A public utility is an entity that provides goods or services to the general public. Public utilities may include common carriers as well as corporations that provide electric, gas, water, heat, and television cable systems. In some contexts, the term “public utility” may be defined to include only private entities that provide such goods or services. For example, when defining the regulatory purview of the Federal Energy Regulatory Commission (FERC), Congress “exclude[d] governmental entities such as cities, counties, local irrigation districts, and state and federal agencies.” Instead, FERC has primary authority over “principally privately owned businesses, commonly referred to as ‘investor-owned utilities’ or ‘regulated utilities.’”
The process of determining whether an entity is a public utility varies by jurisdiction. In Ohio, “public utility” is not defined generally in the Ohio Constitution, and the Ohio Supreme Court has held that definitions elaborated in particular statutes are not applicable to other contexts. Instead, the courts in Ohio look to case law to discern the general characteristics of public utilities and examine each individual entity’s practices in light of the general requirements defined in the case law. Ohio courts have found a “public service” requirement that involves weighing several factors. First, the entity should provide “an essential good or service to the general public which has a legal right to demand or receive this good or service.” Next, the entity must provide that good or service “generally and indiscriminately.” Finally, the entity must have “an obligation to provide the good or service that cannot be arbitrarily or unreasonably withdrawn.” In addition to the “public service” requirement, a public utility in Ohio must carry out “its operations in such a manner as to be a matter of public concern.”
Public utilities are regulated by public utilities commissions that operate at a variety of jurisdictional levels. Public utilities commissions may grant public utilities certain monopoly rights to facilitate servicing a given geographic area with a single system. For example, in California, prohibitions against anticompetitive behavior under the Unfair Practices Law do not apply to public utility corporations. Privately-owned public utilities in areas such as electric, natural gas, telecommunications, water, railroad, rail transit, and passenger transportation are instead regulated by the Public Utilities Commission of California with the goal of “assur[ing] Californians' access to safe and reliable utility infrastructure and services.”
[Last updated in August of 2020 by the Wex Definitions Team]