Goods and services. The simple act of walking into a restroom, turning on the light, and washing your hands, uses the products of perhaps four different utilities. Electricity powers the light, water supply systems provide water for washing, wastewater treatment plants treat the sewage, and natural gas or electricity heats the water. Some government establishments also provide electric, gas, water, and wastewater treatment services and employ a significant number of workers in similar jobs, but they are part of government and not included in this industry. Information concerning government employment in utilities is included in the Career Guide to Industries statements on Federal Government and State and local government, except education and health.

Industry organization. The utilities sector is comprised of three distinctly different industries.

Electric power generation, transmission, and distribution. This segment includes firms engaged in the generation, transmission, and distribution of electric power. Electric plants harness highly pressurized steam, flowing water, or some force of nature to spin the blades of a turbine, which is attached to an electric generator. Coal is the dominant fuel used to generate steam in electric power plants, followed by nuclear power, natural gas, petroleum, and other energy sources. Hydroelectric generators are powered by the release of the tremendous pressure of water existing at the bottom of a dam or near a waterfall. Renewable sources of electric power—including geothermal, wind, and solar energy—are expanding rapidly, but only make up a small percentage of total generation.

Legislative changes and industry competition have created new classes of firms that generate and sell electricity. Some industrial plants have their own electricity-generating facilities, capable of producing more power than they require. Those that sell their excess power to utilities or to other industrial plants are called non-utility generators (NUGs). Independent power producers are a type of NUG that are electricity-generating plants designed to take advantage of both industry deregulation and the latest generating technology to compete directly with utilities for industrial and other wholesale customers.

Transmission lines supported by huge towers connect generating plants with industrial customers and substations. At substations, the electricity’s voltage is reduced and made available for household and small business use via distribution lines, which usually are carried by telephone poles.

Natural gas distribution. Natural gas, a clear odorless gas, is found underground, often near or associated with crude oil reserves. Exploration and extraction of natural gas is part of the oil and gas extraction industry, covered elsewhere in the Career Guide to Industries. Once found and brought to the surface, it is transported throughout the United States, Canada, and Mexico by gas transmission companies using pressurized pipelines. Local distribution companies take natural gas from the pipeline, depressurize it, add its odor, and operate the system that delivers the gas from transmission pipelines to industrial, residential, and commercial customers. Industrial customers, such as chemical and paper manufacturing firms, account for almost a third of natural gas consumption. Electric power plants, residential customers who use gas for heating and cooking, and commercial businesses—such as hospitals and restaurants—account for most of the remaining consumption.

Water, sewage, and other systems. Water utilities treat and distribute nearly 34 billion gallons per day to customers nationwide. Water is collected from various sources such as rivers, lakes, and wells. After collection, water is treated, and sold for residential, industrial, agricultural, commercial, and public use. Depending on the population served by the water system, the utility may be a small plant in a rural area that requires the occasional monitoring of a single operator or a huge system of reservoirs, dams, pipelines, and treatment plants requiring the coordinated efforts of hundreds of people. Sewage treatment facilities operate sewer systems or plants that collect, treat, and dispose of waste from homes and industries. Other utilities include steam and air-conditioning supply utilities, which produce and sell steam, heated air, and cooled air.

Recent developments. Utilities and the services they provide are so vital to everyday life that they are considered public goods and are typically heavily regulated. Most utility companies that distribute to consumers operate as regulated monopolies because utility distribution tends to require a large investment in plant and equipment and it is generally not desirable to have several competing systems of pipes or power lines in most areas. Since these companies do not face competition, they are regulated by public utility commissions that ensure that companies act in the public interest and set the rates that are charged. However, legislative changes in recent years have established and promoted competition in some parts of the utilities industry. Wholesale providers of electricity now face competition from a number of non-utility generators.

Many utility companies are municipally owned. In the natural gas industry, for example, a majority of the distribution companies in the United States are municipally owned. However, they serve just a fraction of the nationwide customers. Historically, utilities serving large cities had sufficient numbers of customers to justify the large investment in infrastructure needed to run a utility, and so private, investor-owned companies established utility service. In rural areas, where the small number of customers in need of services did not provide an adequate return for private investors, the State or local government, or rural cooperative associations, established utility service.

The various segments of the utilities industry vary in the degree to which their workers are involved in production activities, administration and management, or research and development. Industries such as water supply, that employ relatively few wor

The utilities industry is unique in that urban areas with many inhabitants generally have relatively few utility companies. For example, there were about 52,349 community water systems in the United States in 2006 serving more than 281 million people. The 48,275 smallest water systems served only 52 million people while the 4,074 largest systems served more than 229 million. This shows that economies of scale in the utilities industry allow a few large companies to serve large numbers of customers in metropolitan areas more efficiently than many smaller companies. In fact, some utility companies, predominately serving large metropolitan areas, offer more than one type of utility service to their customers.

Unlike most industries, the utilities industry imports and exports only a small portion of its product. To some degree, this is because of the great difficulty in transporting electricity, freshwater, and natural gas. It is also the result of a national policy that utilities should be self-sufficient, without dependence on imports for the basic services our country requires. However, easing trade restrictions, increased pipeline capacity, and shipping natural gas in liquefied form have made international trade in utilities more feasible, especially with Canada and Mexico.

In 2005, Congress passed a new Energy Policy Act, which is the first major legislation on energy since 1992. This will be a major force in the industry through 2016. It was designed to promote conservation and use of cleaner technologies in energy production through higher efficiency standards and tax credits. It is expected that several new power plants will be built as a result of this legislation, including new clean-burning coal and nuclear facilities.