Q. Private power companies argue that municipal electric systems have lower electric rates because they pay no taxes and are unfairly subsidized by the federal government. Municipal electric systems do pay state and local taxes or tax equivalents. Secondly, municipal electric systems are owned and controlled by local citizens. Because they answer to local ratepayers instead of investors, the main goal of municipal electric systems is lower electricity bills for customers, not higher profits for shareholders. An independent analysis of this claim revealed that over 60 percent of the price difference between public power and investor-owned electric utilities is due to the form of ownership.
Consumers benefit from having a variety of suppliers of electric service.
Municipal electric systems, investor-owned electric utilities and rural electric cooperatives are all very different types of suppliers. This diversity contributes toward the goal of a competitive electric industry in which customers benefit from choice. This comparison benefits all consumers, including those served by investor-owned utilities. In fact, they are more closely regulated than any other type of utility. Municipal electric systems are regulated by elected city councils or elected or appointed governing boards.