Ok, I can actually give several different examples. In the town in Massachusetts where I used to live, the town provided the electricity. In the old days it had its own generating plant, but at some point it converted over to just buying power from the (privately owned) grid. So as a homeowner or business, you get an advantage because the town buys the electricity in bulk. Homeowner rates are considerably lower than surrounding communities that don't have their own system.
http://www.shrewsbury-ma.gov/light/news.asp

In Colorado Springs, the city owns its own power plants. They're coal fired plants and they're pretty big, around 600 MW altogether. There's also a couple of small hydro plants.
http://www.csu.org/environment/energy/

The city offers all sorts of special deals. There's an experimental load balancing system for A/C systems. You can also buy wind power from the city for a $3 surcharge per 100 KWH. You can get automatic set-back thermostats at a discount. Also, Nikola Tesla, inventor of many of the features of AC power distribution, lived in Colorado Springs for a while and did lots of interesting experiments here..
http://en.wikipedia.org/wiki/Magnifying_Transmitter

Historically in the west, each town had its own power plant because things are so spread out. Rural electrification proceeded pretty slowly until the second world war; about 25% of rural homes had electricity by 1940. The Rural Electrification Administration was part of Roosevelt's New Deal, and it set up a bunch of rural electric cooperatives. Most city systems, independent operators, and rural cooperatives were gradually consolidated into the Public Service Company of Colorado, which was recently taken over by Xcel energy which covers several states. There are still about a dozen different electricity suppliers in Colorado. I don't know why Colorado Springs remained independent.
http://www.eere.energy.gov/state_energy/states_utilitygenerationtable.cfm?state=CO

All of this is regulated by a state agency.
http://www.dora.state.co.us/puc/

Here's an example of another Colorado city, Fort Collins, that decided in 1935 to stop buying power from the Public Service Company and run its own system. I remember my mother complaining about how stupid it was for the city to be in the electricity business, but the conservative farmers who live there think it's better than being under the thumb of a nasty corporation. They probably were happy when the Public Service Company was bought by Xcel, which is even more anonymous.
http://www.ci.fort-collins.co.us/electric/history.php

This link answers your questions, I think, about my utility.

Austin Energy Power Plants.

Although Texas authorized utilities to deregulate, Austin has chosen not to go that route (Whew! Thank God!) As a result, our rates are much lower than comparable privately-owned electric utilities. This newsletter (pdf, scroll down) shows the rate comparisons - note that the deregulated utilities are the ones with the highest rates.

As a bonus, check out Plug in Austin and some of the other links on the side of the page.