In some areas, local governments are responsible for providing electric or gas services rather than having the services provided by investor-owned utilities (IOU) or cooperative utilities. In many cases, these utilities are run by the city government and are called municipal utilities, or munis. In certain states, these utilities are run by a group of cities, a county, an irrigation district, or another public entity and are called public utility districts, or PUDs. Munis and PUDs are non-profit organizations that are typically run by a professional staff employed by the local government agency. Municipal utilities generally operate as a division of the local city government and provide electricity in the same way that many cities provide water, sewer, garbage, and other utility services.
Municipal utilities are common in many areas of the world. The U.S. has over 2,000 munis and PUDs that serve about 15% of end-use customers. In most U.S. states, they are not regulated by the state. Instead operations and rate setting are overseen by the city council or an appointed utilities board. Larger municipal utilities may own their own generation, transmission, and distribution facilities and may also perform their own system operations. Smaller munis usually band together to create public power agencies that share ownership of generation and transmission. Virtually all munis own and operate their own distribution systems. Many munis also buy power directly from federal power agencies and, in recent years, have commonly traded power with IOUs and other market participants.