What is a public power system?

Question

Can anyone tell me the difference between a public power system, a rural electric cooperative, an investor owned utility, and a municipal owned utility? Are they all considered public power? Why or why not?

Answer 1

Power companies are in the business to make a profit. In fact, many of their rate structures are set up to allow them to do this.

A coop is when the residents of an area join together to establish their own power utility. They will charge for new services, power poles and they usually purchase their power from a major supplier (as opposed to owning their own generating plants), although they can own their own plants.

You join the coop when you decide that you want them to provide your power. You get to vote for the Board of Directors and other managerial decisions.

A Municipal utility is owned and operated by the city that it is located in. Many have contracted their services out to other privately owned companies, but some still provide all services (electric generation, distribution and maintenance). Your city keeps all profits and absorbs all losses.

A public power company is one that is owned by the stockholders and administered by CEO's. IF they make a good profit, the stockholders get a nice dividend. But, if they have a bad year, they have to go into bankruptcy. This is what happened to Entergy in New Orleans after Hurricane Katrina.

They all serve the public, but may or may not be considered public power.

For more information about how power companies are regulated, contact your state public service commission.