Board orders South Fork Utility District to begin merger negotiations

NASHVILLE, Tenn. (WJHL) — A state board ruled on Thursday that the South Fork Utility District must begin negotiations to merge with another utility district following multiple allegations of mishandled money by former leadership.

The Tennessee Board of Utility Regulation (TBOUR) met in Nashville to consider ordering the merger of the South Fork Utility District (SFUD) and Bristol Bluff City Utility District.

The board voted unanimously to order the two utility districts to begin negotiations for a merger.

“We just feel that this is in the best interest of the community because, again, we’re seeking stabilization of rates,” TBOUR Assistant Director Ross Colona said. “We’re seeking stabilization of management. And we’re just trying to ensure the longevity of utility by pursuing this merger.”

Colona said that the merger would most likely result in a rate decrease for South Fork’s customers.

South Fork Utility and Bristol Bluff City Utility have until Dec. 31 to complete those negotiations. Initially, the TBOUR considered giving the utility districts 60 days but felt that was too short a period of time. Board members also considered a span of 120 days, but that did not line up with the board’s scheduled meetings.

Instead, the utility districts will have until the end of 2024 to finish negotiations. The merger will be addressed at the TBOUR’s first meeting of 2025.

The board encouraged both companies to negotiate on their own and reach agreements ahead of schedule if possible.

SFUD, which serves roughly 3,400 customers, already purchases all of its water from Bristol Bluff City Utility. The SFUD was formed in 2020 when two former utility districts merged. The attorney representing the SFUD, Eric W. Reecher, told the TBOUR on Thursday that several of the initial issues SFUD faced were inherited from those former districts.

Reecher spoke during Thursday’s meeting, claiming the new leadership of the SFUD had done well rectifying “the problems that they inherited from previous management.” He told the board that ordering the merger “would be a government overreach to fix a problem that no longer exists.”

The potential merger has been an ongoing topic of discussion as SFUD has faced a number of issues. In April 2022, the Tennessee Comptroller’s Office released a report that found conflicts of interest and questionable payments within the utility district, ultimately leading to SFUD’s general manager resigning along with other members of the company’s board of commissioners.

In 2024, a separate report from the comptroller’s office found more questionable payments by an SFUD employee totaling nearly $150,000.

Colona said previous merger negotiations between the two utilities failed because SFUD wanted to maintain a majority of the seats on any utility board formed post-merger.

Reecher asked that the TBOUR refrain from ordering the merger now that the new SFUD leadership is on the right track. He said forced mergers are only to be ordered in dire circumstances when a provider is no longer financially sustainable, which Reecher said was not the case at SFUD.

“They’ve righted the ship; let them remain on that course and keep their focus on serving their customers,” Reecher said. “Please don’t distract them from that purpose by forcing an unwanted, an unnecessary, and an unjustified merger at this point.”

In June 2024 , the comptroller’s office announced it was working to merge SFUD with Bristol Bluff City Utility District.

For the latest news, weather, sports, and streaming video, head to WJHL | Tri-Cities News & Weather.