separate loan application needed. Combined with the STEP rebate, this minimizes your out-of-pocket cost.
No Separate Loan
Payments on your existing CPS bill
Combine with STEP
Rebate reduces financed amount
Simple Process
Apply through CPS Energy directly
On-bill financing terms, rates, and eligibility vary. Contact CPS Energy directly at (210) 353-2222 or visit cpsenergy.com for the most current financing options. Terms are set by CPS Energy and may change.
Seven steps from verification to rebate. The 30-day application window after installation is strict — do not delay.
Confirm you are a CPS Energy customer in the San Antonio / Bexar County service territory. CPS Energy is a regulated municipal utility with no REP choice.
A Manual J determines the correct system size (tonnage) for your home. Oversizing wastes money; undersizing reduces comfort. A licensed HVAC contractor performs this calculation.
Higher SEER2 ratings earn higher per-ton rebates. SEER2 18+ gives $275/ton versus $100/ton for SEER2 15. The rebate difference often pays for the efficiency upgrade.
CPS Energy requires installation by a licensed HVAC contractor. Get at least three quotes. Ask for SEER2-specific pricing so you can compare rebate tiers.
Schedule your installation. San Antonio has a large pool of qualified HVAC contractors, keeping wait times short and prices competitive.
Submit your STEP program rebate application within 30 days of installation. This deadline is strict. Do NOT delay. Apply through the CPS Energy STEP portal with your installation documentation.
CPS Energy processes your application and issues the rebate. Processing times vary. Keep all installation documentation and confirmation numbers.
CPS Energy enforces a strict 30-day deadline for submitting your STEP program rebate application after installation. If you miss this window, you forfeit your rebate entirely. Have your contractor provide all documentation on installation day. Submit your application through the CPS Energy STEP portal immediately.
Six factors make San Antonio one of the best markets in Texas for heat pump adoption.
San Antonio has the lowest average heat pump installation cost among major Texas metros at $5,231. Large contractor market and competitive pricing drive costs down.
CPS Energy charges approximately $0.125/kWh, among the lowest rates in major Texas metros. Regulated rates mean predictable monthly bills with no surprises.
The STEP rebate scales with system size. A 5-ton system at SEER2 18+ earns $1,375 versus $825 for a 3-ton system. Larger homes benefit proportionally more.
No rate shopping, no surprise charges, no contract games. CPS Energy is a municipally-owned utility with fixed rates set by the city council. One provider, one rate.
San Antonio's moderate climate means heat pumps operate efficiently year-round. Mild winters and hot summers are the ideal use case for heat pump technology.
San Antonio's growing population means a large and competitive HVAC contractor market. More competition drives better pricing, faster scheduling, and higher quality work.
Income-qualified households may receive up to $8,000 for heat pump installation when the HEAR program launches in Texas.
HEAR (Home Efficiency and Appliance Rebates) has not launched in Texas as of February 2026. The state plan requires federal DOE approval. HEAR funds are available until 2031 or exhaustion. Do not count on HEAR for immediate projects.
Below 80% AMI
Up to $8,000 toward heat pump installation. When launched, should be stackable with CPS Energy STEP rebate. Pending federal approval.
80-150% AMI
Up to $4,000 toward heat pump installation. When launched, should be stackable with CPS Energy STEP rebate. Pending federal approval.
Since HEAR has not launched in Texas, plan your heat pump purchase based on the CPS Energy STEP rebate and on-bill financing. If HEAR becomes available before or after your installation, it would be an additional benefit. Do not delay your project waiting for HEAR.
CPS Energy offers $100 to $275 per ton through the STEP (Save for Tomorrow Energy Plan) program in 2026, depending on your system's SEER2 rating. SEER2 15-15.9 earns $100/ton, SEER2 16-17.9 earns $175/ton, and SEER2 18+ earns $275/ton. For a typical 3-ton system at SEER2 18+, that is $825. For a 5-ton system, $1,375.
STEP stands for Save for Tomorrow Energy Plan. It is CPS Energy's comprehensive energy efficiency program that includes rebates for heat pumps, insulation, windows, and other energy improvements. The heat pump rebate component pays a per-ton incentive based on the SEER2 efficiency rating of the installed system. The current program cycle runs February 2026 through January 2027.
CPS Energy calculates your rebate by multiplying the per-ton rate by your system size in tons. For example, a 3-ton system at SEER2 18+ earns $275 times 3 = $825. A 5-ton system at the same rating earns $275 times 5 = $1,375. Your Manual J load calculation determines the correct tonnage for your home. Higher SEER2 ratings earn higher per-ton rebates.
SEER2 18 or higher earns the maximum rebate of $275 per ton. This is nearly three times the base tier rate of $100/ton for SEER2 15-15.9. The cost difference between a SEER2 16 and SEER2 18+ system is often offset by the higher rebate plus lower operating costs over the system's lifetime. We recommend SEER2 18+ for the best long-term value.
San Antonio has the lowest average heat pump installation cost among major Texas metros at $5,231, with a range of $2,381 to $8,574 depending on system size, brand, and complexity. After the CPS Energy STEP rebate for a 3-ton SEER2 18+ system ($825), your net cost drops to approximately $4,406. The low base cost combined with CPS rebates makes San Antonio one of the most affordable markets for heat pump adoption in Texas.
CPS Energy offers on-bill financing for energy improvements including heat pump installations. You pay for your heat pump through your monthly CPS Energy bill with no separate loan application needed. This can be combined with the STEP rebate to minimize your out-of-pocket cost. Contact CPS Energy directly for current on-bill financing terms, rates, and eligibility requirements.
You must apply within 30 days of installation. This is a strict deadline enforced by CPS Energy. Do not delay submitting your STEP program rebate application after your heat pump is installed. Have your contractor provide all necessary documentation immediately upon completion so you can submit promptly through the CPS Energy STEP portal.
CPS Energy is a regulated municipal utility, meaning it is owned and operated by the City of San Antonio. Unlike most of Texas where you choose a Retail Electric Provider (REP), CPS Energy customers have one provider with fixed rates set by the city council. This means stable, predictable electricity rates without the shopping and contract complexity of the deregulated market.
Potentially, yes. HEAR (Home Efficiency and Appliance Rebates) is a federal program offering up to $8,000 for income-qualified households. However, HEAR has not yet launched in Texas as of February 2026. The Texas state plan is pending federal approval. If and when HEAR launches, it should be stackable with CPS Energy STEP rebates. Plan your purchase based on the CPS rebate, and consider HEAR as a potential additional benefit.
CPS Energy charges approximately $0.125 per kWh as of early 2026, making it one of the lowest electricity rates among major Texas metro areas. As a regulated municipal utility, CPS Energy does not have the rate volatility seen in deregulated markets. Your heat pump operating costs will be predictable month to month, which is a significant advantage for budgeting.
Last updated: February 2026. Rebate amounts, eligibility, and program details are subject to change. HEAR federal rebates are pending state plan approval and not yet available in Texas. Contact CPS Energy or NuWatt Energy for the most current information.
San Antonio’s lowest installation costs, CPS Energy STEP rebates up to $275/ton, and on-bill financing make this the right time to switch. Get a free quote and see your exact rebate amount.
NABCEP Certified • Licensed & Insured • 15+ Years Experience • 2,500+ Installations