A consistent gap prevails between publicly and privately owned utilities in the United States, with the former selling their power 16 to 20% cheaper than IOUs (independently-owned utilities).

As acknowledged by the IOU industry association, the Edison Electric Institute (EEI), this gap has existed for the last two decades. It applies to all consumer classes, but is somewhat smaller and fluctuates more for industrial consumers. The EEI attributes the lower rates of public utilities to their preferential access to cheap federal hydro-power, tax-exempt financing, and other government interventions which effectively amount to subsidies.

However, the American Public Power Association (APPA), the industry organization for publicly owned utilities, claims that tax-exempt financing explains only four or five percentage points of this price differential. Preferential access to hydro-power is held to explain about 1.5 – 2 percentage points.

A recent empirical study, using a large data-base covering some 98% of all IOU power sales and 83% of all power sales by publicly-owned utilities found that the public utilities have sale prices 2.5% lower than IOUs, holding constant other factors including costs and taxes.

The results confirm that public ownership lowers prices by 2.7% compared to private ownership for equal cost. The effect is particularly pronounced for residential customers: their prices on average are 15.4% lower if their supplies are publicly-owned utilities.

From the US 1998 Energy Policy Review of the International Energy Agency (OECD).