VOL. 133 | NO. 9 | Thursday, January 11, 2018
City Council Rejects MLGW Gas, Electric Rate Hikes
By Bill Dries
Memphis City Council members voted down proposed electric and gas rate hikes Tuesday, Jan. 9, but left the door open to reconsider that.
Approval of Memphis Light, Gas and Water Division’s annual budget, which is based in part on such rate revenue, was delayed for two weeks.
The votes Tuesday were 5-8 each for the electric and gas-rate hikes, preceded by council discussion about sporadic power outages unrelated to the weather and who will follow Jerry Collins when he retires as head of the utility at the end of January.
“It looks like we’ll have some more discussions in two weeks about the MLGW budget,” Collins said after the council decision.
“The immediate impact is that it will affect our capital improvement projects,” he said. “Some of those would be financed by bond revenue as opposed to operating cash.”
Some of the technology the utility wants to acquire in its pay-as-you-go capital budget would specifically limit power outages or allow power restoration on a more permanent basis after weather causes outages.
Council member Martavius Jones talked about outages in areas when there isn’t a cloud in the sky and the weather is moderate.
“This doesn’t take place in Bartlett, Lakeland or Collierville. It takes place in Orange Mound. It takes place in Boxtown,” said the Super District 9 council member who represents those areas. “It’s because the new technology, the latest – the greatest – the new stuff has gone into the areas that are in Super District 8.”
Jones voted for the rate hikes after hearing where the capital spending would go.
“A rate increase for me translates to infrastructure improvements,” he said.
But the timing of the rate hikes is the issue for council member Frank Colvett.
“My personal feeling is we’re being told, ‘Everything is great,’” he said. “Then all of a sudden, ‘We need increases across the board.’ I feel like we are being taken hostage.”
Collins presented the rate-hike proposals with various options to the council in November as prescribed by city ordinance. Bond rating agencies were told by the utility months earlier that the rate hikes were on the way.
Council member Philip Spinosa is exploring an ordinance or a city charter change referendum that would change the timing and require notice of rate hikes to the council no later than six months before they would take effect.
“Here we are. We’ve got to improve the process,” Spinosa said of the current timing. “We’ve been backed into a corner on this. We’ve got to be better than that.”
Collins said the later notice to the council sometimes allows adjustments that result in savings not possible six months out.
Council member Bill Morrison said the rate-hike proposals came with a solid case for improving the MLGW response to power outages. He hopes the rejection of the gas and electric rate hikes will be reconsidered in two week just as the council reconsidered and approved Tuesday the 18-cent water-rate hike it rejected in December.
“Without these improvements, a massive number of people could be out of power because we simply didn’t have enough guts to pass a budget,” Morrison said. “When your constituents are calling and saying, ‘My power is not on,’ I hope you say, ‘I kept your rates low.’”
Options for reconsidering the gas and electricity rates that would take effect the first of February include approving one-year modest rate hikes and having Collins’ successor come up with future recommendations beyond that.
Council members meet in two weeks with Tennessee Valley Authority president Bill Johnson. Several council members indicated they will question Johnson closely about another multi-year, pre-paid contract for electricity that is credited with keeping that rate low. The pact recently ran out. MLGW is the federal power supplier’s largest customer.