MLGW electric rate hike approved by Memphis City Council. What to know

Memphians will see a 12% increase in their electric bill costs over the next three years after the Memphis City Council approved Memphis Light, Gas & Water’s rate increase request Tuesday night.

The increase was proposed about two months ago, in early October, and was met initially with skepticism from council members.

Doug McGowen, MLGW’s president and CEO, was challenged by council members in early November to “convince” them to vote for it. McGowen has said that electric rates have stayed relatively even over the last four decades, meanwhile, inflation has increased, and outages are becoming “twice as frequent and last three times as long.”

Nine councilmembers ― Ford Canale, Chase Carlisle, Frank Colvett, Rhonda Logan, Worth Morgan, Patrice Robinson, Jeff Warren and Martavius Jones ― voted in favor of the increase, with four councilmembers ― Cheyenne Johnson, Michalyn Easter-Thomas, JB Smiley Jr. and Jana Swearengen-Washington ― voting against it.

“Since the year 2000, outages are twice as frequent and last three times as long,” McGowen said at that November committee meeting. “That is directly attributable to a lack of funding, a lack of approved rate increases over the past two decades. You cannot afford to cut your way to reliability. We need the necessary resources in order to invest in the system. I think that’s all the argument you need.”

Related: Memphis could hike solid waste collection fees in 2024. And more increases can come

The rate will increase 4% each year and is not likely to be dropped in the future, McGowen said at past meetings.

Jones reiterated his main reasoning for supporting the rate increase Tuesday night, saying he believes the amount of extra money MLGW customers will pay for their electricity will be less than paying for another round of groceries if their power goes out for an extended period.

Part of the money from the rate increases will be spent on tree trimming, which McGowen has cited as a large reason for the outages. It will also be used to replace old transformers on a regular basis, so the utility is not waiting for them to fail and cause an outage. Other infrastructure that will be replaced regularly include substations and underground wires.

MLGW works to fix water issues near a residence in Raleigh on Dec. 27, 2022, in Memphis.
MLGW works to fix water issues near a residence in Raleigh on Dec. 27, 2022, in Memphis.

The utility is also planning to bring automatic switches to the grid, which he said will redirect power when a failure is detected. He also said that the switches will help restore outages quicker.

“We would be going about twice as fast as we would be without [the improvements],” McGowen said when asked what the improvements would change when the power goes out.

Councilmembers, community against increase say promises haven't been kept by utility in the past

Among the rate increase’s most vocal opponents was Smiley, who pointed to promises made by MLGW to the council in the past that he viewed as not being kept.

“There have been previous administrations who have sat there and told the council that if we vote for this rate increase, we’re going to see substantial improvement in terms of reliability,” he said. “I think just looking at what transpired, we did not see a substantial increase in reliability.”

Smiley said that, though he supported McGowen’s appointment as MLGW’s president, he said the views on the organization among residents is poor and that McGowen needs to “show us that the reliability is going to improve.”

Previously: Memphis Light, Gas & Water president: 'Reliability will get better.' How that happens

Water and gas rates rose in 2020, but electric rates have remained fairly even, with the last rate increase coming in 2004. Rates were dropped later.

Keshaun Pearson, the president of local nonprofit Memphis Community Against Pollution, agreed with Smiley’s sentiment that more needs to be done before raising rates.

“What I don’t want to do here is continue to perpetuate a system where MLGW comes before this council and continues to get a rate increase,” Pearson said. “MLGW was here in 2020 and they are back here again asking for even more without any proof of resilience. This is a company who proposed to use more technology. We have seen, currently, our LED lights are working inadequately, and the software has been inadequately used to calculate bills for people.”

Memphis City Councilman JB Smiley looks into the audience during a City Council meeting at city hall in Memphis, Tenn., on Tuesday, July 25, 2023.
Memphis City Councilman JB Smiley looks into the audience during a City Council meeting at city hall in Memphis, Tenn., on Tuesday, July 25, 2023.

Carlisle, who voted for the rate increase, echoed statements McGowen has made at past meetings, saying MLGW’s rate increases are needed to ensure Memphis’ power grid can withstand storms and return power more rapidly.

“The issue has been our ability to receive [the Tennessee Valley Authority’s] power, and widely distribute it,” he said. “We’ve got to step up to the plate here, and not be susceptible to the arguments that have been made here for 40 years. These are the same arguments that have been made in these chambers for 40 years by people that are nervous about a rate increase.”

He also said the rate increase might be exponentially higher for homes that are not properly weatherized but argued that was a responsibility for the city to figure out, not MLGW.

Lucas Finton is a criminal justice reporter with The Commercial Appeal. He can be reached at Lucas.Finton@commercialappeal.com, or (901)208-3922, and followed on X, formerly known as Twitter, @LucasFinton.

This article originally appeared on Memphis Commercial Appeal: MLGW electricity rate increases approved by Memphis City Council