Can a Tennessee municipal energy authority created under Tenn. Code Ann. § 7-36-101 et seq. provide natural gas or propane distribution outside its electric service area?

Plain-English summary

A Tennessee legislator asked whether a "municipal energy authority" can deliver natural gas or propane outside its electric service area. AG Slatery's answer reframes the question: an energy authority created under the Municipal Energy Authority Act has no power to provide gas or propane in the first place, regardless of geography.

The reasoning is short and statutory. Tenn. Code Ann. § 7-36-107(a) is a closed list. The Act lets an authority created under it provide only four services: electric (subsection (3)), water (subsection (4)), wastewater (subsection (5)), and telecommunications (subsection (6)). Gas service, of any kind, is not on the list. Tennessee follows the rule that public corporations have only the powers their enabling statute gives them, so an authority created under the Act cannot deliver gas at all, inside or outside its electric footprint.

The opinion then carves out an important exception. Some Tennessee energy authorities were not created under the Act. They were chartered through Private Acts of the General Assembly, which are county-specific or city-specific statutes that grant powers tailored to that particular authority. A Private Act can authorize a specific energy authority to provide gas or propane service in a defined geographic area. The opinion does not name any particular Private Act authority; it just flags that the no-gas conclusion applies to authorities created under the general Municipal Energy Authority Act, not to whatever a Private Act may say for a specific authority.

Currency note

This opinion was issued in 2021. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: What services can a Municipal Energy Authority Act authority actually provide?
A: Per Tenn. Code Ann. § 7-36-107(a)(3)-(6): electric, water, wastewater, and telecommunications. The Act does not authorize natural gas, propane, or other fuel-distribution services.

Q: Why does the answer say "inside or outside its electric footprint"?
A: Because the question asked specifically about service outside the electric area. The AG explained that the territorial question is moot: the Act does not authorize gas service at all, so there is no place inside or outside the footprint where the authority can provide it.

Q: Are there any Tennessee energy authorities that do provide gas?
A: Yes, but those are typically authorities chartered by Private Act. Private Acts can grant powers different from the general Act's defaults. The opinion does not name them but expressly notes the possibility.

Q: Does this opinion apply to utility districts or rural cooperative gas providers?
A: No. Those entities operate under different statutory regimes (utility districts are under Title 7, Chapter 82, for example). This opinion is limited to authorities created under Tenn. Code Ann. § 7-36-101 et seq.

Q: Can a Municipal Energy Authority Act authority partner with a separate gas company to deliver gas?
A: The opinion does not analyze partnerships, joint ventures, or affiliate structures. Ask counsel separately whether a partnership structure that involves a non-authority gas provider keeps gas-service activities outside the authority's powers, or whether the authority would still be acting outside its statutory scope.

Q: How does this relate to the earlier Op. 21-06?
A: Op. 21-06 (May 10, 2021) addressed the general geographic limits on services an Act-authority can provide. Op. 21-18 builds on that to answer the gas-specific version of the question. The earlier opinion's geographic limits do not need to be applied here because the threshold question (is gas service authorized at all) is no.

Background and statutory framework

The Municipal Energy Authority Act, Tenn. Code Ann. § 7-36-101 et seq., authorizes Tennessee municipalities to create energy authorities that own and operate utility systems. Section 7-36-107(a) lists the services those authorities can provide, and the list is exhaustive. Subsections (3) through (6) cover electric, water, wastewater, and telecommunications. Other Title 7 chapters cover gas service through different vehicles, including utility districts under Chapter 82 and gas authorities under Chapter 39, but those are separate creations with their own enabling statutes and rules.

Tennessee public-corporation law is strict about the corollary: a public entity has the powers its enabling statute gives, and no others. The opinion repeats that principle implicitly when it concludes that an Act-created authority "is not authorized" to provide gas service. The same conclusion would follow for any other service not on the § 7-36-107(a) list.

The carve-out for Private Acts reflects the constitutional and historical role of Private Acts in Tennessee local government law. The General Assembly has used Private Acts for decades to charter or modify county-specific and city-specific entities. Where a Private Act grants gas-distribution powers to a particular energy authority, that authority operates under those powers regardless of what the general Act says.

Citations

• Tenn. Code Ann. § 7-36-101 et seq. (Municipal Energy Authority Act)
• Tenn. Code Ann. § 7-36-107(a)(3)-(6) (services authorized: electric, water, wastewater, telecommunications)
• Tenn. Att'y Gen. Op. No. 21-06 (May 10, 2021) (geographic limits on services under the Act)

Subject

Territorial Limits on the Provision of Natural Gas and Propane by an Energy Authority

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2021/op21-18.pdf

Original opinion text

Territorial Limits on the Provision of Natural Gas and Propane by an Energy Authority

QUESTION
Is an energy authority allowed by state law to provide natural gas and propane distribution services outside its electric footprint?

OPINION
An energy authority created under the Municipal Energy Authority Act, Tenn. Code Ann. § 7-36-101 et seq., is not authorized by the Act to provide natural gas or propane distribution services outside its electric footprint.

ANALYSIS
The Municipal Energy Authority Act, Tenn. Code Ann. § 7-36-101 et seq., does not authorize an energy authority created under the Act to provide any utility service other than electric, water, wastewater, and telecommunications services as specified in Tenn. Code Ann. § 7-36-107(a)(3)-(6). And an energy authority created under the Act may provide those services only within certain geographical limits. See Tenn. Att'y Gen. Op. No. 21-06 (May 10, 2021).

Since neither natural gas service nor propane distribution service is among the utility services that an energy authority created under the Act is authorized to provide, an energy authority created under the Act is not authorized to provide any natural gas or propane distribution services either inside or outside its electric footprint. We note, however, that energy authorities created by a private act of the General Assembly, i.e., not created under the Municipal Energy Authority Act, may be authorized by that private act to provide natural gas or propane distribution services in geographic areas as specified in the private act.

HERBERT H. SLATERY III
Attorney General and Reporter

ANDRÉE SOPHIA BLUMSTEIN
Solicitor General

JONATHAN N. WIKE
Senior Assistant Attorney General

Requested by:
The Honorable Chris Todd
State Representative
425 Rep. John N. Lewis Way
Suite 608 Cordell Hull Bldg.
Nashville, TN 37243