MLGW CEO Jerry Collins reflects on a decade in the power structure
by Jon W. Sparks
As Plato said, “The measure of a man is what he does with power.” This month’s Exit Interview is with one of those men who knows a few things about power: Jerry Collins is stepping down in December as president and CEO of Memphis Light, Gas and Water after a decade of managing the utility. Before that, the registered professional engineer was director of public works in Memphis and by the time he retires, he’ll have put in 38 years with the city. If anyone can tell you about aquifer science, natural gas, power lines, or sewer access points, it’s Collins.
“I do have some institutional knowledge,” he says, modestly. “And I know where all the bodies are buried,” he adds, dryly.
He speaks with clarity befitting an engineer and when he finds exactly the right words, he sticks with them. Ten years ago, he told the Memphis Flyer, “We have to make sure that MLGW is not the subject of headlines and TV news pieces. We’re preaching that we want to be dull and boring. If we’re doing what we’re supposed to be doing, there’s no reason that MLGW should be in the limelight.”
In a recent interview with Inside Memphis Business, he said, “MLGW had been in the headlines a lot during that period of time before I got here, and one of my mottoes is it’s good to be dull and boring, and a low profile is the best profile.”
Inevitably, there were headlines during his tenure in the aftermath of storms, with the expansion of smart meters, with rate hikes. He has gotten some criticism from some elected officials, but his stewardship, steadiness, and political acumen are reflected in his desire to, as he says, “endeavor to give the people the service they deserve at the lowest possible price.”
IMB: Is there anything over the past 10 years that you’d do differently?
Jerry Collins: [Seventeen seconds of silence tick by as he ponders this]. Nothing is hitting me.
But what would you say has been difficult?
JC: A lot of utilities do not embrace supplier diversity, but MLGW does. We want to be an organization that leads by example when it comes to supplier diversity, and I’ve said many times that economic development is not just about bringing companies and industries to Memphis, and it’s not just about expanding the large companies and industries that are already here. It’s about creating businesses within our community with the people that are already here so that we can improve the economic condition of our city and our county. I feel that supplier diversity is a core component of economic development and something that ought to be really emphasized, and we do that. I think that we set the example and we still take the low bidder.
I’ve heard people in government and private industry say if they embrace supplier diversity like people want them to, then their profits would diminish. My response is, you can eat your cake and have it too. We have, as far as I’m concerned, the best supplier diversity program in all of Memphis and Shelby County, and we still have the lowest utility rates in the country at the same time.
What have been some challenges over the last 10 years and how did you address them?
JC: Some of my counterparts who lead other utilities don’t embrace energy efficiency very well, because energy efficiency means they will get less revenue for their utilities. I take a different approach. I feel like this utility belongs to the customers, and our governing principle here at MLGW is to always do that which is in the best interests of the customers as a whole. And it’s obviously in the customer’s best interest if they’re spending less money on utilities, and we need to try to help them do that. And so we’ve had many different programs, where we can help people analyze their energy use, recommend home improvements. We’ve administered a number of grants that helps people make home improvements from federal grants or TVA grants.
We’re the only utility in the country as far as I know that has a rental inspection ordinance, where we have set certain basic energy efficiency guidelines for rental properties and we have the authority to inspect rental properties. If we find a rental property that doesn’t meet those guidelines then you can take the landlords to court and make them make those improvements. That is something which has improved the quality of life for hundreds of people and it does reduce our revenues, but it does at the same time increase the quality of life and the well-being of people that we serve. Since we are owned by those people, that’s what we ought to be doing.
You’ve said that customer satisfaction and diversity are priorities. What other areas are important to you?
JC: It’s really important to balance the condition of the assets versus the rates. There is potential that you might have the rates too low for too long, and your infrastructure might suffer for it. On the other hand, there’s a temptation that you spend a lot of money on infrastructure and maybe you’re not letting the infrastructure maximize its useful life; therefore your rates are unnecessarily high. We have to make sure that we have a balance so that we properly maintain the infrastructure and have rates that are as low as they can possibly be.
There are actually measures that can be used to determine whether you’re investing in infrastructure appropriately. We use those measures and those measures tell us that we have an excellent balance in terms of maintaining infrastructure while maintaining rates at a low level. And we have to watch those metrics and when they get out of balance then we need to take appropriate action. That’s for the long-term benefit of our customers, because we don’t want to be in a situation where we skimp on costs and expenses today to the detriment of those that will come and be customers 10 years, 20 years, 30 years down the road.
Why has MLGW adopted the Smart Grid technology?
JC: It’s very much important that MLGW be in step with technology and not be put in a position where we’re behind the rest of the country. We want to maintain our position as being a utility that uses the best available technology to provide customers with great service, and help keep costs low. Smart Grid, which encompasses more than just smart meters, is a very important piece of the utility business these days, especially in the electricity business but also in the natural gas business and the water business.
With Smart Grid you can get more work done with fewer people. You can have more information than ever before. Customers can have a lot more information about their energy use at home, which they can use to help change habits and conserve energy. It makes us better able to respond to emergencies such as major power outages when there’s a storm. It helps us minimize the number of people that are without power and it helps us to maximize our efficiency when restoring power.
But it’s also a major investment. It’s the biggest project in the history of MLGW. The contract is $240 million. We will spend less than that, and it’s running a little ahead of schedule. We’ve deployed about 536,000 smart meters, in a system that has a total of about a million meters. It’s saving our customers a lot of money; for instance when you have your utilities reconnected after a cutoff we can do it from headquarters and not have to send a truck out. So the reconnect fee if you have a smart meter is substantially lower than a reconnect fee if we have to roll a truck.
In the last year, our customers have saved well over $1 million if they have smart meters and reduced reconnect fees. Also, it makes meter reading much more efficient.
There’s been some resistance to the new technology. Why is that?
JC: Some people think that we should employ more people rather than being as efficient as we can to keep rates as low as possible. We now, for the fifth year in a row, have the lowest combined utility rate of any major utility in the country. We live in a city where there are a lot of people that live in poverty, and so keeping the rates low is something that should be a high priority for all of us. We should not try to wastefully spend money if we can find more efficient ways to spend it and keep the rates low.
How did you manage the response to the Memorial Day weekend storms that wreaked havoc on the city and left some people without power for days?
JC: When we have a storm, it’s all about minimizing what I call customer hours without power, which is basically the number of customers times the number of hours that they’ve been out. So, obviously if you’re going to minimize those customer outage hours, what you have to do is hit the biggest outages first and then work your way down the list, which is exactly what we do. We have an excellent system, which is currently based primarily on phone calls from citizens, that tells us in a split second once you make the call, whether there is a four-customer transformer outage or a 40-customer fuse outage, or a 1500-customer circuit outage, and that helps us to prioritize work and to send people out to assess the damage so that we make sure we can get the most people back on in the shortest period of time.
It’s a great system that is transitioning and improving as we move to smart meters, because now we have the ability to what we call “ping” a smart meter and it’ll tell us whether or not it has power, which is a great thing, and it’s another step. Once we get all the bells and whistles deployed, as we finish installing all the smart meters, then it’ll be even a better system.
When we have a power outage, we don’t spare any expense. We try to get the power back up as quickly as possible, so that’s why 30 minutes after the storm hit, we were already working to get contractors in here. And we had 101 contract crews, this is overhead line crews, plus another 78 tree trimming contractor crews, and all of those were working in conjunction with our existing forces to get the power back on as quickly as possible.
How do you think MLGW will deal with alternative forms of power as more people start using them?
JC: We have the responsibility to buy all of our energy from Tennessee Valley Authority. TVA has a mixture of different types of power generation. They have a little bit of solar in that, they have a little bit of wind, they have a little bit of power generated by bio-gas, along with hydroelectric, nuclear, coal, natural gas.
But solar power just really hasn’t made a big impact in Shelby County. The economics are difficult and it’s not likely that a low-income family is going to spend the money to put solar panels on their roof if it’s going to cost them more than it would to buy their energy from MLGW.
The very low prices of natural gas, which we anticipate will remain low for several decades going forward, makes it more difficult for solar power to grow. And the fact that we have low rates of electric, gas, and water also makes it difficult for other forms of energy to get a strong foothold. But it’ll grow in popularity, and it’ll become cheaper over time, and when that happens we’ll have to have more discussions about how we structure rates so we can recover the real cost of the energy for our customers, and for the real cost of services, and some of those costs are fixed and some of those costs are variable.
If you were to sit down with your successor, what would be your advice?
JC: Be more responsive than any other arm of any local government. When a customer has a complaint, get the complaint answered as quickly as possible. Don’t let anything drag, fall through the cracks. Answer the phone in a timely fashion. When it comes to how the various departments run, we have great employees, we have very talented people. What we want to do is hire good people, give them great training, and keep them for a long time. What you don’t want to do in the utility business, because we have so many highly skilled technical people, is to train them and then lose them, so you’ve got to give them a fair wage and you’ve got to give them good benefits, and that’s something a lot of people don’t understand or fully appreciate.
You cannot go out tomorrow and hire three linemen. You have to grow them. You’ve got to find the right people with the right skill-set that go through four and a half years of training, and then they become a lineman, a journeyman lineman, and you want to keep them for as long as possible and not have a lot of turnover. This is true with many job descriptions in utility; that’s just one example. I’ve got 150 engineers. We want to train those engineers and we want to keep them and not have a lot of turnover and do that by paying them a fair wage and giving them good benefits and do your best to try to minimize turnover.
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