Umair Gaines
The concept of community-owned electric utility companies, also known as municipal utilities, is gaining traction in various parts of the world. Municipal or community utilities refer to services that are owned and operated by local governments or state bodies, with the primary objective of providing essential services to the public. This includes electricity, but also other services such as water, gas, internet, and garbage removal. This model of public ownership and control offers an alternative to the traditional privately-owned utility companies, and it is argued that it provides better service at lower rates while also generating revenue for community development and decarbonization initiatives.
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What You'll Learn
Community-owned utilities are not-for-profit
Community-owned utilities, also known as public power utilities, are not-for-profit entities that are owned and operated by the local government or another state body. They are governed by a local city council or an elected or appointed board, and community citizens have a direct say in decisions such as utility rates and sources of electricity.
Public power utilities are one of the three primary types of electric utilities in the U.S., alongside investor-owned utilities and cooperatives. They are common in different parts of the country, providing services such as electricity, water, gas, internet, telephone services, and garbage removal.
Public power utilities provide reliable, low-cost electricity to more than 55 million Americans in 2,000 communities across the country, including large cities like Austin, Nashville, Los Angeles, and Seattle, as well as small towns and the Navajo Nation. They generate 10% of all electricity in the U.S. and distribute or sell 15% of all power to homes and businesses.
The not-for-profit nature of community-owned utilities means they are structurally geared towards the needs of the community, providing better service at lower rates than privately-owned utilities. Citizens also have a say in whether their community-owned utility can be sold to a private entity. Additionally, public power utilities can buy wholesale hydropower generated from federal dams at cost and pass the savings on to customers, further reducing costs for consumers.
The American Public Power Association (APPA) advocates for public power, highlighting how it can provide revenue for communities, improve system-wide resilience, and reduce long-term systemic costs. APPA also emphasizes that public power utilities are environmentally conscious, generating power from diverse sources, including renewable energy options such as solar, water, and wind.
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They are governed by a local city council or elected board
A community-owned electric utility company is a municipality, and these utilities are governed by a local city council or an elected or appointed board. They are not-for-profit entities that are owned and operated by local communities, and they often operate within the local municipal public works department.
Community-owned electric utilities are governed by a local city council or elected board, which means that community citizens have a direct voice in utility decisions. This includes decisions about the rates charged and the sources of electricity. For example, in Omaha, Nebraska, voters elect the members of the utility board of directors, and meetings are open to the public and televised. Each year, a portion of the profits is given back to the city to be spent at the discretion of the city council.
The American Public Power Association (APPA) explains how "not for profit, community-owned, locally controlled" utilities provide better service at lower rates than privately owned utilities while also providing revenue for their communities. Public power utilities are one of three primary types of electric utilities in the US and are found in 2000 communities across the country, serving about 55 million Americans.
Public power utilities are also more environmentally friendly, buying or generating electricity from diverse sources, including renewable energy sources such as solar, water, and wind. In several regions, public power utilities can buy wholesale hydropower generated from federal dams at cost and pass the savings on to customers. In 2023, about 41% of the power generated by public power came from non-carbon-emitting sources.
The current interest in municipalization brings another model to the forefront of public attention and offers potential solutions to issues such as urban planning, affordability, and decarbonization.
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They provide reliable, low-cost electricity to over 55 million Americans
A community-owned electric utility company, also known as a municipal utility, is owned and operated by the local government or another state body. They are not-for-profit entities that provide reliable, low-cost electricity to over 55 million Americans.
Public power utilities are one of the three primary types of electric utilities in the US. They are governed by a local city council or an elected or appointed board. Community citizens have a direct say in utility decisions, including the rates charged and the sources of electricity.
Homes and businesses in 2,000 communities across the US, including large cities like Austin, Nashville, Los Angeles, and Seattle, as well as small towns and the Navajo Nation, get electricity from a public power utility. These utilities serve about 1 in 7 electricity customers across the country and operate in 49 states and several US territories.
Public power utilities generate 10% of all electricity in the US and distribute or sell 15% of all power flowing to homes and businesses. They buy or generate electricity from diverse sources, including renewable energy sources such as solar, water, and wind. In several regions, they can buy wholesale hydropower generated from federal dams at cost and pass the savings on to customers. In 2023, about 41% of the power generated by public power came from non-carbon-emitting sources.
Community-owned utilities provide better service at lower rates than private utilities while also generating revenue for their communities. For example, in Omaha, Nebraska, a portion of the profits made are given back to the city to be spent at the discretion of the city council.
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They are financed by municipal bonds
A community-owned electric utility company is a type of public power utility that is owned and operated by the local government or another state body. They are financed through municipal bonds, which are a type of debt instrument issued by state or local governments or governmental entities, including public power utilities. Municipal bonds allow community members to invest in their electricity infrastructure, such as new generation equipment, transmission lines, and distribution system upgrades. The interest on municipal bonds is typically exempt from federal income tax, making them an attractive investment option.
Public power utilities are not-for-profit entities that provide electricity to customers at lower rates compared to private utilities. They are governed by a local city council or an elected or appointed board, and community citizens have a direct voice in utility decisions, including rates and sources of electricity. This model ensures that the utility operates in the best interests of the community, providing reliable and affordable electricity while also protecting the environment.
Municipal bonds are particularly well-suited for financing capital-intensive and long-lived public infrastructure projects, such as those undertaken by public power utilities. The cost of investments is repaid over time by the customers who use the infrastructure. This helps to keep rates low for customers while also providing the utility with the necessary funds for upgrades and improvements.
In recent years, there has been a growing movement towards municipalization of the electric grid in the United States. Cities like Boston, New York, and San Francisco have campaigns to put the electric system in public hands. This trend is driven by the potential benefits of public power utilities, including lower rates, better service, and revenue for communities. Additionally, public power can facilitate the transition to decarbonization and promote system-wide resilience.
The market for municipal bonds is well-established and highly efficient, with a comprehensive federal legislative and regulatory system in place. However, there are ongoing debates about the tax treatment of municipal bonds, with some arguing for changes that could impact the cost of financing for public power utilities and other infrastructure projects. Despite these discussions, municipal bonds remain a critical source of funding for public power utilities and other community improvements.
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They are one of three primary types of electric utilities in the US
A community-owned electric utility company, also known as a municipal or public power utility, is one of the three primary types of electric utilities in the US. These utilities are owned by the community and run as a division of the local government, often governed by a local city council or an elected board. They are not-for-profit entities that provide electricity at lower rates than private utilities, while also being more reliable, with fewer power outages.
Public power utilities are found in 2000 communities across the US, serving around 55 million Americans, which equates to one in seven electricity customers. They are present in 49 states, as well as several territories. Some of the larger cities powered by public utilities include Austin, Nashville, Los Angeles, and Seattle. Omaha, Nebraska, is another example of a well-run municipal utility, where voters elect the board of directors, and profits are returned to the city.
Community-owned utilities are often favoured for their ability to provide better service at lower rates, while also generating revenue for their communities. Citizens have a say in the rates charged and the sources of electricity, with public power utilities buying or generating electricity from diverse sources, including renewable energy. In some regions, they can purchase wholesale hydropower from federal dams at cost and pass the savings on to customers.
The movement to municipalize the electric grid is gaining traction across the US, with cities like Boston, New York, and San Francisco campaigning to put the electric system in public hands. This interest in municipalization brings a different model to the forefront, providing potential solutions to issues such as urban planning, affordability, and decarbonization.
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Frequently asked questions
A community-owned electric utility company, also known as a municipal utility, is a not-for-profit entity that is owned and operated by the local government or another state body. The community citizens have a say in the utility decisions and rates.
Community-owned electric utility companies provide better service at lower rates than privately-owned utilities. They also provide revenue for their communities and protect the environment.
There are 2009 publicly owned electric utilities in the United States, representing approximately 61% of the power industry. Public power generates 10% of all electricity in the US and distributes or sells 15% of all power to homes and businesses.
Yes, if you live in a community that has a public power utility. Large cities like Austin, Nashville, Los Angeles, and Seattle, as well as small towns and the Navajo Nation, have public power utilities.
