History Of MTEMC
On May 11, 1935, President Franklin D. Roosevelt created the Rural Electrification Administration, thereby providing the funds for the electrifying of rural America. One year later, May 11, 1936, The Middle Tennessee Electric Membership Corporation was born. Through the dedication of farmer and interested leaders of the rural areas saw the "lights come on".
In The Beginning
Before the development of the Tennessee Valley Authority, most of the electricity in the Tennessee Valley was generated at the Hales Bar Dam, build and operated by the Tennessee Electric Power Company (TEPCO). This private power company was interested in primarily in making as much profit as possible. Therefore, it built lines only in heavily populated areas so that a maximum amount of income could be derived from a minimum investment in lines and facilities. In most cases, those persons living in sparsely settled areas had to do without electricity because the only way they could get it was to bear the entire cost of building lines themselves and then pay the high rates charged by the profit-conscious Tennessee Electric Power Company.
The passage of the Tennessee Valley Authority Act in May of 1933 provided a source of cheap electricity. Therefore, electric power distribution began to take on a different aspect. Even though hydroelectric power production was originally intended only as a minor phase of the TVA - to be no more important than flood control, river navigation or conservation - the demand for low-cost electricity soon developed it into the main project of the Authority.
At that time there were only two dams on the Tennessee River, TEPCO's Hales Bar Dam and the government-owned Wilson Dam in Alabama. The Wilson Dam, built during World War I was for the manufacturing of munitions, was transferred from the War Department to the Tennessee Valley Authority by the TVA Act. Cooperatives and publicly owned municipal power systems were given preference to the power generated at this dam, with the rural districts getting the first choice. Any surplus could then be sold to private power companies.
Farmers Wanted Electricity
Since it was obvious that the private power companies were not going to build lines into the rural areas, the farmers began to delve into different methods of getting power themselves. They would not have any trouble getting the electricity from TVA, but they were at a loss as to how to finance the construction of distribution lines. They, of course, did not have sufficient money themselves, and no bank was willing to lend a group of farmers a half-million dollars to experiment with an idea already condemned at every turn by the private power companies as being unfeasible and uneconomical. Recognizing the need of the farmers, both here and across the state, Congress authorized TVA to issue $100,000,000 in bonds to raise the money to lend to farmer co-ops for the construction of distribution lines. The first groups to take advantage of these loans were the Lincoln County Electric Membership Corporation at Fayetteville and the Duck River Electric Membership Corporation at Shelbyville.
Farmers Take Action
About the same time, early in 1935, Professor Commodore F. Holt, Dr. J.C. Kelton, County Agent A.F. Hill and others began investigating the possibility of obtaining TVA power in Rutherford County. Meeting were held and visits were made to Shelbyville, Fayetteville, and other recently organized groups. TVA was asked to send someone to Murfreesboro talk to the rural people of the county and explain what steps would be necessary to get TVA power. Contributing their own time, a group canvassed Rutherford County and secured applications from as many farmers as possible. At that time, only about 6 percent of the farms were electrified, and the remaining 94 percent of the farmers without electricity were very skeptical.
At the first meeting, held at the Health Department in Murfreesboro, the main problem was trying to arouse interest and convince the farmers that rural electrification was practical despite TEPCO propaganda to the contrary. Following this meeting, leaders of the group began negotiating with TVA for a loan and for electric power.
At the same time, a group of farmers in Wilson County, led by Homer Hancock, was trying to get TVA approval on five separate projects but were making little progress. TVA advised that neither the Rutherford County nor the Wilson County was favorable separately, but that a combination of the two projects might prove feasible. Many meetings of the leaders of the two groups were held, with County Agents A.F. Hill of Rutherford County coordinating the work as much as possible. It was at these meetings that the conception and formulation of the Stones River Electric Membership Corporation were received on December 18, 1935.
Soon a plan including all the projects in Rutherford and Wilson Counties, totaling 254 miles of line, was presented to TVA, who readily accepted it and agreed to do the construction work on a contract basis.
Middle Tennessee Electric is Born
On May 11, 1936, the Stones River Electric name was changed to The Middle Tennessee Electric Membership Corporation at a meeting held at the News Journal building Murfreesboro. The charter was adopted by K.T. Hutchinson, Dr. S.B. Smith, M.H. Jones, C.F. Holt, S.E. McElroy, J.C. Couch, and E.W. Carmack; however, the charter was not finally obtained from the Secretary of State until February 1937.
Rural Electrification Administration
Meanwhile, Congress has seen the need for rural electrification all over the country and passed the Rural Electrification Act creating the Rural Electrification Administration. The Act was signed into law by President Roosevelt on May 11, 1935. The REA was provided with funds to lend to any group planning to extend electric service to rural areas. The loans were to bear a low rate of interest and be paid off over a 25-year period. It was the intent of Congress that theses low-cost loans should encourage the investor-owned power companies to extend their lines into the countryside, but the investor-owned companies were not interested. REA then turned its energies toward helping the farmer cooperatives.
Since TVA was not primarily interested in financing the construction of lines for co-ops, Middle Tennessee Electric switched its application for a $254,000 loan from TVA to REA. However, TVA proceeded to build to build distribution lines for Middle Tennessee Electric on a contract basis. The nearest source of power at that time was the Wilson Dam in Alabama. Lines from this dam had already been built as far north as Shelbyville, necessitating the constructing of transmission lines only from that point.
MTEMC Turns On The Power
The first lines were energized on December 10, 1936, serving 125 members on 74 miles of line. The project was entirely completed by June 1937, with a total of 280 miles serving 699 members.
These first lines were built on a basis whereby the farmer agreed to use certain electric appliances. In many cases, however, it was that he did not purchase the appliances agreed to, thus causing revenue to fall short. On September 8, 1938, this was changed to guaranteed revenue per mile of line, which was that time set at $15 per mile per month. This was reduced to $12 in 1940.
TEPCO Fights the Co-ops
As the various rural power companies began to spread over a wider area and to connect more customers, the Tennessee Electric Power Company suddenly realized that they presented a serious threat to its monopoly of power distribution in Tennessee and proceeded at once with every known mean, even to the building of "spite" lines, to try to cripple and possibly kill the farmer-owned cooperatives. Spite lines, which had the most damaging effect upon the struggling cooperatives, were lines built by TEPCO alongside the Cooperative's lines, aimed at dividing the prospective customers and reducing the number the Cooperative could connect. This would make it uneconomical to build the lines and it was hoped that the co-ops would eventually go bankrupt due to a lack of customers.
In those darkest days, TEPCO was very antagonistic and the controversy between the investor-owned system and the farmer-owned cooperatives caused many hard feelings, even among the farmers. TEPCO spread a lot of propaganda, and it took a number of years for the cooperatives to prove that their claims were false and that the cooperatives were competent to distribute electric power.
Meanwhile, REA was lending increasing amounts of money to the cooperative for expansion and TVA was building more dams and more transmission lines and making more cheap power available throughout the state. Some cities began to take up the fight on the side of the cooperatives and started building duplicate systems to transmit TVA power in competition with TEPCO. Among the cities anxious to reduce the high power costs charged be TEPCO were Chattanooga and Fayetteville, two of the first municipalities to build their own power systems.
TEPCO Sells Out
Fighting against the combined forces of the TVA, REA, rural cooperatives and municipalities, TEPCO began to see it was waging a losing battle and finally offered to sell out lock, stock, and barrel to the TVA, cooperative and municipalities. On may 12, 1939, MTEMC signed a contract with TEPCO for the purchase of about 300 miles of line and 2,500 new customers for $442,000. This brought the total miles of line of the Cooperative to about 700, with 3,900 consumers. The contract was executed and the check delivered in New York on August 15, 1939, to the investment company which owned and controlled TEPCO.
This purchase included considerable mileage and a number of customers in Williamson and Cannon Counties. Even though the original charter permitted Middle Tennessee Electric to serve all of Middle Tennessee as far east as Knoxville, this was the first property acquired outside Rutherford and Wilson Counties, and except for fringe areas of five adjoining counties, these four counties constitute the service area of Middle Tennessee Electric today.
When the Cooperative took over the Tennessee Electric Power Company's properties, it closed down the offices that TEPCO had maintained in several small towns, but endeavored to keep a local place where members formerly served by these offices could pay their bills, Therefore, the cooperative worked out agreements with the bank in these various small towns to collect for them, and working agreements have been maintained up to the present to take care of these collections.
Up to the acquisitions of the TEPCO properties, Middle Tennessee Electric was meeting obligations and paying the interest on its loans from REA, but was not making enough to setup a depreciation reserve. This condition was changed as soon as the income from the TEPCO properties started to come in and a sound operating margin was realized. The influence of TEPCO did not end with the purchase of its property. TEPCO had practiced discrimination among its customers with special consideration for politicians and influential people. When Middle Tennessee Electric took over it "toed the mark" on its policy of fair and equal treatment of all members, much to the dismay of the favorite few "big shots" catered to by the private company.
Middle Tennessee Electric Becomes A Cooperative
To legally define cooperative electric systems in Tennessee, and to set forth their responsibilities and obligations, the 1939 state legislature passed the Tennessee Cooperative Act. As a result of this new legislation, the Middle Tennessee Electric trustees passed a resolution on May 22, 1939, converting the system into a cooperative, a non-profit membership corporation. The articles of conversion were executed on June 3. This action was taken because of the various benefits that would accrue a cooperative organization, particularly exemption from certain tax payments.
On August 11, of that same year, W.W. McMasters was employed as manager of the Cooperative. He succeeded W.O. Haggard, who had resigned to take another position. Mr. McMaster was the third manager the Cooperative had had in its brief history; the first being T.E. Steele, who left in 1938, and the second, Haggard. McMasters was the Cooperative's General Manager for 31 years. He retired in 1970 and was replaced by Fred Key, then Assistant Manager. Mr. Key was replaced by James O. Baker in 1980, upon Key's retirement.
Permanent Offices Built
By 1940, the Cooperative had grown to about 4,300 members, served by about 750 miles. A rented office, located at 118 East Main Street in Murfreesboro, housed the corporation, having moved there recently from 125 North Church Street. Anticipating a continued rapid growth, the trustees decided a larger, more permanent office was necessary. A headquarters office was thus completed in February of 1942 at the corner of West Lytle and North Walnut Streets in Murfreesboro. This was again replaced in 1950 with the building at 415 North Maple Street. This office space also contained the administrative staff until an Administration office was built in 1981 at 810 Commercial Court, in Murfreesboro.
Rented offices were opened in Lebanon and Franklin in 1945 and in Woodbury in 1949. In 1950 and 1952, new modern buildings were built in Franklin and Lebanon to replace the old rented quarters. In 1964, a new office was constructed in Woodbury.
MTEMC now serves more than 231,000 members through 12,000+ miles of electrical infrastructure and has built area offices in Smyrna and Mt. Juliet. 415+ employees are now part of a team that shows their commitment to the membership everyday. As the number of members continue to rise, MTEMC is prepared to grow and meet the needs of the communities.
Timeline of MTEMC Presidents
Chris Jones – 2013 until current
Frank Jennings – 2002 until 2013
James Baker – 1980 until 2002
Fred Key – 1970 until 1980
W.W. McMasters – 1939 until 1970
W.O. Haggard – 1938 until 1939
T.E. Steele – 1936 until 1938