The University of Tennessee, Knoxville

Tennessee County Municipal Advisory Service

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Provisions for Electric, Gas & Other Fuel Systems

Reference Number: MTAS-571
Tennessee Code Annotated
Reviewed Date: June 13, 2016
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Energy Production and Landfill Methane
Any municipality is empowered "to construct, own, operate, or maintain – within its corporate limits or within the limits of the county wherein it is located – an existing or planned energy production facility or facilities," including acquiring easements or other appurtenances for transporting or transmitting energy. Such a facility may use "fossil or other fuels" or solid waste. Creating a monopoly by ordinance is specifically authorized, provided the ordinance is first reviewed and approved by the state Department of Environment and Conservation. Annual reports about the monopoly must be made to and reviewed by this department. T.C.A. §§ 7-54-101, et seq.

The Landfill Methane Development Act allows any municipality to construct and operate a facility for the preparation of landfill methane for transportation and as a substitute for natural gas. T.C.A. §§ 65-28-201, et seq.

Averaging Bills
Any utility providing electricity, natural gas, or other fuel to more than 15,000 residential customers must permit bill payment on a monthly averaging basis. Every customer has the option to use such a plan. T.C.A. §§ 65-33-101–106.

Utility Relocation for Highway Construction
Under the common law, utilities using municipal streets may be required to remove or relocate those utilities from those streets at their own expense. With respect to state highways, however, T.C.A. § 54-5-804 authorizes the Department of Transportation, subject to funding, to reimburse public and private utilities the full costs of relocating caused by state road projects.

To qualify, the utility must:

  • Comply with T.C.A. § 54-5-854(b), including preparing and submitting to the department the utility’s relocation plan, its cost estimate, and schedule for completing the relocation within specified allowed times.
  • Enter into a written agreement with the commissioner to include the relocation costs as a part of the department’s highway construction contract, OR enter into an agreement that the utility will remove all facilities that the department wants moved before the department lets the construction contract. The utility will be reimbursed for the cost of the relocation work it has undertaken if the department does not undertake the project within a specified time.

The utility will be responsible for inspecting all phases of the relocation to ensure compliance with all specifications and safety codes.

The department will make no reimbursement until the commissioner is satisfied that the relocation has been performed in accordance with plans and the schedule of calendar days approved by the department.

This section requires the utility to reimburse the department to the extent the department is not compensated from federal funds for the relocation costs.

The utility management review board administers a state-funded loan program to help local governments and certain non-profit businesses relocate utilities in the path of highway construction projects. Such loans are provided for up to 15 years and are interest free for the first five years. The utility management review board requires the borrowing utility to establish user fees sufficient to repay the loan and interest. T.C.A. § 7-82-701, T.C.A. § 67-3-617(j)(1).

Utilities that are relocating because of a state highway project must make monthly progress reports to the Tennessee Department of Transportation (TDOT) and other utility owners. Reports made at pre-construction meetings between the contractor and TDOT will be sufficient to meet this requirement even if the meetings are not held monthly. T.C.A. § 54-5-854 (h) (2).

Energy Acquisition Corporations
The Energy Acquisition Corporation Act, contained in T.C.A. §§ 7-39-101, et seq., authorizes municipalities to establish energy acquisition corporations. These corporations have extraordinarily broad powers to acquire and operate gas- and electricity-producing properties under various arrangements prescribed by the act, including the power to issue bonds for those purposes. Municipalities are authorized to lend money to and enter into other financial arrangements with such corporations. The structure and powers of energy acquisition corporations are prescribed in the act.

T.C.A. § 7-39-302(a)(12) requires engineering services provided by an energy acquisition corporation to be in compliance with T.C.A. § Title 62, Chapter 2.

Electrical Safety Code for Supply Stations
T.C.A. § 68-101-104 adopts the August 1, 2006, edition of the American National Standard Safety Code (for supply stations and lines, overhead and underground electric-supply and communications lines, and work rules governing their construction and operation.)

Oil and Gas Exploration
Municipalities are authorized to undertake oil and gas ventures. Cities may prospect, drill, mine, produce, treat, and transport natural gas, oil, and mineral byproducts. T.C.A. § 6-54-110.

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