Middle Tennessee Electric came into being during the Great Depression as part of national and state efforts to electrify rural America. What started as a movement of farmers and rural residents to obtain the benefits of electricity became one of the nation’s success stories that continue to transform Middle Tennessee today. Here’s how it happened.
On May 11, 1935, President Franklin D. Roosevelt created the Rural Electrification Administration, thereby providing federal funds for rural electrification. On May 11, 1936, Middle Tennessee Electric Membership Corporation was born after farmers, interest leaders and rural residents dedicated themselves to seeing the "lights come on" across the dark countryside.
Before the establishment of the Tennessee Valley Authority (TVA), most electricity in the Tennessee Valley was generated at the Hales Bar Dam, built and operated by the investor-owned, for-profit Tennessee Electric Power Company (TEPCO). Of course, this private company existed to maximize profits. Therefore, it built lines only into heavily populated areas. The expectation was that a maximum amount of revenue could be derived from minimum investment in lines and facilities. In most cases, people 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. Then, they had to pay the high rates charged by the profit-conscious TEPCO.
Passage of the Tennessee Valley Authority Act in May of 1933 provided a source of cheap electricity. Electric power distribution began to take on a different aspect. Although hydroelectric power generation was originally intended to be no more important than flood control, river navigation or conservation, demand for low-cost electricity soon became TVA’s main responsibility.
At the time, there were only two dams on the Tennessee River, TEPCO's Hales Bar Dam and the government-owned Wilson Dam in Alabama. Wilson Dam, built during World War I, was meant to provide power for the manufacture of munitions. Ownership 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 rural districts getting the first choice. Any surplus generation then could be sold to private power companies.
Across the nation, it became obvious that private power companies were not going to build lines into rural areas. Farmers and rural residents, encouraged by REA and TVA, took on the job of getting power themselves. They would not have any trouble obtaining wholesale electricity from TVA. The challenge, therefore, was how to finance the construction of distribution lines and get the infrastructure built. The rural electrification movement also faced opposition from naysayers, political foes and private power companies like TEPCO. The idea of lighting the countryside was criticized as being unfeasible and uneconomical. Those who desired electricity for the entire nation were undeterred, however. Recognizing the need of the farmers and rural residents, Congress authorized TVA to issue $100 million in bonds to raise money for loans to farmer co-ops for the construction of distribution lines. The first groups in Tennessee to take advantage of these loans were Lincoln County Electric Membership Corporation at Fayetteville and Duck River Electric Membership Corporation at Shelbyville.
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. Meetings were held and visits made to Shelbyville, Fayetteville, and other recently organized groups. TVA was asked to send someone to Murfreesboro to talk to the rural people of the county and explain what steps would be necessary to get power. Contributing their own time, a group canvassed Rutherford County and secured applications from as many farmers as possible. Only about six percent of the farms were electrified and few of the rural homes. Those without power relied on oil lamps and candles for lighting, wood stoves for cooking, and had no effective refrigeration. They carried water from springs, wells, creeks, and most of the farm operations involved hard manual labor. Even so, some rural residents remained skeptical of electrification promises.
The first large meeting about establishing a rural electric utility was held at the Health Department in Murfreesboro. The purpose was to explain the plan, arouse interest, garner support, and convince everyone that rural electrification was practical, despite TEPCO’s negative propaganda. Following this meeting, leaders of the group began to negotiate with TVA for a loan and wholesale power.
Similarly, a group of farmers in Wilson County, led by Homer Hancock, was trying to get TVA approval on five separate projects but had made little progress. TVA advised that neither Rutherford County nor Wilson County was favorable separately, but a combination of the two efforts might prove feasible. Many meetings of the leaders of these two groups were held, with County Agent A.F. Hill of Rutherford County coordinating the work as much as possible. These meetings produced the Stones River Electric Membership Corporation. The new electric cooperative was established on December 18, 1935.
Soon a plan, including the projects in Rutherford and Wilson counties that totaled 254 miles of line, was presented to TVA. It was readily accepted, and TVA agreed to do the construction work on a contract basis.
On May 11, 1936, Middle Tennessee Electric Membership Corporation came into being when the name of Stones River Electric was changed at a meeting held at the News Journal building in 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 Tennessee Secretary of State until February of 1937.
Meanwhile, Congress had seen the need for rural electrification all over the country and passed the Rural Electrification Act, creating the Rural Electrification Administration (REA). 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-interest rate and be paid off over a 25-year period. It was the intent of Congress that these low-cost loans encourage the investor-owned power companies to extend lines into the countryside, but the private utility companies were not interested. REA then turned its energies toward helping the farmer cooperatives.
Middle Tennessee Electric switched its application for a $254,000 loan from TVA to REA. However, TVA proceeded to build distribution lines for MTE on a contract basis. The nearest source of power at that time was Wilson Dam in Alabama. Transmission lines from this dam had already been built as far north as Shelbyville, necessitating the construction of additional transmission lines only from that point.
MTE’s first lines were energized on December 10, 1936, to serve 125 members over 74 miles. The overall project was completed by June of 1937, with a total of 280 miles serving 699 members.
These first lines were built contingent on the farmer or rural household agreeing to use a certain amount of electricity each month. In many cases, electric appliances and powered farm equipment weren’t purchased. The main use was for lighting, thus co-op power revenue fell short. On September 8, 1938, this was changed to guaranteed revenue per mile of line. At the time, it was set at $15 per mile, per month. This was reduced to $12 in 1940. In the meantime, MTE and various agencies and community groups began to heavily promote the labor-saving aspects of electricity on the farm and in the home.
As rural electric cooperatives began to spread over a wider area and connect more customers, TEPCO’s management suddenly realized these member-owned utilities presented a serious threat to the monopoly of power distribution. TEPCO, therefore, began to oppose the electric cooperatives at every turn, even building "spite" lines in an effort to financially cripple and possibly kill the cooperatives. Spite lines, which had the most damaging effect upon the struggling cooperatives, were built by TEPCO alongside the cooperative's lines, aimed at dividing the prospective customers and reducing the number the co-op could connect. This would make it uneconomical to build the lines. It was hoped that the co-ops would eventually go bankrupt due to a lack of customers.
In those days, TEPCO was very aggressive. The controversy between the investor-owned system and the electric cooperatives caused hard feelings, even among the farmers. TEPCO spread propaganda to hurt the co-ops, and it took a number of years to prove those claims were false. The cooperatives eventually gained reputations as competent power distributors dedicated to those they served. This became the foundation on which MTE was built.
REA lent increasing amounts of money to the cooperatives for expansion, and TVA was building more dams and more transmission lines to make cheaper 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 power costs were Chattanooga and Fayetteville, two of the first municipalities to build their own electric systems.
Fighting against the combined forces of the TVA, REA, rural cooperatives and municipalities, TEPCO leaders began to see the writing on the wall. The company was waging a losing battle and finally offered to sell out to the TVA, cooperatives, and municipalities. On May 12, 1939, MTE 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 cooperative’s total miles of line 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. Although 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. Except for fringe areas of five adjoining counties, these four counties constitute the bulk of service area for Middle Tennessee Electric today.
When MTE took over the TEPCO's properties, it closed down the offices that TEPCO maintained in several small towns, but endeavored to keep a location where members formerly served by these offices could pay their bills, Therefore, the cooperative worked out payment acceptance agreements with banks in these various small towns. Such agreements have been maintained to the present.
Prior to the acquisition of the TEPCO properties, Middle Tennessee Electric was meeting obligations and paying the interest on loans from REA, but not making enough to set up a depreciation reserve. This condition changed with income from the TEPCO properties, 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 given to politicians and influential people. When MTE took over, it "toed the mark" on its policy of fair and equal treatment of all members, much to the dismay of the favored few "big shots" to whom the private company catered.
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, MTE directors passed a resolution on May 22, 1939, converting the system into a cooperative and non-profit membership corporation. The articles of conversion were executed on June 3. This action was taken because of various benefits that would accrue to a cooperative organization, particularly exemption from certain tax payments.
On August 11, 1939, W.W. McMasters was employed as a manager. He succeeded W.O. Haggard, who had resigned to take another position. McMaster was the third manager of the cooperative during its brief history, the first being T.E. Steele who left in 1938. McMasters, who was the cooperative's general manager for 31 years, retired in 1970 and was replaced by Fred Key, then assistant manager. Key was replaced by James O. Baker in 1980, upon Key's retirement.
By 1940, the cooperative had grown to about 4,300 members, served by approximately 750 miles of line. A rented office, located at 118 East Main Street in Murfreesboro, housed the corporation. MTE moved there from 125 North Church Street. Anticipating continued rapid growth, the directors decided a larger, more permanent office was necessary. A headquarters was completed in February of 1942 at the corner of West Lytle and North Walnut Streets in Murfreesboro. This was replaced in 1950 with the building at 415 North Maple Street. This office space 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.
In 1971, MTE purchased the City of Franklin’s municipal electric utility, Franklin Power & Light Company. With this addition, MTE’s service territory grew to 33,963 meters on 3,937 miles of line.
Nearly three decades later, MTE began conversations with the City of Lebanon to buy its electric utility. With the addition of Lebanon Electric Department in 2000, MTE’s service territory grew to serve 137,000 meters with more than 7,900 miles of line.
The communities continued to grow, and local offices were bought in Smyrna and Mt. Juliet to accommodate the needs of the membership.
Since our founding in 1936, our members’ needs have continued to evolve. Among these, we have seen calls increase for broadband in rural areas and our communities. Without broadband Internet access, many rural businesses lack the connection and internet speeds to compete in the ever-changing economic landscape.
Cooperatives across Tennessee began investigating the feasibility of providing broadband to their members. Utilizing information from underserved areas, MTE, other electric co-ops, and the Tennessee Electric Cooperative Association (TECA) worked with state legislators to pass the Tennessee Broadband Accessibility Act. This 2017 legislation changed state law to allow electric cooperatives to provide broadband services in their territories.
In 2018, MTE’s Board of Directors approved the purchase of a controlling interest in United Communications (UC) located in Chapel Hill, TN. The partnership with United Communications strategically made sense. As an established local broadband provider with a 70-plus year history in the telecom industry--and proven track record of providing outstanding service to consumers-- UC’s expertise could be combined with MTE’s resources to provide the best broadband solution for members in our service territory.
MTE now serves more than 231,000 members through 12,000-plus miles of electric distribution infrastructure. With more than 415 employees, we work every day to show our commitment to members. As our communities continue to experience explosive growth and evolving expectations, Middle Tennessee Electric is positioned to grow with them and meet our members’ needs.
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