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Behind the Headlines
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- The new president of MLGW
on rates, storm recovery and more,
tonight on Behind the Headlines.
[dramatic orchestral music]
I'm Eric Barnes, publisher of the Memphis Daily News.
Thanks for joining us.
I am joined tonight by J.T. Young,
the newly appointed president and CEO of MLGW.
Thanks for being here.
- Thank you, glad to be here.
- (Eric) Absolutely.
Along with Bill Dries, senior reporter
with the Memphis Daily News.
You are barely, eight days into the job I believe.
Appointed by the mayor, approved by the council,
just newly moved to Memphis,
we chatted a little bit beforehand.
Let's talk about all kinds of things with MLGW.
I wanna start with one of the things
that comes up very often here it seems,
which is a question of affordability
and cost, of course.
What is your mandate or your, maybe it's goals,
maybe it's requirements, in terms of affordability
of the utilities, and maybe that breaks down
into residents versus businesses,
and even with residents it may
break down into special consideration
for maybe the poor and the elderly.
So walk through that question
of your mandate with affordability.
- Well, we know that the services that we provide
are essential for sustaining life
and pursuing the value that customers
of all persuasions wish to pursue.
And so my general philosophy around pricing
is that you always wanna deliver maximum customer value.
It's true not just in a utility environment,
but it's true in other areas, is that,
folks wanna make sure that whatever they pay for,
that they're getting maximum value for that.
So my goal and my, I'm driven
by ensuring that that's happening
for residential, commercial, industrial,
for all of the folks we're privileged to serve.
And so, there will be times,
as I know and I've seen in my career,
where affordability is a real challenge.
And so, I know MLGW has a lot of great programs
to try to help meet the needs of those who are struggling.
And we'll continue to do that
and we'll offer more of those as we can
so that we can ensure that everyone
has the opportunity to sustain their quality of life
as they need to and as we'd love for them to.
So it's gonna be a focus,
and we're gonna make sure that we continue to key on
ensuring that we're delivering
maximum value for those customers.
- And for you, you come in as the council approved
two percent, I believe, rate increases back in February,
the first rate increases in 10 plus years. They're one year.
We'll talk more about the specifics of those.
But I am interested, when you talk about
providing maximum value, it's an interesting business
in that, utilities, in that you've got
people who are worried about what they're paying today,
at the extreme end you've got people
worried about paying their bill today,
you've got businesses who wanna
have the lowest cost possible.
You not only have to meet your budget this year,
you've gotta plan for a long time horizon
in terms of infrastructure and,
you know, capital improvements.
So how do you balance that?
I mean, you're talking about quality of life
and the immediate needs, but you also
need to look, what? 5, 10, 20 years ahead,
and have the funding for the infrastructure
that people expect the city to have.
- Yeah so, it's a loaded question,
but I'll tell you, I'll sorta break it apart this way.
The services that we provide depend heavily
upon the infrastructure that we have.
And much like any asset that you own,
it's imperative that you maintain those assets
and that you continue to invest in those assets
so that they can deliver the value that
they were designed to deliver.
It will be great if we could build a substation
or set a transformer or erect a pole and a line
or put an underground cable in
and leave it alone for 100 years.
That's just not the reality of the business.
So we will have to continue to make
investments in our assets, in our infrastructure.
And the way we're gonna try to balance that
and the charge I sort of come in
and give our folks in leadership
is we're gonna continue to find
more and more efficient ways to do what we do.
And that means sustainable efficiencies,
not just a cut here and a cut there.
We are charged, just like any other business,
with ensuring that the things that we do every day,
that we're doing them in as efficient
and innovative a way as possible.
So in other words, I'm gonna, I wanna make sure
that whatever cost we're incurring, for example,
to maintain facilities, or cost we're incurring
to do whatever we do, that those costs
are exactly what they need to be, no more no less.
And that's an ongoing continuum
that really, you never rest from that.
You always try to find more and more efficiencies.
And so I'm focused on that.
I wanna make sure that our team,
our teammates can enjoy the quality of life
and an employment environment that means a lot to them,
so when they come into the workplace
they have the resources they need
so that they can deliver the value to the customers.
So we gotta balance the need for
restraint on cost, which is imperative,
but also making sure that the infrastructure
and the things that are necessary to deliver
the services to our customers is maintained.
We have a fiscal obligation to do that.
- Bill Dries.
- So a week and a day into the job,
what do you still need to know
in terms of kinda taking inventory
of what you've got here?
- Well, I've worked 35 years in the industry.
I have some familiarity with the things that we do.
I'm learning, still learning a lot
about this industry, in that we do gas and water
in addition to electricity.
And so my eyes are focused on those things as well.
I also really want to ensure,
I wanna see the state of our facilities,
I wanna know what, when you look at all our substations,
when you look at our, the areas where we
actually have to, the things that we use
to get the services to our customers,
I wanna know what condition they're in,
and I wanna understand, from a budgeting standpoint,
how we're spending our dollars.
I wanna make sure that we are spending those dollars wisely.
And so I've gotta spend some time
learning the business, learning about our people,
really getting engaged in the community
and making sure that we are doing
the things that we need to from
a community perspective as well.
So my learning curve is extremely high, I get that.
And I committed to our team
that I'm gonna do the best I can
to make sure that I'm leading them in a way
that is most efficient and effective.
- We're also, as you've probably heard
dozens of times over the last eight days,
we are the Tennessee Valley Authority's largest customer.
How do you think that relationship
is gonna work, and the reason I ask
is that there is kind of always this tension
of, okay, we're TVA's largest customer,
what are we getting for being their largest customer?
- Right, so just like I'm encouraging
our folks to make sure we're delivering
maximum value to our customers,
I expect the same from our relationship with TVA.
I think it's, we're obligated to ensuring
that we are deriving maximum value
from that service as well.
And I'm not suggesting that we're not.
I don't know that.
So that's another area that, of course,
is gonna be very, very important
as we move forward, because of course,
the value we receive from the supplier,
from our supplier, will translate into
the value we can deliver for our customers.
- From your experience in the industry overall,
what kind of times are we in
in terms of alternative sources of energy
and how that affects the grid
and those kind of considerations?
- Well I think, it's my observation
that we are at a, the term unprecedented comes to mind.
It may not be the case, but I think it's close to that,
if not already unprecedented,
where renewables and other sources of generation
are taking a larger role in the delivery of energy.
And it's appropriate.
We have seen greater efficiencies
in many of the areas of renewable.
In particular solar, for example,
has become a lot more efficient in recent years
versus what it was a couple decades ago.
And so, it is incumbent upon, I think,
all deliverers of energy to make sure
that we keep our eye on the opportunities
that are out there in the renewable world,
because we have to make sure
that what we're delivering is sustainable over time
so that we can make sure that we are
continuing to deliver that maximum value.
Where I came from, I was with
Southern Company and Gulf Power Company,
had a strong commitment to that.
In fact, Gulf Power had about
eleven percent of its generation
that was done by renewable resources.
And so that's a huge, huge piece of, I think,
the value pie that's delivered to our customers.
- And of course, of much interest here
is the one billion dollar natural gas fired plant
the TVA is building in Southwest Memphis.
That's also gonna be a big change for the utility
and moving away from coal as well here.
- Right, and we've seen in the industry overall
a transition over the last several years
towards gas fired facilities, combined cycle type facilities
as well as other renewable sources,
and I think that, I don't know,
I haven't been to that plant, haven't seen it,
but I'm understanding that it's designed
to be efficient and to operate well
for the benefit of our customers.
So we're excited about that.
- And to clarify, that's a TVA plant.
And that gets into, it's hard to talk
right now about TVA without talking about the aquifer.
There were lots of questions, again, before you were here,
but you must have been brought up to speed on this.
And the concerns about TVA drilling wells
into the aquifer, using that fresh water,
and it's a point of pride, a tremendous resource in Memphis,
to cool the, for the new plant.
They are now buying water from MLGW, is that correct?
- That's my understanding, they will be.
- And what is your understanding
and your goals for MLGW relative to the aquifer?
I mean, in terms of, are you a steward of the aquifer?
Are you simply someone who drills in the aquifer?
Talk about the aquifer to the degree you can.
- Well, and I don't want to, again,
this is an area of learning for me.
- (Eric) Fair enough.
- Only thing I will tell you,
that I can say with clarity, is that,
just like any other area of the environment,
we're gonna do everything possible
to make sure that we maintain the quality of the aquifer.
Anything that, that's an incredible resource
for this community, for this area.
There is absolutely no way that we're
gonna do anything to in any way compromise that.
So the decisions that we make going forward
will certainly be, as I'm sure they have been in the past,
will be decisions oriented around
ensuring the integrity of that.
- Talk about, again, your 30 year history
in the utility business, profession.
You were in Pensacola, Florida.
You mentioned, you know, trends towards gas,
away from coal, industry, wide.
Talking generally about water,
it is a thing I think people in Memphis take for granted.
I mean, I grew up out on the West Coast in the Northwest.
They have huge water issues and droughts.
Everyone knows about California,
but many other communities do.
Your sense in the industry about
the awareness of utilities of water conservation
and proper water management,
I mean, what do you hear industry-wide?
- I think it's, well, the thing that comes to my mind
when I hear about, when we think about water
probably wasn't as prevalent as
in the last five years it has been
when we think about the Flint issue.
We heard a lot about that.
- (Eric) In Detroit, polluted water
- And Detroit, right.
So it sort of piqued everyone's interest
in ensuring that, quality of water is something
I certainly took for granted, you know, growing up,
in the communities in which I've lived over my career.
But it's huge because water supply is vital
for the health of any community.
And again, that goes back to my point earlier
about ensuring that we maintain the integrity
of the aquifer and the water supply that we provide
to make sure the customers are benefiting from
that great resource that we have here.
And I know, just like in the community I left,
we took for granted some of the natural resources.
We have beautiful beaches and beautiful,
you know, community and tourism industry and all.
Those things are easy to do when you're there all the time,
and I just wanna make sure that that's something
we focus on here in making sure the quality stays high.
- You mentioned Flint, and part of what happened there,
I mean, in very broad terms,
was problems of infrastructure and investment.
They got tied up in the whole disaster
that was Detroit's finances and so on.
And again, that gets back to where we started the show,
rates and near-term decisions and long-term decisions.
I meant to ask when we were talking about rates,
again, knowing that you're a week plus on the job
but, you know, interviewed and done research and so on,
is MLGW in the right place in terms of
having the funding for those long-term needs?
- Well my understanding is the,
you mentioned the two percent rate increase
for gas and electric that will go into effect in July.
My understanding, of course,
is that prior to that, we did get a one percent increase
for the water to help fund the research
to make sure that things are going well with the aquifer.
I believe that, moving forward,
just like I talked earlier about infrastructure
as it relates to delivering gas, electricity, et cetera,
my focus is the same on delivering water quality
and ensuring that that's where it should be.
So no difference in any of those,
it just may mean that there will be
some different approaches, but the focus is still the same.
- We have about 10 minutes left here.
Again with infrastructure, storms.
So here we get, you now, whether it's an ice storm
or it's some sort of wind storm
or it's some sort of tornado-related,
thankfully we've not had a tornado hit here,
but that kind of storm damage,
in the Gulf you had obviously hurricanes and so on,
where do you think Memphis is
in terms of its infrastructure,
in terms of readiness for storms?
I mean, how at risk are we relative
to other utilities around the country?
- The difficulty in answering that question
stems from the fact that it's gonna depend
on the severity of the storm.
And I'll say that for anyone,
having gone through several in my career,
no storm, no two storms are the same.
But it is my understanding
that MLGW has done a great job
trying to maintain its facilities as best they could,
given the funding they've had,
to withstand the storms that we anticipate.
I've had some initial conversations around that.
As you can imagine, that's certainly
an early focus of mine.
But the thing that we're not able to do in this business
is guarantee reliability following any type of storm,
simply because you just never know
what you're gonna have to endure.
But we do need to make sure that our facilities
are hardened in whatever way is reasonable
and the way that our funding allows it to be.
What people tend to understand
is that when you have a storm,
they tend to understand outages and things like that.
The challenge is when you have a blue sky outage
and you have infrastructure failures
because of, not a storm, but because of just failure.
So we've gotta make sure that those don't happen
so that we can also be ready when the,
when and if, god forbid, a big storm were to hit.
- And when storms hit, it seems,
and the council discussion recently in February
about, when they approved these rate increases,
which are just for the one year, rate increases,
there was a lot of talk about
not just the storm, the storm damage,
people hate losing power, that's a given.
The thing they hate next most, it seems like,
and what I hear, the feedback we get in the paper,
is if there's a lack of communication.
And if they somehow feel,
in their area or their neighborhood,
why are they last on the list, you know?
So a big storm comes, 100,000 people are without power,
the utility works that number down,
and there are, it just seem inevitably
there are pockets of people who
feel like they have no communication
and that, why are we last on the list.
Again, acknowledging that you're here a week,
but you've dealt with big storms down in the Gulf.
How do you manage that communication and prioritization
for your customers, for the citizens of Memphis?
- Our communications folks have done, I think,
a great job in pulling together information
that we're going to even more,
putting out more in front of our customers
regarding alerts and the outage map,
which is already out there,
people can go out and see the status
of outages in their communities
and understand about when they may be back on
based on resources that we have
and the severity and all of that.
So we're gonna be doing another push
to make sure that that gets out there for customers
to be able to have that in their hands
if they're on their mobile device,
so they can be alerted and know when things are going on.
We have found, in my experience,
that that type of proactive communication,
getting customers ready before the storm,
making sure they understand what to do
and how to plan and prepare
and keeping them updated in the aftermath is critical.
And our team, I think, is doing a great job now
in pulling that stuff together just to make sure
that it's even more widely available.
- And just briefly, and then I'm gonna go back to Bill,
Jerry Collins, your predecessor, was on the show,
and he talked about, you know,
part of that prioritization when power's
coming back on after a big storm is efficiency.
So if they can go to one place,
do some work and get 5,000 people up,
and another place and get 500 people up,
they're gonna go to the place
where 5,000 people get turned on.
Is that pretty much industry standard?
You go for those big wins as quickly as possible?
It is in a sense, though,
that the way the system is designed,
our system is designed with main trunk lines or feeders
that just happen to have a lot of customer load on it,
and you wanna get your feeders up first
because that serves the majority,
that's the most efficient way to do that.
You can't go to an area that's got a small number
and restore it, because you don't have your backbone up yet.
So even if you did all the work down there,
no power would come on.
So it's a matter of trying to ensure
that you get the maximum opportunity
before what you're doing with, you know,
efficiently getting folks back on.
So you do start, typically, with your critical
infrastructure, critical locations,
but you also wanna make sure you get your main lines up.
- (Eric) No matter how much
people complain? I mean that's, you gotta do it.
- (J.T.) It's the system design.
- (Eric) Bill.
- What about underground utilities?
Is that do-able on a widespread basis
or is that something that basically
the frequency of storms might not justify, economically?
- Well, and we've had this experience
in my career in a lot of areas,
underground facilities, usually, you know,
your newer subdivisions that go in are put in underground.
Undergrounding is extremely expensive,
as most people, I think, know.
Restoration with underground facilities,
because you do have failures
with underground equipment as well,
is often difficult because you can't
see what's failed, oftentimes,
and so it's not a panacea.
But what we, what I would say to folks is,
and it comes back to this affordability question,
you know, if you were to take our entire system
and go underground with it, it would be
extremely costly and probably not practical
in certain areas, depending on where that would be.
We had experience where we had underground facilities,
we had storms come through,
and we had facilities that got,
because of the erosion it all got washed away,
that we couldn't, you know, we had a hard time locating.
So we just have to recognize that our goal,
we have no incentive, as a company,
to not have customers back up as soon as possible.
We want folks back up as soon as possible.
And we do work diligently to ensure that happens.
And so we try to make sure that
we've got the right balance between underground and overhead
that's efficient, that makes economic sense,
and reliability-wise is the best thing to do.
- How unusual in the industry is a three-pronged utility,
three-pronged publicly owned utility
like Memphis Light, Gas and Water?
- I can't answer that, I just know that there aren't many.
I know that MLGW is the largest in the country.
But I don't know, and it actually creates, for me,
I feel that we have an awesome privilege,
and we're just blessed to be able to have
the ability to provide those three critical services
to the communities that we serve.
And so the fact that we have the resources
and we're charged with delivering
those resources to this community
from one entity, I think is a great privilege.
- And what we've seen is that, financially,
each of the three divisions, so to speak
stand on their own.
So in other words, if one does well,
you can't transfer some of that over to another division.
- That's correct, that's my understanding,
is that they are all in, exactly.
- And just to clarify, and I actually asked
Bill this before the show, secrets of Behind the Headlines,
I just had to double check, MLGW is not
in charge of the sewer system in Memphis,
which is a big issue right now and probably not one,
you're probably happier not having to deal with that.
If you've read about it, there are some major issues.
That's public works through the city.
So, for people who may have thought,
well wait, why aren't they talking about
the issues with the sewer, that's not on you.
I wanted to ask about,
we talked about publicly owned utility.
Who is your boss?
And I don't mean that flippantly,
because you've got a board of commissioners
appointed by the Mayor.
The mayor appoints you, so you're obviously,
but the City Council approves rates, approves budgets.
So that dynamic, and you've got a whole lot of customers,
from big corporations to individuals.
Who do you work for?
- Well, in all honesty, I believe
that I am accountable to all our stakeholders.
And I don't mean that to sort of dodge the question,
but I will be honest with you,
I think that the nature of the role that I have,
of course the Mayor and of course the commissioners,
of course the City Council, we work with
and I answer to them, but I'm really,
I really feel like I'm accountable to all of them,
but I'm also accountable to all
of the citizens that we serve
and the communities that we serve.
Because we are here to ensure
that they can enjoy the quality of life
that, and I believe my leadership
and the leadership of our team
and the actions of our company
is imperative to deliver that.
And so, in my mind, I feel there's an accountability,
a broad accountability, and I've actually,
I actually think this is a unique,
back to your point earlier about the three utilities,
it's one of the unique things about this company
and the way it's set up by statute.
But I just feel that I am accountable
to all of our stakeholders.
- MLGW plays a big role in economic development
and business recruitment.
You know, Memphis is America's distribution center.
One of the things people talk about,
it's also a relatively low-cost area.
At various points the Chamber of Commerce,
for instance, has promoted the availability
of high quality water as a resource, the electricity.
I mean there are pressures on you, again,
we talked about the residents and the challenges,
maybe with, you know, maybe elderly.
But let's talk about business.
Your role in economic development
and in business recruitment, again,
acknowledging that you're new in the job,
what will that role be?
- It's an incredibly large responsibility
because the quality of life for all
of the folks in our community
hinges on our ability to see
strong economic and community development.
And because of the nature where we sit positionally
as a company, it's incumbent upon us
to make sure that we're doing all we can.
In fact, today we're involved with a procurement fair
to help build our small and minority,
women and local-owned businesses
to be able to do business with us
and expand their opportunities.
So we really feel that it's important
and imperative that we, as MLGW,
stay front and center, and I'm gonna
make sure we continue to push that
from an economic development standpoint.
Because when the economy does well, you know
all boats rise to the top with a strong economy,
and that's part of what we have to do.
- With just 30 seconds left,
and we could do a whole show on this,
smart meters have been, they're being rolled out in Memphis.
They've been controversial here for some people.
Are they controversial nationwide?
- My understanding is that
they are not widely controversial.
We rolled out smart meters back in, beginning in 2008
in the company where I was before, finished in 2012.
- Were there pushback in some quarters?
- Very small, out of the 450,000, 440,00 customers,
we had less than 100 that we couldn't
make work in that regard.
So, it works, it provides opportunities
that we never had before,
that will bring additional value to customers.
I've seen the success of it
and I understand the challenges there.
We're gonna work through those.
- Alright, thank you for being here, welcome to Memphis.
Thank you for joining us. - Thank you.
Join us again next week.
[dramatic orchestral music]
[acoustic guitar chords]
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