A public utility company (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and regulation ranging from local community-based groups to statewide government monopolies. Public utilities are meant to supply goods and services that are considered essential; water, gas, electricity, telephone, waste disposal, and other communication systems represent much of the public utility market. The transmission lines used in the transportation of electricity, or natural gas pipelines, have natural monopoly characteristics. A monopoly can occur when it finds the best way to minimize its costs through economies of scale to the point where other companies cannot compete with it. If the infrastructure already exists in a given area, minimal benefit is gained through competing. In other words, these industries are characterized by economies of scale in production. Though it can be mentioned that these natural monopolies are handled or watched by a public utilities commission, or an institution that represents the government. There are many different types of public utilities. Some, especially large companies, offer multiple products, such as electricity and natural gas. Other companies specialize in a specific product, such as water. Modern public utilities may also be partially (or completely) sourced from clean and renewable energy in order to produce sustainable electricity. Of these, wind turbines and solar panels are those used most frequently. Whether broadband internet access should be a public utility is a question that was being discussed with the rise of internet usage. This is a question that was being asked due to the telephone service being considered a public utility. Since arguably broadband internet access has taken over telephone service, perhaps it should be a public utility. The Federal Communications Commission (FCC) in the United States in 2015 made its stance on this issue clear. Due to the telephone service having been considered a public utility, the FCC made broadband internet access a public utility in the United States.
Management The utility model has historically been considered most applicable in the case of natural monopoly. Such monopolies are defined by high barriers to entry or large network effects making it more cost-efficient to do business through a single firm or small number of firms. Utilities are usually capital-intensive businesses with unusually large economies of scale and high fixed costs associated with building and operating the infrastructure, e.g. power plants, telephone lines and water treatment facilities. However, such contexts can be fluid, particularly in the face of technological or regulatory innovation. Regulators can choose to ensure some level of competition in an effort to improve service, as has been witnessed with electricity retailing and customer choice. Also, over time some aspects of a traditional utilities' monopoly position can erode. For instance, in the OECD, wholesale electricity generation markets have become far more decentralised with the advent of solar power and wind power. Nevertheless, infrastructure used to distribute utility products and services and other aspects of public service often remain more centralised. For example, ensuring the safety and stability of electric transmission networks and electricity provision still often requires heavy government involvement . Similar hybrid approaches to regulating utlities have been made in some countries for telecommunications, and some types of public transit. For example, the United Kingdom disaggregated British Rail into a government utility governing the rails itself (Network Rail), and separate private (or even foreign public) providers of train service. As of 2026, the UK government is discussing reversing this partial privatisation. Even postal services have been mooted as potentially privatisable, though this is again heavily contested. Conservative political parties often promise liberalization, deregulation and privatization of public utilities. Certain sectors such as gas and oil are often nationalised e.g. by countries in OPEC, because profits from these are also seen to be a form of public good, though profits themselves are neither service nor infrastructure. Key players in the public utility sector include:
Generators produce or collect the specific product to be used by customers: for example, electricity or water. Network operators (grid operators, regional network operators, and distribution network operators) sell access to their networks to retail service providers, who deliver the product to the end user. Traders and marketers buy and sell the actual product and create further complex structured products, combined services and derivative products. Depending on the product structure, these companies may provide utilities and businesses with a reliable supply of a product like electricity at a stable, predictable price, or a shorter-term supply at a more volatile price. Service providers and retailers are the last segment in the supply chain, selling directly to the final consumer. In some markets, final consumers can choose their own retail service provider. Public utilities must pursue the following objective given the social responsibility their services attribute to them:
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