Tag: MLGW

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Politics Politics Feature

Shocking!

CREDIT: Jackson Baker

Although petitions for city office won’t be available at the Election Commission until next month, this year’s Memphis municipal election — or at least the mayoral component of it — is already fully under way.

To judge by the charges and countercharges and the quantity of mud that has so far been slung, this contest promises to be as entertaining and down-and-dirty as any in the past (see also Viewpoint).

And the fact is, for all the complaints levied by abstract theorists at “horse-race” journalism, we are electing people, not position papers, and all of it — the battle of personalities, the spin machines, the fund-raising competition, and certainly the size and effectiveness of the contenders’ cadres — counts toward a bona fide measure of the candidates and what they might do in office.

But in this election year, more than in many previous, issues will play a huge role in voters’ minds and none more so than the issue of Memphis Light, Gas and Water, which — both for those ordinary citizens whose service is constantly under threat and for those privileged ones who (we now know) have been allowed to run up huge bills — has alarm bells ringing throughout the city.

Rarely has the distinction between haves and have-nots been so starkly drawn as by the disclosures of the last few weeks concerning the now infamous “third-party notification” lists kept by current MLGW president, Joseph Lee, a protégé and appointee of incumbent mayor Willie Herenton.

But at least one major opponent of Herenton’s, former MLGW president Herman Morris, is also tainted by the scandal — particularly by a 2002 e-mail, dating from his own tenure as head of the giant city utility, that arguably might have established the precedent.

Morris’ memo, written in response to a customer complaint from then Commercial Appeal editor Angus McEachran, urged staff to “make sure we handle this matter with sensitivity.” Another key point of the e-mail was that MLGW should develop a list of customers “that require my special awareness, attention or staff intervention when they have problems.” He spelled that out to mean a longish list of elected officials (city, county, and state) and news media members.

The memo, conveniently leaked to the media by Herenton allies, was clearly meant to blunt Morris’ almost simultaneous announcement of his candidacy and to share out an albatross that was already a burden on the mayor himself. Meanwhile, candidate Carol Chumney, a frequent critic of Herenton on MLGW’s future and other issues, could enjoy the serendipity of having become chair of the City Council’s MLGW committee as of January 31st.

As such, she is entitled to conduct investigations and to shepherd solutions regarding MLGW and all the controversies attending it, old and new. In her campaign opening last month, she made a point of standing in opposition to the sale of MLGW, something which Herenton proposed a few years back and a project which many of his detractors believe he still holds in reserve.

The new scandal gives Chumney ample opportunity to burnish her reformer credentials (it also presumably gives a boost to the anti-establishment candidate John Willingham), while at the same time it inevitably tarnishes those of Morris.

When he was asked about the memo at his opening announcement last week, Morris floundered for some time, managing in a remarkably unhoned and stammering answer to acknowledge that he had given access to “family and friends” and to influential members of the community at large but not making clear distinctions between such a procedure and the possibility of granting special privileges.

In a curious way, the awkwardness of Morris’ response was exculpatory. It was as if, instead of indulging in some ready-made spin, he was trying to reason it all out as he spoke.

In a brief Flyer interview this week, the newly announced candidate had thought it through more carefully. (See sidebar.)

Special Election(s) Jackson Baker

Chair candidates Bailey (left) and Norman

Report: Yard signs indicate that the two Republican candidates in next Tuesday’s special elections for state Senate District 30 and state House District 92 — Larry Parrish and Richard Morton, respectively — are putting forth an effort, but the two Democratic nominees — state representative Beverly Marrero for the Senate position and G.A. Hardaway for the House seat — are heavily favored.

Two-Man Race for Chair of Shelby Dems? So it would seem, after Saturday’s preliminary caucus, in which a record crowd showed up at Airways Junior High to elect delegates for the party convention on March 31st. Current chairman Matt Kuhn is not seeking reelection, and things are shaping up for a two-man race between lawyer Jay Bailey and minister Keith Norman.

Bailey is supported by David Upton and some, but not all, members of the party’s old Ford faction, as well as by the activist Grant brothers (Greg and Alonzo), Del Gill, and blogger Thaddeus Matthews. Norman has emerged as the candidate of the Sidney Chism faction and is likely also to be supported by Desi Franklin of the MidSouth Democrats in Action reform group. It should be noted that other Democrats — including longtime activist Jody Patterson, who says she will run — may also launch candidacies before March 31st.

For more reports on the mayor’s race and other political news, go to “Political Beat” at www.memphisflyer.com.

A Q&A With Herman Morris

Flyer: Do you think it was strange that the text of your memo about access to certain customers became public just as you got ready to announce for mayor?

Morris: It was a very curious timing. Someone must have scoured the records of the utilities.

What’s the difference between how you handled “special” customers and how Joseph Lee has handled them?

On my watch, if you didn’t pay or didn’t make an arrangement to pay, you got a cut-off notice and services were terminated. It didn’t matter who you were. I wanted elected officials to be able to get through. They, after all, were representatives of a constituency. Big industrial users were a somewhat different case with major issues. But even they, if they got months in arrears, could get cut off.

What about the well-publicized case of former Commercial Appeal editor Angus McEachran? It was in reaction to a query from him, about wildly fluctuating monthly charges, that you wrote the memo that got leaked.

Angus was a tough issue. We ultimately concluded that he paid his bill every month and that our meter malfunctioned. He ended up owing more than he thought he did, so we worked out a payment plan to collect it from him.

The case that’s aroused most attention has been Councilman Edmund Ford’s. Did you have the same problem as Joseph Lee, and did you, too, let him go indefinitely without paying?

I’m not aware of any time that we had anyone go delinquent for the period of time that he did later on, except maybe in cases of bankruptcy, when we couldn’t by law cut them off. My recollection is that Edmund Ford did get cut off, though he would also come in and make payments to avoid cut-offs.

Can you shed any light on your departure from MLGW in 2003?

My departure remains a mystery to me, too. It could have been that I was opposed to the sale of MLGW. It could have been a more open attitude toward providing services to outside communities awaiting annexation. It could have been disagreements about staffing or the way the mayor wanted to handle the “prepaid” issue [an advance purchase of TVA power via preferred brokers designated by the mayor]. I was never given a specific statement or reason.

Another issue that has aroused the public is that of too easy and too lucrative pension arrangements for public employees. Was that an issue with your own golden parachute?

At the time, the parachute didn’t seem very golden. I negotiated fairly in terms of my departure. I wasn’t eligible for a pension, so I had to negotiate. At 52, I wasn’t quite old enough, and I hadn’t been there 15 years. I was just under the limit both ways for a pension. In all honesty, the final settlement probably fell short of being the equivalent of what I would have received through retirement eligibility.

Categories
Opinion

News About This and That

The MLGW story has legs, but the county public school realignment has even longer legs. MLGW is good water-cooler fodder. School zones determine where people live and how the county grows. If I were a decision maker, I’d be picking the brains of two people: Willie Herenton and developer Jackie Welch. Herenton knows this story cold and could predict the ramifications better than anyone because of his experience in the city school system when it still looked a little bit like the county system. Welch made a great living selling new school sites to the county for 20 years. The two men are anything but friends, but they agree on a surprising number of things on this issue, and anyone who ignores or demonizes either of them will get it wrong.

• Regionalism does matter. That’s one of the conclusions that can be drawn in the post-mortem of Marion, Arkansas’ failure to land the new Toyota manufacturing plant. Not only did Mississippi governor Haley Barbour out-hustle the competition, he lined up support for Tupelo from the governor of Alabama. Last time I looked, Alabama also borders Tennessee. The Memphis Regional Chamber of Commerce took a my-governor-right-or-wrong approach, and Marion/Memphis once again came up empty-handed. It’s time for the chamber’s board and local business leaders to do some soul searching.

• Speaking of the chamber of commerce, the front-page news in last weekend’s Nashville Tennessean was the latest news of the weird in the continuing saga of football player Adam “Pacman” Jones of the Tennessee Titans. The front-page story in last weekend’s Commercial Appeal was the latest news of the weird in the continuing saga of Mayor Willie Herenton. In which city would you rather be running the chamber or building a career or a business?

• Everyone’s an editor these days, and the problem of sourcing a story has never been clearer than it is in the MLGW saga. MLGW spokeswoman Gale Jones Carson was Willie Herenton’s spokeswoman until this year. Former MLGW president Herman Morris is running against Herenton for mayor. A story that suggests the Morris years were golden years is most likely pro-Morris spin. A story from Carson must be treated as pro-Herenton spin. Board members were appointed by Herenton but are supposed to show independence and represent citizens. One of them, Nick Clark, wrote an opinion column for The Commercial Appeal Tuesday saying Joe Lee should quit.

• The Morris style is a mystery. He announced his candidacy at The Peabody in front of a mostly geriatric crowd that buffered him from the news media. A picture was worth a thousand words. A couple days later, knowing full well that political storms were brewing in Memphis, he headed for California for an NAACP function. Odd timing.

• The story about the $12.5 million settlement between the Federal Communications Commission and four radio networks (including Clear Channel) representing more than 1,500 stations got buried beneath other news. But opening the airways was a big deal at the National Conference for Media Reform in Memphis in January. In theory, the settlement will mean a greater variety of music and programming. We’ll see.

• There are a couple of pieces of good news for downtown Memphis. First, notice the bulldozers and tree-clearing on Mud Island north of the Interstate 40 bridge. It’s preparation for more houses and apartments on the last large piece of undeveloped property on the island. Second, the University of Memphis law school is proceeding with plans to move to the old Front Street post office and customs house. James Smoot, dean of the law school, said last week the move-in is scheduled for 2009.

• A confusing and little-noticed change in the Memphis City Charter could make it possible for newcomers to run for council and even mayor this year. The original charter says mayoral candidates have to be residents of Memphis for five years. But at this writing, city attorney Sara Hall was researching the question. I’m not the only one confused. When I called the Memphis City Council and Shelby County Election Commission last week, both chief administrators thought that the five-year requirement was still in place. If we’re wrong, watch for a fresh face with big-name support to jump in.

Categories
Letter From The Editor Opinion

Letter from the Editor: MLGW Causes Marriage Rift

My friend Charley’s marriage is on the rocks, and it’s all MLGW’s fault. Let me explain.

Charley’s wife, Cecilia, has always been a bit of a high-maintenence type, but she tolerated Charley’s golf habit and he tolerated her insistence on trying to appear in RSVP every month, and they’d managed to live fairly contentedly for years. But recent events at our public utility have pushed this once-happy union to the breaking point.

Last week, Charley was sitting at the breakfast table, savoring his second cup of fresh-ground Guatemalan treetops blend and reading the CA sports section. Cecilia nursed her skin-rejuvenating Chai tea and perused the local news.

“Man, the Grizzlies suck,” Charley said. “And poor Stromile Swift — he’s got those darn ‘flu-like’ symptoms again. That’s the 27th game in a row … ”

When Cecilia didn’t respond, Charley looked up from his paper to see his wife’s steely eyes burning into him in a way that foretold dark clouds on the marriage Doppler.

“Why are you such a loser, Charley?” Cecilia said, flatly.

“What, wha … ?” Charley was flummoxed. He’d built his family’s patio-furniture business into a tidy fortune. He and Cecilia were members of all the best clubs. They lived in Southwind in a 6,000-square-foot replica of Buckingham Palace and drove shiny new BMWs. How dare she call him a loser? He wasn’t going to take it, dammit!

“Um, whatever do you mean, sweetcakes?”

“You’re not on the list.”

“What list?”

“The MLGW list of bigshots. The list that says you’re important. The list that says you don’t have to pay your utility bill if you don’t feel like it. The list that says you are somebody. We’re nobodies, Charley, face it.”

“But that’s a list of deadbeats.”

“No,” Cecilia sighed, “it’s a list of people who are important enough to be allowed to be deadbeats, and you’re not on it. How are we going to show our faces at the Black Tie/Bermuda Shorts ball this weekend?”

“Well, uh, maybe we could say we have flu-like symptoms.”

“Not funny, Charley. Not funny at all.”

Bruce VanWyngarden

brucev@memphisflyer.com

Categories
Editorial Opinion

MLGW: The Fallout

Maybe he should have sold it.

When Mayor Herenton suggested several years ago that serious consideration be given to the possible sale of Memphis Light, Gas & Water to an investor-owned utility company, he found few supporters, aside from the banks and brokerage firms that would have done the underwriting. The more typical response was that the idea was kooky and unthinkable and

just what you’d expect from “King Willie.”

So now MLGW head Joseph Lee is appearing before a federal grand jury, there are indications that politics have corrupted the utility, and the ordinary Memphians who are the shareholders of MLGW get bad news, high bills, Memphis Networx, and diversion of money from the water division to a professional basketball team.

It might seem to add up to a great platform for former MLGW CEO Herman Morris to run for mayor against Herenton this year, but it’s not that simple. There’s enough credit and blame to go around for both of them. Morris, by the way, has made no official announcement but has told several people he is interested. The filing deadline is not until July, and qualifying petitions can’t be pulled until April.

Herenton, remember, promoted Morris to CEO from legal counsel and gave him a free rein. When Morris’ term expired, Herenton let him continue and even approved giving him a raise to a salary higher than the mayor’s own. Morris left with a generous pension and severance package, although not as lucrative as the one he originally sought because Herenton thought it was too much and blew the whistle.

Right after the big windstorm in 2003, Herenton famously made a campaign visit to Little Rock while Memphians coped without power. In a press conference after the storm, he passed questions about MLGW’s slow response to Morris. Neither man can claim stellar marks for that one.

Herenton replaced Morris with Lee in 2004 and replaced several board members as well. That was overdue. The board had been dominated by cronies, consultants, and preachers for too long.

Late last year, Herenton chose his communications assistant (and Democratic Party activist) Gale Jones Carson to be MLGW’s head of public relations. She says the political favors that have been recently uncovered at MLGW predated Lee’s tenure. But the argument makes no sense. Herenton appointed both Morris and Lee, as well as the board members. And if he wanted to cut down on the politics and the impression of political skullduggery, he should have gone outside his inner circle and hired someone other than Carson for the PR job. There is no way she can be seen as a neutral spokesperson, given her history, especially if Morris jumps into the mayor’s race.

Candidate Morris would be questioned about his performance at MLGW. What does he know about “the list”? It seems there was such a thing when he was CEO. (See our story on page 15.) Why did he allow MLGW surpluses and PILOT payments to be used for Memphis Networx and the financing of FedExForum? Can the city afford the pensions, union pay scales, and health-care packages that were approved on his watch?

In short, both Herenton and Morris are likely to be careful about throwing stones. MLGW’s office headquarters is crawling with loyalists and grudge-holders for both of them. And now federal investigators are on the case. This looks like a story with staying power until the October election and beyond.

Categories
News

Politics, Favors at MLGW Preceded Lee

Politics and special attention at MLGW preceded current CEO Joseph Lee and were extended to, among others, the former editor of The Commercial Appeal, according to e-mails obtained by the Flyer.

On March 29, 2002, then-MLGW CEO Herman Morris wrote an e-mail to communications manager Mark Heuberger and vice president Curtis Dillihunt about the “CA Editor Problem.”

Morris wrote that he received a handwritten note “from the editor of the CA with a letter of complaint from his wife” requesting Morris’ help in a billing matter.

“This could set editorial policy toward MLGW for years and must be handled with touch,” Morris’ e-mail says. “I tried to call him Thursday but he was not in. I will be out of town 4/1/02 but will call him when I return on Tuesday. I would like you to get involved and make sure that we handle this matter with sensitivity.”

The e-mail has not previously been reported by The Commercial Appeal in its coverage of politics and special treatment at MLGW. The CA editor at the time of the e-mail was Angus McEachran.

The e-mail was obtained by the Flyer from MLGW communications manager Gale Jones Carson on Tuesday, shortly before our deadlines. It continues:

“Finally, I need to develop a list of customers that require my personal awareness, attention, or staff intervention when they have problems. Generally, customers who can call me or the mayor at home should be on the list. The mayor(s); city councilmen; county commissioners; state legislators; congressmen; any city director; editor of the CA; news or station director of TV stations; hospitals; jails; airports; FedEx; other big plants or customers; Fred Smith, Jack Belz, Mike Rose, Ira Lipman, Maxine Smith, Carol Miller (my sister), Lori Miller (my niece), Haymond Turner (my inlaws), Tom Garrott, Ron Terry, Marc Jordan, Pat Tigrett, Dean Jernigan, Herman Ewing, Pitt Hyde, Ben Hooks, Jesse Turner, Russell Sugarmon, Bill Crawford, and Pete Aviotti.”

For more on this breaking story and Morris’ list, go to www.memphisflyer.com.

Categories
News The Fly-By

All in the Family

CREDIT: Melking | Dreamstime.com

Full disclosure: At this time last week, I was planning to write about the incestuous relationship between MLGW and city government.

Of course, I was only going to talk about interlocking pensions and retirement benefits. But then came news about a list of elected officials that MLGW insiders considered friends and family.

The Commercial Appeal reported last week that Mayor Willie Herenton, along with City Council members Edmund Ford, Rickey Peete, E.C. Jones, Myron Lowery, Jack Sammons, and former council members John Vergos and Pat Vander Schaaf, were all included in MLGW’s “Third Party Notification” service, a program designed to alert friends and family if loved ones’ utilities are in danger of being cut off.

But the politicians’ cut-off notifications, if there were any, were slated to go right back to MLGW executives.

Talk about friends with benefits.

Gale Jones Carson, MLGW’s new director of corporate communications, sent out a statement this week saying that the list was compiled before Joseph Lee, the former city finance director, was appointed president of MLGW in 2004. And that people included on the list probably didn’t even know it existed.

“We know that it’s more than a decade old,” said Glen Thomas, supervisor of corporate communications for MLGW. “Judging from the people on there, it has to be pretty old.” Thomas said he didn’t know what steps MLGW executives would have taken if one of the politicians’ accounts became delinquent. One can assume, however, that if someone wanted to know about it, they probably would do something about it.

In her statement, Carson said she could not explain how or why certain elected officials were selected for third-party notification. If council members didn’t have knowledge their account was being flagged, that means MLGW executives — for whatever reason — were interested if certain individuals were ever at risk of getting cut off. Was the utility simply being nice? Or was it looking for leverage with members of the City Council?

Technically, MLGW is owned by the city. The council has to approve rate increases and budgetary items. But MLGW has its own CEO, CFO, and board. That leads to some interesting overlap.

Carson created a stir in January when she left her job as Herenton’s spokesperson to work for MLGW, “bought” her six years back from her previous employment at MLGW, added it to her time working for the city, and because she now had 12 years of service under her belt, started collecting her city pension. And an MLGW paycheck.

But last week City Council attorney Alan Wade determined that there was nothing improper about what Carson did, even if she did buy her time back right before retiring.

“That may seem unfair,” said Wade. “If she had bought her time back when she first came over to the city, it would have been $9,000 as opposed to $14,000. By waiting, she penalized herself.”

More than 30 other employees have used the system in the same way; five of those were with MLGW.

“The two pension plans are separate and distinct. They’re not one and the same,” said Wade. “If an MLGW employee comes to the city and is in payment mode, he or she cannot buy into our plan. They have to start fresh.”

Lorraine Essex, head of human resources for the city, said she doesn’t know why MLGW has a different pension plan than the city. “This is the way the plan was set up in the ordinance,” she said. “It didn’t just happen this way, but I’m not sure how old the provisions are. Probably older than some members of the council.”

That doesn’t explain why employees can transfer time from MLGW or the Memphis library to their years with the city, but don’t have to add their time together. Employees should get what they’ve earned; I just wonder why there is an option that leaves the public paying for a pension and a salary at the same time.

Right now, an underlying problem is the “12 and out” provision that lets both elected and appointed officials retire after 12 years of service with the city. The industry standard is more than double that and that’s what the city now uses. The “12 and out” provision was ended November 2004 but, because of grandfathering, may come up until 2016.

Politicians with third-party notification, on the other hand, looks to be a thing of the past. Herenton is strongly recommending that the board discontinue the program immediately. MLGW’s Thomas said he doesn’t know what will happen to the list or if there will be any legal ramifications for the utility.

But with a lawsuit pending and the feds investigating, it seems that when you join this family, it may be for life.

Categories
News The Fly-By

The Cheat Sheet

CREDIT: Greg Cravens

After a Local Bank of America noticed it was missing more than $850,000, it discovers the culprit is one of its own employees. Agents soon pick up the vault operations manager while she is “on vacation” in Florida. Probably a pretty long vacation at that. Just one question: We know accommodations around DisneyWorld are expensive, but with 850 grand, was the Gator Motel outside Orlando the best she could do?

Let’s see if we got this straight: Gale Jones Carson, the former aide to Mayor Willie Herenton, has returned to work at Memphis Light, Gas & Water. But because she previously worked at MLGW for six years, and then worked for the mayor for six years, she met the 12-year requirement to collect a generous city pension — even though she is still employed? Okay, this is Memphis government, after all, so now it makes perfect sense.

Convicted of drug charges in Miami, a man named Felix Ortiz evades the law for some 31 years, living the last 10 of them in Memphis — under the name of Felix Ortiz-Pulley. We can see how such a clever subterfuge would stump the nation’s best detectives.

Black Snake Moan Greg Cravens

premieres at the Sundance Film Festival. Controversy erupts — sort of — over the description of Christina Ricci’s character as a “nymphomaniac.” Nobody has any problem, it seems, with the film’s promotional posters that show her half-naked and in chains.

Categories
News The Fly-By

The Cheat Sheet

CREDIT: Greg Cravens

In a recent column, we compared Memphis to the Wild West because of all the gunplay here. But at least one thing we didn’t have to complain about was cattle rustlin’. Or so we thought. Last week, some good-for-nothing varmints stole a horse that a local fellow gave to his wife as a gift. It wasn’t a real horse — just a very expensive, almost-life-size fiberglass replica that she displayed in her front yard near Millington — but that still makes them horse thieves.

The world of television can teach us so many valuable things. A Binghampton man was accused of murder after human remains were found in his backyard. When police investigated, they found traces of blood under the newly painted walls of his home. The suspect’s simple explanation: “Yeah, I painted the walls of the bedroom. I watch CSI.” Perhaps he should also have watched Boston Legal — you know that part where the cops say, “Anything you say can and will be used against you.”

Greg Cravens

Steve Cohen is off to Washington, and state representative Beverly Marrero wants to take his place as state senator. Then, it seems Patrice Robinson, who is head of the school board, wants a chair on the Memphis City Council, to replace TaJuan Stout Mitchell, who has resigned to take a job in city government. Maybe. Look, we played musical chairs when we were kids. It was a fun game then. Not now.

Memphis Light, Gas and Water announced a plan to replace its meter readers with computerized gadgets that somehow transmit utility readings to headquarters. The project would cost anywhere from $70 million to $150 million, but MGLW wouldn’t be more specific. That doesn’t surprise us. That’s about the same amount our bill changes from month to month, and they can’t explain that either.

Categories
News The Fly-By

Power Pay

The City Council approved a plan last month requiring city service contractors to pay their employees a living wage, defined as $10 an hour with health insurance or $12 without. Though a division of city government, Memphis Light, Gas & Water (MLGW) wasn’t included in the original resolution, and now its labor union is pushing for the same requirement for companies that contract with MLGW.

After Bill Hawkins of the International Brotherhood of Electrical Workers (IBEW) Local Union 1288 asked the council during a public-comments period if the measure included MLGW contractors, the issue was referred to committee.

This week, the council referred the issue to the MLGW board of directors. They’ll have 90 days to determine if a living wage for contractors would affect the price of utility rates.

According to Hawkins, some contracted workers are currently being paid minimum wage.

“We hadn’t really thought about [MLGW] before,” said Rebekah Jordan, who, as head of the Living Wage Coalition has been fighting for the city service contract ordinance for two years. “We definitely want to follow up with [the MLGW resolution] though, because if the city is going to do this for their contractors, MLGW should do the same.”

“MLGW has $2 billion coming in a year, and a big portion of that is being spent on contracts,” said Rick Thompson, business manager for IBEW Local 1288.

MLGW contracts with companies to provide services in seasonal ground maintenance at its substations, pest control, courier service, janitorial work, as well as utility construction work such as installing city streetlights and laying gas and water pipes.

“We use service contracts if there’s a service that’s not being done by our employees or we don’t have the specific knowledge to perform what needs to be done,” said Chris Stanley, an MLGW spokesman. “Or if we don’t have enough employees to lead the work, like with seasonal construction shifts, we bring in contract employees.”

Stanley said MLGW does not have any say in how much those employees are paid by their employers.

Council members are open to the resolution. “We need to get some numbers, but MLGW is in much better shape financially than the city, so they’re in a stronger position for us to look at [enacting a living wage],” said council member Carol Chumney.

Councilman Dedrick Brittenum agreed. He said that “it makes sense to include MLGW” since the council has already decided to extend a living wage for city contracts.

But Brent Taylor, the council member who cast the lone dissenting vote on the living wage resolution for city contracts, said he’ll do the same when the MLGW issue comes up for a vote.

“I think wages are better set by the private sector than by government,” said Taylor. “Eventually, the higher cost is going to be passed on to the MLGW ratepayers. If we adopt this, I don’t think rates will go up the next week. But it obviously increases costs, so a rate increase will be necessary.”

Jordan said research in other cities shows the overall cost is minimal with regard to living wage ordinances.

Categories
News The Fly-By

In Sickness and In Health

In a world where younger workers will change jobs 7 to 10 times in their career and where corporate “divorce” is as much a fact of life as corporate mergers, MLGW is an anomaly.

“We have a very low turnover rate,” vice president of human resources Armstead Ward told the City Council last month. “We have more hires than we do separations.

“Our people come in young and they stay for a long period of time. Then they go into retirement, but they’re all still relatively young,” he said.

Ward presented the information as part of the utility’s recent work-force analysis, an in-depth look at how many employees the division has, how many it needs, and how much it pays its employees. Energy costs account for 80 percent of the utility’s costs and are fixed. The other 20 percent — where MLGW has some flexibility to find savings — is largely in labor costs.

But in the last six years, labor costs at the utility have increased 36 percent. Medical costs have gone up 12 to 17 percent each year. And the utility spends 41 cents in benefits for every dollar it spends on payroll.

“We’re working on that now, trying to figure out a way to control those costs,” said Ward. “Everything else looked like any other business.”

The utility company is in the process of approving a new health-care plan, which it estimates will save over $6 million. The administration is trying to trim expenses because MLGW forecasts increases next year for all three of its services — electricity, gas, and water — and that means higher utility bills.

One thing that is different at MLGW from many companies — public or private — is that retirees receive full medical benefits. And while medical costs are a nationwide problem, they have become an all-out crisis for companies that have a lot of retirees on the rolls. Retirees’ pension and benefit plans have nearly bankrupted car makers GM and Ford.

And while longevity and loyalty are things to be admired, companies can’t always afford them. Mature airline carriers such as Northwest and Delta have found themselves at a distinct disadvantage because their employees have more seniority than those employees at airlines such as Southwest.

But Ward said that’s not a concern at MLGW.

“It benefits us to have people who work for long periods of time. We have a turnover rate of 3 percent — that’s unheard of. Yes, there are benefits of [less experienced] employees, but the little bit of money you would save — okay, the significant amount of money you would save — you would put so much more at risk.”

But that longevity often means that when employees leave, they retire. Currently, MLGW has about 2,700 employees and 2,000 retirees, meaning there are 1.35 active employees for every retiree.

Ward called the ratio of employees to retirees normal; the division has a smaller workforce than it once had and people are living longer. But it’s possible that 79 percent of MLGW’s managers could retire within the next five years. How will it affect the ratio and, more important, the bottom line?

Even when an employee quits MLGW, it’s not always forever. At retirement, the average MLGW employee is 57 years old with 27 years of experience at the utility. Employees can retire after 25 years, and if they choose to come back to work, they are supposed to wait a year.

“One of the things we heard was that people [would] retire on Friday and come back to work on Monday,” said Ward. “Only a few situations like that occurred. It wasn’t as rampant as people thought.”

Retirees have started lobbying the MLGW board for a firm commitment that the division will continue to pay all future health-insurance costs for retirees, in perpetuity. But in the last few months, MLGW management and board members have cited a changing fiscal environment: flattening revenues, flat customer growth, and skyrocketing energy costs. While the utility has made a promise to its employees, it also has a relationship with its customers. In a marriage such as this, which comes first: the wife or the mistress?

Just for comparison, GM had 11 workers for every retiree in 1962. In 2005, there were 3.2 retirees for every worker. MLGW’s situation could be better, but it could also be worse.

With increasing pension costs, rising medical costs, and an aging workforce, when MLGW executives say they need to turn the trend and find a way to be productive, they aren’t kidding.

The good news for the utility company — but perhaps the bad news for customers — is that MLGW’s the only fish in the sea.