Cleveland City Council Approves Allowing Cleveland Utilities To Go Into Broadband Business With New Energy Authority

  • Monday, April 10, 2023

The power company in Cleveland, Tn., is planning to get into the broadband business. Appoval was given on Monday by the Cleveland City Council for the formation of the Cleveland Utilities Authority.

Tim Henderson, president/CEO of Cleveland Utilities, said the move would allow the utility to put in a "Smart Grid" similar to EPB's in five years instead of the current projected 15 years.

The $72 million includes $64 million capital for installing the fiber system and $8 million for three years of operation for the new division.

There initially would be 12 new jobs.

The utility would offer a standard one-gig service and up to 10 gigs.

Mr. Henderson said, "Our fiber service will touch every electric meter we have."

He said the new utility's division would be a stand-alone branch. The utility currently handles electric, water and wastewater.

Mr. Henderson said the planned Internet rates would be lower than those currently quoted by private providers that include Spectrum and AT&T.

He acknowledged that local private firms could "undercut" the Cleveland Utility rates as has happened elsewhere. Officials said the utility would be able to offer much better customer service.

Councilman Ken Webb, who formerly headed Cleveland Utility, said private companies have some fiber but much less-reliable "co ax and copper."

Officials said the new setup would allow the utility to partner with private companies on solar projects.

The initial board for the planned new "Energy Authority" is the same as for the current Cleveland Utilities Board:

Aubrey Ector At large Director June 30, 2025

Joe Cate At large Director June 30, 2026

Eddie Cartwright At large Director June 30, 2024

Debbie Melton At large Director June 30, 2023

David May, Jr. Representative of Cleveland City Council September 2024

Under an amendment, the Authority Board will have seven members, including an additional member of the City Council.

The Cleveland City Council will continue to name the board members.

Councilman Casada said he was getting some kickback on the idea, and he noted that most Cleveland households and businesses can currently get Internet from private firms.

He and Vice Mayor Avery Johnson were opposed on the vote on setting up the authority, but it prevailed 5-2.

A citizen group, the Cleveland TN Patriots, asked for a delay, saying the public has had very little notice of the plan.

The group said a public hearing was held last Wednesday night "when most residents of Bradley County are in church."

They said a vote on the far-reaching project was then set for today.

Members of the group include Dan Rawls, founder of Bradley Constitutionalists; Glenda Pappu, organizer for the Tennessee Neighbors for Liberty; Ted Gleason, treasurer for Advocates for Bradley County; and Angie Kitchen, State Coordinator of Information and Education for Tennessee Republic.

In Chattanooga, EPB has operated a broadband program for a number of years.

The Cleveland City Council approved this resolution:

WHEREAS, the Board of Directors of Cleveland Utilities (“CU”) has determined that CU should provide broadband services under the authority of Tennessee Code Annotated Section 7-52-601, et seq., and otherwise applicable law, subject only to the approval of the City Council of the City of Cleveland, Tennessee (the “City”); and
WHEREAS, in connection with the development of the broadband business plan for CU, the Board of Directors and the management team of CU have evaluated the potential benefits associated with the formation of an energy authority pursuant to the provisions of the Municipal Energy Authority Act, Tennessee Code Annotated Section 7-36-101, et seq. (the “Authority Act”); and
WHEREAS, the Board of Directors has determined that the formation of an energy authority by the City Council will provide the optimal business structure for CU’s existing electric, water, and wastewater operations and for CU’s broadband operations;
and
WHEREAS, the management team of CU has presented a proposed form of the Certificate of Incorporation for Cleveland Utilities Authority, a copy of which is attached as Exhibit A; and
WHEREAS, the Board of Directors recommends the City Council to consider the formation of an Authority.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CLEVELAND duly adopts a resolution by a two-thirds (2/3), or greater vote, and finds and determines that it is wise, expedient, necessary, and advisable that an authority be formed, it shall authorize the City Manager to proceed to form the authority,
and the City Council shall approve the form of the Certificate of Incorporation proposed to be used by the authority; and
BE IT FURTHER RESOLVED, according to the powers of this Act, the Authority in most ways will have the power to Act as an independent local jurisdiction where the City will have to consider how to give the Authority control over the hundreds of millions
of dollars in public assets to the independent authority; and
BE IT FURTHER RESOLVED, that after the approval of this resolution the City Council will have no authority to unilaterally to change the Articles of Incorporation, or ever reverse this decision, and this Authority will act in perpetuity; and

BE IT FURTHER RESOLVED, according to the powers of this Act the Authority Board will have complete control and supervision of any system of the authority and to make all such rules governing the rendering of services; and
BE IT FURTHER RESOLVED, according to the powers of this Act the City Council would not have any approval powers or have any authority over water rates, wastewater rates, broadband rates, electric rates, or the budget of Cleveland Utilities in perpetuity; and
BE IT FURTHER RESOLVED, according to the powers of this Act, upon transfer of an electric, water, and wastewater system from the City to an authority and the assumption or satisfaction of all obligations of the Board, the all jurisdiction and all control of the City over such system must be transferred to the authority, and supervisor board having oversight over such system shall cease to exist.

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