Skip Navigation

Flip the Switch

Original Illustration by Samantha Takeda '27

As the clock struck 8:00 PM on March 31, 1880 in Wabash, Indiana, “thousands of eyes that were turned upward toward the inky darkness… saw a shower of sparks emitted from a point above them, small steady spots of light, growing more brilliant… it was absolutely dazzling.” With a flip of the town’s first publicly powered light switch, Wabash became the first city in the world to be lit entirely by electric light, and thus the illustrious history of public electric utilities began. 

Electric utilities are companies that engage in electricity generation and distribution. Public power refers to a utility managed by a municipality or state government. It has been part of the electrical grid in the United States for nearly as long as we’ve had one. However, as other actors, namely privately owned utilities, took advantage of this monopolized resource, how Americans got their power was reshaped to prioritize shareholders’ returns above public needs.

The shadow of utilities’ early history still looms large, obstructing progress on renewable energy. To meet the crucial demands of the climate crisis, we must provide consumers with more agency and power, whether by reforming our current system or considering entirely different ways of providing people with power, such as consumer-owned utilities.

Although the first utilities were publicly owned, growing electricity demand and advancing technological capabilities spurred the introduction of private alternatives. Private utilities—commonly referred to as investor-owned—are for-profit companies that own parts of or the entire process of electricity production and distribution. Early market entrants argued that utilities constitute natural monopolies—and so, large, private utilities systemically acquired smaller ones, growing their holdings until just 10 private companies delivered 75 percent of electricity in the United States at the close of the 1920s. 

Simultaneously, smaller, publicly owned utilities like the one in Wabash continued to grow, though rarely at the same rate as private companies. Cooperative utilities, which return profits to customers, also proliferated during the 20th century. While public, cooperative, and private utilities still coexist today, privately owned utilities, which made up a notable two-thirds of the US electricity industry in 2021, have dominated the modern electrical grid—and the political conversation.

To legally maintain their near-monopoly status, privately owned utilities must be overseen by Public Utilities Commissions (PUCs), which are state-by-state, quasi-governmental bodies. These PUCs, made up of three to five regulators, take on critical questions about everything from rates to renewable energy mandates. Between 2000 and 2020, 25 percent of PUC regulators had previously been employed in the private utility or fossil fuel industries, leading regulatory decisions to tilt away from climate change mitigation. In recent years, more regulators with environmental expertise have been appointed. As a result, some researchers see significant potential for PUCs to become important actors in the decarbonization of the electrical grid. However, this would require reforming the fundamental, profit-motivated model of investor-owned utilities.

While utility monopolies made sense 100 years ago, this model is no longer feasible today. It is nearly impossible for these companies to take into account their consumers’ climate priorities without jeopardizing their bottom line. They are incentivized to do two things: supply reliable, low-cost energy to consumers and provide a solid return on stakeholders’ investments. 

Private utilities have historically been staunch opponents of measures like net metering, an incredibly popular program across the political spectrum that allows customers with solar to sell their energy back to the grid. The profit motive of investor-owned utilities relies on consumers being fully dependent on their services and is inherently unfriendly to small-scale, locally-generated power—the kind of power we need significantly more of to meet energy demands at scale. We need to vastly improve the reliability of the grid and double its capacity to meet our energy needs—and do it fast. The current structure of investor-owned utilities will not get us there.

Because of their history and the inherent importance of providing energy to a large number of people, utilities have outsized power in our political system. They enjoy significant access and sway in clean energy legislative processes. Research conducted by Brown’s very own Climate Development Lab has found that utilities have had great success in blocking clean energy legislation and that their preferred version of a bill is most often adopted. Some utilities have adopted lofty climate pledges, but a study by the Sierra Club found that they have routinely fallen short of these goals. Those without official climate pledges harm the clean energy movement even more greatly.

This little-understood corner of the climate obstruction movement is one that advocates must focus on to actualize decarbonization efforts. Research has found a variety of reforms that would make investor-owned utilities more compatible with the clean energy fight, including separating revenues from the amount of energy supplied, legislating to force utilities to center climate considerations, and restructuring the electricity sector. To create buy-in for clean energy, it is crucial that we decouple power from profit.

New York and California have both introduced regulations that reform utility business models, while Minnesota and Massachusetts have taken a phased-in approach to this challenge. Lastly, Rhode Island has upped its renewable energy goals and made changes that it hopes will make renewable energy more palatable for utilities.

Another solution allows people—not corporate interests—to control their utilities. Consumer-owned utilities are run by an elected board and do not have any shareholders to appease. Instead, they can reinvest profits into the grid, making them more efficient and effective. Nationwide, consumer-owned utilities supply power that is 4 percent cheaper than investor-owned utility power and 16 percent cheaper than that of cooperative utilities. The State of Nebraska is powered entirely by publicly owned utilities, showing that it is possible to provide low-cost, reliable energy controlled by local decision-makers. 

In Maine, many are dissatisfied with the state’s investor-owned utilities, Central Maine Power (CMP) and Versant. Mainers pay the nation’s seventh-highest electricity rates while simultaneously experiencing the most frequent and second-longest power outages in the country. Statewide public power was on the ballot this fall with the proposed Pine Tree Power initiative. CMP and Versant collectively spent over $35 million during this political campaign, exhausting customers with constant ads and flexing their considerable economic might. Pine Tree Power, by contrast, raised only around $1 million for the same fight. 

In an unfortunate coda to what could have been a story about collective action and the future of utilities, 69 percent of Mainers rejected Pine Tree Power. There are several possible reasons why: an unwillingness to shift away from the status quo, fear of change, and the well-funded opposition campaign staged by the utilities themselves.

One can hope that the persistent efforts of advocates to reform this system might present a wake-up call for the utilities, who themselves could choose to value renewable energy more highly and shave down their profit margins to make energy more affordable for Americans. 

At the very least, the case of Pine Tree Power teaches us that we must consider how our utilities function, how they are failing us, and how we can make them better. Whether we do this by creating entirely new systems or reforming existing ones, this climate obstacle must be revealed; we must push utilities out from the shadows and into a brighter, solar-powered future.