Tag: MLGW

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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.

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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.

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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.

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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.

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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.