TMEPA Legislative Update - April 2016

At the time of this publication, the Tennessee General Assembly should be just about done with its business for the year. The $34.8 billion state budget passed last week without much hassle, probably due to a large surplus that allowed legislators to allocate new money to areas such as education and transportation. Because municipal utilities including electric systems are self sufficient, the state budget rarely has anything in it that could affect the state’s public utilities. Nearly every issue before the legislature has been resolved for good or bad, with some of them needing just the final approval of the full House or Senate after getting worked out among the parties in committee. Below are some of the lingering issues that have been resolved in the past month since our last Legislative Update. Next month we’ll update you on every bill or issue affecting municipal electric systems in this year’s legislative session. Until then, here’s the latest.

After another year fighting to expand broadband, it appears getting better access to more Tennesseans will
have to wait at least another year. All broadband expansion bills (HB1333 and HB2408) were pulled from committee calendars in the House and Senate last month after it was clear they did not have the votes for passage. The lack of votes was illustrated when Rep. Kevin Brooks attempted to amend a caption bill (HB2133) to allow for EPB of Chattanooga to conduct a demonstration expansion project to go along with the studies being conducted by the Tennessee Department of Economic and Community Development and TACIR. The project would have allowed EPB to serve the rest of Hamilton County and into Bradley County. The amendment failed 3-5, with one committee member absent that likely would have voted "no" as well. While no bill is going forward this year, the chairman of the subcommittee, Rep. Art Swann, made the announcement that all broadband bills would be placed into a summer study. Several legislators both publicly and privately have committed this is the last year they would oppose any expansion legislation, and that next year they would support a bill of some kind. This is encouraging, however promises of "next year" have been heard for several years. This year was perhaps the most promising so far, particularly with Rep. Swann’s hard work of trying to find a solution to help rural areas. Also, the development of legislators asking for the electric cooperatives to become broadband providers has another aspect to the fight to get more broadband service to more Tennesseans, especially in rural areas where there are the most unserved and underserved. We’ll keep you updated on how the studies progress, which are what several legislators say was the reason for the voting against any expansion legislation this year. The TACIR broadband study is set to be completed in January 2017, and the Department of Economic and Community Development is due in June 2016. 

This year TMEPA sought passage of legislation (HB1766) to clarify the statute that requires a referendum before a city can dispose of its electric system, so the language matches the clear intent of the statute. The statute insures the process of selling or disposing of an electric system is an open one, with the city’s residents having the final say over whether to sell what is often times a city’s largest asset. Unfortunately, due to opposition from electric cooperatives and a key legislator, the bill will not be moving forward this session. Nearly all legislators expressed support of the legislation when we discussed it with them, however the opposition was too much to overcome. Due to this bill, legislators now know our dedication to public power and doing what is in the best interest of our ratepayers.

TMEPA is pleased the bill that would have required seats be added to the boards of municipal electric systems that serve more than one county is not going forward this year. SB1602 required the governing body of a city operating a municipal electric system to create a new position on the supervisory board for every county served by the utility. This would have affected many of the systems that offer electric service in multiple counties, resulting in a total of at least 79 new board members being added to systems across the state. The Municipal Electric Plant Act already requires two additional positions on a board to represent a county whose residents represent more than sixty percent (60%) of the utility's customers. We are pleased the legislation will not be going forward.

With the increasing use of drones for personal and business use, state law is trying to keep up. SB2106 would create the offense of using a drone to fly within 250 feet of a critical infrastructure facility for the purpose of conducting surveillance, gathering information about the facility or electronically recording critical infrastructure data. The final version of the bill that passed the Senate and House contained language that includes in the definition of critical infrastructure "an electrical power generation system, electrical transmission system, either as a whole system or any individual component of the system, or electrical distribution substation."

Legislation (SB2430) has passed the House and Senate to allow Tennessee’s home rule cities to convert their electric system to an energy authority. Other cities are able to have the legislature pass a private act authorizing such a shift, but home rule cities are not subject to private acts. The bill still follows a nearly similar process as the private acts have called for in the past. A private act (HB2633) also passed the legislature that would allow Tullahoma Utilities Board it to become an energy authority.

Every local governmental entity will be required to establish a written public records policy, according to legislation (HB2082) that has now passed the House and Senate. The entity would be able to use a model public records policy, which the bill requires the Comptroller’s Office of Open Records Counsel to develop. The bill also revises requirements for protecting personally identifying information in records held by governmental entities. The governor has signed the bill.

A bill that garnered the attention this year of every city (and therefore every legislator) dealt with annexation. Last year the Senate passed legislation that added to the options for areas of municipalities to de-annex. This year, the House passed a version of the legislation (HB779) that would allow a referendum in an area that was annexed by the city if 10% of the registered voters in the area sign a petition. The House passed the bill so that it only applied to five cities: Monteagle, Kingsport, Chattanooga, Knoxville, and Memphis. When the bill returned to the Senate several amendments filed on it, including one amendment filed at the request of TMEPA and other municipal utilities that clarified municipal utility systems could still offer their services in the de-annexed areas. Because of the many amendments, and the opposition of several senators to the House version that only applied to a select number of cities, the bill was re-referred to the Senate State and Local Government Committee. During several meetings over two weeks, mayors from Memphis, Chattanooga and Knoxville spoke in opposition of the bill. Sen. Watson, the Senate sponsor, agreed to language requested by TMEPA and several municipal utilities that would clarify de-annexation would not "require a municipal utility to cease providing electrical service, sanitary sewer service, other utility services, or street lighting in the territory" being de-annexed. During committee discussion as they were amending the bill, in a surprising move the Senate State and Local Government Committee on Wednesday voted to send the bill to summer study, a tactic used many times each legislative session. With this legislation, we’ll have to see if the tactic was used to kill the bill, or if the committee will make a genuine effort to examine this complicated issue.

A bill that would have addressed local governments writing off uncollectible debts will not be going forward this year. HB2461 requires that accounts receivable owed to governmental entities that remain unpaid and owing for at least 15 years must be deemed uncollectible and written off. The bill also requires the governmental claimant to provide written notice to the debtor that the outstanding payment is discharged and not required within 30 days of an account receivable being deemed uncollectible. TMEPA worked with both House and Senate sponsors so that both writing off debt and providing notice when it’s written off were optional. The bill ended up not going forward due to a legal technicality with the way the bill was drafted, but the sponsor will be working on the bill over the summer with a likely return next year.