Written by: Joe B Kent

This Memphis City Council MLGW electrical rate increase deliberation is important because it involves huge sums of ratepayer money. This deliberation is about MLGW eventually reaping $178M more per year, from electrical rate increases, with the 1000kw household paying $180 more. 

Ultimately, at stake, is a public financial decision akin to a combined 15% Memphis/Shelby County property tax increase. At the same time, this rate increase is being sold by the media and MLGW, as $5 more per month, to residential customers. Does anyone see any red flags here?

History and Deliberation 

Let’s start with some recent history. After the MLGW resignation of CEO J.T. Young, City of Memphis COO Doug McGowen was expeditiously appointed by the mayor and confirmed by Memphis City Council, as MLGW CEO on November 1, 2022. The appointment was largely based on, at the time, McGowen’s developed knowledge and immersion in MLGW challenges and way forward. 

With the appointment, the public avoided an extended MLGW CEO search, while McGowen, a familiar face, hit the ground running, day 1, with accountable and desperately needed leadership for MLGW. No honeymoon period, as the City Council gave McGowen a mulligan for his non-transparent leadership of the Riverfront Steering Committee, that has resulted in a restricted Riverside Drive, bullied Memphis in May organization and an apparent dump site at the Cobblestone Landing costing taxpayers an extra $10M. 

The former is why it was strange when Councilman Chase Carlisle spoke up, to defend McGowen, from what Carlisle described as a “crucifixion” of McGowen. This defense came after City Council members were merely attempting to hold McGowen accountable for a hefty FY23 $27M purchase and a 12% electrical rate increase. That is the electrical rate increase, that will eventually result in $178M more per year, for MLGW, for years to come. 

The need for a 12% electrical rate increase, which follows a recent 7.2% increase, stems from an FY24 MLGW operating and multi-year capital budget, riddled with excessive contracts, that have been benchmarked by the public, to include an excessive $43.5M per year in tree trimming, $5M for out-sourced customer service and a $16.5M paving budget. These benchmarked and excessive contracts point to the probability that there are other excessive contracts, in the FY24 MLGW operating and multi-year capital budget, placing in order, a forensic audit of MLGW. 

Regarding a FY23 $27M 600 mhz communication spectrum purchase, it came to a surprised Council without advance warning. McGowen described the purchase as a rare opportunity to acquire a 600 mhz communication band, that had to be executed before the end of the year, for the purpose of improving electrical reliability. Does anyone see any red flags here? 

Councilman J.B. Smiley asked McGowen for competitive options to the $27M purchase. Seemingly surprised by the questioning, McGowen appeared to struggle, while providing an annual extended term lease option totaling $47M over time. Later Council members questioned McGowen on the FY24 operating and capital budgets, which support a series of rate increases totaling 12% over 3 yrs. 

Later in the meeting, Councilman Chase Carlisle arrives to say in summary, that accountability and questioning are great but because we, the Council, don’t do this full-time, we just need to trust Doug McGowen and his team. That is a red flag when it comes to what could result in $178M more from ratepayers for MLGW. 

With red flags, throughout the public record on MLGW, a forensic MLGW audit, along with thoughtful and thorough deliberations, inclusive of and featuring the public, are all in order. 

Check The Facts 

Memphis City Council. MLGW Committee 11/9/23 - https://memphis.granicus.com/player/clip/9738?view_id=6&redirect=true&h=fc3d557af92410b8e2bd97b0db302fcc