Guide · Updated November 2026 · Data: EIA Form 861 2025 and EIA-861M

Investor-Owned, Municipal and Cooperative Utilities: What's the Difference?

The United States does not have an electric company. It has more than 3,000 of them, in four ownership forms - and the form your utility takes determines who sets its rates and where any surplus goes. Every profile on this site labels its utility's ownership.

Investor-owned utilities (IOUs)

Roughly — IOUs - household names like Duke Energy, Pacific Gas & Electric and Florida Power & Light - serve the large majority of U.S. customers. They are for-profit corporations whose rates are set by state public utility commissions: the commission audits their costs and authorizes a return on invested capital. That return makes IOU rates structurally higher, but the model also raises large amounts of capital for grid investment.

Municipal utilities (public power)

About 1,806 city-owned utilities - Los Angeles DWP, Austin Energy, Nashville Electric Service and hundreds of small-town departments - are run by city councils or independent public boards. They borrow tax-exempt, pay no income tax, and answer to local voters rather than a state commission. Many buy low-cost federal hydro power. Surpluses typically fund city services or hold rates down.

Cooperatives

About 810 electric cooperatives, owned by the customers they serve, dominate rural America - a legacy of the 1936 Rural Electrification Act. Members elect the board; margins are returned as capital credits or reinvested. Co-ops face the toughest delivery economics (few customers per mile of line) and often lean on generation-and-transmission co-ops for wholesale power.

State and federal utilities

A smaller group - the Tennessee Valley Authority, Bonneville Power Administration marketing arms, state power authorities and irrigation districts - generates and wholesales (and sometimes retails) power as government enterprises. Federal preference power flows first to public and cooperative utilities, one reason public-power rates in hydro regions anchor the bottom of the cheapest-utilities ranking.

Does ownership predict price?

Only partly. The cheapest and most expensive lists both contain every ownership type; fuel mix, territory and history matter at least as much - the full argument is in why electricity prices vary by state. Ownership tells you who to call, who regulates the rate, and whose meeting to attend when it changes - which, for most households, is the more useful fact.

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Electricity rates by state · Utility rankings · Utility directory · All guides