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More than 180 directors and employees from Tennessee’s electric cooperatives were in Nashville April 1 and 2 for the 2013 Tennessee Electric Cooperative Association Legislative Conference. Attendees met with their legislators on Capitol Hill to help them better understand electric cooperatives and the issues that impact them.

U.S. Rep. Marsha Blackburn also addressed the group, discussing in detail how the Environmental Protection Agency (EPA) is overstepping its boundaries and stifling job creation. “The EPA audits businesses looking for ways to fine them,” said Blackburn. “Their attitude is not helpful, and that is not what the Federal government is supposed to do.”

Tennessee’s electric cooperatives maintain an active presence in Nashville and Washington, D.C., to be certain that the interests of co-op members are protected. “Electric cooperatives are not-for-profit, member-owned and -regulated and accountable to their communities. These are important distinctions that legislators must understand,” says David Callis, general manager of the Tennessee Electric Cooperative Association. “The decisions made by legislators can have enormous effects on our members’ electric bills, so our job is to inform and educate them on the impacts of proposed legislation.”

Most issues affecting co-ops this year revolve around local control. “We believe that our members are best served when local decisions are made by local board members elected to run the cooperative,” says Mike Knotts, director of government affairs with TECA. “We are concerned when legislation limits a board’s ability to act in the best interests of its members.”

“Educated and informed legislators are a key component of low-cost, reliable power in Tennessee,” says Knotts. “Co-op members make a powerful impression when they come to meet with their legislators.”

More than 90 legislative visits were made during the conference, and 63 house and senate members attended the co-ops’ legislative reception.

The Tennessee Electric Cooperative Association and the electric cooperatives of Tennessee oppose the cable lobby’s Freedom to Connect Act and support the Watson/Matlock bill (HB 1111/SB 1222), a true compromise and attempt to end ongoing legislative disputes.

 

The Freedom to Connect Act (HB 567/SB 1049) will hurt rural Tennesseans

The primary purpose of the Freedom to Connect Act is to lower the pole attachment cost to cable companies, increasing their net profit and value to shareholders. This bill will take millions of dollars each year from the pockets of rural Tennesseans and give it to out-of-state corporations.

The Freedom to Connect Act

  • deletes an existing law requiring cable companies to seek permission to use an electric utility’s property
  • takes the authority over a cooperative’s private property away from locally elected boards and gives it to an Administrative Law Judge (ALJ) with limited understanding of the cooperative’s business, finances or membership
  • specifically instructs the ALJs to consider the $7 Federal Communications Commission rate established in 1978, but it does not require any other rate formulation to be considered

Passage of the Freedom to Connect Act would result in increased electric bills across Tennessee.

Tennessee’s electric cooperatives are not-for-profit, member-owned, private utilities. Pole attachment rates in Tennessee are set by local boards and are based on actual costs. Rates vary from co-op to co-op because they are set to recover the actual costs incurred, and the cost structure of each utility is different, with varying costs of capital, labor and materials.

The FCC rate was established to help cable companies grow, and it does not reflect actual costs. The rate applies only to for-profit utilities; not-for-profit cooperatives have always been exempt. The Tennessee Valley Authority regulates many aspects of electric co-ops at the federal level, including pole attachment rates.

The average cost of a pole attachment in Tennessee is $14 per pole annually.

Lower pole attachment rates found in other states are legally mandated and do not reflect the actual cost of the attachment. These rates are subsidized by electric ratepayers.

Cooperatives in Tennessee have more than 1 million telecom and cable attachments on their poles. Forcing electric utilities to use the subsidized FCC rate for all attachments would cost electric cooperative members $13 million annually.

Electric cooperatives support a true compromise, reflected in the Watson/Matlock bill (HB 1111/SB 1222)

The Watson/Matlock bill is based on good-faith efforts to compromise with cable in the past. The bill preserves a cooperative’s authority over its own property while giving attachers a clearly defined dispute resolution process and protection against legitimate abuse.

The compromise seeks to

  • develop better working relationships between pole owners and attachers and establish a set of best practices
  • provide a clear path for dispute resolution while respecting the important role of local control and local decision making
  • establish a first-ever avenue for judicial review of disputes
  • provide for the involvement of an Administrative Law Judge early in the process to make a determination of the maximum appropriate cost-based rate applicable to each utility. The local board’s final decision is then appealable to Chancery Court under the Administrative Procedures Act. A dispute resolution process has been previously unavailable.

Tennessee’s electric cooperatives support our rural communities, and we believe that broadband expansion is important to the economic prosperity of rural Tennessee.

Pole attachment rates do not stand in the way of broadband expansion. Legislation passed in 2008 requires Tennessee utilities to provide a significantly reduced attachment rate to providers expanding broadband into previously unserved areas. This rate has never been requested or utilized by a cable company in Tennessee. The rate is half of the 2008 rate, which averages less than $7 per pole, per year.

We are active in economic development, working with TVA, the Department of Economic and Community Development, regional economic development groups and local chambers of commerce to recruit jobs and investment to our communities.

Just as electricity did in the 1930s, we believe that broadband infrastructure will make rural America competitive and relevant in a global economy. Tennessee co-ops have provided mapping data and other resources to accelerate the expansion of broadband in Tennessee.

The Tennessee Electric Cooperative Association is a trade association representing the interests of Tennessee’s 23 rural and suburban, not-for-profit electric distribution cooperatives and the 1.1 million members they serve.

On May 1, the 107th Tennessee General Assembly adjourned its second session and brought to a close legislative business for the year – it’s earliest finish since 1998. The TECA Bill Tracker is finalized, and available by clicking the links below.

A $31.5 B budget for the state government was approved, which is a a $400 M reduction over last year’s $31.9 B budget. Even with the reductions, state employees will receive a two-and-a-half percent increase in their base pay and there will be a 0.25% reduction in the state sales tax levied on food. The state’s inheritance tax will phased out over a six-year period, and the gift tax will be eliminated entirely. A great deal of attention was paid to Governor Haslam’s proposal to modernize the State’s employment policies, also known as civil service. Ultimately, after some contention over the issue, the Tennessee State Employee Association supported the measure and it passed by large, bi-partisan majorities.

Another successful initiative of the Governor was to alter the make-up of the Tennessee Regulatory Authority from four full-time directors to a traditional five-member Board of Directors who would serve part-time.  A new Executive Director, initially appointed by the Governor and subsequently appointed by the Board of Directors, will manage the day to day operations of the TRA.  The final version of the bill contains a requirement that TRA submit an annual report to the Governor comparing the rates of regulated and non-regulated utilities (including electric utilities).  While the comparison of electric rates is not germane to TRA, as they do not regulate cooperative or municipally-owned utilities, TECA staff will pay close attention to these reports to ensure accuracy and relevance of any information included.

Upon the conclusion of the session, all bills not passed by both chamber and signed by the Governor are now officially “dead.”  When newly elected Legislators return to Nashville in January 2013, all bills and resolutions must be filed anew.

Final TECA Bill Summary

Electric cooperative interests were well protected throughout the session, as the entirety of TECA’s legislative agenda was resolved satisfactorily.  The bills of greatest importance included:

Trespasser Liability (Sen. Brian Kelsey/Rep. Vance Dennis)
By codifying the common law that a property owner owes no duty of care to a trespasser, electric cooperatives will see an increase in its protection against liability from copper thieves and other criminal activities on cooperative property.

Board Meeting Access (Sen. Delores Gresham/Rep. Vance Dennis) – The general subcommittee of the House State and Local Government committee unanimously agreed with our position that access to electric cooperative board meetings is best determined by electric cooperative members, rather than the legislature.

Pole Attachments (Sen. Brian Kelsey and Lt. Gov. Ron Ramsey/Rep. Debra Maggart) – This perennial issue saw much more legislative attention, due to the co-sponsorship of Lt. Gov. Ramsey and several committee hearings that included testimony on the bill.  Ultimately, electric cooperative member-owners owe a debt of gratitude to the Lieutenant Governor and the members of the Senate Commerce Committee who failed to make a motion that would bring the bill to a vote. This is a very unusual event in the senate, and sent a strong message to the cable industry about the depth of support enjoyed by electric cooperatives in Tennessee.