Differences Between Public Power And Cooperative Utilities

There is often much confusion about the exact differences between public power and cooperative utilities. In this blog post, we clear up any misinformation and outline what public power and cooperative utilities are.

What Is Public Power?

Like a public school or library, public powered utilities are a division of a local government and are owned, run and managed by the local community and elected officials. Public power electricity is produced by a community-owned utility, for this reason, different public power utilities can vary depending on the characteristics, management styles, and values of a local community. The majority of public powered utilities are owned by towns and cities, but some utilities are owned by states, counties, and districts.

Although different public power utilities can vary, they each have the same purpose: to provide their local community with reliable electricity at a not-for-profit, affordable price. They also have the common purpose of providing electricity whilst protecting the environment. Whether public power utilities exist in a bit city or small community, it is a core pillar of the American ideal as it supports the idea of people working together for their community and maintaining local control over an area.

Summary of public power:

Public power utilities may generate or buy power
Public power is subject to Sunshine Laws and must be transparent
Citizens are responsible for decision making in public power utilities
They must follow a not-for-profit business structure
Public power utilities can bring power to both domestic and commercial buildings

What Are Cooperative Utilities?

A utility cooperative is made up of individuals who are members/owners of the business. Each cooperative member has equal status and together they deliver public utilities, such as electricity, to the cooperative members. Cooperative profits are either reinvested into the cooperative infrastructure or divided between members as ‘capital credits’ which are distributed proportionally depending on the cooperative member’s investment into the group.

Cooperative utilities were introduced in the US after the New Deal, in order to help bring electricity and other modern services to rural areas of the US. Cooperative utilities were popular in areas that were not nearby an investor-owned utility and areas where the government believed there would be insufficient profit to justify adding new power infrastructures.

Although many cooperatives aim to bring services at a low cost, the high cost of maintenance and setting up the original infrastructure can cause their prices to be high.

Summary of cooperative utilities:

Cooperatives are open to all and are voluntary organizations
Cooperatives are democratic and are controlled by their members, not a leader
All or a part of the cooperative capital is seen as the common property of the cooperative.

What are the main differences between public power and cooperative utilities?

As seen above, there are multiple differences between electric cooperatives and public power utilities. The primary differences include cooperatives having members/owners, not just customers. Unlike public power utilities which are managed by an elected board, cooperatives follow democratic processes and do not have leadership positions.

If you’d like to learn more about public power and cooperative utilities, contact Peak Substations today. Our team of experienced, knowledgeable professionals would be more than happy to answer any questions you may have at 877-324-0909.