Types of Electric Utilities

After understanding the process that goes into providing your electricity, you may wonder who is working to make it possible. The answer is electric utilities, which can be divided into three main classes:

1. Municipals

Municipals are utility companies that are publicly owned for the purpose of providing power to a city’s residents.

Municipals operate in two different ways. They may have their own generation facilities or they may not have their own generation facilities. If a municipal does not have their own generation facilities, they can develop a contract with another company to generate electricity. In either case, the municipals distribute electricity locally, and do not need to transmit electricity over high-voltage power lines because the customers are local.

In Iowa there are 136 electric municipal utilities. For more information on municipal utilities, visit Iowa Association of Municipal Utilities .

2. Rural Electric Cooperatives (RECs)

Rural Electric Cooperatives are owned by their customers and members, and operate on a non-profit basis. These utilities usually operate in rural areas that investor-owned utilities do not serve. RECs are divided into distribution cooperatives or generation and transmission cooperatives.

Some examples of RECs in Iowa can be found on the Iowa Association of Electric Cooperatives list, which is divided into distribution cooperatives and generation and transmission cooperatives.

3. Investor-owned Utilities (IOUs)

Investor-owned utilities are privately owned and for-profit businesses. They can operate the full range of generation, distribution, and transmission processes. A list of investor-owned utilities in Iowa can be found on the Iowa Utility Association website.

Traditionally, investor-owned utilities are vertically integrated, meaning they own generation, transmission, and distribution assets. However, investor-owned companies are not required to own all the assets and often partner or sell parts of the generation, transmission, or distribution process to other companies.

Continue to the Understanding Your Electric Bill page to learn how you are being charged for electricity.