Merger could bring close electric systems closer

Nathan Baker • Updated Nov 18, 2017 at 11:22 PM

Editor’s note: This article was changed from the original to correct the monthly difference between BrightRidge’s and Elizabethton Electric Department’s bills in November 2017.

Leaders in Johnson City and Elizabethton are considering merging the two public utilities serving the communities, a move they say could help stabilize their core services in an unstable energy market.

Jeff Dykes, CEO of BrightRidge, which until last month was known as the Johnson City Power Board, said merging BrightRidge and the Elizabethton Electric Department was a natural thing to study.

The two utilities serve neighboring communities and face similar challenges from the Tennessee Valley Authority’s changing electric rate structure and stagnant revenues thanks to increasing energy efficiency and new power generation technology available to home users.

“This could be an opportunity for two utilities that have a long history with one another,” Dykes said. “It’s natural fit between two communities and systems, and with the changes in our industry, it’s the proper time to be looking at something like this.”

In 2012, facing a rate hike for power customers, the Elizabethton City Council considered selling the municipal system to the Johnson City Power Board.

The deal didn’t materialize, but Dykes said conversations showed the two municipalities were open to the idea of joining the utilities.

Should they join, which would require a public referendum of city voters, a majority vote of the Elizabethton City Council and an affirming vote by BrightRidge’s board of directors, Dykes said efficiencies would likely be found through the shared administration and resources.

He said substations along the border of Washington and Carter counties could be used to spread out the load, especially in areas where customer demand is growing.

Currently, Elizabethton charges residential customers about two tenths of a cent more per kilowatt-hour of electricity than BrightRidge, but BrightRidge’s fixed base rate is about $7 more. For a house using 1,200 kilowatt-hours in a month, an approximate average for the area, the BrightRidge bill is $5 more.

Rates are one of the many factors the commissioned study will consider, Dykes said. Should it be needed, the utilities could operate separately, but under the same umbrella, until rates can be brought near enough to parity to completely merge the systems.

Dykes expects the study, the costs of which will be shared by BrightRidge and Elizabethton, to take a year while engineers and financial consultants dig into both companies’ records.

If the study shows a merger is feasible, Elizabethton would then need to schedule and hold a public referendum.

Last year, the Johnson City Power Board separated from the city and became an energy authority. Its directors cited a need to be able to more nimbly respond to changes in the power industry and increased potential for public-private partnerships as reasons for the separation.

Dykes said becoming an authority likely made it easier for BrightRidge to merge with Elizabethton.

Though other neighboring utilities are facing the same industry challenges, Dykes said BrightRidge is not considering any other mergers.

The close relationship between the two utilities was the major factor that put the merger discussions on the table, he said.

If the two systems merge, it will be a rejoining of sorts of parts of an electric utility split apart in 1945.

Before then, one electric system, East Tennessee Light and Power, a holding company of Cities Services Co. — later Citgo — provided power to Carter and Johnson counties, Jonesborough, Greeneville, Johnson City, Erwin and parts of North Carolina.

When the federal government introduced antitrust regulations for the utility industry to encourage large national companies to break up their non-contiguous holdings, TVA purchased many of the electric systems in the valley and sold them to municipalities to operate as public providers.

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