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Three Kinds of Electric Utilities Serve the Carolinas

From Scott Carlberg

There are different kinds of electric utilities in the Carolinas. People may not even think about them because if electric service is running properly, well, why think about it? With the headlines in our states over the past several years about ownership of electric companies and services and rates, this may be a good time to take a quick look at the kinds of electric companies that serve Carolinians.

The basics: “Utility” organizations can provide electricity, gas service, water or communications. Sometime several of these services. This blog will only look at electric utilities. There are three kinds of electric utilities, and we will do this alphabetically:

Electric cooperatives.

It was in the 1930s that electric coops really started with a bang, created to serve largely rural areas that may not have the economic incentive of a more populated area for electric service. A cooperative is a not-for-profit business voluntarily owned and controlled by the people who use its services.

Operating principles of a coop are that the membership is voluntary, each member gets to vote for leadership, there can be an economic return to members, it is autonomous in its management, and often highly involved in the community. This carries an obligation for customers – it means that members need to be informed and involved to make the most of their coop membership, management and service. Members elect a Board of Directors, who establish the rates charged to customers for electricity.

Most co-ops do not generate their own electricity but purchase power from cooperative associates such as the NC Electric Membership Corporation and Central Electric Power Cooperative in SC, or other companies or utilities that do generate electricity.

The power lines can look alike for cooperatives, IOUs or public power organizations

Examples in the Carolinas:

Investor owned companies.

Investor-owned utilities (IOUs) are privately-owned companies with shareholders, just like companies such as General Motors or Target. IOUs are almost always larger than coops or municipal operations. In the Carolinas we have seen mergers of IOUs, for instance with Duke Energy and Progress Energy several years ago, then with SCANA and Dominion at the start of 2019.

IOUs generally have more territory, customers, infrastructure, and requirements for engineering and technical staffs than smaller organizations. IOUs can also frequently plan and implement new technologies quicker than other electric services by virtue of shear size and opportunities to try technologies on a test basis. Also, most IOUs operate power plants and transmit electricity to both retail and wholesale customers.

In the Carolinas the investor-owned utilities are regulated by the SC Public Service Commission and the NC Utilities Commission.  These public bodies set the rates that the IOUs can charge for electricity.

Examples in the Carolinas:

Publicly owned companies. (Also known as Public Power.)

Publicly owned utilities are owned by cities, counties or states. They produce or buy power and sell to individuals or other utilities. These utilities are not-for-profit organizations intended to provide power at a highly competitive cost. They are managed by public employees and are accountable through local elected or appointed officials. Rates charged by a municipal utility often are set by the city council or a city public utilities board.  There are some 2,000 US public power utilities that provide electricity to about 50 million people.

Easley Combined Utilities webpage

Examples in the Carolinas:

Utilities do not necessarily make all the decisions on their own. Several other government organizations can have a say in electric utilities. The Federal Energy Regulatory Commission, or FERC, is an independent agency that regulates the interstate transmission of electricity, natural gas, and oil, as well as hydroelectric dams and lakes. State Public Service Commissions (sometimes called Utility Commissions) regulate IOUs.  The NC Utility Commission and SC Public Service Commission do not regulate municipally-owned, public utility districts, and cooperative electrics.

Different kinds of electric utility organizations may need different kinds of responses from customers because each kind of organization has unique governing needs. Being an aware energy consumer is a good bet.