Tennessee board rescinds merger order for South Fork Utility District; case remains open

The Tennessee Board of Utility Regulation voted 7-2 in a special-called meeting to rescind its July order that would have merged South Fork Utility District with Bristol Bluff City Utility District, though board staff said the case will remain open and the board will continue to monitor South Fork’s operations.

Board staff member K. Ross told the board that staff was recommending rescission after South Fork’s general manager, Adam Hale, left the utility. "We are requesting and recommending that the board vote to rescind the order from our July meeting," Ross said, adding that rescinding the order would not close the board’s review: "South Fork Utility District will stay under the Tennessee Board of Utility Regulation until the board takes formal action to close the case."

The board’s July order — which the rescission reverses — had laid out the terms of a merger and included a projected 5% cost savings for customers contingent on the merger. Ross told board members South Fork "would not be able to decrease their rates without our prior approval" because the rate decrease was tied to the merger agreement.

Members who opposed rescinding the order cited concern that allowing a rescission after an apparent turnaround could encourage other utilities to delay compliance. "I feel like that would let other mergers try to do the same thing," said Mr. Hampton. Supporters of rescission said the facts have changed since July: South Fork had shown signs of financial stabilization while under manager Adam Hale, and staff said that reality made reversal at this time reasonable despite the board’s continued view that consolidation could be in customers’ long-term interest.

Board counsel and another attorney noted a legal risk if the order were not rescinded: South Fork could file a court challenge within 60 days of the order’s issuance, requiring service on the Attorney General’s office and possible litigation over statutory interpretation. One board member summarized the legal concern as "bad facts make bad law," urging rescission to avoid an adverse court ruling tied to the specific facts of this case.

After discussion, a motion to rescind the July order passed on a roll-call vote with seven ayes and two nays. The board chair announced the tally: 7 ayes, 2 nays. Board staff said they would continue to scrutinize South Fork’s operations, and members discussed putting South Fork back on the agenda for a future meeting to collect updates; counsel advised keeping any long-range orders limited to items specifically noticed for the special meeting. Ross said staff would monitor the utility and present additional information when appropriate. The board adjourned following the vote and said it expects to reconvene on its regular schedule in the coming weeks.