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Rate hike: Monthly MLGW bill to jump about $5 for most customers

Seeking to improve reliability and mitigate outages, Memphis City Council members Tuesday (Dec. 5) agreed to a 12 percent electrical rate increase spread over three years.

The increased funds will be used to update Memphis Light, Gas and Water Division’s aging infrastructure and to trim overgrown tree limbs.

Council members also agreed on a 2024 budget for the utility. It reflects the first 4 percent ratepayer hike installment for the increase.

For most MLGW customers, the increase is expected to add $5 to their monthly bills.

Doug McGowen

“This is the necessary remedy for decades of disinvestment and failed decisions under previous (MLGW) presidents, (and) under previous councils to adequately address the condition and maintaining it to modern operating standard,” said MLGW President and CEO Doug McGowen.

The increase will pay for a systemwide overhaul of the utility’s infrastructure. In addition to routinely replacing transformers and underground cables, MLGW will invest $130 million in distribution automation switches, as well as add 450 voltage regulators. New software and hardware will further improve the distribution system.

The improvements are designed to get power back on more speedily after outages by automatically redirecting electricity around problem areas.

Long-neglected communities such as Orange Mound will see significant investment, too. The historic African-American community will receive a $21 million rebuild to its electrical distribution system.

South Memphis’ Castalia Heights and the East Memphis’ Sherwood Forest areas also will see benefit from similar investments.

Orange Mound was hit hard during the city’s most recent outage-causing weather event.

On July 18, a round of storms caused 138,000 outages throughout MGLW’s service area. While many saw their power restored after a few hours or even a day, interruptions in Orange Mound lingered for days.

“In 35 years, between 1985 and 2020, MLGW had one rate increase approved for 4.7 percent. During that same period of time, (it) had two rate decreases. The rate of inflation during that period of time is 280 percent,” said McGowen. “That meant this organization enjoyed an 11 percent rate increase over 38 years.”

While long term lack of investment extended the misery of outages, the root cause was/is overgrown tree limbs McGowen again told council members.

To prevent a replay, partnering tree services already have been contacted about picking up additional work. Four crews have also been added to tackle backyard lines, where most of the failures occur.

“They are out in front of the goals we have set this year, but they have agreed to go faster,” said McGowen. “The net result of all that is you will have fewer outages. When outages do occur, you will have more rapid restoration.”

Along with improved reliability, a more agile communication system is another component that could improve public opinion of the local provider – not only to warn of outages, but to report improvements to the system.

“The reporting aspect, that’s what I think has been the missing part of this…,” said council Chairman Martavius Jones. “The next storm that we have, the next weather event we have, there should be a corresponding report to basically say…the last time we had a major weather event, they were out this amount of time. But, because of these improvements, they were only out this amount of time.”

Jones added, the rate increase will save residents money in the long term, explaining that when there’s an extended power outage and someone has to throw out a refrigerator of food, they likely will spend more money replacing the food than they would have on their power bill.

Nevertheless, neither the rate hike nor MLGW went unscathed Tuesday.

The increase was knocked for being punitive on lower income people. Another councilmember chalked up his eventual “no” vote to a history of unfulfilled promises from MLGW.

“This is nothing against you or your administration. There’s been previous administrations that have told the council, ‘If you pass this rate increase, you’re going to see substantial improvement in terms of reliability,’ said council Vice Chair JB Smiley Jr. “This is more of an indictment of what MLGW has been in the past.”

Despite the negative appraisals, others were more willing to give McGowen and his proposal a shot.

“I know that people are scared that MLGW is not going to execute on the plan like they say they are. I’m putting my faith in Doug McGowen and his team to demonstrate that,” said Councilmember Chase Carlisle.

I think in the time that Doug has been there, I’ve not seen him not deliver on a single thing he promised me. That goes back to his time with the City of Memphis.”

Before Mayor Jim Strickland named McGowen to head MLGW, McGowen was the mayor’s chief operating officer.

Voting in favor of the rate hike were council members Ford Canale, Carlisle, Frank Colvett, Edmund Ford Sr., Rhonda Logan, Worth Morgan, Patrice Robinson, Jeff Warren, and Jones.

Voting no were councilmembers Cheyenne Johnson, Michalyn Easter-Thomas, Smiley, and Jana Swearengen-Washington.

 

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