THE MLGW HONEYPOT
December 12, 2006
As we approach Christmas it is a good time to sit back and think about what is going on in the City of Memphis.
• The corruption in the City of Memphis and Shelby County is well entrenched and getting worse. Who knows who will be the next public figure to fall.
• The City Council, the City Administration and the MLGW are changing fast as people run to secure a higher salary or pension as they are unsure who will be the next figure to fall.
• The only thing that is in relatively good financial shape is the MLGW. As of December 31, 2005, they were sitting on $192 million in unrestricted cash and cash equivalents as compared to $151 million as of December 31, 2004. They have stated that they only need cash to cover 30 days purchases and this would be an average of $94 million. Why do they not return this $98 million dollar excess in lower rates?
But you have to ask yourself why are they in such good shape? The obvious answer is that they are a monopoly and they can charge whatever they and the City Council choose. They always look good in their statements because they have ghost positions in their budget which they do not fill and therefore they come in under budget. If they make a mistake in gas purchases, they simply pass the mistake along in their purchased gas adjustment (PGA). A current analysis shows that the gas rates in the last five months are running up to 65% higher than the Henry Hub Natural Gas Price index used as a standard for spot gas purchases rates. But you will only be able to know late next year if you have been ripped off because the MLGW is always very late in publishing their annual financial statements and they do not publish their annual budgets on their website as the City and the County do. WHY do they hide this information?
According to the law the MLGW is supposed to operate at a break even position with any profits returned to the rate payers in lower rates. Section 7-34-115 of the Tennessee Code states:
Operation of utility systems- Disposition of revenue. (a) Notwithstanding the provisions of any other law to the contrary, as a matter of public policy, municipal utility systems shall be operated on sound business principles as self-sufficient entities. User charges, rates and fees shall reflect the actual cost of providing the services rendered. No public works shall operate for gain or profit or as a source of revenue to a governmental entity, but shall operate for the use and benefit of the consumers served by such public works and for the improvement of the health and safety of the inhabitants of the area service. The law further states that “any surplus remaining, after establishment of proper reserves, if any, shall be devoted solely to the reduction of rates.”
Year after year they keep piling up profit when they should be returning these profits to the ratepayers in lower rates.
December 12, 2006
As we approach Christmas it is a good time to sit back and think about what is going on in the City of Memphis.
• The corruption in the City of Memphis and Shelby County is well entrenched and getting worse. Who knows who will be the next public figure to fall.
• The City Council, the City Administration and the MLGW are changing fast as people run to secure a higher salary or pension as they are unsure who will be the next figure to fall.
• The only thing that is in relatively good financial shape is the MLGW. As of December 31, 2005, they were sitting on $192 million in unrestricted cash and cash equivalents as compared to $151 million as of December 31, 2004. They have stated that they only need cash to cover 30 days purchases and this would be an average of $94 million. Why do they not return this $98 million dollar excess in lower rates?
But you have to ask yourself why are they in such good shape? The obvious answer is that they are a monopoly and they can charge whatever they and the City Council choose. They always look good in their statements because they have ghost positions in their budget which they do not fill and therefore they come in under budget. If they make a mistake in gas purchases, they simply pass the mistake along in their purchased gas adjustment (PGA). A current analysis shows that the gas rates in the last five months are running up to 65% higher than the Henry Hub Natural Gas Price index used as a standard for spot gas purchases rates. But you will only be able to know late next year if you have been ripped off because the MLGW is always very late in publishing their annual financial statements and they do not publish their annual budgets on their website as the City and the County do. WHY do they hide this information?
According to the law the MLGW is supposed to operate at a break even position with any profits returned to the rate payers in lower rates. Section 7-34-115 of the Tennessee Code states:
Operation of utility systems- Disposition of revenue. (a) Notwithstanding the provisions of any other law to the contrary, as a matter of public policy, municipal utility systems shall be operated on sound business principles as self-sufficient entities. User charges, rates and fees shall reflect the actual cost of providing the services rendered. No public works shall operate for gain or profit or as a source of revenue to a governmental entity, but shall operate for the use and benefit of the consumers served by such public works and for the improvement of the health and safety of the inhabitants of the area service. The law further states that “any surplus remaining, after establishment of proper reserves, if any, shall be devoted solely to the reduction of rates.”
Year after year they keep piling up profit when they should be returning these profits to the ratepayers in lower rates.
posted by watchdog at
7:23 PM
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