Behind the Headlines – March 30, 2018


– (female announcer)
Production funding for Behind the Headlines is made possible in part by: the WKNO Production Fund, the WKNO Endowment Fund, and by viewers like you.
Thank you. – 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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