The Murfreesboro Electric Department's sale to a larger utility won approval from the Tennessee Valley Authority, a press release announced Tuesday.
The Murfreesboro City Council in a 6-1 vote agreed to sell MED in January for a base price of $245 million to the larger Middle Tennessee Electric Membership Corporation.
"I think it will make a lot of the MED employees happy who had requested the transaction take place, and it will be beneficial to rate payers in the future not having to pay for duplication of services," Councilman Eddie Smotherman said.
Fellow Councilman Ricky Martin was the lone opponent of the transaction because he said this one-time sale can't solve the long-term financial issues of the city.
MED has 67,000 customers and provides power for about 136,000 residents. The larger utility is based in Murfreesboro, and serves 240-plus customers and over 500,000 residents in Middle Tennessee. The sale expands on a larger utility mostly in Rutherford, Williamson, Wilson and Cannon counties.
MTE president praises purchase
Chris Jones, Middle Tennessee Electric's president and CEO, offered the following comment in the press release.
“This represents the coming together of two excellent electric utilities that have coexisted very well in Murfreesboro for the past 80 years," Jones said. "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."
Jones also thanked city officials in their support for the sale.
"And we thank TVA for its very thorough examination and analysis of this opportunity," Jones said.
While MTE and the city will work to sign closing documents in the coming days, TVA’s regulatory review and approval was the last step needed to finalize the merger, according to the press release.
The regulatory review process was required to determine if the transaction created value for all ratepayers, since TVA supplies wholesale electric power to both not-for-profit distributors and has oversight over such transactions, Jones said.
TVA expects sale to benefit customers
TVA Vice President Dan Pratt agreed, according to the press release.
“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, who oversees customer delivery for TVA. “It aligns with the values and principles of the Valley Public Power Model and reinforces our primary Regulatory role in protecting Valley ratepayers.”
As previously reported, MTE will pay $245 million for MED. With interest, the total payment will be $302 million over 15 years.
“MTE is an exceptional organization with incredibly strong leadership," Murfreesboro Mayor Shane McFarland said in the press release. "The future benefits of the combined electric system to the ratepayers and the citizens of Murfreesboro are tremendous."
On again, off again talks of a possible merger were renewed in late 2018 when the city approached MTE about the possibility.
Throughout last year, efforts to move toward that end culminated in the fall with 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. Following unanimous approval from the MTE board, the paperwork for the TVA regulatory review was sent, also in January.
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Reach Scott Broden at sbroden@dnj.com or 615-278-5158, and on Twitter @ScottBroden.
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