By the Public, For the Public
people, including business owners, don't pay all that much attention to
who is providing their energy. After all, electricity is electricity,
right? On the contrary, what matters is who is on the other end of the
power line - or more to the point, what kind of utility.
utilities known collectively as public power systems are owned and
operated by local or regional governments or public utility districts.
Their function is simply to provide reliable electricity at a
reasonable cost, in a businesslike manner. In these respects, they are
very similar to other types of electric utilities, including
What sets them apart is the nature
of their mission. Public power systems operate as a public service,
just like the local police and fire agencies and the street department.
Public service is what they're all about. They are not in the business
of making money and turning a profit. They are not-for-profit
operations, with no investors or stockholders who are expecting a
return on their investment.
Also, public power systems answer to
local bosses, not corporate structures that might be based in a faraway
city. Ultimately, the local bosses in many cases are mayors and city
council members who not only live in the city but are answerable to
voters and taxpayers.
In short, public power systems are really
working on behalf of the people and businesses that they serve. There
are no other masters with conflicting priorities, just local leaders
and taxpayers and voters, all of whom happen to also be electric
So how does this distinction make a difference? The
most obvious way is cost of power. Because public power systems are
not-for-profit operations, their rates typically are among the lowest
in the country. Commercial customers of investor-owned utilities pay an
average of 9 percent higher rates than commercial customers who are
served by public power systems. For residential customers, the rates
charged by investor-owned utilities average 14 percent higher. Public
and investor-owned utilities average similar industrial rates.
power systems operate in more than 2,000 American cities and towns, in
all but one American state. The first public power system was created
in 1880, and on the whole these organizations have deep roots in their
communities. By 2010, a third of all public power systems will have
celebrated their centennials.
Communities of all sizes are
served by public power - the largest include Los Angeles and
Sacramento, California; Long Island, New York; San Antonio and Austin,
Texas; Seattle, Washington; and Nashville, Tennessee. The majority of
the systems, however, are relatively small - 1,400 of the roughly 2,000
serve communities with populations of 10,000 or fewer. As a result,
though there are 10 times as many public power systems as there are
investor-owned utilities, the share of the population served by public
power is about 15 percent, while nearly 70 percent get power from
Public power systems may often be
small, but they defy any stereotypes suggesting that bigger is better.
In fact, their customers in many cases will hail the benefits of
smallness. That's because having customer service representatives and
repair crews located right there in town, rather than somewhere else,
can translate into particularly responsive customer service - whether
it's resolving a billing issue or restoring power following a storm.
other key point to consider is that because public power systems
typically answer to the same bosses as the rest of the local
government, they maintain a strong interest in the economic health of
the community. That's an especially important priority these days, with
the economy struggling.
This interest in local economic health
manifests itself in a number of ways. Public power systems provide a
direct benefit to communities through payments and contributions to
state and local governments. These may be payments in lieu of taxes,
property-tax-like contributions, transfers to governmental general
funds, as well as free or reduced-cost services offered to governmental
agencies. This type of support averages about 5 percent of electric
operating revenues. Of course, investor-owned utilities support
governments through taxes and fees, too - those average just over 4
percent of electric operating revenues.
And as mentioned
earlier, public power systems also are heavily involved in supporting
the health and profitability of their business customers. They
frequently offer efficiency audits, financial assistance for customers
implementing cost-saving efficiency projects, and technical assistance
that typically covers energy-related matters but also supports
manufacturing improvements and other initiatives.
connection to local government is also helpful in supporting companies
that are expanding or are in the midst of picking a site for their next
manufacturing facility or distribution center. Economic development
incentive packages can be that much better coordinated when more
players sit around the same table. Plus, that coordination often
extends beyond electricity, because many public power communities are
also served by municipally owned natural gas utilities, and some even
have their own publicly owned broadband providers. All of these other
publicly owned utilities promise the same non-profit mission as their
public power counterparts.
Finally, even though they're often
relatively small systems, public power providers are a collegial crowd.
Because they're not competitors and they're not driven by a profit
motive, they're willing to join forces for the common good through such
organizations as the American Public Power Association. They'll share
ideas, jointly pursue legislative priorities, cooperate on training and
R&D initiatives, and in general ensure that all public power
systems are able to look out for number one - the public that they