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Regulation of Franchises

Reference Number: MTAS-1477
Reviewed Date: 04/11/2023

T.C.A. Title 65, particularly Chapters 4 and 5, give the Tennessee Public Utility Commission extensive authority to regulate privately owed public utilities, and limited authority to regulate municipally owned public utilities. Tennessee municipal utilities are expressly excluded from the definition of "public utilities" for those purposes in T.C.A. § 65-4-101(a)(2). But the Tennessee Public Utility Commission's regulation of municipal utilities comes through its right to regulate the relationship between public utilities and municipalities.

Franchise payments by a public utility for the use of municipal streets made after February 24, 1961, are, insofar as practicable, to be billed pro rata to the public utility's customers. T.C.A. § 65-4-105(e).

Franchises granted to any public utility by the state or any political subdivision must have the approval of the Tennessee Public Utility Commission, which must hold a hearing to determine whether the franchise is necessary for the public convenience. T.C.A. § 65-4-107. T.C.A. § 65-4-201 prohibits a public utility from extending services to a municipality already being served by another utility unless it obtains a certificate of convenience.

A public utility can appeal to the Tennessee Public Utility Commission any order or regulation made by a municipality, and the Tennessee Public Utility Commission can resolve such an appeal. T.C.A. § 65-4-108.

Administrative changes made to this chapter on April 27, 2018 pursuant to Public Chapter 94 of 2017; “Tennessee Regulatory Authority” references were changed to “Tennessee Public Utility Commission,” “Authority” references were changed to “Commission,” “Authority Director” references were changed to “Commissioner,” and “Chief” references were changed to “Director.”