Behind the Scenes

When the fine print becomes hot news.



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This column isn't called Fine Print for nothing. The controversy over Memphis Light, Gas and Water (MLGW) and the entry of former MLGW President Herman Morris into the city mayor's race is in one sense a personal battle between Morris and Mayor Willie Herenton.

But in another sense it's about the fine print in everything from MLGW cutoff procedures to pensions and severance packages. And those issues aren't going away whether the next mayor is one of those two gentlemen or someone else.

In 1997, Herenton appointed Morris, who was then MLGW general counsel, to be interim president of MLGW. Later that year Morris got the "interim" removed from his title. But he had only been on the job about eight months when the friction between Morris and Herenton began to create sparks. Working with a consultant from Philadelphia, Herenton and Morgan Keegan suggested that the time was right to look at possibly selling customer-owned MLGW to an investor-owned utility for as much as $800 million.

The proposal went nowhere, but it brought to light the problems in the chain of command between City Hall and MLGW. And reporters began to look a little harder at a utility company that was both a sacred cow that (by its own description) provided "great service and low rates" and an unusually closed corporate culture in which, officially or by custom, board meetings were conducted in private before lunch and quickly ratified in a token "public" meeting after lunch.

The crash course for the media was worth it. We learned and reported that in 1997 MLGW was sending out 3,000 cutoff notices per day and that there were about 400 actual cutoffs each day. Over one-fifth of customers were more than 30 days past due on their bills. Of course that wasn't news to financially strapped customers, but it was an eye-opener to the rest of us.

Here's my point: MLGW was constantly dealing with cutoffs for rich and poor, powerful and powerless alike. Sometimes a notice would result in a cutoff. Sometimes it would produce a partial payment. Sometimes a third party would be notified and make the payment. Sometimes the poor customer would call the Memphis City Council office and a council member or staff person would make a call to MLGW and, if the customer wasn't a known reprobate, get some temporary relief. It was no big deal, or at least it was not big news and it wasn't red meat for a federal grand jury.

In 1999, Herenton was elected to a third term and Edmund Ford was elected to the city council. It wasn't long before Ford began having trouble with his MLGW bills, according to records that became public in February. His service was even cut off a couple of times while Morris was MLGW president. Ford denounced Morris, who had to be mindful of Ford's position as a council member who approved budgets.

Meanwhile, relations between Morris and Herenton were getting worse. In 2001, MLGW's board adopted without discussion a severance policy for Morris and other executives that would pay them over $1 million if they "voluntarily" retired. But the public didn't know this, and it didn't know how sensitive Morris was to publicity. In 2002, he advised two associates that a billing dispute with an editor of The Commercial Appeal "could set editorial policy toward MLGW for years and must be handled with touch" and that a VIP list was needed. More fine print that didn't make the news.

By 2003 Herenton had decided that Morris would have to go. They disagreed about which firms should get lucrative bond business, the size of rate increases, protocol, and spending the mayor called "wasteful" and "self-aggrandizing." That set the stage for Morris to negotiate his severance package. Herenton balked, went public with his objection (and his calculations purporting to show Morris was seeking over $1.1 million), and open warfare was declared between Herenton and the city council over the appointment of Joseph Lee to succeed Morris.

In February of this year, Edmund Ford's longstanding problem with his MLGW bills was suddenly "hot" news, along with cutoff policies and mayoral control. But it wasn't really such hot news. It had been there in the fine print all along, but most people weren't paying attention.

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