July 30, 2007
Re: Questions regarding utility district operations
Dear City Manager,
You have asked if the utility district board is exempt from municipal planning
commission regulations and whether or not their rates are regulated by the Tennessee Regulatory
Agency. The answer to the first question is “yes,” the utility is essentially exempt from
municipal planning commission regulations. The answer to your second question is “no,” the
utility is not subject to regulations adopted and enforced by the Tennessee Regulatory Agency,
however, there are means by which customers may take action to dispute the rates and actions of
the utility.
With regard to municipal planning commission regulations, T.C.A. '13-4-104 provides
that the governing body of the municipality may overrule the planning commission’s disapproval
of a project, but if it is a project proposed by another government, such as a county or utility not
controlled by the city, the city governing body does not have such control:
...if the public way, ground, place, space, building, structure or utility be one the
authorization or financing of which does not, under the law governing the same, fall
within the province of such legislative body, then the submission to the planning
commission shall be by the state, county, district, municipal or other board or official
having such jurisdiction, and the planning commission’s disapproval may be overruled by
such board by a majority vote of its membership, or by such official.
Essentially, the utility district’s board or official may simply overrule the planning
commission’s disapproval of their plans. While not an outright exemption from planning
commission regulations, the impact of this statute is just that - utility districts, state and federal
projects do not have to have approval of planning commissions. Some utility districts do submit
plans for lines, substations and other projects to municipal planning commissions, which
basically just serve as notice. Those planning commissions, however, do not have the ability to
stop the utility districts from going forward with such plans. As the language above indicates,
their disapproval may simply be overruled by the district itself.
The Tennessee Regulatory Agency does not have authority over municipal utility
districts. T.C.A. '7-34-117 provides an exemption from regulation by the agency to
municipalities. Furthermore, T.C.A. '7-34-106 provides that municipal utilities do not have to
comply with public necessity or certificates of necessity required of other utilities by the TRA.
However, there is a procedure for citizens to complain about the rates set by municipal
utilities. Our state laws require that utility district boards have rules and regulations for handling
complaints about their rates and services. Enclosed in this letter is a copy of correspondence I
sent to other cities in March of this year. The March 7 letter states the legal requirements applied
to utility districts such as yours, and further outlines the process for filing and pursuing
complaints. The Utility Management Review Board has jurisdiction over appeals from the
process, but this state agency can only be involved after the procedure is followed for filing
complaints with the utility board. If citizens have complaints about the utility’s services and/or
rates, they should follow this process and take their complaints before the state Utility
Management Review Board if the utility does not handle their complaints to their satisfaction.
This is the only method provided by our laws for such complaints against a public utility.
I hope this information is helpful. Thank you for consulting with MTAS.
Sincerely,
Melissa A. Ashburn
Legal Consultant