A utility distribution company (UDC) is an electric utility that provides distribution services. As electric markets are restructured, many of the functions previously served by the monopoly utility are removed from the utility function and replaced by competitive companies. This can include generation, system operations, retail sales of supply, and sometimes transmission.
The one remaining utility function is the distribution function. Thus, in markets where generation and retail sales have been made competitive, the utility company becomes a UDC, or utility distribution company. The UDC is the monopoly provider of electric distribution services. This may also include providing supply to some customers — usually smaller customers who are not eligible for competitive services or those who can choose between the UDC and a competitive supplier, or larger customers who have chosen not to take service from a marketer. In other cases, regulation prohibits the UDC from offering supply services to any customer.