Solar contractors must work with a variety of electric providers to put new solar projects on the grid. Here are the three types of utilities and who they’re accountable to.

Investor-owned utilities (IOUs)

IOUs are privately owned electricity and natural gas providers with the objective of producing a return for investors. They distribute profits to stockholders or reinvest it. Rates are set and regulated by a public utilities commission with some customer participation. IOUs purchase power through contracts and also own their own generation facilities. They are the largest type of electric utility and have a complex mix of customers.

Examples:

• FirstEnergy (Ohio)
• Pacific Gas & Electric (California)

Public (municipality-owned)

Public utilities are non-profit local government agencies that have the objective to provide service to communities in a way that recovers costs and earns additional return to invest in new facilities. They’re managed by locally elected officials or public employees. Public utilities can return excess funds to consumers through reduced rates, community contributions and increased operations efficiencies. Rates are set by the utility governing body or city council. They operate their own generation facilities or buy power through contracts. Most are small or mid-sized.

Examples:

• Breckenridge Public Utilities (Minnesota)
• Burlington Electric Department (Vermont)

Electric cooperatives

Electric co-ops are private, non-profit utility businesses owned by the customers they serve. They’re established to provide at-cost electric service and are governed by an elected board of directors. There are two types of cooperatives: Distribution and Generation & Transmission (G&T). Distribution cooperatives deliver electricity to their member-owners. G&Ts provide wholesale power to distribution co-ops through their own generation or by purchasing power on behalf of the distribution members. Co-ops are established in rural areas that don’t have an investor-owned or municipal utility nearby to supply electric power.

Examples:

• Great Lakes Energy Cooperative (Michigan)
• Dixie Power (Utah)