Memphis Light Gas & Water implemented a 'temporary' franchise fee surcharge of 2% in 2022 to cover COVID revenue losses. Now they're making it permanent through Ordinance 24-78 despite the fact that their revenues have recovered. This affects every commercial and industrial account in Memphis. The surcharge is generating about $18 million annually that's going directly to city general fund, not utility operations. Time to organize opposition to this cash grab.
MLGW 'temporary' franchise fee surcharge now permanent - fighting back
Randy - Alabama Power tried something similar with Birmingham's franchise fee during COVID. The key argument is whether the original emergency authorization has expired and whether proper public notice was given for making it permanent. In Birmingham, we successfully argued that the emergency powers didn't extend beyond the declared emergency period. Worth checking if Memphis followed proper ordinance procedures for permanent adoption.
This is exactly what happened with Georgia Power and Atlanta's franchise fee in 2021. They used COVID as justification for a 'temporary' increase that became permanent. We challenged it based on lack of proper cost justification - if utility revenues have recovered, what's the ongoing justification for the surcharge? The Georgia PSC eventually required better documentation of the need for permanent rates.
Randy - Is MLGW subject to Tennessee PUC oversight or are they purely municipal? If they're municipal, your challenge would be through Memphis city council rather than state regulators. Either way, the key is showing that the original justification (COVID revenue impact) no longer exists. DTE Energy in Michigan had to reverse similar 'temporary' charges when we showed their financial recovery eliminated the original need.
Tina - MLGW is municipal so this goes through Memphis City Council. The problem is the surcharge revenue is now built into the city budget so council has financial incentive to keep it. We're organizing affected businesses to attend the July 30th council meeting. The argument is simple: temporary means temporary. If MLGW's finances have stabilized, the emergency surcharge should end. Already have 15 large commercial customers committed to speak.
Cincinnati had similar battle with Duke Energy Ohio over franchise fees used for general city revenue rather than utility-related expenses. The Ohio Supreme Court ruled in City of Cincinnati v. Duke Energy that franchise fees must be reasonably related to utility operations or right-of-way costs. If Memphis is using this for general fund, might be vulnerable to legal challenge under Tennessee law.
Cecilia raises good legal point. Washington courts have held that franchise fees should be compensation for use of public rights-of-way, not general taxation. If MLGW's surcharge is going to general city operations unrelated to utility infrastructure, it might exceed the scope of legitimate franchise fees. Worth consulting with Tennessee municipal law attorney who specializes in utility franchises.
Randy - PPL Electric in Pennsylvania tried permanent adoption of COVID surcharges and the PA PUC required detailed cost-benefit analysis showing ongoing need. Even for municipal utilities, courts generally require some rational basis for permanent rate changes. Document MLGW's current financial condition compared to pre-COVID baseline. If they've recovered, the permanent surcharge lacks justification.
Sylvia's right about documenting financial recovery. Alabama Power had to provide detailed financial data when we challenged their permanent COVID adjustments. The key metrics are revenue recovery, bad debt levels, and cash flow compared to 2019 baseline. If MLGW can't show ongoing financial impact from COVID, the permanent surcharge is just opportunistic taxation. Good luck with the council meeting Randy - document everything for potential legal action.