Water rates from Memphis Light Gas & Water [MLGW] could increase by 22 percent, or about $3 annually per customer, if the Memphis City Council approves the hike in a meeting this afternoon.
The rate increase has been talked about ever since Cargill announced in 2014
that it would close it corn milling facility here, which it did in January. The company said the plant was underutilized and was too far away from the Corn Belt.
Cargill used “five times” more water than anyone in the MLGW system, Jerry Collins, the utility’s president, told the Memphis City Council during a committee meeting Tuesday.
“No one out there was as big as Cargill in terms of water use,” Collins said.
Collins said Cargill’s absence as a MLGW water customer left a $2 million hole in the utility’s budget and would have a 1.8 percent impact on water rates. The proposed rate increase would raise much more than that but Collins said new money is needed in the water division for things like a project to rehabilitate some old water pumping stations, making up for some lost rents, and a $1 million increase in legal fees.
But many council members did not like the fact that MLGW sought to balance its budget on the backs of MLGW customers.
“Residential customers will bear the brunt of what (Cargill) has done. Is that how it's always going be?” asked council member Janis Fullilove. “Large companies decide they’re going to leave and go wherever and this will this fall back on the customer as your asking us to do with this 22% rate increase?”
Collins explained that Cargill was MLGW’s biggest water customer.
Fullilove pushed back asking how the rate increase will benefit MLGW’s residential water customers. She noted that Memphis has a high poverty rate and that “$3 amounts to $30 to some people out there.”
She asked why MLGW couldn't go after Cargill for the money, noting that she knew the idea sounded silly “but it sounds just as silly to me to put this on the backs of the residents for what Cargill did.”
Collins said if MLGW does not raise water rates, the utility will have a budget gap, and then the state of Tennessee will step in and raise rates for the utility. That increase would like be more than 22 percent Collins said, noting the state just rose rates in Bartlett by 42 percent.
Fullilove dismissed this as a “scare tactic” and said she’d vote against MLGW’s rate hike this afternoon.
Council member Berlin Boyd agreed with Fullilove that the hike will impact the impoverished citizens of Memphis and said more needs to be done to make inner-city homes more energy efficient.
“It looks like you’re taking from the ones with the least and making them pay for something a company with (an exorbitant) amount of revenues, Cargill…” said council member Joe Brown. “They’re not in a fix like these rate payers are going to be.”
The resolution to increase the water rates failed in the committee meeting, meaning it will still get a vote but her full council council this afternoon. But the resolution will go before the council with a negative recommendation from the committee.