Memphis City Council member grilled Memphis Light Gas & Water (MLGW) president Jerry Collins for nearly an hour Monday in a special meeting called before Tuesday’s vote on a proposed water rate increase.
Collins
MLGW leaders want a water rate hike of 22 percent, which averages to about $3.31 per customer per year. The increase would yield $22 million per year for the utility.
MLGW leaders said they need the money to fill budget gaps in the water department this year. Those gaps come from increasing legal fees, higher operation costs, and $2 million in revenues lost when Cargill shattered its corn milling facility here this year. Also, MLGW leaders want to spend $2.7 million to upgrade two water pumping stations.
Council member Alan Crone asked Collins what he’d done to lower expenses and close the budget gaps. Collins said he’s cut the water budget as much as he could. MLGW has deferred maintenance on plants and equipment across the service area, inducing leaky water meters on customers’ homes.
Collins said he delivered the council “a good budget,” evidenced by the fact that the utility has the second-lowest water rates in the country and the lowest combined rates for water, gas, and electricity.
“Sometimes you have to raise rates and this is one of those times,” Collins said.
MLGW raised water rates 14.9 percent in 2008, 5 percent in 2011, 7.1 percent in 2013, and 2.1 percent in 2014. The utility asked the council for a rate increase last year but council members voted it down.
According to state law, the state will automatically increase water rates if a utility shows two years of budget gaps. When the council vote down the water rate hike last year, “it started the clock” on a two-year window that ends with state control of water prices. Collins said if the council does not approve this rate increase, the state would increase the rates in a year-and-a-half and the hike would be more than 22 percent.
Council member Harold Collins asked how MLGW could square spending $240 million to install smart meters to all of its customers and also ask them to pay more for water. MLGW’s Collins said the money would be spent over five years and the smart meters would, once installed, save the MLGW system $40 million annually, which could delay further rate hikes.
Crone asked MLGW’s Collins if the utility could cut rates on electric and gas without having to raise rates on water. Collins said he’d explore the suggestion and report back to the council tomorrow before they vote on the rate hike during their regular meeting.
