Month: February 2006

Opening an MLGW bill can be frightening. One minute you’re warm and toasty, and the next, ice water runs through your veins as you come to terms with what you owe. And with a rate hike from the Tennessee Valley Authority — MLGW’s electric supplier — announced last week and being passed onto local consumers in April, it only gets scarier. We sat down with Bill Bullock, MLGW’s manager of economic development, and Eliza King, supervisor of billing, and asked them to explain a utility bill.

Flyer: What exactly does this bill tell us, other than we owe MLGW $368?

Bullock: This is a utility bill for 32 days of service ending on January 30, 2006. It gives you the previous and current readings of natural gas and it lists [usage as] 192 units. Those units are in ccf, or hundreds of cubic feet. The next line talks about the purchased gas adjustment: the PGA.

Which is?

Bullock: The PGA is a “true-up” mechanism. In the ’80s, natural gas prices did not fluctuate. They were regulated. We would often have one rate in place for some time, maybe several years in a row, and there would be no need to make any adjustments.

So the PGA changes monthly?

Bullock: The current assumption is that the cost of natural gas is in the range of 45 cents per ccf. The assumption is that if MLGW bought all of its gas at 45 cents per ccf, the PGA would be zero. As the actual cost of gas fluctuates — and fluctuations in the last couple of years have been strongly on the upswing — the PGA is the mechanism that MLGW uses so that we can recover our costs of natural gas.

Using the number of units and the amount owed, the cost of gas was $1.38 per ccf.

Bullock: The cost of natural gas is a portfolio of what we’ve purchased over time, what we’re using from storage, and what we’ve bought on the market at any given time. Our whole strategy is to dampen the volatility and lower the amount those huge fluctuations in the market affect our customers.

This customer was charged $360 for this month, $470 the month before, and $280 the month before that. Those seem like huge fluctuations.

Bullock: The price when you divide it might be $1.30 or $1.40, but what really fluctuates is the usage. And usage is going to be proportional to weather.

King: You have to look at the number of days in a billing period, because that can go from 29 to 34 days. The month of December is also the holiday period. People have guests over, and they’re doing a lot of things. They’re at home more. You can’t just say last month my bill was this and this month it’s this. It’s how do you use it. A lot of times our customers don’t stop to analyze.

Why doesn’t MLGW itemize commodity cost versus distribution and operational costs on rate payers’ bills?

Bullock: In our [last] board meeting, one of our board members suggested doing something like that. Quite frankly, it’s something that would be useful for our customers. Eighty to 85 percent of the dollars that come to MLGW go to our suppliers for the commodity. Very little of that money stays in Memphis for our operations.

What about stocking up?

Bullock: Where many people would say buy natural gas in the summer when it’s cheap and use it in the winter when it’s expensive — the market doesn’t operate like that anymore. In the last decade, virtually every bit of electric generation built in the United States has been built to be fired with natural gas. It’s cheaper to build and it’s cleaner to operate. In the summer of 2005, we had quite a hot summer and it took a lot of natural gas to generate a lot of electricity. At the same time, the war in Iraq meant the price of crude oil was going up, and we have a lot of industrial customers who can either use fuel or natural gas. With crude oil going up, they switched to natural gas.

MLGW estimated that bills would be 70 percent higher than last winter.

Bullock: We’ve had some warm weather, and prices have come down. It’s very logical to say that because of that, your bills aren’t going to be as high. We’re uncomfortable going with that message because prices are still very high.

We get some attention from headlines in Nashville or Detroit that say natural gas bills will be going down. … The reason bills are going up and down is consumption, and consumption is directly related to the weather. We didn’t want to change our message to our customers. We want them to continue to conserve. Our goals may be a little different from an investor-owned utility that’s trying to get good information out to its stockholders or a gas company that’s competing with an electric company for heating customers.

Why is MLGW’s address on the back of the payment coupon?

King: We process 21,000 payments a day. Our people would have carpal tunnel if they had to re-orient every single one. The machine cuts it on three sides and it’s right there, already oriented so they can read it.

Read more about utility costs on page 13.

Sugar Creek Charter School in Charlotte, North Carolina, isn’t your typical little red schoolhouse. Sure, it serves 525 students, grades K-8, all of whom wear a uniform of polo shirts and khaki pants. But if the windowed front looks a little familiar, it’s because the building used to be a Kmart.

Here at home, the county school system is converting a Schnucks in southeast Shelby County into a temporary school to ease overcrowding in the area.

“It’s an interesting idea that’s working around the country,” says Maura Black Sullivan, director of research and planning for SCS. “Memphis City Schools could look at it, as well. In Florida, they’ve converted whole shopping malls.”

But it’s an interesting idea that has generated controversy here. Last week, because they didn’t want students going to school in a Schnucks, a County Commission committee discussed additional, emergency funding for the school system.

The district initially looked at the grocery store several years ago. “That particular building kept coming up from the owners. At the time, we were looking at a long-term lease, adding another whole wing, a gym, and a new front, so it would look just like any one of our current school buildings,” says Sullivan. “I think people were so excited about the possibility that they started talking about it before a full study could be done.”

I can see why. With new school construction seemingly out of control, renting a big empty building could be a bargain as well as a benefit for the community.

A few years ago, drivers could travel south on Germantown Parkway from Cordova and actually see empty, undeveloped land. Now, virtually the only land that’s “empty,” is where a Wal-mart and a Kmart have both been built, used, and now abandoned.

Across the country, communities are struggling with what to do after big box retailers ditch their old buildings for new ones, sometimes only a few miles away. And because they don’t want the buildings used by their competitors, they often sit empty.

Unfortunately, the Schnucks school project has hit several speed bumps. First the district realized the long-term lease would cost more than $37 million.

“We have had several private developers come to us with the building lease idea before,” says Richard Holden, chief of operations. “None of those ideas ever panned out, because no one can borrow money cheaper than the government. … One part of the Schnucks equation is that it was built as a grocery store, and it would take extensive renovation. Adding all that in, it costs the same as building a whole new school, especially with the cost of the long-term lease.”

The school district still plans to use the building — albeit only for one to three years — because the other option is adding more portables, and the district already uses 145. But some parents are concerned that the facility can’t compare to other school buildings. How do you go from “clean up on aisle three” to teaching the ABC’s?

Under the current plan, the school will use the building’s existing lighting and HVAC system. Because of fire codes, classroom back walls will reach to the ceiling, but the remaining walls will only be 60 inches high.

The administration is still unsure how the district will use the building, but it’s expected to present a plan to the board in March.

“It looks like the way it is set up, it will lend itself better to a K-8 environment,” says Sullivan. “We have to decide: Do you do a grade, a series of grades, or draw a little attendance zone and do K-8?”

One popular idea is moving the kindergarten and first grades of Highland Oaks and Southwind elementary schools to the Schnucks building. Only, the former grocery store cannot accommodate more than 37 classrooms.

“To do that, we would need 42 classrooms. Those are the kinds of problems that we’re battling to get the right environment for kids,” says Sullivan.

I hope they figure it out, if just to show that schools can work in buildings that once saw blue-light specials and people going Krogering.

“It’s costly,” says Sullivan, “but if it’s a building that has value to the community and it gives it new life, I think that’s a smart use.”

Big boxes aren’t necessarily valuable in themselves. Their design is almost anti-architecture; they’re not historic; and they’re certainly not rare. But abandoned and empty, they’re like a retail black hole, sucking the value out of the surrounding area.

In the case of the Schnucks school, the long-term lease was too expensive for the school district. But if a retailer has a building that they’re going to let sit empty anyway, why not offer a discounted lease to the local school board? Could we get a price check on that, please?

1. Developers have targeted the Highland Strip — that cluttery stretch of Highland from Southern to Midland — for conversion into a mixed-use “lifestyle center.” Man, we’re old enough to remember when the Strip was lined with dimly lit bars, a seedy pool hall, hippie clothing shops, and the fragrance of pot wafting over the neighborhood. Ah, good times! Why would anyone want to change that?

2. Vandals on four-wheelers did thousands of dollars in damage to the greens and fairways at Olive Branch’s Wedgewood Golfers Club. Then they drove straight home, and police simply followed their tracks across the snow. Which means: It’s only February, and we already have our nominees for the Dumbass of the Year award.

3. Memphis Light, Gas and Water officials are proud that a negotiation they made with TVA several years ago will save customers $2 a month on their utility bills. Yes, $2. We’re really not sure how we will spend that extra $24 a year. Buy a Corvette? Invest in Google stock?

4. Germantown officials announce they will build an underground water system instead of a new water tower, and residents breathe a sigh of relief that they won’t have to look at what The Commercial Appeal described as a “tower of terror.” It was just a big water tank, people. Nothing to be afraid of. Water is good for you.