Powerful combination: Murfreesboro combines with Middle Tennessee Electric Coop

High-voltage power lines. Electricity distribution station. high voltage electric transmission tower. Distribution electric substation with power lines and transformers - stock photo power tile utility tile power line tile / Getty Images
High-voltage power lines. Electricity distribution station. high voltage electric transmission tower. Distribution electric substation with power lines and transformers - stock photo power tile utility tile power line tile / Getty Images

In the biggest acquisition ever by a power cooperative of a municipally owned utility, Middle Tennessee Electric Membership Coop will take over Murfreesboro's municipal electric system to create one of the biggest distributors of power generated by the Tennessee Valley Authority.

TVA approved the proposed merger between the two Murfreesboro-based power utilities, which is expected to become effective in July. Under the agreement already approved by the boards for both utilities, Middle Tennessee Electric will pay $302 million over the next 15 years to the city of Murfreesboro to acquire the Murfreesboro Electric Department and its 67,000 customers.

"This represents the coming together of two excellent electric utilities that have coexisted very well in Murfreesboro for the past 80 years," Chris Jones, MTE's president and CEO, said in an announced of the merger Tuesday. "We're confident the result will be an even stronger entity with increased effectiveness for strengthening our mission of providing safe, reliable and low-cost services to all customers."

The combined utility will serve more than 300,000 customers and collect nearly $800 million a year in revenues.

Murfreesboro Mayor Shane McFarland, a proponent of the sale of the city-owned utility, said Middle Tennessee Electric can offer power at competitive rates and the city can reap extra funds for other municipal operations.

"Middle Tennessee Electric is an exceptional organization with incredibly strong leadership," McFarland said in a statement Tuesday. "The future benefits of the combined electric system to the ratepayers and the citizens of Murfreesboro are tremendous."

A similar purchase plan proposed four years ago was scrapped by Middle Tennessee Electric when the proposed valuation of the city utility appeared too high. Steve Sax, the former general manager for the Murfreesboro Electric Department, voiced surprise and skepticism at the time about any merger.

"MED (Murfreesboro Electric Department) never expected to be the subject of a buyout attempt," Sax said in a white paper written about the earlier merger talks. ""MED's management and board were never consulted leading up to the signing of the memorandum."

The Murfreesboro Electric Department Power Board ultimately dismissed Sax after he gave out merit raises without the proper consent of his board.

Merger talks were renewed in late 2018 and last year included a series of City Council workshops and listening sessions, meetings with employees and other stakeholders, a citywide open house, and a series of council votes ending in approval by the city in January of this year.

TVA, which both supplies the power and regulates activities of the 154 local power companies that distribute its electricity, had to approve the merger and find that it would not harm ratepayers for either utility.

"The review concluded that this transaction is in the best interest of the affected ratepayers, and upholds our mission to serve the people of the Valley," said Dan Pratt, TVA vice president of customer delivery. "It aligns with the values and principles of the Valley Public Power Model and reinforces our primary regulatory role in protecting Valley ratepayers."

Founded in 1936, Middle Tennessee Electric Membership Corporation is the largest electric co-op in TVA's 7-state region and and among the five largest in the U.S., serving more than 236,000 customers in 11 Middle Tennessee counties, primarily Rutherford, Cannon, Williamson, and Wilson counties. MTE employs 420 people in six local offices, including its Murfreesboro corporate headquarters, and generated $619 million in revenues last year.

The Murfreesboro Electric Department has served the city and the surrounding area since 1939, serving about 67,000 customers with 90 employees. The city utility generated $175 million in revenues last year.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340

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