Utilities Law Law and Legal Definition

A public utility is a business or service, which may be publicly or privately owned, engaged in supplying the public generally with some commodity or service, such as electricity, gas, water, transportation, or telephone or telegraph service. Privately owned public utilities most often operate within a designated area through an exclusive franchise granted by the legislature, public service commission, or other regulatory agency, and their operation is strictly regulated by the franchisor. Public utilities may be required to file rate schedules with a public service commission. Usually, there must be an approval by the regulatory body before such rates or proposed changes in rates may take effect.

For example, an electric utility generally refers to any plant, works, system, facilities or properties, together with all parts and appurtenances thereto, including contract and franchise rights, used and useful primarily for the production, transmission or distribution of electric energy. Electric utility boards are usually delegated power by the state legislature and rates are subject to state regulation.

The states' various public utilties commissions oversee electric companies. Deregulation of the industry has recently gained momentum to allow more competition in providing electricity to customers. Municipal boards may be authorized to acquire, construct, operate and maintain, and to take all necessary action, in order to provide an adequate, dependable, and economical alternative supply of bulk electric power and energy and related services for wholesale sales to those municipalities which may desire such supply. In this way, they aim to take advantage of economies of scale in the provision of economical and reliable wholesale power supply to the municipalities, and may enter into interconnection arrangements with other electric suppliers having generation and transmission capabilities.