August 13, 2012
The MLGW just published their latest annual financial report in July 2012 for the year ended December 31, 2011. It has some interesting figures in it which I will recap.
I have been complaining for some time about two things at the MLGW.
- That the MLGW is supposed to operate as a non profit but over the years they have piled up a lot of profits.
- That they have used these profits to finance their pensions, health care and OPEB funding which are much richer and more generous than the City of Memphis and especially Shelby County.
Well maybe these complaints have had some effect when I look at the new financial statement. I have attached a spreadsheet showing the year to year increases in net assets (basically profits) and the working capital (current assets minus current liabilities. From 2004 to 2010 they increased net assets by an average of $60 million per year. However from 2010 to 2011 this dropped to $34 million. The increase in working capital (current assets versus current liabilities) from 2004 to 2010 averaged $28 million per year. However from 2010 to 2011 this dropped to $4.8 million.
What does all this mean to you the ratepayer? The MLGW rate structure is difficult to understand. Electric, gas and water rates are established by MLGW and rate changes are subject to approval by the Council. The Council has approved mechanisms for pass-through of wholesale electric rate changes from
TVA and natural gas price changes from suppliers without requiring additional specific approval.
I predict that this fall (either before or possibly after the election) the MLGW will ask for a substantial rate increase across the board. However they should reform their benefits before any increase is granted by adopting the same pension reforms adopted by the City and County and bring their health care cost and OPEB rates in line with the City and County.