The reaction from Memphis City Council members to proposed Memphis Light, Gas and Water Division rate hikes was lots of questions Tuesday at City Hall but no overt opposition at the outset.

There were a few questions about the 3.1% raise for utility employees included in the MLGW budget and how the organization intends to lose 387 employees, or 13% of its workforce, over several year through attrition.

Eight to 10 of the council’s 13 members were present for the committee session.

Council trying to check off various items as terms approach end

The council will discuss the proposal more in two weeks with a public hearing and possible vote on the plan scheduled for the Nov. 19 council session.

The council was briefed Tuesday on the budget, including the rate hikes, as well as the efficiency study by the consulting firm Baker Tilly.

Council member Martavius Jones was quick to notice a consultant’s recommendation to do away with purchasing programs to increase the utility’s spend with minority and locally-owned businesses.

“While both programs are valuable, they add to the length of MLGW’s procurement process, reduce competitiveness in the bidding process and may not have the desired impact,” the report reads.

Jones said MLGW’s minority business plan in particular has been a “role model” for other government entities.

“I would not be in support at all,” Jones said of the recommendation, “if it’s not talking about broadening or increasing our spend.”

MLGW president and CEO J.T. Young said the recommendation isn’t aimed at reducing the spend with minority and local businesses.

“It’s aimed at making it more effective so that more people can participate,” he told Jones.

The total rate hike proposal across all three divisions of MLGW over the next three years is a $14.07 monthly increase for the average residential user. That comes to a $7.42 increase effective this coming July — $3.08 more in January 2021 and $3.57 in January 2022.

Young hopes a majority on the council will approve the multi-year rate hikes by combining them with a paring of the utility’s workforce and other measures, including closing three of the utility’s five community offices.

“We know it’s going to be a challenge,” Young said last week of eliminating the positions through attrition instead of layoffs. “We know it’s going to be difficult.”

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He wants the rate hikes to fund about half of the $1 billion overhaul of MLGW’s infrastructure. That was the goal of two previous rate hike proposal from the utility in 2017 and 2018 that the council voted down, opting instead for smaller one-year rate hikes.

The 2% water rate hike approved by the council in early 2019 is a temporary increase to be phased out.

The Baker Tilly efficiency study’s conclusions confirmed what Young says he suspected — the MLGW kiosks at 80 locations could serve the public better than the offices proposed for closing.

“Customers can make payments and have those payments posted to their accounts within about 10 minutes. So those locations are invariably more convenient for them than coming to our office,” Young said on The Daily Memphian Politics Podcast.

“But some of those have a small convenience fee of maybe $1.50 or something. Then some have no convenience fee. So, what we have to do is formulate a plan on how to help our customer know where those are and help them understand other ways they can make payments.”

And the two surviving community offices would offer more financial counseling services and probably absorb some of the employees from the three offices that are closed.

The report from the consulting firm also concluded MLGW is too lenient in working out payment plans. Young says that’s a function of 15 programs that cost a combined $4 million to run. Some have a 3% participation level.

“I think MLGW has more programs, especially as it pertains to assistance and bill payment, than any other utility I’ve been a part of and utilities where there are relatively high poverty rates,” said the nearly 40-year veteran of the utility industry.

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He wants to weed out the assistance programs that have too much bureaucracy and that the public isn’t using in great numbers.

“The downstream effect of having those complex programs is you need more people to oversee a function and deal with those programs which is inefficient,” he said. “What we have to think about is what are we going to do to help our customers who are participating — which ones are really useful, which ones are not.”