Public Utilities in the U.S. and Charleston

History of Public Utilities in the U.S.

Public Utilities

         Public utilities are services such as water, electricity, sewage, and natural gas that are provided by a utility company and these companies can either be publicly controlled and regulated or privately owned. Privately owned public utility companies are regulated and monitored by a public utilities commission, a governmental agency. Publicly owned utilities can be municipal or cooperative. Municipal utilities can serve whole cities and surrounding areas or even just a small part of the city. Cooperative utilities are typically in rural areas and owned by the customers it serves. Publicly owned utilities are typically non-profit and private owned utilities are typically for-profit.

Public Utilities in the US (and its Problems)

         Public utilities have often been susceptible to monopolies, cyclical patterns of regulation and de-regulation, and corruption. Those executing the creation of monopolies argued that public utilities like electricity were a ‘natural monopoly’ because of the expense of investment and upkeep of multiple power plants, when one could do the same job alone. This led to government involvement to curb the monopolies power, wherein government regulators can get too involved in the special interests of the industry they regulate. Corruption in public utilities is often political in nature. In order to keep their rates high, public utility companies could pay off politicians so that they wouldn’t try and curb their profits. Regardless of how utilities are regulated, whether by municipal ownership, regulatory commissions or otherwise, each is open to controversy.

         Monopolies were tackled particularly during President Franklin Roosevelt’s time. Under him, Congress passed the Public Utility Holding Company Act, which helped decrease the number of utility holding companies, and the Federal Power Act of 1935, which gave the Federal Power Commission regulatory power over electric power. He also created the Rural Electrification Association in 1935 as part of the New Deal to distribute utilities in rural areas.

         Regulation and de-regulation in public utilities is cyclical in nature. In the 20th century public utilities went through long stretches of increased regulation only to be followed by another long stretch of de-regulation. In the 20’s and 30’s regulation increased by FDR, but regulation was undone in the 80’s/90’s by President George H.W. Bush.