Behind the Headlines – October 6, 2017

Behind the Headlines – October 6, 2017


– (female announcer)
Production funding for Behind the Headlines is made possible in part by:
the WKNO Production Fund, the WKNO Endowment Fund,
and by viewers like you. Thank you. – A look at MLG&W’s past,
present, and future, tonight on Behind the Headlines. [dramatic orchestral music] I’m Eric Barnes, Publisher
of the Memphis Daily News. Thanks for joining us. We’re joined tonight
by Jerry Collins, President and CEO of MLG&W. Thanks for being here again.
– Glad to be here. – Along with Bill
Dries, Senior Reporter with the Memphis Daily News. You are retiring at the end
of this year, give or take. Is that right?
– That’s what I hear. – That’s what you hear. After 10 years at
MLGW, and we’ll talk about some of the things
going on right now, but just one, after
10 years there, the biggest challenge
that you’ve faced, and the biggest challenge
you think MLGW faces as it goes into its next
10, 20, and 100 years. – Sure. So, things that are
going on currently, we are about 65% deployed with the smart meters, which
has been the biggest project in the history of Memphis
Light, Gas, and Water. And we’re ahead of
schedule, and under budget, both of which are good things. And about the end of
next month, October, we will be fully deployed with
electric residential meters. So that’s a big step
in the right direction. And it takes a little bit
longer to put in the gas meters and the water meters. So we’ll be putting
those in next year as well.
– The scope of that project, in terms of dollars, is what? – 240 million. – Some of that came from
the Federal Government? Is that correct?
– No, no. – No, it was all MLGW?
– That’s correct. – How is that paid for? – Okay. (laughing)
– No, I mean that’s a huge number. So it’s an interesting
thing that people probably go whoa,
hey, $245 million. – So this is a
capital expenditure, and we sell bonds
when we have a project that’s this large, so we can pay for it
over a 20-year period. And this is a unique
project in terms of capital infrastructure, because it not only
significantly improves the level of service, but it
also saves money. And you don’t have that
combination all the time. – A smart meter, and
some are way into this, but I’m fascinated by
this in part because it was a little bit politically, there was some real resistance. There’s still some
resistance to smart meters, nationally and locally. The benefits of a smart meter, and what is a smart meter? For those who haven’t
gotten one yet. – So, a smart meter is
a meter that sends us the information on how
much energy or water that you’ve used, rather
than having to send a meter reader by your house. It also lets us put all
of your energy usage on a password-protected
website that you can use to observe your energy usage. And with electrical energy, you can look and see
how you use energy in 15-minute increments,
whereas previously all you saw was once a month. Now you can see what happens
when you turn on the dryer, or what happens when you
turn on the air conditioner, and it gives you a
much better sense of how you use energy
and what possibilities there are for saving energy. – And that’s on the
consumer, on the user, the end user. I could ostensibly
modify my habits and spend less money on
electricity, and gas, and so on, in that sense.
– Yes. – I guess part of the
resistance was, no one likes to see somebody lose a job. Meter readers losing a job,
there was push back on that. What was that like? And what was your response? – Well no one is being
laid off, but as positions become vacant that
we no longer need, we just won’t fill them. And we’re doing that
at a very rapid rate. This year’s budget, which
we’ll take to City Council in a few weeks,
will show a decrease in the total
personnel complement. And this is something
which will continue for years going forward. When we have all the
residential electric meters as smart meters,
that’s 200,000 fewer truck trips a year.
– (Eric) Wow. – So it has an incredible
impact on our ability to operate more cheaply, when
then saves the customer money. – Yeah, Bill Dries. – So Jerry, tell me
where smart meters get you in terms of the
larger transformation to a smart grid. – Smart grid is the
ultimate concept. Smart meters is a piece of that. Smart grid lets us do things like handle outage
restoration more efficiently and more quickly,
it will tell us when we have full implementation
of all the smart meters, which homes don’t have
power or which businesses don’t have power,
it will let us know if we have outages
within outages, which is always a
problem, like if you have a 5,000-customer
outage and you fix it, well are there smaller
outages within that? Currently we don’t know
that unless those people call us back and tell us. – Which, I think a lot of
people don’t understand. They assume you know. So they’re just kind of
waiting for you guys to come. You know, if people
get in a storm, well of course they know,
they have some way of knowing that my power is out. But that isn’t
necessarily the case. – Currently you have to call. But with smart meters
being fully deployed with all the bells and
whistles, we will know that you don’t have power. – Back to Bill, sorry. – So, with the smart grid, there are also other
advantages to this. There are also, I mean
it’s a tremendous thing to tout to a business
that’s looking to relocate as well.
– Absolutely, absolutely. And so, for instance, when
we have fully deployed smart grid, which
is, smart meters is a piece of, a
outage that currently might knock out power
to 1,500 customers, with smart grid might
only knock out power to 300 customers, because we’ll have
switches that are automated and smart, that can isolate
that outage to a smaller area. – Right. So, since you
brought up outages, there’s been a
lot of discussion, some of it on the City Council, about whether we’re
having more of these, in part because we just got
through with the third-largest incident that we’ve
had, the “Tom Lee Storm” that came up on the
Memorial Day weekend. Are we having more of these? Not on that kind of basis,
but on a smaller basis. Are we having more disruptions, or is it just that that storm has kind of magnified
the problem? – Well of course, Memphis
is a city of trees, and the vast majority of the power
outages when you have a storm is caused by trees. When you have a
80-foot-tall oak tree falling on a 40-foot-tall
power line, or pole, that’s not an infrastructure
problem, that’s a tree problem. And our trees are
getting bigger, and when you have some of
these hot, dry summers, sometimes they’re not as healthy as they might be going forward. So trees can be a problem,
but the trees are beautiful, Memphis is a city of trees, and so that’s what we have. The all-time record for what
I would call major storms, was 2011, and I
define a major storm as a storm that knocks out
more than 30,000 customers. In 2011, there were
five such storms. This year we’ve had four, and I hope we can get
’till the end of the year without having a fifth. So when you have
more frequent storms, you know, there’s
occasionally a year when we don’t have
any major storms, but this year’s been one
where there’s been four. – Right. And, you’ve been pleased
with the utility’s response? – Our philosophy on
outage restoration is spare no expense. Get the power restored
as quickly as possible. – When those outages
happen, we were joking as we were coming in the studio, one thing you said you’d look
forward to when you retire is not worrying about radar, not worrying about a possible
weather system coming through, not being called in the
middle of the night. When you look at the
response the teams have now, the people who go out and
respond to these major storms, how has it changed
over the last 10 years? Smart meters are one thing
you just talked about, but in other ways, have
you changed your strategies in terms of, going back
to Hurricane Elvis? Before that, I don’t
think you were there when the big ice storm happened. But how has MLGW
adapted over time, to these events? – So for instance now
we have an outage map. Now we have an app that we initiated back
in the spring of 2011 when we were having all
those storms in 2011. So you can actually go to
your app on your phone, and you can look at the
outage map on your phone, which is something that
we didn’t used to have. And we have a
really smart system, in terms of when you call us, how it classifies your outage as a fuse outage,
or a circuit outage, et cetera, et cetera. It does a marvelous job
of doing that very quickly so we can prioritize
our restoration efforts. – Let’s switch
gears a little bit. Last time you were on
the show, in the spring, it was about the aquifer, so the aquifer that
supplies water to Memphis, massive and very clean, very high quality drinking water that’s also very cheap, and
some controversy around TVA, Tennessee Valley Authority drilling holes directly
into the aquifer to put water into the new gas
plant that they’re building. What’s the status on that? – So the status is that
the Tennessee Department of Environment
Conservation, in concert with the local Shelby
County Health Department, is doing a study of the wells around the ash pond, and on
the edge of McKellar Lake where these high levels of
arsenic have been found. And they’re also gonna
be working with TVA to see if when TVA turns
on their new wells, if that has any impact
in drawing that arsenic towards the aquifer. So we’re waiting for that
study to be done so we can then figure out what’s the best
course of action going forward. – You know, it’s a strange
situation in some ways. I think we talked about
maybe when you were on, but people have written
about it and talked about it, MLGW is a customer
of TVA, right? I mean, MLGW buys power
and so on from them. – That’s correct.
– And yet you’ve got this
relationship where, I think you had said, I know a
lot of people had said they would prefer
that TVA, in terms of taking the water it
needs for this new plant, this new natural
gas-fired plant to replace the old coal plant,
that they get the water through MLGW, or they use,
they had talked at one point about either river water or
whatever they call dirty water which is like partially-treated, but not use the aquifer. They went ahead and they
drilled in the aquifer. Does that make for a
difficult relationship between MLGW and TVA? – I wouldn’t call it a
difficult relationship. Memphis is TVA’s
largest customer, and we’ve always had
a good relationship. We think their best
course of action in this case is to buy the
water directly from MLGW rather than to pump
directly out of the aquifer, but I think TVA wants
to do the right thing, and will make the right
decision ultimately. – Are they still
open to doing that, even though they’ve
drilled their wells? Do you think there’s
some possibility they turn around and
say well actually we’re gonna go ahead and
buy the water from MLGW? – I think there is a possibility that they would ultimately
buy the water from MLGW. – One more question
on all of that, back to the quality of water. Bill talked about
economic development and businesses, and so on. But water is an economic
development amenity, right? I mean, if you’re trying to
get a company to relocate, we’ve had for instance,
the local brewers on, about the rise
of the craft brewers, and they make the
point that we can brew really great beer here, which
sounds like a silly thing, but at a lower cost than
you can in other places because you have to treat
the water so heavily. That’s true of beer,
but it’s also true of all kinds of
manufacturing processes that aren’t food related
or drink related, require a tremendous
amount of water. What is the balancing act
there, of encouraging companies to come or to expand, and then use more water because
it is this low-cost amenity, high-quality amenity? But how do you monitor
that too much water doesn’t get used? I’m not focusing
on TVA right now. That too much water
doesn’t get used, that they’re using it
appropriately, and so on. – So first of all,
we confidently state that we have the best quality
drinking water in the country. And don’t let any of this
arsenic stuff scare you, it’s not getting in
the drinking water. Our drinking water is just as
good as it has always been. We have great water. As you know, this water
comes from an aquifer which is 500 to 1,000
feet below the surface. It has been filtered
for 2,000 years. It is very soft water. Industries love our water. At the same time, over
the last 17 years, our citizens and our
businesses have gradually been using less and less water, so we’re pumping less and less. And as a result of that,
the hydrostatic pressure of that aquifer,
is actually rising, which means our aquifer
is becoming more healthy, and that’s a really unique
position for us to be in, to have the best
water in the country with an aquifer that is
becoming more healthy. – And why are they using
less, just efficiencies? – Yes.
– More efficient washing machines, more
efficient dishwashers, or whatever it is. – All kinds of
government regulations, which have regulated how
much water dishwashers use, washing machines
use, shower nozzles, toilets, et cetera, et cetera. All that’s coming to bear,
and we’re using less water on a daily basis. – Alright, back to Bill. – So, Jerry, as you head for retirement from this, what would be your advice
for whoever comes next in this job? Where do you think this
job is at, in terms of its responsibilities and
where the utility is heading? – So, my governing principle
at MLGW from day one has been always do that
which is in the best interest of the customers as a whole. I think that’s a good
governing principle. I would encourage my, the
people that follow me, to use that same principle, and whenever there’s a
choice or a question, ask themselves: what
is in the best interest of the customers as a whole? And that usually
answers the question quickly and easily. – To be sure, to that sounds easier than it
winds up being, because being the President of
Memphis Light, Gas and Water division, is something
of a lightning rod. It’s a different kind of
lightning rod probably, than the traditional
political lightning rod that people think about. But this is something
that affects citizens on a daily basis. And so they have a
lot of questions, they have a lot of concerns. – And we’re in a position
where we’ve been the utility with the
lowest utility rates of any major city
in the country, for five years in a row. And I think that’s a
very important position that we should try to maintain, because we have very many
customers in this city that are poor, that do
not make a lot of money, and the utility bill that
comes each month is a big deal. And many people struggle
to make ends meet when that utility bill comes. Also, the fact that we have
the lowest rates in the country helps attract industry. So, it helps the low
income, and it helps attract industry, and
so keeping the rates low is a really important thing,
in my mind, going forward. – You also have a
considerable, I’ll call it a retinue of regulations. As a public utility,
as one of the few that has light, gas, and water
in it, what do you think about the level of
federal regulation? – The biggest cause of increased costs,
is regulations. We’ve seen that especially
over the last five or six years, the regulations
just keep on coming. As I put together
this year’s budget, a new state regulation now requires that I
have metal detectors at our facilities where the
public comes in and out, otherwise they can bring
guns into the building. And I cannot keep them from
bringing guns in the building unless I have a metal detector with a security
guard standing there. So now I’ve gotta hire
more security guards, buy these metal detectors. That’s an expense which
is gonna be ongoing for years and years to come. – In a state that has gun
laws that in some ways are very different from that
federal regulation as well. – You talked a little bit
before about poor customers, and I’ve got to
imagine, I don’t know, but I’ve got to imagine that’s
one of the most difficult things that you, I can’t
imagine anyone takes lightly the idea of shutting
off someone’s utilities. You need to make money, and
people have to pay their bills, and there’s consequences
and so on, but at the end of the day, if you’re thinking
about an elderly person who for whatever reason
is not in a position to pay their heat or their
water or their air conditioner, at some point, MLGW
has to make a choice, to say look, this
has gone on too long and we have to cut that off. How does that decision get made? How do you feel about
that when you know, I don’t know that you know
each one that happens, but you certainly probably
see numbers, that x number of people were cut off this
month for underpayment. How does MLGW handle that? How do you handle that? – It’s against the law to
give anybody free utilities. So that’s not an option. Nevertheless, MLGW has
possibly the most liberal payment and credit
policy in the country, and we try every way
possible to help a customer meet their obligation
without cutting them off. With that said, we
also find ourselves cutting off thousands of
people for non-payment, each year, and basically, 90% of
’em pay those amounts and are reconnected
within 24 hours. – So it’s just that stick is
what’s necessary at some point, to get them to pay.
– That’s correct. – But you have all
kinds of, probably, we should write it down,
I mean, Plus One, you work with MIFA, the
Share the Pennies, there’re different programs. Talk about some of
those and how those work to try to mitigate
the number of people whose utilities are shut off.
– So for instance, with Plus One,
that helps a person with their utility
bill if they have some kind of a
medical emergency, if they’ve recently lost
their job or something. That’s for helping a person
on a one-time crisis event. Share the Pennies, on the
other hand, is more like teaching someone how to fish, because we are
making improvements using the Share the Pennies
funds, to people’s homes, so that they use less
energy on an ongoing basis. And hopefully their utility
bills will then also be less, and that will improve
their quality of life. – Let’s switch a
little bit, for people who don’t know, and
I get murky on this, so I imagine other
people do too. MLGW is owned by
the City of Memphis. Just walk through
its structure, and why it is structured
the way it is. And as we were talking before about how your replacement
will not be hired by the Board of MLGW,
which I should have known but didn’t, it’ll be the Mayor
bringing a recommendation to the City Council. So talk about that relationship
and how it’s set up. – So dating back to 1939,
MLGW was established as a entity which is owned
by the City of Memphis. MLGW employees are
not city employees. The pension system is separate
from the city pension system. The healthcare is
separate from the city. It’s actually against the law for the city to subsidize MLGW’s operations, and
it’s against the law for MLGW to subsidize
the city’s operations, except to the extent which
is stated by state law, which is in the form
of a annual payment in lieu of taxes,
from MLGW to the city. Otherwise, our finances
are totally separate and must be kept separate. – Does MLGW make
money every year, or, do you run a
surplus every year? – We are a non-profit company. We have to make sure that
we have positive net income so that we don’t lose money
over a long period of time, but we are not a
profit-making company, and we have no shareholders. – And no shareholders. How common is this: there was a wave, for
instance, of public utilities that were sold, Enron famously had gathered a bunch
of public utilities, I think Mayor Harrington,
back in the day, talked about wanting to
consider maybe some City Council people, Bill and you would
remember better than me, about wanting to sell MLGW. That talk seems to
not come up anymore. But what is the
state nationally? How many city-owned public
utilities are there? – There’s thousands. And in the TVA
system, there’s 155 publicly-owned systems
that TVA serves. The City of Memphis
and its citizens already own MLGW. If MLGW was ever sold, well whoever bought it
has to figure out some way to recapture that expense. So essentially, our
citizens would be buying it back a second time, which doesn’t make any sense. And the only way to do
that is to raise rates. – (Eric)
Okay. Bill, just a couple
minutes left. – Jerry, let’s talk about
some of the alternatives that are out there:
solar power, wind power. TVA did some buy-back programs that involved some
residential rooftops. More prominently, I think
they did a commercial real estate rooftops as well. Are we gonna see more of that? – We will see more, yes, because the price of solar power is becoming cheaper. We have a requirement
that we must buy all of the power
we sell, from TVA. TVA has a very diverse portfolio of power generation facilities,
which includes solar, it includes wind,
as well as coal, natural gas, hydro, and nuclear. Citizens can put solar
panels on their homes, but that would not get them out of the point
of being dependent on Memphis Light,
Gas, and Water. They would still be
dependent on the grid, they would still need
to buy electricity from MLGW, or natural gas. – Right. And the clean line that’s been talked about
in terms of wind power, that does not actually involve the big windmills that
we’ve seen in other places. Here, it would be
that power generated elsewhere, coming through here? – It would actually be
generated in Oklahoma, and then there would
be power lines built to bring it to Tennessee. And if they were to sell that, they would sell it to TVA, and TVA would in turn sell
it to us or other utilities. – A couple questions along that. Just a couple minutes left. We’ve just had a whole
bunch of hurricanes, really destructive, sad,
terrible hurricanes. And people talk about
solar, we talked about the power plant going
from a coal-fired plant to a gas-fired plant,
and gas is cheaper, more available in
the United States, also less emissions, and
the environmental groups are very happy about that. Has MLGW, I mean you have to
plan over long periods of time. What do you guys look at
in terms of climate change? Do you all believe
in climate change? Is that a part of
your strategic plan and your long-term outlook? – So the effects
of climate change, if the climate becomes warmer, means obviously that
we’ll have warmer summers and we’ll have winters
that are not as cold. That will potentially increase
the use of electricity in the summer, and we’ve
always been a summer-peaking electrical load anyway, and probably less use of natural
gas in the winter months. So this will put some
added pressure on TVA to be able to give us the
electricity that we need when we need it during
the summer months, as the load picks up
due to air conditioning. – Yeah, okay. We leave it there,
sorry, I ran out of time. But thank you for being here. Good luck in your future work. – Thank you.
– And thank you, Bill. And thank you for joining us. Join us again next week. [dramatic orchestral music] [acoustic guitar chord]

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