Purposes — Nonprofit Cooperatives

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  1. A cooperative shall have one (1) or more of the:
    1. Primary purposes of:
      1. Supplying or furnishing at wholesale or retail, electric power and energy services to, and promoting the efficient use and conservation thereof by, one (1) or more patrons; or
      2. Supplying, furnishing or exchanging wholesale power and energy to or with any other entity; and/or
    2. Secondary purposes of:
      1. Supplying or furnishing other community utility services as provided in §§ 65-25-102(3) and 65-25-131;
      2. Providing management or operating services by contract with any cooperative, utility district, municipality, or other entity engaged in the provision of community services or of services including, but not limited to, water, sewer, and natural gas; and
      3. Promoting economic and industrial development through participation, including either as a borrower or as a lender, in any economic or industrial development program established by any agency of the United States or of the state of Tennessee.
  2. A cooperative existing prior to, or coming into existence on or after, April 7, 1988, may, without further action other than the adoption by its board of a resolution to that effect, have, and may engage in business for, one (1) or more of the secondary purposes, and may, subject to any approvals by its members that may otherwise be required by this chapter, after engaging in such business abandon the same by the adoption by its board of a resolution to that effect.
  3. A cooperative having the primary purpose may be the only incorporator and member or one (1) of the incorporators and members of another cooperative having a primary purpose and/or a secondary purpose; and a cooperative not having a primary purpose may be the only incorporator and member or one (1) of the incorporators and members of another cooperative having a secondary purpose only.
  4. Notwithstanding any other provision of this chapter, a cooperative having a primary purpose shall not, in pursuance of one (1) or more secondary purposes, burden, obstruct, prevent, interfere with, jeopardize, impair, delay, or lower the quality, reliability or adequacy, or increase the cost of, the pursuance and achievement of a primary purpose. Without limiting the generality of the foregoing sentence, in the business and affairs of the cooperative, including its ownership of and titles to, or its interests as mortgagor or mortgagee or as lessor or lessee in, any property of any kind or estate whatever, real or personal:
    1. Its conduct of business in pursuance of a primary purpose and of each of its secondary purposes shall be separately accounted for, so that the costs, expenses, expenditures, assets, properties, liabilities, obligations, revenues, receipts, capital indebtedness, equity, book value, net worth and other information necessary to reveal the operations and financial and other conditions of its business for each may be accurately ascertained; and its books and records shall be so set up and kept that, at any reasonable time after normal periods of business accounting and reporting and after a reasonable time following the end of each fiscal year, such ascertainment, including the determination of the pro rata amounts of patronage or the amounts of equity, if any, of the patrons in respect of its business for each such purpose, may be made; and
    2. It will not so operate as to permit its income from business transacted for one (1) or more secondary purposes to be such, in amount or as a percentage of its total income, as to prevent it from being able to obtain or to cause it to lose exemption from federal income taxation relative to a primary purpose.


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