Energy literacy: Utilities decarbonizing slow and fast

I spent a recent Saturday at an event promoting home electrification, where I conducted a small, random and totally unscientific survey, asking people, “How much do you know about where your electricity comes from?”

In most cases, the answer was either “very little,” “nothing” or the name of a local utility, which was about what I had expected.

Energy literacy – knowing at least the basics of the U.S. electric power system and how electricity is generated, transmitted and used – is not something most Americans think or care about, and it is worth asking why? 

Electricity is the lifeblood of our increasingly digital society. It is essential to our daily lives, our economy and our national security. An extreme weather-related power outage of more than a few hours may be considered catastrophic if not life-threatening.

Electricity is part of our Western, industrialized sense of entitlement and, as such, has become highly politicized. For the first time in decades, demand is going up rapidly, and within hours of his inauguration, President Donald Trump declared a national energy emergency, based partly on a fear-driven, ill-informed attack on renewable energy as unreliable and expensive.  

Many Republicans in Congress are similarly hell-bent on rolling back all federal incentives for clean energy, while expediting the permitting of fossil fuel-fired generation and severely limiting any opportunities for public input on or opposition to such projects.

In an ideal world, energy literacy would be an integral part of American education, included in what is widely referred to as STEM – science, technology, engineering and math – all of which are integral to our complex, dynamic and always-transitioning electric power system.

Instead, the industry has surrounded itself with impenetrable jargon and regulatory proceedings, which keep our largest, richest utilities insulated from the public they serve and significant parts of that public disengaged from any knowledge of the industry. 

One of my goals for E/lectrify is to at least make a start at providing the basics of energy literacy for a broad audience and hopefully making it cool, fun and interesting  –  something people understand, care about and see themselves as part of.

I am starting with electric utilities, because as above, they are the most familiar and immediate connection between people and the electric power system. They also play a major role in determining how and where our power is generated and how much we pay for it.

As always, I will do my utmost to minimize industry jargon, or where unavoidable, at least provide clear definitions.

IOUs, munis and co-ops

The United States is serious about electric utilities. We have about 3,000 of them, keeping lights on and cell phones charged across the country. The industry is broken down into three main sectors: investor-owned utilities – in industry speak, IOUs – municipal or public power utilities and electric cooperatives.

The IOUs are the big guys, corporations worth millions if not billions of dollars, traded on U.S. stock exchanges and, in some cases, owning multiple local utilities. At present, the Edison Electric Institute, the main industry trade group, has a membership list of 140 IOUs, which serve 72% of U.S. households. 

For example, I live in Maryland, where my local utility is Pepco, which is owned by Exelon, which also owns Baltimore Gas & Electric (Maryland), Delmarva Power (Maryland and Delaware), Atlantic City Electric (New Jersey), PECO (Pennsylvania) and Commonwealth Edison (Illinois). 

The main things to remember here are that these companies typically have been given a virtual monopoly within their specific geographic locations, which means they must provide power to customers in those areas. They are regulated by state utility commissions, and they are guaranteed a certain percentage of profit, which tends to run between 8% and 10%. 

Earning that profit depends not so much on the amount of electricity these utilities sell, but on the amount of money they invest in building things – big, expensive things like power plants and the poles and wires that bring electricity to your home. They also tend to spend big bucks on electing and lobbying regulators and lawmakers. 

Municipals are smaller, publicly owned utilities serving specific cities or metropolitan areas and range in size depending on the city. The Los Angeles Department of Water and Power is one the largest munis in the U.S., serving more than 4 million residents and businesses in LA and the surrounding area. At the other end of the spectrum, you have places like the Village of Minster, Ohio – population around 3,000 – where the local electric system is part of city government. 

In addition to munis, this sector also includes public power authorities that provide electricity for a larger region – like the Tennessee Valley Authority in the Southeast. All together, munis and public power total close to 2,000 utilities serving 55 million people.

The electric co-ops – about 832 of them – have their roots in the rural electrification initiatives of the 1930s. Back then, it was not profitable for the big utilities to electrify remote, thinly populated farming communities, so co-ops were formed to bring electricity to these towns and villages.  

Continuing to serve remote, low-income communities, co-ops are nonprofit organizations owned by their members and range in membership size, from hundreds to hundreds of thousands. But the geographic areas they serve cover 56% of the U.S. 

Like co-ops, public power utilities are also nonprofit, which means both are not motivated by a need to make profits for shareholders and in general are not directly regulated by state commissions. Public utilities are governed by their cities, co-ops by their members, and both pride themselves on having strong ties to their communities and listening to and meeting the needs of their customers.

Investor-owned and regulated vs nonprofit

One thing I have learned from writing about utilities for 20 years is that however they are organized, they all have a deep commitment to providing safe, reliable electric power to their customers. Ensuring the lights stay on – or getting them back on as quickly as possible after an outage – lies at the heart of their mission, and they take this responsibility very seriously.

Which is partly why utilities in general, and the big corporations especially, are very hesitant to take risks. The industry jargon is that they are “risk-averse.” Getting them to try new technologies or to change the way they do things even a little bit can be extremely difficult.

But the difference between for- and nonprofit, regulated and unregulated can be significant in ways that may have direct impacts on their customers and the clean energy transition. To begin with, nonprofit utilities, both munis and co-ops, tend to have lower rates than for-profit utilities – a big plus for consumers.

Regulation is another critical difference. Almost anything the big corporate utilities do – the rates they charge, their plans for building new generation or power lines or launching pilot programs to try out new technologies – has to be approved by their state utility commissions.

Nailing down these approvals can take months, if not years, in some cases involving multiple, long meetings and hundreds of pages of applications, motions, comments and rebuttals, all awash in technical, legal and administrative jargon. 

Less- or unregulated munis and co-ops have more flexibility. They can do cool stuff much faster than the IOUs – like trying out new technologies or electric rate structures –  because no one tells them they can’t.   

Founded in 1944, the Kit Carson Electric Cooperative serves 29,000 members across three counties in northern New Mexico. With encouragement from its members, the co-op began building solar in 2002 and as of 2022 had reached its goal of providing 100% of its daytime power from solar. 

Hitting this target involved breaking a contract with the co-op’s long-time energy supplier, which had traditionally generated much of its power from fossil fuels. The co-op ended up paying a heavy exit fee, but other co-ops seeking cleaner energy followed Kit Carson, ultimately pushing the supplier to start building wind and solar projects. 

The co-op continues to innovate, with plans to turn a closed mining site into a clean energy hub, with solar and wind powering the production of green hydrogen. 

Consumer choice, consumer power

Finding out your utility’s energy mix can be tricky, depending on where you live and the type of utility providing your power. In Maryland, utilities are required to report on their energy mix once a year, but finding that information on a utility’s website may take some hit-and-miss digging.

Getting to Baltimore Gas & Electric’s energy mix involves drilling down through three subcategories in its Safety and Community section and then scrolling to the bottom of the Accountability web page. (Natural gas, 44.21%; nuclear, 33.62%; coal, 14.94%, renewables 6.94%)

The website provides no direct link, and the information does not immediately pop up if you search for it.

But stories like Kit Carson’s illustrate the power consumers can have to influence where their electricity comes from. In California, communities dissatisfied with the power they were getting from their corporate utilities started organizing locally to buy cheaper, cleaner power from independent power companies. 

They were dubbed “community choice aggregators,” or CCAs, because they were pooling, or aggregating, their communities’ electricity demand to procure lower prices for clean energy. 

I was covering energy in Palm Springs when the first CCA was formed in Marin County in 2010. Today, California has 25 CCAs, all nonprofits, providing electricity to about one-third of the state’s population. 

In 2024, they signed contracts for more than 18 GW of new clean energy, including solar, wind, storage and geothermal, according to the California Community Choice Association. 

In addition to California, nine other states have laws allowing CCAs – Illinois, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Rhode Island and Virginia. Even more states – 32 and the District of Columbia – are “unregulated,” which means consumers can stay with their corporate utility or shop around for cleaner, cheaper power. 

Why this is important is that utilities typically make plans for new generation years in advance, and the Trump administration and Republican lawmakers are attempting to realign how power is planned, permitted and produced in this country. In somewhat oversimplified terms, they want to make it easier to build new natural gas and coal-fired power plants, and harder and more expensive to build new clean energy.

The impact of such policies can be seen in the plans for new electricity production that corporate utilities are formulating – and filing with their state commissions – to meet new demand. Natural gas plants are now the top form of new power production being proposed, accounting for 30% of all new planned generation, according to a report from the North Carolina Clean Energy Technology Center.

Planned solar, wind and storage together are still way ahead of natural gas, but the report sees the trend as significant.

And why you should care is that the cost of any new generation – renewable or fossil fueled – could show up on your electric bill in the form of rate increases, potentially for years and years. Any associated emissions from coal and natural gas will also show up in the form of increasingly erratic and severe extreme weather and power outages.

The next few years are critical for determining how the U.S. will meet its growing demand for clean, reliable and affordable power in a time of changing climate. Some new, targeted fossil fuel generation could be necessary, but we must push our utilities, regulators and lawmakers to prioritize cleaner, more efficient and flexible ways to meet that demand. 

Both we and they can do better.

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NOTE: What parts of the U.S. power system don’t you understand? Let me know so I can write about them as part of E/lectrify’s Energy Literacy series.