HB 542 - SB 1139
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
March 8, 2025
Fiscal Analyst: Justin Billingsley | Email: justin.billingsley@capitol.tn.gov | Phone: 615-741-2564
HB 542 - SB 1139
SUMMARY OF BILL: Requires a county or municipality-owned water utility to complete a
review of any plan of development it receives within 30 days of submission.
If any such utility does not complete such review within 30 days, the person who submitted the plan
is authorized to hire a third-party plans examiner to perform the review and must submit the
appropriate fee and a stamped-and-sealed copy of all plans that were examined to the utility, in
addition to certain information pertaining to the development. Requires the respective utility to,
within 10 days of receipt of the fee and plans, to: (1) approve the plans; (2) provide to the person, or
the person’s designee, a report of deficiencies; or (3) request additional information necessary to
ensure compliance with applicable codes.
If the utility fails to take any of the aforementioned actions within the 10-day timeframe, the utility
must refund any associated plan review fees that were collected and the plans are deemed approved.
If a plan of development is approved after review by a third-party plans examiner, the utility must
perform inspections of the installation and construction of the water, electric, and natural gas
infrastructure of the development. The utility may charge a fee for such inspections; however, such
fee may not exceed two percent of the total cost of development.
Requires a utility to provide persons with a schedule of all approved materials for water, electric, and
natural gas infrastructure with specification for such materials.
FISCAL IMPACT:
OTHER FISCAL IMPACT
The proposed legislation will result in a significant impact to revenue and an increase in expenditures
for utilities, the extent of which cannot be estimated with reasonable certainty. Utilities may increase
rates, if needed, to offset such increase in expenditures to remain self-supporting.
Article II, Section 24 of the Tennessee Constitution provides that: no law of general application shall impose increased expenditure
requirements on cities or counties unless the General Assembly shall provide that the state share in the cost.
Assumptions:
• This legislation requires county or municipal-owned water utilities in this state to complete
a review of development plans it receives within a 30-day timeline.
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• Based on information provided by the Tennessee Association of Utility Districts (TAUD), a
30-day timeline for a review of any development plan is not a feasible time frame, thus it is
assumed that the submission of any development plans submitted would authorize the
applicant to seek a third-party plans examiner to review the plans for compliance with all
applicable codes, then submit them to the utility with the appropriate fee.
• There will be no significant impact to fee revenue collected by utilities across the state, as
utilities currently collect fees for review of development plans.
• Upon submission by the third-party plans examiner, the utility must, within 10 days from
submission, do the following:
o Approve the plans;
o Provide to the examiner, or examiner’s designee, a report of deficiencies; or
o Request additional information necessary to ensure compliance with applicable
codes.
• Based on information provided by TAUD, it is assumed that 10 days is not an adequate
timeframe for any applicable water utility to accurately review such plans, as such
requirement would be in conjunction with other duties of the utility.
• This legislation specifies that if the utility fails to take any of the aforementioned actions
within the 10-day timeframe, the utility must refund any associated plan review fees that
were collected and the plans are deemed approved; therefore, this legislation could result in
a decrease in fee revenue to applicable utilities across the state.
• This legislation requires that, upon approval of a development plan, the utility is required to
perform inspections of the installation and construction of the water, electric, and natural
gas infrastructure of the development, and to collect a fee for such inspections, not to
exceed two percent of the total cost of the development.
• The cost of any such developments is unknown, thus any increase in fee revenue collected
by affected utilities is unknown.
• Utilities already charge fees for such inspections. There could be a decrease in local revenue
if utilities currently charge more than two percent. Additionally, if the two percent cap does
not cover the cost of the inspection, the utility may have to increase rates to customers to
subsidize any decrease.
• Based on information from TAUD, a water utility does not hold the expertise to review
electrical and natural gas infrastructure and, thus, would be unable to accurately review any
installation or construction of such.
• Additionally, this legislation requires a utility to provide persons with a schedule of all
approved materials for water, electric, and natural gas infrastructure with specification for
such materials.
• Based on information provided by TAUD, this legislation may result in affected utilities
needing to hire additional engineers in order to: (1) meet the 10-day and 30-day time
requirements established by this legislation; (2) review the installation and construction of
electrical and natural gas infrastructure; and (3) provide a schedule of all approved materials
for electric and natural gas infrastructure with specification for such materials.
• The number of additional engineers and utility personnel that would be needed across the
state as a result of this legislation is unknown.
• Such increase in mandatory expenditures may necessitate that affected utilities charge higher
rates to customers to offset the estimated increase in expenditures.
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IMPACT TO COMMERCE:
OTHER COMMERCE IMPACT
Any impact upon commerce or jobs, as a direct result of this legislation, cannot be determined
with reasonable certainty.
Assumptions:
• This legislation establishes different timelines and processes regarding the review of
proposed and constructed developments by county and municipality-owned water utilities
across the state.
• Any impact upon commerce or jobs, as a direct result of this legislation, cannot be
determined with reasonable certainty.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director