MLGW proposes pair of rate hikes to take effect in 2019, 2021
Memphis Light, Gas & Water is proposing electric, gas and water rate hikes that would increase the average customer’s monthly residential bill by a combined $9.77 in July.
MLGW chief J.T. Young presented the utility’s 2019 budget and a five-year financial outlook to a Memphis City Council committee on Tuesday, which forecasts two rounds of rate hikes that would take effect in July, and then in 2021.
If the rate increases are approved as part of the utility’s 2019 spending plan by the City Council, MLGW residential customers would see their monthly bills grow, on average, by $5.47 for electric, $1.78 for gas and $2.52 for water.
“If we don’t get any relief, reliability will degrade, customers’ outages will be longer, and there’s a greater risk of not having the water production we talked about earlier,” Young said.
The longer-term plan is aimed at providing customers with more reliable service, while also focusing on modernization. The rate increases are phased to allow customers to plan, Young said.
Over a five-year period, if the utility finds savings, those will be credited back to customers, Young said.
The City Council in February approved 2 percent rate increases for both electric and gas, which took effect in July and added roughly $3 to the average household’s monthly utility bill.
The requested rate increases outlined on Tuesday weren’t a surprise because when the council approved the smaller-than-requested electric and gas hikes earlier this year, utility officials said it meant they would likely be back to ask for more as part of the 2019 budget.
If the council had approved larger rate increases this year, MLGW could have made it to 2023 before proposing another rate hike, utility officials said.
Council members who favored the larger increased advocated that it would give MLGW a stronger fiscal footing, while allowing for system upgrades to curb outages and cut back on other issues.
Customer expectations have surpassed MLGW’s ability to deliver, Young said.
“There is really no other way to make the improvements our customers expect, without making some additional investment,” Young said.
City Council members earlier this month heard a presentation by Nuclear Development LLC CEO Bill McCollum, who said defecting from the Tennessee Valley Authority in favor of purchasing electricity from the Bellefonte Nuclear Plant in Alabama could save MLGW $487 million per year.
Young has voiced concerns about that proposal, including that the plant isn’t yet operational, and that if it is finished on time and within the expected cost, it will not provide MLGW with all the power it needs.
The company is seeking an updated letter of intent and a nonbinding power purchase agreement from MLGW, in order to secure an $8.6 billion federal loan from the U.S. Department of Energy.
Jamie Munks covers Memphis city government and politics for The Commercial Appeal. She can be reached at 901-529-2536, jamie.munks@commercialappeal.com or on Twitter @journo_jamie_.