Vertically integrated investor owned utilities vs co-ops

Grid operators Seven regional grid operators PJM, MISO, CAISO, SPP, NYISO, ISO-NE, and ERCOT together dispatch across roughly two thirds of the country's electricity load. The other third of the country never adopted this particular institutional layer. Large stretches of the Pacific Northwest, the Mountain West, most of the Southeast, and parts of the central US operate as what's usually called vertically integrated territory, where a utility plans its own system, builds its own generation, and dispatches its own power without an independent regional operator.

In RTO or ISO territory, the interconnection queue for a large generator is very often run by the regional operator itself. For example, PJM has a queue, MISO has its own. However, in vertically integrated territory, the utility runs that same process end to end.

Utility ownership Minnesota's Municipal Utilities Association lays out the three ownership types:

• Investor owned utilities are for profit companies governed by a board elected by shareholders, and in Minnesota's case regulated by the state Public Utilities Commission (PUC) the way most of this series has assumed a utility is regulated all along.
• Cooperatives are nonprofit entities governed by a board elected by their own customers. Traditionally, they set their own rates rather than filing them with a state commission for approval.
• Municipal utilities are owned by a city government and governed either directly by the city council or by an appointed utility commission, outside the state PUC's rate-setting authority. The state commission typically retains a safety or reporting jurisdiction.

Virginia's electric cooperative trade association has noted that co-ops in 3/4 of states set their own rates rather than filing them for state commission approval. The argument behind self regulation is that a co-op’s customers and owners are the same people, so the usual reason for a regulator to referee between a utility and its ratepayers doesn't apply in the same way.

Some states go further and put the choice itself directly to a vote. New Hampshire's statute lets a rural electric cooperative petition to exit state PUC jurisdiction entirely, subject to a 60% affirmative vote of its own membership, and Delaware enacted similar legislation. A cooperative operating in the same state as a heavily regulated investor owned utility can be functionally invisible to that state's PUC docket system, answering instead to its own board and its own membership vote.

A vertically integrated, investor-owned utility in a state with no RTO is still going to file rate cases and often publish planning data, because the ownership structure, not the grid-operator status, is what drives a state PUC's leverage. A municipal or cooperative utility in the same state, subject to the exact same RTO or lack of one, may file almost nothing with that same commission, because ownership put it largely outside the commission's reach from the start.