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VOL. 133 | NO. 29 | Thursday, February 8, 2018

Council Debate on MLGW Rates Reveals Trust Issues

By Bill Dries

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It began after the Tom Lee storm last Memorial Day weekend – a burst of sudden, intense winds that knocked out power to 188,000 homes and businesses as well as toppling the circa-1950s obelisk memorial to Tom Lee Downtown.

While Memphis City Council members generally praised Memphis Light, Gas and Water Division for its response to the third most damaging storm ever recorded in the city, there were some questions and concerns below the surface.

The concerns were about better outage maps on MLGW social media, burying some or all power lines underground to avoid future wind damage and outages that aren’t weather related.

“We just hope and pray that citizens of Memphis are OK, nothing happens and we can keep power flowing until somehow we find some inner-strength on this body.”

Bill Morrison
Memphis City Council member

All of those concerns and more surfaced Tuesday, Feb. 6, in a protracted council debate before votes to raise gas and electric rates by 2 percent starting in July.

And with a new CEO, Jarl T. Young, starting the top job at MLGW in March, improving the utility will be a dominant topic.

The approved gas and electric rate hikes are for one year only, effective in July.

The 2 percent rate hikes came after a prolonged council debate and an initial vote against the 2 percent increase for electricity.

A majority of the 13-member body opposed larger, multi-year rate hikes of 9 percent for gas and 6.3 percent for electricity. And in that majority was considerable sentiment that any longer term rate proposals and financial decisions should come after Young takes a critical look at MLGW operations.

“This organization needs to allow a new president to come in,” council chairman Berlin Boyd said.

Council member Bill Morrison made the same argument in support of a bigger rate hike over several years.

“Let’s give the new president a chance to get MLGW where it needs to be,” Morrison said.

The smaller 2 percent rate hikes, Morrison argued, could leave Young on the defensive as soon as he takes the job should there be a storm or some other unplanned event that knocks out power and damages the power infrastructure.

“We just hope and pray that citizens of Memphis are OK, nothing happens and we can keep power flowing until somehow we find some inner-strength on this body,” he said.

The council decision reflects trust issues, like bond rating agencies getting word of the recommended rate hikes in September before the council learned about them in November. The trust issue is also fed by power outages that aren’t related to the weather and may be because of outdated infrastructure.

“In my neighborhood, it can be sunny outside and the power goes off for no apparent reason,” Boyd said.

Council member Philip Spinosa, who voted no on both of the rate hikes with Boyd, has complained of such power outages as well, and has been critical of the utility for the flow of information to consumers in outages and the outage maps the utility provides.

Boyd said he got different answers from the utility to his questions about infrastructure.

“I don’t need two different answers from people at the top,” he said. “If I don’t trust, I react with a no.”

Other council members don’t like the fact that they will soon be discussing rate hikes again, most likely at the beginning of 2019. They argued the larger rate increases will be necessary if future infrastructure projects are needed.

“This is not that complicated of a vote,” said council member Martavius Jones. “It’s the right thing to do.”

Interim chief utility officer Dana Jeanes said the 2 percent rate hikes for a year would allow MLGW to continue to fund capital projects upgrading infrastructure before hard decisions must made if there are no further rate hikes.

The multi-year, higher rate increases would have meant no new rate hikes until at least 2023, according to Jeanes. The lower rate hikes mean there could be additional rates hikes sooner, he added.

The council debate even crossed into basic issues of poverty.

Jamita Swearengen

Council member Jamita Swearengen said the rate hikes would force her constituents to choose between food and medicine.

“The constituents trust in us to be their voice,” she said. “My constituents are on a fixed income. They just simply can’t afford it.”

Council member Patrice Robinson, a retired MLGW employee, took a different view.

“I am asking you to not just look at the 30 percent of the people that we have in poverty,” she said. “It is our responsibility to not just look at that, but look at the other 70 percent who call me every day and my staff about reliable utilities.”

Patrice Robinson

Robinson has made the point before in discussions since November when the rate hikes were proposed by MLGW. She has said the council, in setting rates, has a larger obligation to make decisions that maintain the utility’s system for all customers.

And Tuesday she said a delay in making the necessary rate hikes could cause bills to go up more.

“The reality is our bills can go up … but not because of MLGW – because of decisions made right here,” she said. “MLGW is not our enemy.”

Council member Janis Fullilove, a vocal critic of the utility’s move to Smart meters starting several years ago, asked if the roll out of the meters is a factor in the rate hikes.

Jeanes said it wasn’t.

“We’ve gone 10 years without a gas rate increase,” he answered. “14 years without an electric rate increase.”

But Boyd, who has rejected Fullilove’s claims that the meters are an invasion of privacy and a health and fire hazard, said the timing of the expensive cost over several years may not have been the best priority.

“I don’t have a problem with Smart meters. But the timing was completely wrong when we have these infrastructure issues,” he said.

The council also gave final approval Tuesday to a third ballot question for city voters to decide in the November elections. The new ballot question would, if approved by voters, eliminate the runoff provision in single-member council district races if no contender gets a majority of the votes cast.

It joins a proposed extension of term limits for council members and the mayor from two consecutive terms to three terms and a repeal of ranked-choice voting on the Nov. 6 ballot.

The council also approved on third and final reading an ordinance requiring more advance notice of street closings for marathons and 5Ks as well as an appeals process on permits granted by the city for such events.

The council delayed until March 6 a final vote on an ordinance that would amend the procedures for ticketing cars parked overtime in commercial parking lots.

In other business, the council approved a memorandum of understanding with county government that would allocate and appropriate $4 million in storm water funds to cover the city’s match of funding for resiliency projects at Rodney Baber and Kennedy parks in Raleigh and southwest Memphis in the flood plain of Cypress Creek. The projects, plus a water recreation area in Millington, are funded with a $60 million federal grant as is a longer-term resiliency study to identify other projects.

And the council approved up to $50,000 for the firm ERMS to study crowd control methods for the Beale Street Entertainment District. The funding comes from $257,779 in cover fees collected with and without the Beale Street Bucks program. The original bucks program charged a $10 cover fee to get on Beale Street on spring and summer Saturday nights after 10 p.m. It included rebate coupons worth $8 in Beale Street businesses. The council cut the cover charge to $5 last summer and did away with the rebate coupons. The council then voted later last year to do away with any cover charge.

PROPERTY SALES 57 280 1,209
MORTGAGES 55 244 916
BUILDING PERMITS 158 699 2,751