Who Owns the Grid?
No one owns the American grid. It is held by roughly three thousand separate utilities plus hundreds of independent generators, under four distinct forms of ownership that answer to shareholders, city councils, member-customers or Congress.
Four kinds of owner
Ownership determines almost everything else about how a utility behaves: what return it is allowed to earn, who approves its rates, how cheaply it can borrow, and whom it has to convince before it builds anything. The four models below emerged at different moments in the twentieth century and have coexisted ever since, often serving neighboring towns.
Investor-owned utilities
Publicly traded or privately held companies with shareholders. About 170 of them, serving roughly three quarters of US customers. State commissions set their rates and approve their investments.
Public power
Municipal utilities and public utility districts owned by the community they serve, governed by a city council or elected board. Around 2,000 systems, mostly small, but including Los Angeles, Seattle, Nashville and San Antonio.
Cooperatives
Nonprofits owned by their own customers, created to electrify rural areas the private companies would not serve. Around 900 co-ops cover more than half the land area of the country at low customer density.
Federal power agencies
The Tennessee Valley Authority and four power marketing administrations that sell output from federal dams and, in TVA’s case, its own fleet. They also own large blocks of high-voltage transmission.
How the models compare
| Ownership | Answers to | Rates set by | Cost of capital | Typical footprint |
|---|---|---|---|---|
| Investor-owned | Shareholders | State public utility commission | Debt plus equity, with an authorized return typically near 10 percent | Multi-state holding companies serving millions of customers |
| Municipal / public | Voters | City council or elected utility board | Tax-exempt municipal debt; no equity return | One city or district; a few very large systems |
| Cooperative | Member-customers | Member-elected board; state oversight varies | Federal loan programs and co-op lenders; margins returned to members | Rural distribution territories, supplied by generation and transmission co-ops |
| Federal | Congress | Agency board or the Secretary of Energy | Federal borrowing; rates set to recover cost | Whole river basins and multi-state transmission corridors |
| Independent power producer | Investors | The market, within FERC rules | Project finance backed by contracts or merchant revenue | Individual plants, sold wholesale rather than to end customers |
The federal footprint
The federal government is not a retail utility, but it is one of the largest wholesale suppliers and transmission owners in the country. The power marketing administrations sell electricity generated at federal dams, giving first call to public power systems and cooperatives, and they own the backbone lines that carry it.
Bonneville Power Administration
Columbia River hydro and most of the high-voltage network in the Pacific Northwest.
Western Area Power Administration
Hydro from Hoover, Glen Canyon and other federal dams across fifteen western states.
Tennessee Valley Authority
A federal corporation that generates, transmits and sells power across seven states, including a large nuclear fleet.
Southeastern and Southwestern PAs
Market the output of Army Corps of Engineers dams in the Southeast and lower Midwest.
Owning wires is not the same as operating them
In much of the country a utility hands day-to-day control of its transmission lines to a regional operator while keeping the lines on its own balance sheet. The operator decides how power flows and who gets access; the owner still maintains the equipment and collects a regulated return on it. This separation, required for open access under federal rules in the 1990s, is why the question of ownership and the question of control now have different answers.
A smaller group of companies owns transmission and nothing else, building and operating lines as a standalone regulated business. And on the customer side of the meter a fifth category has appeared: households, businesses and developers who own rooftop solar, batteries and backup generation, and who now sell services back into a system originally designed to flow one way.