by Emily Hunter
Energy utilities are the link between energy suppliers, such as oil, gas, and solar companies, and energy consumers, including homes and businesses. Utilities oversee the distribution of energy to consumers by owning and operating transmission lines and energy infrastructure. Utility companies will also read your electric meter to determine your home’s energy consumption and will restore power in the event of a power outage.
There are three main types of utilities:
- Investor-owned utilities (IOUs) are privately-owned companies that have stock and investments from shareholders. Examples include National Grid and PG&E.
- Publicly-owned utilities (POUs) are controlled by federal, state, or municipal entities. They may also be run by public utility districts (PUDs), which can be created through votes from residents and are operated by an elected board of commissioners; they’re independent from the government.
- Cooperatives (co-ops) are nonprofit and member-owned organizations that are owned and operated by the consumers who use the energy provided.
This graph shows the distribution of three different ownership types for utilities (investor-owned, cooperatives, and publicly-owned). The second column shows the number of customers served by each utility type. Image source: EIA
As shown by this graph, while there are more publicly and cooperatively-owned utilities and much fewer investor-owned utilities, these large investor-owned energy companies dominate the industry. According to the U.S. Energy Information Administration (EIA), investor-owned utilities serve 3 out of 4 utility customers across the country. They are also the most wealthy: in 2020, the utility giant Dominion Energy made $3.0 billion in profits. These companies have massive power and influence in energy markets and policy, and there is an ongoing effort to transform this outdated energy market and increase public control of energy.
In June 2021, U.S. Representatives Cori Bush and Jamaal Bowman introduced the Public Utilities Resolution. This proposal aims to make utilities public goods for everyone, starting with energy, while also transitioning away from fossil fuels to renewable energy sources. Specifically, the Public Utilities Resolution strives to:
- Fund a just energy transition for publicly and cooperatively-owned utilities and replace current energy infrastructure with renewable and affordable sources of power.
- Make federal energy renewable by requiring federal power providers (such as the Tennessee Valley Authority) to become renewable power utilities that are accountable to the public.
- Transition from investor-owned power to renewable, publicly-owned power by enacting aggressive goals for the decarbonization of investor-owned utilities’, ending power shutoffs, and bringing non-compliant private utilities into an appropriate level of public control.
- Promote energy democracy and make processes more transparent by creating federal guidelines and incentives to empower communities and workers to hold all utilities accountable.
- Bolster grid resilience and ensure access to affordable power by banning electricity disconnections for nonpayment and mandating affordable residential electricity rates.
This legislation would be vitally important for furthering energy justice, particularly for marginalized communities of color who often face a much greater energy burden. A study from the American Council for an Energy-Efficient Economy (ACEEE) found that Black, Hispanic, and Native American households spend 43, 20, and 45 percent more, respectively, of their income on energy bills than white households.
In a statement on the resolution, Rep. Cori Bush said, “The burden of high energy costs is felt disproportionately by low-income and Black and brown families. Every person has the right to these basic services and by making them public goods, we can unburden families and reduce our country’s dependence on fossil fuels.”
Rep. Jamaal Bowman expressed a similar sentiment, saying, “As long as energy is treated as a commodity, not a right, poor people, workers, and communities of color will suffer. We need to make power a public utility to end man-made energy disasters and ensure that no family ever has to choose between keeping the lights on or feeding their kids.”
The bottom line is that, in our current energy system, investor-owned utilities are focused on maximizing profits for their investors, which can lead to failing energy infrastructure and force millions of Americans to have to decide between electricity or food. Putting people, not for-profit companies, in control of their energy through co-ops and public utilities ensures that the needs of all energy consumers are met. This resolution recognizes the simple fact that energy is an essential good and aims to make energy as affordable and reliable as possible. Increasing the number of public power utilities while mandating renewable investments and accountability for investor-owned utilities will bring power back into the hands of the people.
Want to learn more about publicly and cooperatively-owned utilities? Go to the American Public Power Association website to learn more about public power utilities, and check out some resources from the National Rural Electric Cooperative Association.