April 9, 2007

RAID BY THE CITY OF MEMPHIS ON THE MLGW GAS DIVISION RESERVES

Watchdog has been watching for some time the raiding of the reserves of the MLGW for the benefit of the City budget. Take the water division and the raid on it for the financing of the FedEx arena. Over $60 million dollars pledged to finance the arena bonds. At least this was done above board, legally, and with the approval of the City Council.

Now, for some time, the City Council has been raiding the Gas Division reserves without the approval of the Board of Commissioners of the MLGW and in violation of the Memphis City Charter. From 2001 to 2006 the amount of the illegal payments comes to over $45 million dollars. I have attached a chart showing the amount of overpayment and the Memphis City Charter provisions that apply to this payment. What is the next step? A lawsuit?

The whole situation at the MLGW needs an open study and explanation of 1) why the gas division overpaid the pilot payments and 2) why the gas division lost $18 million dollars through November 2006 and why they paid anywhere from $75 million to $150 million more than the spot natural gas prices during 2006 and 2007, costing the rate payers millions of dollars in high gas bills. Take a look at the city charter provision and the gas price chart which are part of the attached file. Hopefully Carol Chumney and the City Council utility subcommittee will discuss this situation tomorrow.

Click here to see the overpayment of gas division pilot payments to the city of memphis and the high prices paid by the gas division for the gas that they sell to the ratepayers