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- MLGW CEO on storm recovery, TVA and much more tonight on Behind The Headlines.

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

Thanks for joining us.

I'm joined tonight by JT Young, President and CEO of MLGW.

Thanks for being here again.

- Thank you, glad to be here.

- Along with Bill Dries, reporter with The Daily Memphian.

We have lots to talk about.

You have a lot going on at MLGW but I wanted to start with the sort of sudden, at least to me, out of the blue suggestion that Mayor Strickland made, City Mayor Strickland, a couple weeks ago in his weekly email blast of the possibility, not the likelihood, of MLGW being sold.

It is for those who aren't close to this, it is owned as a city asset, it is independently owned by the city.

When were you aware of that possibility in Mayor Strickland's mind?

And is there movement in any way to sell MLGW?

- Well I'm aware that there have been, you know, previous discussions regarding the potential of selling MLGW, in fact, well before I think I arrived, I think there were some conversations around that.

And it's my understanding that that was really something I think he put out as a suggestion, as a way to maybe help, maybe finance some opportunities and things with regarding infrastructure.

I think, I certainly don't think, and he certainly hasn't told me that it's in any way, any type of certainty.

And of course as you may know, any sale of the assets of MLGW would require a referendum, of course Council would have to pass that and then voters would have to approve that.

And then one other thing to remember is MLGW is electric, gas, and water, and so you'd have to consider all three services in that.

So, I just think it was maybe something to consider as it has been considered in the past.

So I don't know the long term effect of that but certainly an opportunity.

- And he again, was not pushing it in the way he presented it, he just put it out there.

It was a potential way to raise what is estimated to be what?

Six billion dollars if we were to put all the city's power lines and transmission systems underground, and we'll segue into that, I think with the storm in February, February 3rd I think it was, was one of the worst I think it was according to what something you all put out and I think Bill wrote, the 4th worst storm in the 83-year history of MLGW.

Two hundred and seventy four thousand customers were without power.

It was the most since, I think 2003, Hurricane Elvis, when 339,000 customers were without power.

And Mayor Strickland's suggestion was in the context of here is the cost associated with really hardening or upgrading or making more robust the electric grid in Memphis.

Your thoughts on that, I mean what, let me do it this way.

With the benefit of what now, a couple of months, I'm sure some internal reviews, there's a big 50-person community group that is public, private people, looking at storm response.

What do you look at that went right?

And what do you look at that went wrong?

And how do implement that for what inevitably will be future storms?

- Well, no doubt the February '22 storm, of course we had another storm, February '21, but this one will certainly leave its mark, as you said the fourth largest impact on our customers.

And that's really what I hone in on is the impact to our customers that such events have and one of the things we went through a process and really are still somewhat going through this process of best practices.

The mayor, to his credit, talked to me about and suggested that we do this Outage Improvement Advisory Team which Doug McGowan's the chief operating officer of the city and I are co-chairing.

That has now met twice, we have our third meeting coming up in a couple of weeks.

Suggestions from that and options from that group and that team will probably be valuable as we move forward because in addition to what we have already started with our five-year service improvement plan that began back in 2020, we are probably on the electric side about, I'm going to say 30% through that because COVID had its impact on slowing us down a little bit.

I think that it was put together to reduce outage minutes by 50% but we know there's probably other things that we need to consider and that's what this scheme, I think, will bring.

We know we have some challenges on our texting alerts and outage communications and those kind of things, but on the other hand we learned a lot of things that I think will be more helpful.

We came up with some more visibility around dashboards, letting customers who do have power know what's going on and the status of crews and where we are and where we're working.

So there are a lot of good things that came out of it but no doubt lots of challenges without a doubt.

- I should say before I go to Bill, we'll have Mayor Jim Strickland on May 12th and talk more about the suggestion he put forward and these issues and many others, but let me bring in Bill Dries.

- And to the point about the information, there's a regular outage map but the dashboard has actually a more detailed map because when you're without power, the dashboard map kind of lets you know with more specificity what's going on in your area.

- And it also lets folks know, the customers know where we are, and there's a lot of misconception sometimes about what our crews are doing and so we want to try to make sure our customers know that crews are dispersed across our area.

In that particular storm, widespread outages, we had crews and assistance from outside crews and we had those crews deployed in a lot of areas.

One of the things this outage improvement team is allowing us to do is help communicate the restoration process and how we do it, and to find ways of doing that even better.

So it's been a great opportunity to do that, get community input.

- There was so much discussion about underground power lines and then the discussion really moved pretty rapidly to people who have underground power saying, hey, I lost my power too, it's not a cure all for this.

- Always tell people, the underground service is not a panacea.

When you're worried about trees it might be helpful, but what we have learned, and in my career, I used to design underground subdivisions and I used to do that work as an engineer, one of the things we learned is that underground facilities have a lifespan much shorter than overhead facilities.

And so you have a lot more maintenance issues once you have to deal with underground facilities.

And when there are outages involving underground equipment, it's much more difficult to restore because you can't see it, you have to dig it up, you have to, there's a lot more that it takes to get that restored.

And so one of the things we try to let folks know is, and it's more expensive as well to put in.

So when you factor that in, I think overhead lines tend to have a lifespan of two to three times that of underground and so that's something to consider when we think about going underground.

It's got it's pluses aesthetically certainly, you know, much better not to see the lines, but at the end of the day those lines still have to be maintained.

- The other thing is the outage advisory group had its second meeting just this past week as we record this show, the third meeting's coming up in May.

Where is some kind of, for lack of a better term, a tree policy in terms of first of all dealing with trees that directly impact overhead lines, and then trees that don't impact that directly at least.

Which seems to be something that is not just Light, Gas and Water.

- Right, there are, you know tree issues and overhead lines have always been and always will be a challenge.

One of the things in our five-year improvement plan was to try, we had provisions to escalate our tree trimming and make sure that we get that on, we want it to be a four-year cycle.

And that has been a bit of a challenge of course, actually a three-year cycle, but that's been a bit of a challenge, going about a four-and-a-half to five-year cycle right now.

We want to make sure that, and that's been because of labor challenges, COVID-related issues, etc.

And we are working through that to help make that better.

We have heard from members of the team some of the issues around trees.

The balance we always have to deal with is some customers who are, you know, don't want us to trim trees at all, some who don't like the way we trim trees, but what we always want to remind customers of is that when we do trim trees, it may be in your front yard or near your home, but the line that traverses that tree serves hundreds, maybe thousand of other customers.

So it's not, you know, it's certainly your tree but the line is providing service to many others and that's why we have to stay on top of effective trimming process and protocols.

- Did I hear correctly that that's all outsourced, the tree trimming?

- Yes, we do have two contractors actually now, that we use for tree trimming, most utilities do.

There are probably a few that don't but with as many trees as we have in, we're an urban forest as most folks know, and it's, I said when I moved here that Memphis was a shady town and I meant that in terms of trees but some people took it the other way.

But we're an urban forest and so we have, certainly we do have two contractors, one to help supplement the main line work, but we have a lot of tree trimming issues in rear lot lines, which is where we saw in the February storm where we had many, many problems was in rear lot lines behind homes.

Hard to get to because those lines were, trees were in lines back there where you had to manually climb and walk and it was just a challenge, so.

- Give or take how much in the most recent outage, how much of the outage was trees, limbs, falling debris, how much of it was something else?

- Yeah, I don't have the exact number but I will tell you the vast, vast majority, I'd almost say 80% probably in that range, was related either to trees directly.

So remember, we had not just tree limbs but we had entire trees falling on lines, and when a tree falls on a line, like we had an issue over on Kimble when I went out to see and we had a triple, what we call a triple circuit, so three circuits, probably three or four thousand customers maybe affected.

That one tree that came down on those three circuits took all those out, just one tree did that.

And so we had the issue up in Frayser in a rear lot situation with the same kind of thing with a double circuit.

So, trees predominately because of the ice and the weight of the ice on those branches brought down not just branches but trees, and we had outages that we repaired and then more limbs fell and we had to go back, so those outages sort of got replicated.

You know, it was a challenge.

- In terms of, you mentioned, I already forgot the name but in 2020 you guys got a big, relatively big rate increase for a billion dollars to go towards the infrastructure, that included not just electric but also- - Gas and water- - Gas and water.

You said a minute ago, the goal of that five-year plan is to bring the power outages down 50%.

- Yeah, outage minutes.

- Outage minutes, thank you.

- Decrease by 50%.

- Is that, you mentioned the tree trimming, what else goes into that?

That's a pretty big goal, 50%, what else goes into that?

- So the other pieces of that, significant pieces of that, one is what we call distribution automation and that automation is really where we employ technology and put technology out on our lines to sense outages in ways that maybe a little bit faster than we could and can actually do things on our lines, what's called self-healing, to close in switches and open others to isolate outages, so that when our troubleshooters are engaged they have less that they have to worry about because that distribution automation picks up more customers more quickly.

And so that's another, that's a pretty significant piece.

We also, and last year made great progress in replacing a lot of poles that needed to be replaced to sort of harden that system.

We did probably somewhere close to 800.

Our goal was 600, we actually exceeded that goal last year with that.

And then we had substation equipment that's antiquated that needs to be replaced, so that's a part as well of the plan.

So those are some of the major components.

- The decision making around what areas get reconnected first is a source of immense frustration, lots of social media conspiracy theories, anger, and I make light of it and I shouldn't because there are, I mean it is unbelievably annoying, it is for some people dangerous.

The temperatures were extremely cold we had, and I'm not saying you don't get that, I mean, but the frustration was huge and it was directed at MLGW.

Why not my neighborhood?

I see a truck, my neighbor's power is on.

How that decision making happens and how do you assure the public you're doing it as efficiently as you can?

- One of the biggest things we're trying to do with the Outage Improvement Advisory Team is to communicate just that, the process of restoration.

And one of the things we're going to be doing in the future even more is putting out and making it more public on our website and through other means.

We do, I think our communications team do a great job trying to let folks know on social media how we do that.

But our restoration process is not unlike, and I've been through more than a dozen hurricanes in Florida and this is the same process, you always go to the restoration of those emergency services, public safety issues, in our case water pumping stations, we wanted to make sure, we had challenges with those in February.

And then once you get those back, you start looking at what effort can I put forth in restoring what we call our circuits that'll bring back on the most customers at one time?

And so we start with our main line circuits that can bring back on the most customers at once and work our way down to ultimately the individual outages that may affect the neighborhood or a home in a neighborhood.

The way homes are served, you can be in a neighborhood where your next door neighbor's served entirely different to you, so their lights may be off and yours may be on or vice versa because of the way the network is designed.

And we also remind people that when you don't see crews in your neighborhood that doesn't mean they're not working on behalf of your neighborhood because of the way our system is networked.

So it's a process that we use that really is not discriminating against any neighborhood or any particular community, but it's looking at the most efficient, safest way to bring loads back on.

- Bill?

- Is the outage advisory team going to cause any changes or amendments to the overall infrastructure plan?

- It's possible, and one of the things we shared and I shared with our board at our most recent board meeting is that once we get those recommendations and we look at those to the extent that those recommendations are feasible and plausible, we will at a minimum want to make sure we integrate those into our budget process and it's possible that those suggestions might lead to the need to acquire more funding.

We don't know yet, I have no idea what that might be but certainly as I say to people, there's no magic money.

But to do this the right way we're gonna make sure we listen and do what's right in getting it done.

- And one of the things that I think you heard from the Council in the immediate aftermath of the storm was some Council members who were saying, well maybe we should bring the tree trimming in-house.

And you've been through that already but these are some, these could be some pretty big swings.

- And that's actually almost similar to another division but that's something we will certainly look at if it makes sense to do it.

If we find some ways to do that more efficiently, then we would.

I will say that the labor challenges that our contractors are finding with tree trim workers, I suspect we would find whether it's in-house or not.

So I think the issues that we're having aren't necessarily who's doing it, it's more about getting the labor to make sure the work gets done.

- Listen, with 10 minutes here, segue, and I may or may not have said this, that what I think you all are estimating, it's a billion dollars to put all backyard circuit, the stuff people see out the back window, give or take, yeah, give or take a billion dollars to put that underground.

It would be six billion to do all the overhead lines around the city, all the lines we see.

So again, you're in the middle of a five-year, billion-dollar plan but that is again, I would assume, roughly a third of which is electric and the other two-thirds is gas.

- About half electric.

- Half electric, thank you.

But that segues us to TVA and the decision that MLGW is going through this process of does MLGW leave TVA as a provider of electricity to Memphis?

The MLGW needs to give five years notice to TVA.

It's been a source of a lot of back and forth and some criticism of the process.

It will ultimately be a decision of in part MLGW board of commissioners, but given that it's a city owned property it comes down to the City Council, the City Council will have to approve any switch.

Where are we in the RFP process?

And again, I segue in part because some people are saying there are hundreds of millions of dollars a year to be saved by moving from TVA.

Others are saying there's millions to be saved by getting a better deal from TVA.

Where are we in the RFP process of looking at alternatives?

- As I understand it and just to be clear, the RFP process is ongoing, I've seen none of the RFPs, I know we have more than 20 that we have received.

And I will say that the real, we have no incentive not to help our customers save money, so let's start with that.

So our goal here is to ensure most of all that our customers have a reliable source of power.

The arrangement that we have with TVA and I've been saying this for a while and the interconnections that we have, and to transition from TVA to any other source is a complicated one.

It is not a simple thing to do.

And I don't really look at it necessarily as stay with TVA or not, I'm trying to figure out what's the best optimal situation for all of our customers?

Where can they, you know, get the most reliable, lowest cost form of energy?

We buy it wholesale from TVA and to do something other than that, there's no other entity that's designed their system for MLGW's load, MLGW's load.

And one thing to keep in mind that I think is really important, the size that we are, about 3,500 megawatts of load, it's significant in the TVA realm of things, we're their largest customers you know, about 9 or 10% of their load.

And I am just not aware of other entities of our size and complexity that had no generation of their own that were able to make this transition, and certainly not to make it easily.

So that's why the RFP is in three parts.

It's in three parts because of that, to make sure we address the Integrated Resource Plan, looked at that to make sure that we address appropriately all of those things.

- Those three parts I'm going to take a guess here, on a fly, is transmission, power generation and... - Renewables and then all other ways to provide service.

So some people presumed that we only wanted RFPs, we only put RFPs out there for transmission and generation but we actually are looking to get more renewable energy as well as if some entity has other ways to serve us, that's a part of that third RFP as well.

- Let me get Bill in here.

- And also in this process, as part of this process, there has been some discussion about whether the description of what you're looking for was broad enough to include something that might not be what's been considered before.

In these proposals, once they're made public, once that consideration begins, will we see plans that are kind of new thoughts on those?

- I'm assuming you would.

Again, I've not seen them but I will tell you that the third RFP that was put out there asked for that.

In addition to renewables it also asked for any other ways that an entity wanted to consider serving our load.

And that could be, you know, come one, come all, however you want to do it.

Again it's a, I keep saying it but providing a transition for our service away from TVA, is it doable, very likely doable, we've got over 20, remember, these RFPs I believe that we have are addressing specifically what was in the bid packages.

But I think at some point, what everybody's also remember is the bid process is designed specifically and in accordance with what was approved last year by our board and the Council, to follow a process that we're following to protect the confidentiality of those bids is really important.

And we also know that there will be a time when all of this will be available for, before a final decision by the way is made, all of this information will be available.

What we don't want to do is compromise the situation prematurely such that any individual bidder may feel as though they have an argument to bring that their information was not protected appropriately according to state law and according to the rules of the road that they knew when they bid.

So we want to make sure we maintain that integrity of this process.

But folks need to understand that when there's a time that's coming that will be before a final decision when information will certainly be available.

- And confidentiality is important because this is proprietary information?

- So many of the, as my understanding, well in any bid process that we do not just for power supply but in any bid, this is the same process.

We need to be, I think, making sure we're compliant with state law which is a driver here, as well as being compliant what everyone understood at the beginning of the game.

So we don't want to change the rules before the game is over.

And so it's important if you're a bidder that you know your information is not going to be compromised before any intent to award is made, so that you can be assured and those that bid with you can be assured that your information is going to be looked at with the right integrity.

And that's all we're trying to do at the end of the day because we know it makes no sense to not do that because we know it's going to be made available certainly at the appropriate time and folks will be able to review all of the information.

- On power generation, much of the discussion of that has been that Light, Gas and Water, if this happens, would likely contract out for that.

Is that a safe assumption or is that still up in the air?

- Yeah, it's up in the air but my assumption is that those folks who bid on that phase of the RFP process may be coming in as an individual, independent power producer or another entity that wants to construct and own and maintain the system.

We just don't know, I certainly don't know, but I will say that the power generation piece is crucial.

MISO confirmed that in their analysis.

The load size that we have, we just have no choice but to make sure, if we want to maintain stability, voltage stability on the system, that's really important.

- Just, excuse me, just a couple of minutes left.

The City Council recently moved to begin to hire its own energy consultant, I think the mayor's office has its won.

Are all of these consultants helpful?

Or do we have competing sort of fiefdoms here?

- I don't think they're competing.

I mean I think, you know, certainly I want everyone and I'm fine with everybody getting the information they need however, they need to get it to be comfortable.

Our consultant as you know was approved by the board and the Council and they're going to be making a presentation to our board and the Council together to kind of give them an update on what's going with this.

- About when will everything be revealed?

- That, well- - Apologies if you can't talk about it.

- Well, what I just spoke about, the consultant's report out to the board and the Council likely to occur, I'm going to suggest late May, early June.

And that's just going to be on their findings thus far about what it looks like overall.

The details of the proposal, each proposal, may not be revealed at that time but that'll be probably at some point when there is an intent to award, but before a final decision is made.

So that folks want to challenge something or question something they'll have time to do that.

- There were some, switching gears a little bit with just a minute left, there were some criticisms, questions about some MLGW Board of Commissioners who are on the board but in expired terms.

Commissioners are allowed to vote and be on the board with expired terms, it's not uncommon for nonprofits and others.

There were critics that looks bad especially with these huge decisions that are being made right now.

How involved are you in the dealings of the board and the rules making in terms of their disclosures, who's on expired terms, who is not?

Is that part of your purview?

- Not really but we do have a process as you may know now where everyone annually fills out the disclosure information.

Several employees do, probably close to 60 or 70 MLGW employees fill that out.

Our information is now online in our website, you can go out and see that.

And of course as you know the board's, there's been three reappointed members and two new members appointed to the MLGW.

- We're out of time.

I'm going to ask a few more questions, Bill will probably get that in an article about that.

But thank you for being here, thanks for your time.

Thank you, Bill.

Thank you for joining us again.

Next week we've got TVA CEO Jeff Lyash, talking about some of these very similar issues.

Mayor Jim Strickland coming up soon.

If you missed anything today, you can go to the podcast or you can go to WKNO.org and get the full video.

Thanks, we'll see you next week.

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