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A public utility (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and regulation ranging from local community-based groups to statewide government monopolies.
The term utilities can also refer to the set of services provided by these organizations consumed by the public: electricity, natural gas, water, and sewage. Broadband internet services (both fixed-line and mobile) are increasingly being included within the definition.
In the United States, public utilities are often natural monopolies because the infrastructure required to produce and deliver a product such as electricity or water is very expensive to build and maintain. As a result, they are often government monopolies, or if privately owned, the sectors are specially regulated by a public utilities commission. The first public utility in the United States was a grist mill on Mother Brook in Dedham, Massachusetts.
Developments in technology have eroded some of the natural monopoly aspects of traditional public utilities. For instance, electricity generation, electricity retailing, telecommunication, some types of public transit and postal services have become competitive in some countries and the trend towards liberalization, deregulation and privatization of public utilities is growing, but the network infrastructure used to distribute most utility products and services has remained largely monopolistic.
Public utilities can be privately owned or publicly owned. Publicly owned utilities include cooperative and municipal utilities. Municipal utilities may actually include territories outside of city limits or may not even serve the entire city. Cooperative utilities are owned by the customers they serve. They are usually found in rural areas. Publicly owned utilities are non-profit. Private utilities, also called investor-owned utilities, are owned by investors, and operate for profit, often referred to as a rate of return.
Public utilities provide services at the consumer level, be it residential, commercial, or industrial consumer. In turn, utilities and very large consumers buy and sell electricity at the wholesale level through a network of RTOs and ISOs within one of three grids, the eastern grid, Texas, which is a single ISO, and the western grid.
Public utilities commissions
Each US state has their public utilities commission which regulates the privately owned electric, natural gas, telecommunications, water, railroad, rail transit, and/ or passenger transportation companies. For example, the California Public Utilities Commission (or CPUC) is an operating in the state of California. and the Public Utility Commission of Texas which regulates the state’s electric and telecommunication utilities, implements respective legislation, and offers customer assistance in resolving consumer complaints. Over the years, various changes have dramatically re-shaped the PUC’s mission and focus, shifting from up-front regulation of rates and services to oversight of competitive markets and compliance enforcement of statutes and rules.
United Kingdom and Ireland
In the United Kingdom and Ireland, the state, private firms, and charities ran the traditional public utilities. For instance, the Sanitary Districts were established in England and Wales in 1875 and in Ireland in 1878.
The term can refer to the set of services provided by various organizations that are used in everyday life by the public, such as: electricity generation, electricity retailing, electricity supplies, natural gas supplies, water supplies, Sewage works, sewage systems and broadband internet services. They are regulated by Ofgem, Ofwat and Ofcom. Disabled community transport services may occasionally be included within the definition. They were mostly privatised in the UK during the 1980s.
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- Energy Dictionary
- Investor Owned Electric Utilities
- Investor-Owned Utilities: Asleep at the Switch or Above the Law?
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