There is nothing wrong with not being a growing city. But there is something wrong with being delusional and disconnected from reality. As the holidays begin, this blog follows a City Mayor / Chamber gathering at City Hall that seems to involve a versional reproduction of the Enchanted Forest winter wonderland. The gathering touted grandiose crime reduction outcomes from the City and nation leading job growth claims from the Chamber. The public is being snowed. 

Meanwhile, operating in a delusionary state seems to be the reality for the MLGW Board of Commissioners, as they approve billions in capital expenditures. No checks on MLGW, bye bye public utility benefits, as rates are sure to climb. Recently, prior to the deposing of the former MATA Board, City of Memphis transit consultant Transpro blasted the former MATA Board for not asking any questions while approving MATA’s $67 million FY25 Budget.

Guess what happened at the 11/6/24 MLGW Board of Commissioners meeting? No questions were asked by the MLGW Board of Commissioners in approving a $2.5 billion FY25 MLGW budget. The lack of questioning is especially alarming after MLGW CEO Doug McGowen’s repeated narrative of “decades of MLGW capital underspend” had been disemboweled by this blog and in public comment. 

McGowen has used the narrative to justify MLGW’s hefty FY25 budget containing yet another increasing 5yr capital budget, within a capital upgrade cycle that was originally scheduled to end this FY24 year. The FY25 Way Forward 5 yr. capital budget has increased yet again from $1.5 in FY24 to $1.7 billion in FY25. This should fundamentally not be happening.

Instead of budget questions during the MLGW Board meeting, Commissioner Mike Pohlman asserted that Memphis is a growing city. This delusional assertion goes to fill the gap left by the disembowelment of the “decades of capital underspend” narrative. In this way, filling the gap would help justify an exploding Way Forward capital budget, which unnecessarily leads to higher utility rates.

Again, the problem is not an absence of grandiose outcomes but far more with being disconnected from reality and delusional. MLGW’s delusional narrative efforts follow a local trend of bogus narratives that create a false perception of a growing city and economy. Taxpayers and ratepayers can only be harmed by such conspiratorial narrative schemes.

Such conspiracies work to jack up and inflate public spending without organic support. The result is higher tax and utility rates where only local elitists win with excessive public contracts. Bill Dunavant, Chair of the Chamber Chairman’s Circle, now leads the Circle’s efforts with a focus on “narrative” as opposed to public implementation and taxpayer justice. The above “job growth” delusion, contained in the above image, is the Dunavant product and follows a recently exposed County/Chamber conspiracy to botch the public workforce development system. 

Per MLGW Commissioner Mike Pohlman’s groundless “growing city” comment, the fact is that MLGW’s service area population of Shelby County, Tennessee has fallen by 3.1% from 939,421 in 2012 to 910,042 in 2023. Prior to questioning historic MLGW capital underspend as asserted by McGowen, I like many believed MLGW capital underspend had occurred. It made sense in explaining the underperforming MLGW grid.

But unfortunately, I was only able to validate historically above average MLGW capital spend using utility capital spend ratios. And I feel McGowen believed his own narrative and had adopted it from someone he trusted. After all, the narrative worked to explain an underperforming MLGW electrical grid. But with actual historic capital spend above average, the underperforming grid points to a potential public contract conspiracy waged against MLGW ratepayers going back years.

As far as the Chamber’s recent above assertion around fastest job growth, per BLS QCEW data, Shelby County employment growth ranks 8 of 10, since 2010, against the Chamber’s self-selected peer group, and last in the same peer group for year over year (YOY) employment growth. As of June 2024, Shelby County had a 1% reduction in YOY employment. But back to MLGW.

Depending on how one wants to look at it, the MLGW Way Forward capital upgrade budget has exploded upward under McGowen by $500 to $800M. That is a 35% to 60% increase over the $1.5 billion inflation adjusted amount of the original Way Forward first announced by MLGW’s former CEO J.T. Young. The original Way Forward upgrade cycle was originally set to end this FY24 year.

Upon McGowen’s arrival, McGowen was allowed to extend and explode the costs for the Way Forward upgrade upward for FY24-28 to $1.5 billion and since 2020 $2.3 billion. Now for FY25-29, the costs are exploding again to $1.7 billion. That red bars above should fundamentally not be happening. What should be happening is something akin to the green bars and a decrease from $1.5 billion announced by McGowen for the previous 5 yr Way Forward capital budget. It makes no public sense to sustain recklessly high capital spend ratios into the future. But that is what the McGowen led MLGW is doing, which can only end in unnecessary rate increases thereby stifling the benefit of a public utility.

Overall, to date in FY24, MLGW is off their capital spend target by 39%. MLGW is way off target for Electric and Gas and ahead of target with Water. What this means, when combined with excess inventories benchmarked against the beginning of FY22, ratepayers are capitally underserved by $153M. And sure, with MLGW falling behind in their FY24 spend, the FY25-29 capital budget should absorb some of that, but the 5yr budget should still be coming down and not increasing. 

Massive MLGW balance sheet cash excesses remain. Cash excesses are 114% against the 45-day minimum for all divisions with more cash on the way for the Electric division with the issuance of $150M+ of debt. In order, is $100M back to taxpayers off the MLGW Gas balance sheet and the rejection of an unneeded $70M McGowen proposed MLGW Engineering Operations facility that was never part of the Way Forward capital improvement plan until this year. The unneeded budgeted facility spend was potentially triggered by excessive cash on the Gas balance sheet.

In pitching the Engineering Operations facility, McGowen referenced TVA’s facility. TVA is a multistate producer of electrical power serving hundreds of counties. MLGW distributes utilities to a single county. TVA is just not a reliable comparison. Besides, the MLGW Engineering Operations facility came out of nowhere and should be rejected.

Unless MLGW spending is publicly checked, the benefits of a public utility vanish, with forward leaning pressure on utility rates. So MLGW spending needs to be publicly checked by both the MLGW Board of Commissioners and Memphis City Council. The Memphis City Council should depart the Enchanted Forest, get back to reality and reject the MLGW FY25 budget.

To learn more, visit the Taxpayer Justice Institute.

CHECK THE FACTS

At 00:33:00 Pohlman “Growing City” - https://mlgw.iqm2.com/Citizens/SplitView.aspx?Mode=Video&MeetingID=2218&Format=Agenda

BLS QCEW

Population - https://www.neilsberg.com/insights/shelby-county-tn-population-by-year/