The REA, (now Rural Utilities Service, RUS), was created to loan federal money to rural electric cooperatives formed by rural people to provide to themselves electric power and to assist in the development and operation of such cooperatives. Rural electric cooperatives were to be owned and governed by the people served by them. Tennessee and other states adopted state enabling legislation to complement the federal law and to provide an appropriate atmosphere for the development of electric cooperatives.
The Upper Cumberland Electric Membership Corporation, UCEMC, was formed by citizens of the Upper Cumberland Region led by R. W. Royster, H. W. Kemp, J. W. Jellicorse and Lee Harris from Smith County, J. B. Cassetty and Guy Maddux from Jackson County and Solon McDonald from Putnam County. They with Attorney DeWitt Fisher met in the spring or early summer of 1938 in the Carthage office of County Agent C. L. Simmons to discuss the strategy and procedure to form an electric cooperative. The results of the meeting and subsequent actions by the group caused the cooperative to be incorporated on July 1, 1938.
The Tennessee Electric Power Company, TEPCO, provided power to citizens and businesses in towns in the region and to a few customers along its lines between the towns. However, TEPCO would not provide power to rural people generally because it was not considered profitable or because rural people could not pay the exorbitant cost to construct lines to serve them. The TVA Act authorized TVA to purchase private power companies in the Tennessee Valley. UCEMC, through authority given TVA, purchased the assets of TEPCO. UCEMC began distributing electric power to former TEPCO customers on August 16, 1939. At the end of its first fiscal year, June 30, 1940, UCEMC was serving a total of 2,951 consumers. It had sold 3.2 million kilowatt hours and had received $93.5 thousand for the power sold. It directed by a board of nine directors representing Jackson, Overton, Putnam and Smith Counties and had 18 employees.