- (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.

- MLGW, tonight on Behind the Headlines.

[intense orchestral music] I'm Eric Barnes with The Daily Memphian.

Thanks for joining us.

I am joined tonight by Doug McGowen, president and CEO of MLGW.

Thanks for being here again.

- Glad to be here, Eric.

- And Ursula Madden is VP of Corporate Communications for MLGW.

Thanks for being here.

- Hi, Eric, thanks.

- Along with Sam Hardiman, reporter for The Daily Memphian.

We're gonna talk about a lot of things today.

We're gonna talk about a Plus One program you all have and helping people during difficult times.

We're gonna talk about new substations, infrastructure.

We're gonna try to get to tree trimming, which is important.

We wanna get into the weeds, literally, of things.

But I wanna start with xAI and power demand.

And we're, however many months since xAI, I'll turn to you first, Doug, announced this plant.

There's been a lot of controversy about it.

There's been what sort of power demands they're gonna need.

When you look at xAI and you look at the power demands they have, and they're building another plant.

Sam will get into more of the details.

There's talk Google is looking across the river, outside your service area, but nationally, all these big data centers are getting built around the country with huge power demands.

Do you look forward to that with dread, with excitement, with there's an end in sight of how much power MLGW can provide these sort of big providers?

What's your take on it?

- Sure, well, it's an exciting time to be in the energy industry, that's for sure.

And I think you said it right, Eric, this is not a local problem here in Memphis, Tennessee.

It's a national and international.

It's actually a global problem.

The demand for electricity is growing at a rate beyond that, which we actually forecast.

We forecast a low growth of about 1 to 1.5% a year.

It's actually about 2.5% here in the Tennessee Valley and across America.

It's actually eclipsing what we had planned for as well.

Now, a lot of attention gets focused on the data centers and the huge demands, and that certainly is something that we should take a look at.

But it's actually residential demand that drives all the peaks that we worry about, because residential customers use their power irregularly, when everybody's home cooking and the heating in the wintertime and the cooling in the summertime, that drives a lot of peaks.

Industrial users like data centers have more of a flat profile.

So what the AI and data centers generally have done is have raised the floor of the baseline load that we serve, and residential customers' increased demand for energy have caused those peaks to get even higher.

That is a phenomenon that we're seeing across the country and that we have to address.

And so we need resources to take on additional base load power and resources that can address that peak that we see, and those peaks are getting higher.

So, dread?

Absolutely not.

Deliberate planning and accounting for what we are seeing, absolutely.

- Let me bring in Sam.

- Yeah.

Yeah, so Doug, ask about xAI a little bit.

So first, for people at home, their first data center on Paul R. Lowry Road is now essentially almost fully on the Memphis Light, Gas and Water grid, correct?

- Sure.

- It's two substations serving at about 300 megawatts?

- Well, they haven't quite taken the second 150 megawatts yet.

The first substation was built to provide 150 megawatts that is nearly all online, powering about half of what they have inside the building.

The rest are those temporary turbines.

As the second substation comes online in about September, throughout the fall they will increase the demand on that.

And by about the first of the year, that should be nearly fully online, providing about 300 megawatts of power to that Paul Lowry site.

- Yeah, and so can you explain the difference then to what appears to be going on at 5420 Tulane, which is their second data center, which is in Whitehaven?

It's about 9 to 10 miles away from the first, but right along the Mississippi line.

How much power is MLGW providing, and how has that situation differed from what happened on Paul R. Lowry Road?

- Sure.

Pretty significant differences.

The first site had a need, and they described the need as about 300 megawatts of power.

And together with TVA, MLGW said, "Here's the infrastructure necessary to serve that."

There is still a request for that second 150 megawatts to get them to 300.

That has not been approved by the TVA board yet.

When we move over to the Tulane site, there's, we believe, the request is 1,100 megawatts or 1.1 gigawatts of power for that site.

Much larger facility.

They have not asked MLGW to serve that load.

They have asked TVA to serve that load.

Today, we are providing the level of power that the building was essentially taking before xAI got there.

So the total demand on the building is less than 40 megawatts today.

Some provided by TVA, some provided by MLGW.

They're getting basically domestic water and gas, essentially just what was there before.

And now, what you're seeing is a discussion about how they will provide the power needs for that facility.

They have requested power from TVA that has not yet been studied and approved.

You're hearing all kinds of things in the news about power plants that they may decide to put on the Duke Energy site down there-- - It looks like they are.

I mean, we have documents at The Daily Memphian that show, they have modeled essentially what a private natural gas plant at that former Duke Energy site in Southaven.

- That's right, and so the reason I say that is because your reporting has told us what's happening there, because it is in Mississippi, it's not in the MLGW service territory.

But what you're seeing is consistent with what you're seeing with other large users across the country with the Googles and the Microsoft where they're attaching themselves to either very large natural gas plants or nuclear plants.

So I think this is a common trend among data centers that need a lot of power.

- Is that better, actually?

I would guess, it's like, should the data centers just essentially find their own supply and not impact the broader grid?

I'm asking you as essentially the custodian of the public grid.

- Yeah, absolutely, so I thank you for asking that because our responsibility before we connect any new customers to ensure the reliability and availability of power for our existing customers.

And if we can't guarantee that, then we will not allow anybody to connect to the grid.

So what you're saying is the practical reality of things is we just don't have 1,000 megawatts of power laying around.

So if you wanna put your data center here, you're going to have to generate power on your own and connect it to your system.

The question then becomes, if you wanna be connected to the larger grid for when your power plant goes down, and that is the technical challenge that TVA is working on today.

- Let me bring you in, Ursula, on this.

You were in this seat, figuratively, for many, many years, and communications for Mayor Strickland and now at MLGW, when you look at this both, if you put your old journalist hat on, you look at your communications hat, you've been in public service, is there just a failure to communicate on the part of xAI?

I mean, you think about the protests from the neighbors, the questions about pollution.

Are they using gas turbines?

Are they not?

MLGW is a player in this, obviously, as Sam has talked about and reported on very extensively.

But it's not the only player in this.

And there's just this sort of anxiety in the neighborhoods and worry, and sometimes, that feeds into a level of, I think, misinformation or misunderstood information.

Kind of give me your perspective on how this whole story has gone down and played out.

- Well, I would hesitate to chime in on how another organization is doing its communications.

What I can say is that MLGW has been very forthcoming about our role in what is going on with xAI and our ability to provide them power.

We've been very transparent, tried to have community engagement sessions so that people could ask their questions and get those answered.

And we keep a live update on our website.

When we do have news that is relevant to xAI, we put it at mlgw.com/xAI, and people can go there and get that information.

We are aware about people's concerns about energy drain, they're worried about the water.

We are here to make sure that we are responding to those concerns.

- But do you get questions from the public, from customers, from board, I mean, from constituents, as it were, that you can't answer?

- A hundred percent, and what we tell them is that you should please go direct your questions to xAI directly.

- Eric, I would just add to that that for about the first year after this, essentially, I was the only one talking, because we were being considered the resource for information.

We were providing some power, we were building a substation.

We had gas and water.

I will say that without, as Ursula said, talking about how other people communicate, I implored our partners to communicate.

I said, "I can't be the only one 'cause I can't answer the questions."

I think more recently, you're seeing more information coming out.

So I was pleased that other people began talking about the project than just MLGW, because we certainly could not speak for other folks.

- Yeah, and so back to maybe I guess the practical matter of how they exist in this ecosystem that you guys are a big part of, they're building a natural gas plant.

It's gonna have significant use.

I mean, it's gonna be maybe two times the size potentially of the Southaven Combined Cycle Plant, which is also half mile away from it.

MLGW is a giant gas customer.

It's how most of us heat our homes, right?

Is there ever a time where there's gonna be competition on pipeline capacity for xAI's needs, like say on a hard winter day and there's tight gas across the country?

Like explain how [a] maybe how is that gonna work really?

- Yeah, so that's a great question, Sam, and I do not forecast that we will be there anytime in the near future.

Certainly, there's not an infinite supply of this.

So if you took it to the nth degree, you could always see that.

But the thing that we are blessed with here in Memphis and Shelby County is that we have three separate gas transmission pipelines that actually come through our service territory.

That is unusual.

Most large cities only have one pipeline that serves all of their needs.

Because of that, we have contracts with all three pipelines to make sure that we have sufficient capacity for MLGW.

And just to build confidence in people's faith in our ability to get this done and to make sure that you always have that available, just last winter, during the most recent polar vortex, the people in Arkansas and Mississippi were actually under a natural gas conservation order.

But the people in Memphis, Tennessee were not because we worked very hard to make sure we have enough contracts for gas on those pipelines to make sure we always have sufficient capacity to do that.

Further, we have two methods of storing gas.

We buy extra gas in the summer, we liquefy it and put it into our liquid natural gas plant, one billion cubic feet of natural gas.

Then we buy five billion cubic feet of natural gas and put it underground in Midland, Kentucky.

So we always have a hedge of additional gas that we can dispatch.

Number one, we buy it cheap in the summer and store it.

And then in the wintertime, when the prices are high, we set it to our customers to keep your rates low.

But it also gives us that additional edge.

It is something that we have to keep our eye on.

The gas companies understand this, and they're actually expanding their pipelines to provide additional capacity.

And this country has incredible capacity to produce more natural gas.

We are not anywhere near the production level that we could be.

In fact, this country exports an incredible amount of liquid natural gas because we have an excess abundance of natural gas that can be converted to liquid natural gas and set to other countries.

So I think we're in good shape for the foreseeable future.

- We may circle back about halfway through show to more xAI and capacity things.

I wanna get, you talked about winter and you talked about people.

We just went through a big heat dome and a big extreme heat situation.

You all during that time said, and MLGW has done this in the past, you're gonna stop cutoffs of individuals 'cause they're gonna use a lot of air conditioning, there's a whole health and safety issue.

Some of that gets into, I think it's called the Plus One program where people can donate to help people who are struggling with their bills.

But there's also the backdrop of, and I don't wanna get overly political, but it's just a fact, federal money that supports low-income people nationally with utility assistance is at risk.

Where does, I guess I'll go to you Ursula, where does the federal money stand?

I don't know and I get lost sometimes in the national convolutions of the budget.

And what's the risk of that $17 million?

How many homes?

Just give us a lay of the land from the very big picture that we've been talking about to the individuals who need heat in the winter and maybe have kids, maybe don't have a job, and are struggling.

- Yeah, so the federal money that you're talking about is the Low Income Home Energy Assistance Program, LIHEAP.

And in 2024, the calendar year, MLGW customers who were in need, about 25,000 households, received roughly $17 million.

And change in administration, they have different priorities.

And so the thought is that there could be some changes to the LIHEAP program.

Health and Human Services had some layoffs and some firings and how that money gets distributed, what the program's gonna look like in the future.

There's some questions about that.

And that actually prompted Memphis Light, Gas and Water to start thinking about, well, how do we find steady revenue for our Plus One program?

Our Plus One program has been in existence for 40-plus years.

MIFA used to help us actually administer that program.

And in that time, it helped about roughly, it was $12 million distributed to about 50,000 households.

But we felt that if we could take the program back and administer it ourselves, it would give us more money to be able to distribute to some of our customers who struggle with utility assistance needs.

So we have done that.

We've set up a fund at the Community Foundation as the MLGW Power of Giving Fund.

And so the thought there is that we would encourage non-MLGW customers and businesses to actually donate to the fund so that we can help our customers who are in need.

- I mean, we're sitting here on public television, public television, public radio funding, it has been explicitly cut as, I think, probably most people who watch this show know a big impact to WKNO and stations around TV and radio stations around the country.

WYXR are also in Memphis.

There are other, I mean, we had the folks from MIFA on and the Aging Commission.

We've been able to report on some of this, and you certainly hear it off the record, organizations around the city, around the region are struggling with cuts and potential cuts from federal funding.

How do you line up against all those other needs?

I mean, it's a lot of need that the federal government passes through sometimes directly to Memphis, directly to people, or through the state to Memphis.

I mean, how do you make the case when you're in line with a whole lot of other people and looking to philanthropies and individuals to fill these gaps?

- Well, it's certainly a challenge, but because there are folks competing for the same dollars, but the reality of it is is that having the ability to heat your home, to make sure that the lights are on is critical.

A lot of our folks here in Memphis and Shelby County, they are renters.

And sometimes, if your utilities are cut, that could be the first step to you being evicted from your apartment or from the house that you're renting.

So we wanna make sure that we are keeping our seniors cool, our children warm, and the ability to have the lights on and able to do their homework in all circumstances.

- Eric, can I just mention, - Yeah, sure.

- I would love to have the same reaction that WKNO had here.

Oftentimes, we take it for granted.

We turn on the radio in the morning and there it is.

And until such time as the federal funding's put at risk, some people didn't even think about making a donation to WKNO.

I'd like them to think about that with Plus One.

Oftentimes, they see that on their bill, and they're like, "Yeah, I'm not sure."

What we're saying is there's a need today.

So if you have not given before, we would ask people to think consciously about the things that help people in their community and have that same kind of reaction.

People live horizontal lives.

They need a little from the food bank, they need a little utility assistance, they need some assistance with rental income.

And so we wanna be complimentary to what everybody else is doing.

But I think what you said is right, everybody has to lift up more locally if there's a risk at federal funding.

- Let me go back to Sam.

- Yeah, and to ask you guys I think a little more about this, you're asking for donations.

We were just talking about how tight the philanthropic market, so to speak, is.

Is there a step MLGW can take given the high poverty that y'all serve that we see in our city, right?

If we get an economic downturn, is MLGW going, is there a path to supplementing with electric revenues, in a small way, utility assistance?

Is there a path to that?

- Sure, I think we'll consider every option if we get to that point.

We pride ourselves on having the lowest combined utility bill in the country with electric, gas and water rates.

And so we always have to balance affordability with value.

We can have programs for affordability, but value, the number one complaint I used to get is about the power going out, not the amount that the bill was or the cost of the actual electricity.

So we're focusing on those folks who really are feeling the tightest pinch so we can get those programs that are directed at them.

And so when I balance affordability and value, we take very seriously any time that we have to move our rates and any time the TVA moves their rates, we understand that impacts customers.

So we're gonna focus on keeping that as stable as we can.

The reason we have put out RFP for solar and batteries, so we can charge batteries when the power costs are low.

We can have solar, which is low cost energy that has a net reduction on pressure for rate.

- Yeah, and where is the utility now on putting some solar and some battery on the grid?

Where are y'all in agreement with TVA to be able to situate that once you get it and then you issued an RFP and they've gotten responses but we haven't had a winner yet.

- Yeah, we are still evaluating those, and so as the RFP goes, you get responses back, you evaluate them, you narrow it down to a field, then you have interviews to pick the best.

So the question you had is how do we interact with TVA, first, to put batteries in the system?

We have the authorization to do that.

And yesterday at the Board of Commissioners meeting, we passed a contract to allow a contractor to help us with the specific technical siting of that.

So we will have large-scale utility battery storage within the next year on our system.

The solar RFP is still being evaluated.

We are working closely with Tennessee Valley Authority because we do have an all requirements contract.

I would tell you that things are changing.

You've seen lots of dialogue in the paper.

Even TVA's Valley Vision calls for local power companies to be adding to and putting power on.

So it's not a question of if, it's just a function of when, and I'm very confident we're gonna have that solar in our system soon.

- Two questions on solar.

Do you know where you're gonna put it?

- So it will be on, it can be wherever the solar developer would like to have it, and some have land that they have already identified.

And there are some MLGW parcels that we own.

There's some industrial parcels that we may put it on.

- Could it be spread out on multiple locations?

- Could be spread out.

The most convenient and most efficient way is to have it next to your electric transmission lines so that you can connect it.

- And change, we talked about federal government.

I mean, the changes, that the federal government has not exactly been pro-renewable energies.

Does that affect what you're doing with these plans?

- Sure, so there are some, the investment tax credit and production tax credit all expire on July 7th, 2026.

So any project that you have, solar or battery, you need to get underway and underconstruction so you could take advantage of that up to 40% tax credit.

And that's what makes these programs make financial sense.

- So you guys are essentially gonna be running the hurry up?

- We are.

- Because you got eleven months, yeah.

- We are running the hurry up offense right now, Sam, if you will.

To get these projects underway.

- Yeah, and so you talked about keeping the lights on.

It seems like just generally, but also looking at the outage map, when we see severe weather, the outage map doesn't look the way it used to.

They were not reflecting so many outages.

Why is that?

Can you explain to people why MLGW seems to be more reliable?

- Sure, well, when I came, I was a part of the outage improvement team when I was with the city and I understood the priorities there were to, and when Mayor Strickland asked me to come, he said, "We gotta do something to improve the reliability."

So our team understands that reliability is job number one and has to be, our customers have to be able to count on us.

And so we took some steps to improve that reliability.

The first thing, as Eric mentioned, or we said we might talk about is the tree trimming.

And that is the most fundamental thing you can do is keep vegetation away from the power lines that are overhead because when the wind blows, the power goes out because the tree branch hits that power line.

We hadn't met our tree trimming goal in quite some time.

I said about a course of saying we're going to exceed it, and we're gonna get back on a schedule.

And that's exactly what we've done.

Last year we exceeded the goal by 18%.

So we got 118% of the goal.

This year, we're already at 134% of the goal and we still have another month to go.

So we'll get a three-year trimming cycle done in about two years and three months.

And the net result of that is the reliability you're seeing today.

Taken together with the aggressive replacement of outdated infrastructure at our substations in the field and our distribution system, since 2023, we've cut outage minutes in half, which is a dramatic change, and people are actually feeling that.

But I also wanna mention that I think people are also feeling like they know what's going on more, because Ursula and her team, we've also been deliberate about when the power goes out, people hate it.

But what they really hate is not knowing why it's out or when it's gonna come back on.

Or "Do you even know my power's out?"

And I think we've taken a round turn on that.

- And with just a couple minutes left, we're gonna try to race to a bunch of things we could do whole shows on.

But on that, people do get frustrated when the tree trimming happens.

Do you guys, have you changed your communication strategies with individual homeowners and property owners?

- So we try to be more proactive when we are going out and doing some of our service work, right?

We wanna tell people, "Hey, we're gonna be in your neighborhood."

A really good example of that is our Weaver Guild project.

We're replacing 96 and 85-year-old gas lines out there in that section of South Memphis.

And we were very proactive in the communications.

We had folks with T-shirts and QR codes on the back.

We did door knockers and text messages and phone calls.

So the idea is that in 2025, in the 21st century, people want you to tell them they don't wanna have to reach out to you and ask.

- Let me race through some stuff.

The greywater plant that xAI has talked about helping, so basically taking water from the sewage plant, processing that it can be used, by industrial use by xAI, by the steel plant and by the power plant down on President's Island.

What's the status on that?

- It's underway, they've started clearing the land, the materials were on onsite.

Again, we're not controlling that project, but together with Mayor Strickland and Jerry Collins back in the time, we kind of initiated this process in 2016.

We're glad to see it coming to fruition.

TVA, Nucor, and the other industrial users down there, as I understand.

If they haven't already inked a deal, they're very close to inking a deal to take that water.

So it's a real thing and it's underway.

- Maybe a year ago, something like that, I have no sense of time anymore, you announced you're gonna maybe move from downtown headquarters.

That did not go well.

Where do things stand in terms of, but you were on the show and we talked about how MLGW needs a more high-end kind of operations center, but you wanna be downtown with some presence.

What's the plan there?

- Yeah, so that was about two years ago, and things got caught up in a swirl there and it was really a little bit of a confusion there.

But what I need is a modern control room.

That's the center that controls all of the utilities.

And that's part of our plan is to build a modern control room.

You'll hear more about that in the coming weeks and months.

That goes along with our grid modernization.

That has nothing to do with the headquarters, which City Council passed a resolution, saying that MLGW headquarters shall stay downtown.

I've committed that MLGW-- - In that building?

Or just downtown too?

- We will stay downtown.

Again, people have said, "When's MLGW gonna move out of that building, because we should do something better with that land?"

My commitment to the mayor and the City Council is when you have a redevelopment plan that you approve, we'll move anywhere else downtown.

But until then, we're gonna stay in the headquarters downtown.

But I do need a new modern control room.

- Okay, well, a minute left for Sam here.

- Yeah, and so I'll just ask about downtown.

Just specifically, I mean, you've run the city, COO of the city as well.

Where should government employees be situated in downtown Memphis?

Should there be a government plaza?

Should they be filling existing office space that exists?

- Well, unfortunately, there's a limited number of government employees and an abundance of buildings downtown.

So I think government employees and utility employees can be a great anchor.

If you ask some of the restaurants around our headquarters, they get great benefit from our employees who do take lunch down there and sometimes evening events.

But there's a lot of other places people could go, but a limited number of employees.

But anchoring us downtown between the city, the county, the federal government, and MLGW, I think that's a great base to work from, downtown.

- Twenty seconds left here.

The suburbs, there's been noise.

Over time, suburbs are a big customer of MLGW.

There's been talk about giving seats on the board, more control to the suburb, where does all that stand?

- So we have two representatives who represent, they're non-voting representatives.

We made an effort.

Together, our MLGW Board of Commissioners made an approach to the Memphis City Council to ask if they would consider giving them voting.

I think we moved that pretty far down the road.

The municipal mayors expressed their satisfaction that we did at least get their voice heard.

And I think we're very satisfied with that representation today.

- That is all the time we have this week.

Thank you for being here.

Ursula, thank you so much for being here, and Sam as well.

If you missed any of the show today, you can get the full episode on YouTube, The Daily Memphian and WKNO.org, or you can download the full podcast to the show wherever you get your podcasts.

Thanks very much.

We'll see you next week.

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