U.S. Department of Energy - Energy Efficiency and Renewable Energy

Tribal Energy Program

Types of Utilities

Four main types of electric utilities operate in the United States:

Investor-owned utilities (IOUs), are for-profit companies owned by their shareholders. These utilities may have service territories in one or more states. Each state will provide them a "franchise" or "certificate of public convenience and necessity" to operate in specific areas of the state under certain terms and conditions. Their generation, bulk power sales, and transmission are regulated by the FERC and their distribution system and rates are regulated by the states, or in some cases by tribes.

Public power utilities are not-for-profit utilities owned by cities, counties, and tribes. City-owned utilities are referred to as municipal utilities, or "munis". In some cases universities or military bases own and operate their own utilities. These are generally not regulated by FERC or by states, since their own local government has a legally devised system for their operation and management.

Cooperatives, or coops, are not-for-profit entities owned by their members. These include traditional rural utilities created by groups of farmers and ranchers who needed a way to get service to their sparsely populated areas. Historically, federal policies supported these (often more expensive) infrastructure developments through low-interest federal loans, which are now administered by the U.S. Department of Agriculture's Rural Utilities Service.

The federal utilities include the Bonneville Power Administration (BPA), the Tennessee Valley Authority (TVA), and the Western Area Power Administration (WAPA). All three of these are wholesale-only utilities that provide electricity to other (primarily municipal- and tribal-) utilities for distribution to customers. BPA and WAPA are also called Power Marketing Administrations (PMAs). BPA and TVA own both generation and transmission facilities. WAPA is a transmission-only utility providing power from federal hydroelectric facilities in the West (operated by the U.S. Army Corps of Engineers, the U.S. Bureau of Reclamation, and the International Boundary and Water Commission) to other retail utilities.