Senate adopts changes to municipal utility boards, sets one-year annexation moratorium

NASHVILLE — The Tennessee Senate on the floor adopted the conference committee report on Senate Bill 2102, approving new rules for representation on municipal utility boards and placing a one-year moratorium on municipalities condemning electric cooperatives by annexation.

Senator Taylor, the bill sponsor, sought adoption of the conference committee report and said the measure “has statewide application” and would apply to any municipal utility in jurisdictions with populations greater than 485,000. Under the conference report, a municipality serving 3,500 customers outside its home jurisdiction would warrant one board member from that county, and serving more than 130,000 customers would warrant an additional member.

The proposal prompted sharp floor debate focused on home-rule concerns and whether the changes effectively target large cities. Senator Campbell told colleagues the amendment “is obviously specifically meant to target Memphis and Nashville” and urged members to consider constitutional limits on targeted legislation. Senator Yarbrough described the process of multiple last-minute amendments as “farcical,” saying the changes looked like legal maneuvering to evade constitutional constraints.

Senator Oliver pressed the sponsor on whether municipalities could expand board seats beyond current levels; Taylor explained the 3,500 and 130,000 customer thresholds and said counties meeting those thresholds could receive up to two voting members. Senators and other members also sought clarification about advisory, nonvoting board members; Taylor said municipalities could retain nonvoting advisory members but would need to add voting members if statutory thresholds were met.

On annexation, Senator Reeves asked about compromises in the conference report. Taylor said the report “puts a moratorium on municipalities condemning electric cooperatives by annexation for one year beginning 09/01/2026” and that transfers or purchases during that period “may only be accomplished by mutual agreement between the cooperative and the municipality.” Taylor noted the moratorium would not apply to municipalities that completed annexation prior to the effective date.

Senator Hensley asked whether the change would alter current practice; Taylor replied it would prevent forced purchases during the moratorium and said the measure seeks to equalize treatment when utilities or cooperatives buy assets from one another. Senator Johnson, speaking in support, cited constituent outages after a recent ice storm and said the bill would give customers served outside a municipality a clearer path to representation.

The Senate voted to adopt the conference committee report on SB2102; the clerk announced the tally as 25 ayes and 5 nays, and the report was adopted, making it the final action of the Senate on the bill.

What happens next: The adopted conference report modifies governance and representation rules for certain municipal utilities and delays forcible annexation-based transfers of cooperative assets for a one-year window beginning Sept. 1, 2026.