While all electric utilities offer the same product, where it comes from makes a difference.
In the U.S., the vast majority of people receive their electricity from one of three types of utilities; investor-owned, municipal-owned or through their electric cooperative, which is owned and controlled by the people who use it. Let’s take a closer look at these three types of ownership models and see why it matters.
In the investor-owned model, the corporation is owned by a great number of stockholders who may or may not be real customers of the utility. Investor-owned utilities tend to be very large corporations such as Westar Energy and Kansas City Power and Light (KCP&L). They serve large cities, suburban areas and some rural areas, too.
In most cases, investor-owned utilities (IOUs) have few employees in the communities where they operate. This, combined with the fact that they have outside investors whose sole motive is to make a profit on their investment, generally tends to lead to less personalized service. Consumer surveys confirm that IOUs have the lowest customer satisfaction ratings. About 72 percent of the U.S. population is served by investor-owned utilities.
Municipal electric systems, as the name implies, are government owned, and they serve residents of their towns or cities. The largest municipal utility is the Kansas City Board of Public Utilities, which serves approximately 158,000 residents in Kansas City, Kansas. In municipal systems, the city runs the utility with little to no meaningful oversight from the citizens. About 16 percent of the market is served by municipal utilities.
More than 835 rural distribution electric cooperatives—six of which are Sunflower’s Members—located in 47 states serve the smallest number of consumers, about 12 percent of the market, which equals 42 million people. While co-ops serve the fewest number of people, co-op electric lines cover more than 75 percent of the U.S. landmass. This is because our Members and other distribution co-ops provide power where others once refused to go because of the low population density.
However, electric co-ops rank highest in member satisfaction among the three types of utilities—quite likely because cooperatives serve member-owners, not customers.
As the electric utility business continues to evolve, we are committed to being there for our Members and the thousands of Kansans they serve. Unlike large investor-owned utilities, we and our Members are rooted right here in central and western Kansas.
Spread the word: there is a cooperative difference!
By Adam Schwartz, with additions by Sunflower staff.