The Tennessee attorney general says the state’s rural electric cooperatives are not entitled to a tax break on new investments.
In an opinion finalized Wednesday, the attorney general says cooperatives are neither government agencies nor charities. As a result, the state constitution doesn’t let them get a tax break on their property taxes.
The break has been on the books since the late 1980s. It entitles them to an exemption from local property taxes for the first four years after building a new facility or plant.
But most co-ops discovered it only recently, says David Callis, executive director of the Tennessee Electric Cooperative Association. They had been working with state officials to figure out how to begin taking advantage of the tax break.
“This attorney general’s opinion comes completely out of the blue,” he says. “We’re still discussing our next steps.”
Callis says co-ops don’t intend to ask governments to pay them back for the years in which they overpaid. But now that they know about it, Callis adds, they have a fiduciary duty to their customers to claim a break that could lower their power bills.
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