Cullman utility tax issue could lead to more new taxes in other Alabama towns

The Cullman Electric Cooperative lawsuit filed this week asks the federal court for an injunction to enforce a ruling the court made in 1991.

Posted: Oct 27, 2021 4:27 PM
Updated: Oct 27, 2021 5:58 PM

The federal courts are being asked to step in and keep the City of Cullman from forcing an electric cooperative to raise utility rates for some customers inside Cullman's city limits, an issue that first went before a judge 30 years ago.

The Cullman Electric Cooperative lawsuit filed this week asks the federal court for an injunction to enforce a ruling the court made in 1991. The outcome of this issue could clear the way for more local governments to copy Cullman’s revenue generating plan, which could lead to increased utility bills throughout the state.

A 3% charge may not sound like that much for the average property, as it works out to a couple of dollars extra per month, but for businesses and other large users of electricity, it could add up to thousands of dollars each year.

“What was an issue that has been litigated before, we felt it was in the best interest of our members to go ahead and file a lawsuit," Cullman Electric Cooperative external communications manager Brian Lacy told WAAY 31 on Wednesday.

The cooperative represents 36,000 members in Cullman, Lawrence and Morgan counties. If allowed to stand, the Cullman ordinance would affect about 1,200 customers inside the city limits.

Lacy said power companies in North Alabama distributes power from the Tennessee Valley Authority. TVA sets the price, and special laws bar local governments from charging more, but it’s a grey area that continues to be a point of contention.

WAAY 31 attempted to get Cullman city leaders to speak with us on camera, but they refused, saying they won't comment on pending legal matters. 

Cullman Electric Cooperative estimates the 3% tax represents a total revenue of about $500,000 for the city annually, a big chunk of which would come from 10 large industrial customers.

“We hope to get a ruling and hopefully get some clarification on this and help our members on this issue that’s important to them," Lacy said.

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