Umair Gaines
The retail structure of the electricity industry varies from region to region, with a variety of companies offering electricity distribution. In the United States, investor-owned utilities served 72% of electricity customers in 2017, while the country has 1,958 publicly owned utilities with an average of 12,100 customers each. The US also has 812 cooperatives or co-ops, which are not-for-profit member-owned utilities. In India, there are numerous electricity organisations, including state-specific power generation and distribution companies, as well as companies that operate across multiple states.
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What You'll Learn
Investor-owned utilities
Because these entities are for-profit, they are subject to regulation to ensure that the interests of consumers are preserved. Each IOU is assigned a specific franchise service territory by the regulator and is responsible for serving all consumers within that area. No other entity can provide gas or electric distribution services in the IOU’s service territory. The regulator determines the rates the IOU can charge and sets the conditions under which the utility can earn a profit.
The two largest IOUs are in California: Pacific Gas and Electric, with 5.48 million customers, and Southern California Edison Company, with 5.07 million customers. In 2017, investor-owned utilities served 72% of U.S. electricity customers, according to the U.S. Energy Information Administration (EIA).
Publicly owned utilities, or POUs, include federal-, state-, and municipal-run utilities. In addition to government entities, political subdivisions may run POUs, also called public utility districts—utilities that residents vote into existence operate independently of city or country government. The United States has 1,958 POUs with an average of 12,100 electricity customers each. Cooperatives, or co-ops, are not-for-profit member-owned utilities. The United States has 812 co-ops with an average of 24,500 electricity customers each.
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Publicly-owned utilities
Public power utilities are committed to environmental protection and buy or generate electricity from diverse sources, including natural gas, coal, nuclear, and renewable energy such as solar, water, and wind. In 2023, about 41% of the power generated by public power came from non-carbon-emitting sources. These utilities serve over 55 million Americans across 2,000 communities in large cities like Austin, Nashville, Los Angeles, and Seattle, as well as small towns and the Navajo Nation. They are present in 49 states, excluding only Hawaii, and they also serve territories like American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the US Virgin Islands.
The United States has 1,958 POUs, with an average of 12,100 electricity customers each. The largest POUs are the state-run Puerto Rico Electric Power Authority (PREPA), with 1.47 million customers, and the Los Angeles Department of Water and Power, a municipal utility with 1.43 million customers.
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Cooperatives
Electric cooperatives, or co-ops, are private, non-profit organisations owned and operated by their members or customers. Their primary purpose is to deliver electricity to their members or customers, particularly in rural areas that commercial utility companies often overlook due to higher profits in towns and cities. Co-ops are present in several countries, including the United States, the Philippines, and the United Kingdom.
In the United States, electric cooperatives emerged from President Roosevelt's "New Deal" in the mid-1930s, which aimed to improve America's electrical infrastructure and provide electricity to rural areas. Today, there are over 800 distribution cooperatives in the United States, serving approximately 42 million people across 48 states. These cooperatives are built by and belong to the communities they serve, and they are led by members from these communities. Co-ops are committed to reinvesting their revenues into infrastructure development and community improvement initiatives, such as broadband expansion, or returning the profits to their members in the form of capital credits or patronage dividends. This democratic structure ensures that members have a say in board elections, policy-making, and sharing their ideas and concerns.
Electric cooperatives in the United States have made significant progress in reducing their carbon footprint. Between 2005 and 2021, co-ops reduced carbon dioxide emissions by 17%, sulphur dioxide emissions by 82-83%, and nitrogen oxide emissions by 68%. They have also increased their focus on renewable energy sources, nearly doubling their renewable capacity since 2016. Co-ops have consistently scored higher in customer satisfaction surveys compared to investor-owned utility companies.
In the Philippines, cooperatives are overseen by the government through the National Electrification Administration (NEA), and their rates are regulated by the Energy Regulatory Commission (ERC). Similarly, the UK has a single telephone cooperative, The Phone Co-op, which provides fixed, mobile, and internet services. Electric cooperatives worldwide offer an alternative to commercial utility companies, prioritising community needs and sustainable development over shareholder returns.
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State-by-state differences
The United States has almost 3,000 electric distribution companies, or utilities, which the U.S. Energy Information Administration (EIA) classifies into three ownership types: investor-owned utilities, publicly run or managed utilities, and cooperatives. While there are fewer investor-owned utilities than the other two types, they tend to be very large and serve three out of every four utility customers nationwide. These investor-owned utilities, or IOUs, are most prevalent in heavily populated areas on the East and West coasts, such as California, where the two largest IOUs, Pacific Gas and Electric and Southern California Edison Company, are located.
Publicly owned utilities, or POUs, include federal-, state-, and municipal-run utilities. In addition, political subdivisions may run POUs, also known as public utility districts, which are utilities that residents vote into existence and operate independently of city or country governments. The United States has 1,958 POUs with an average of 12,100 electricity customers each. The largest POUs are the state-run Puerto Rico Electric Power Authority (PREPA) and the Los Angeles Department of Water and Power, a municipal utility.
Cooperatives, or co-ops, are not-for-profit member-owned utilities located in 47 states but are most prevalent in the Midwest, Southeast, and rural areas. The United States has 812 co-ops with an average of 24,500 electricity customers each. The largest co-op is Pedernales Electric Co-op in Johnson City, Texas, with nearly 50% more customers than the second-largest co-op, Jackson Electric Member Corporation in Jefferson, Georgia.
- Montana: Central Montana Electric Power Cooperative, MDU, Montana Electric Cooperatives' Association, and NorthWestern Energy.
- Nebraska: Omaha Public Power District and Nebraska Public Power District.
- New Hampshire: Northeast Utilities (including Public Service of NH) and National Grid (including Granite State Electric).
- New Jersey: Atlantic City Electric, Public Service Electric and Gas Company (PSE&G), Northeast Utilities, and FirstEnergy.
- New York: CH Energy Group, Consolidated Edison Company of New York (Con Edison), and Long Island Power Authority (LIPA).
- California: Azusa Light & Water, East Bay Municipal Utility District, Glendale Public Service Department, Gridley Municipal Utilities, Los Angeles Department of Water and Power, and Pacific Gas & Electric.
- Connecticut: Northeast Utilities (including Connecticut Light & Power), United Illuminating, Connecticut Natural Gas, and Discount Power.
- Florida: Florida Power & Light, TECO, Progress Energy Florida, and JEA (formerly Jacksonville Electric Authority).
- Georgia: Georgia Power, a part of the Southern Company, and Flint Energies.
- Indiana: AES Indiana, Duke Energy, and Northern Indiana Public Service Company.
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International comparisons
North America:
The United States and Canada had the highest electricity consumption per capita in 2017. Within the US, the electricity distribution landscape varies by state, with some states having more providers than others. For example, California has providers such as Pacific Gas & Electric, Los Angeles Department of Water and Power, and San Diego Gas & Electric, while Florida has Florida Power & Light, Progress Energy Florida, and Gulf Power Company.
Europe:
France, Italy, Germany, and Spain are home to some of the biggest electric utilities in the world, including EDF (France), Enel (Italy), E.ON (Germany), and Iberdrola (Spain). These companies have a strong international presence and are committed to renewable energy development. Other notable European countries with significant electricity distribution companies include Italy, with Edison S.p.A. and Enel, and Spain, with Iberdrola and Endesa.
Asia:
In Japan, the Tokyo Electric Power Co. generates and distributes electricity in the Tokyo area and other regions. South Korea's largest electric utility is the Korea Electric Power Corp. In India, however, more than 260 million people lacked access to the main electricity grid in 2016, highlighting the challenges in electricity distribution in developing countries.
Other Regions:
Australia, South America, and Central America are also served by Iberdrola, a Spanish multinational electric utility. Additionally, countries like Sweden and Romania have multiple electricity distribution companies, such as Götene Elförening and Enea Operator, respectively.
While these comparisons provide a glimpse of the international landscape, it's important to recognize that the electricity distribution sector varies greatly across different regions, with some countries having more centralized systems and others having more fragmented markets.
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Frequently asked questions
There are thousands of electricity distribution companies in the United States. The U.S. Energy Information Administration (EIA) reports that investor-owned utilities served 72% of U.S. electricity customers in 2017. The country's two largest IOUs are in California: Pacific Gas and Electric, and Southern California Edison Company.
India has several electricity distribution companies, including Dakshin Gujarat Vij Company Ltd., Madhya Pradesh Power Management Company Limited, and Karnataka Power Corporation Limited.
Pogo Energy is an electricity distribution company that serves Texas.
Florida has several electricity distribution companies, including Florida Power & Light, TECO, and Progress Energy Florida.
Minnesota has numerous electricity distribution companies, such as Xcel Energy, Great River Energy, and Minnkota Power Cooperative.
