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Municipal utilities warn bill allowing customers to seek alternate ownership could threaten bonds, rates
Summary
A bill that would let cities or counties served by another municipality's electric system seek purchase or redress drew strong opposition from municipal utility associations, which warned of financial and operational risks and unequal treatment of co‑ops.
Chairman Vaughn presented HB 2592 and an amendment to allow political subdivisions that receive electric service from a municipality to evaluate purchase options and seek redress if service is inadequate. Jeremy Elrod, representing the Tennessee Municipal Electric Power Association, told the committee he and member utilities appreciated cooperation with the sponsor but said the bill "makes portions of an electric system available for sale at virtually any time" and would threaten bond ratings, long‑term planning and rates.
Elrod also argued the measure treats municipal utilities and electric cooperatives unequally: municipal utilities are public entities subject to open‑records requirements, whereas co‑ops are private and would not be subject to the same transparency if the bill were applied unevenly. "If legislation is to allow cities and counties to buy their electric system, it should apply equally regardless of whether served by municipal or cooperative," he said.
Proponents said the bill creates a formal path for customers outside municipal corporate boundaries to seek better service and governance; opponents asked for more proportional protections and attention to valuation mechanisms and potential bond covenant effects. The committee adopted the amendment and moved the bill forward.
