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Cleveland Utilities warns state pause on municipal service expansions could block utilities in newly annexed areas
Summary
Cleveland Utilities leaders told the City Council their FY2027 projections show strong utility revenues but warned recent state legislation imposes a pause on municipal electric (and thus fiber) service into newly annexed areas beginning Sept. 1, prompting legal review and a pledge to lobby legislators to protect city residents’ service access.
Walt Vineyard, executive vice president of Cleveland Utilities, and Marshall Stinnett, the authority’s vice president and chief financial officer, presented the board’s FY2027 budget and told City Council members that recent action in the Tennessee legislature could prevent municipal utilities from serving newly annexed areas.
The utility projected FY2027 revenues of about $128 million for the Electric division, $31.7 million for Water, $24.2 million for Wastewater and $4.3 million for Fiber. Vineyard and Stinnett said the Fiber division has posted positive net income for the last four months, and that combined services lower costs for customers when they are permitted to operate together.
"Any areas that are fully annexed by the city prior to September 1st of this year will still be allowed by, to be served by CU for existing state law," Stinnett said, adding that a conference‑committee compromise created a pause that "takes effect on September 1st and runs through September 2nd of next year." He said that pause prevents municipal utilities from providing electric service — and therefore fiber service, which is tied to electric service — to newly annexed areas and warned the restriction could become permanent.
Mayor Kevin Brooks said the change, made with last‑minute amendments, risks leaving city taxpayers unable to receive city utility services even while paying city taxes. "You could pay taxes and live in the City of Cleveland and not be able to receive benefits or utilities or services by Cleveland Utilities," he said, urging continued legislative engagement.
Stinnett told the council CU is evaluating legal options and is in discussions with neighboring providers and legal counsel. He said the uncertainty increases capital costs for utilities and could raise rates if multi‑service extension is prohibited. City Manager Joe Fivas and CU officials said they intend to press local legislators and evaluate all options — including litigation — as the language and effects are reviewed.
Why it matters: the municipal restriction could slow or halt utility and broadband service to parcels annexed after the pause date, complicating pending annexations and developer plans that expect CU service. At least one developer at the meeting urged completing annexations before Sept. 1 to secure fiber installations tied to electric service.
Next steps: Cleveland Utilities and city staff said they will continue legal review, coordinate with local legislators and bring additional options back to council as the bill’s language and its consequences are clarified.
