Continued from yesterday:

Looking in from the outside, it’s hard not to suspect that Memphis Light, Gas & Water executives have already decided that they plan to make sure Tennessee Valley Authority remains as MLGW’s supplier of electricity for Memphis and Shelby County.

MLGW seems to have first pursued a process that would produce that result, but that was upended by City Hall as a result of the public demand for a real process.  It has cast aspersions on the people who believed the contract with TVA should end, complaining that the anti-forces had paid consultants (although TVA was paying for its own public relations consultants and lobbyists). 

 It proceeded to mount an advocacy of TVA that ignored the impact of reduced rates on Memphis and Shelby County customers and the potential impact of the savings to pay for the infrastructure it claimed to need.  Its latest action was to write an RFP (Request for Proposal) that was skewed toward the answer it wanted and that eliminated options that could benefit ratepayers. 

Most of all, at a time when the public looked to its public utility to play it straight, to exercise its fiduciary responsibilities fairly, and to take an objective position in the debate about an electricity contract that was based on reducing utility bills for ratepayers in one of the poorest cities in the U.S., it has appeared to put its relationship with TVA ahead of relationships with its own customers.  Those are the same customers who pay more for electricity than people who live just across the state lines of Arkansas and Mississippi. 

Secret Evaluations at MLGW

All in all, the manipulations by TVA have been an insult to the intelligence of ratepayers.  That’s the only way to interpret how, after ignoring Memphis for decades, it decided that Memphis politicians and grassroots leaders were for sale.  Evidence of it can be seen in the way its thrown money around to ingratiate itself with some nonprofits, churches, and people perceived to have political influence. 

It was as if TVA doesn’t respect Memphians enough to think it can win the debate about Memphis’ electricity on its merits.  Instead, it is spending Memphis’ own money to execute a clumsy political strategy disguised as community generosity.  It is spending money for everything from the remodeling of the offices of nonprofit groups, church receptions, comic books, coupons for discounts at a specific drug store, and more.

At the same time, back in the closeted offices of MLGW, the almost 30 proposals for alternatives to TVA are being evaluated, allegedly to decide which one best serves the interests of Memphis and Shelby County. 

It’s strange and unconscionable that all of this is hidden from Memphians, who pay the bills and own MLGW.  At a time when transparency is the watchword, the utility is shielding what it’s doing and who it’s received responses from.  It is the most detrimental example of MLGW’s disdain for the public’s right to know.  

Sunshine As Antiseptic

As the old saying suggests, sunshine is the best antiseptic.  And yet, City Hall does not demand for MLGW to be open and honest with the public and to stop stonewalling the news media.  Whether you are for TVA continuing its role with MLGW or against it, the present closed door process is a detrimental way to conduct the public’s business.  

So far, the mayor has been loathe to invest his political equity to bring the TVA decision to a close – four years of back and forth, study after study, false starts and stops, and now committee after committee. 

Based on the manipulations and the secrecy, it’s possible to imagine that at the end of this prolonged process, the public may note even believe MLGW’s recommendation.  And we will have spent four years spinning our wheels.

It’s no wonder that in this context, the pro-RFP group, $450 million for Memphis, recently mailed the following letter protesting the present process and MLGW’s Request for Proposals (RFP):  

 Dear Mayor Strickland, City Council and MLGW Board, 

We write to you with incredulity regarding our belated realization that MLGW Executive Management disregarded your collective, written, and public 2021 instructions regarding two of the three Request for Proposals (RFP) components of the MLGW “Wholesale Energy Delivery” RFP.   This is particularly relevant with this week’s ice storm that has devastated Memphis, as potential energy savings could be part of the solution to these chronic MLGW problems. 

In 2021, each of you, City Hall, City Council and the MLGW Board, explicitly instructed MLGW Executive Management to include in the RFPs that “bidders may include proposals for other methods of providing transmission and generation to Memphis and Shelby County.”  

Of the three RFP components, only the Renewables RFP (Sept 14, 2021) complies.  Neither the Transmission RFP (July 12, 2021) nor the Thermal Generation RFP (August 6, 2021) comply.  This is doubly problematic as Transmission and Generation account for the vast majority of the RFP economics and savings.     Your public instructions to MLGW Executive Management regarding the “Other methods” were the following: 

  • Mayor Strickland’s March 15, 2021, executive intervention via letter to re-start the stalled RFP on March 15, 2021 upon certain conditions.  (Mayor’s letter is attached)  
  • The “Four Points” approved by the MLGW Board on March 31, 2021, in which;
    • MLGW CEO, Mr. Young specifically acknowledged the “other methods” work order (5-minute mark in 3/31/2021 MLGW Board video recording)
    • MLGW’s own consultant, GDS, responded to Commissioner Wishnia’s specific question regarding “capital leasing” options, saying “that’s probably going to be the preferred avenue for MLGW, so you don’t have to load your balance sheet up with a bunch of debt to finance it.”  (30-minute mark in 3/31/21 MLGW Board video recording)
    • http://mlgw.iqm2.com/Citizens/SplitView.aspx?Mode=Video&MeetingID=2001&Format=None

 * The “Amendment #1 Work Plan”, Resolution to the Memphis City Council for the RFP approved by City Council on April 6, 2021. 

We expended the effort to read the RFPs (on MLGW’s website), and are surprised that nobody else did.   When we saw that MLGW Executive Management excluded “other methods” in its July 12, 2021, Transmission RFP, we mailed a public letter to Mayor Strickland on July 30, 2021, (attached) noting this blatant disregard by MLGW.   We then read the Thermal Generation RFP, dated August 6, and it also excluded “other methods”.   

Shortly thereafter, the City Hall’s own independent energy consultant, Enervision, confirmed in writing, via a public letter, that “Neither the Transmission RFP or the Generation RFP made it clear that “bidders may include proposal for other methods of providing transmission and generation for Memphis and Shelby County.”   

We understand that after receipt of the Enervision letter, Mayor Strickland subsequently met with MLGW Executive Management, which would be the fourth time city officials directed MLGW on this matter.   On September 14, MLGW issued its “Renewables RFP”, which finally acknowledged “other methods”.   

The problem, however, is that MLGW did NOT properly or fully edit its Transmission or Thermal Generation RFPs to become compliant, despite minor wordsmithing, and we had assumed that they would.   This was an unfortunate assumption and which is why we remained silent, under the assumption that disregarding this fourth order on the “other methods” subject from the Mayor, would be career-ending for those involved.   

  • In the Transmission RFP, Section 3.2 specifically states “MLGW will own, operate and maintain the Interconnection Projects”.   This sentence is key, as it overtly disregards “capital leasing” options – and is restricted to IRP-assumed financing – which is the specific concern that Commissioner Wishnia and GDS discussed with MLGW Executive Management on 3/31/21 (see recording), and would require that MLGW issue huge amounts of avoidable and risky debt.  It is also the core concern that caused 450M to exist. 
  • In the Thermal Generation RFP, while “capital leasing” is permitted in Section 3.2, the power plant options are limited to IRP assumptions, as described in Section 2.1, and therefore prohibits “other methods” that could take advantage of potential innovative technological improvements.  

If any of you has any uncertainty about this, we request that you ask City Hall – the non-voting entity in the RFP process – confirm directly with the Transmission and Thermal bidders themselves.  Mayor Strickland is widely known for his fairness and honesty, which are two reasons why we believe City Hall is the correct entity to verify this with the bidders themselves. 

Power Outage Funding Solutions

With yet another ice storm that has severely damaged MLGW power distribution assets – if the RFP proves that MLGW can save hundreds of millions annually – the funding to begin burying power lines, upgrading local systems and reducing electricity rates could all be within reach.    If we are even HALF right about potential electricity savings under the RFP, which could be $225 million per year, MLGW could provide its ratepayers BOTH double digit electricity rate cuts and have debt-free funds to bury power lines.   Results of an Independent and Transparent RFP could be the solution for the many woes of MLGW.   Why is MLGW Executive Management trying to bury information that could help?

 We publicly seek these RFP-related changes: 

  1. First, for the Transmission RFP, permit all parties who bid to amend their bid for capital lease options, should they want to.  This would prevent MLGW from taking on hundreds of millions of unnecessary and risky debt. 
  1. Secondly, for the Thermal Generation RFP, permit all parties who bid to amend their bids to include generation options other than the detailed specifications, which would include room for technological innovation, should they want to.  
  • We demand Impartiality.   Anyone involved in voting who may have a conflict of interest should be removed.  Additionally, the MLGW Executives responsible for disregarding its own Board, City Council and City Hall should be removed from further involvement in the RFP selection process.  We demand that MLGW Executive Management publicly address why they disregarded its own Board’s vote, City Council’s vote and the Mayor’s instruction on “other methods” being included in the RFP.   
  1. We request that Mayor Strickland’s energy consultant, Enervision, be heavily involved in the RFP evaluation process to ensure honesty and Transparency.  MLGW is the sole judge of what is “viable”, and they have repeatedly proven to be biased. (see timeline) MLGW apparently intends to seal all records from public view, and this is a public sector contract. We do NOT seek to know the identity of bidders or their details during the selection process.   

Conclusion

MLGW Executive Management’s cavalier confidence to act with impunity towards their own Board, to City Council and to City Hall suggests that City Government is not who they feel they report to.   Which leads to the obvious question, just who do they actually report to and how did the checks and balances fail on this?  

We anticipate this could be the final correspondence from $450M as a formal 501c4 group, having proven that there is a broad coalition of Shelby County citizens who want an Impartial and Transparent RFP process.  Once we see that the RFP is amended to the prior specifications of the MLGW Board, City Council and the City Hall, we will happily dissolve our charter, which we had hoped to do over a year ago. 

If you all collectively do not care to cure these deliberately flawed RFPs, what is the point of City Government checks and balances?   If City leadership has the will to force an Impartial and Transparent RFP, then the time is now or never.   

Yours Sincerely, 

Karl Schledwitz                                                    Jim Gilliland Jr.

President                                                              Treasurer

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