To: josephlee@mlgw.org
Cc: Mike Fleming
From: Mike Whitten

Subject: How does all of this save the City of Memphis any money???

Joe,

For the life of me, I can't figure out how all of this combination of MLGW departments with the City of Memphis will save the City of Memphis, the one you left $30 million in the red, any significant amount of money. Every single combination you've outlined, Legal, Internal Audit, Human Resources and I/S has the City in charge, with MLGW employees reporting to them. This will only increase the City's labor and benefit costs.

You've also told more than a few MLGW employees that they will be working for the City. How in the world will ADDING employees to the City save any money, since your counterparts, WW and Keith, just laid off about 2100 folks. Have you thought that maybe, just maybe, some of those laid off City workers might just resent MLGW employees getting jobs at the City, after they lost theirs in the name of Budgetary Savings??? I know it's been a while since you practiced as an auditor, but surely this math can't be that difficult?

Even if you save the $4 million that you proposed--which we both know you won't--that amount of money doesn't represent one penny of a possible rate decrease. Nor will it stave off the rate increases that will have to be in your budgets in the near future. If you want to save some real money, figure out how to reduce electric line losses, or unaccounted for water, or better yet, collect the over $10 million in bad debts owed the Division by customers who default on their utility bills. These items all have real cash savings, unlike the smoke and mirrors game you are currently proposing.

By the way, nice touch with the double digit raises for Heuberger and Hurt. I wondered how you got both of them to buy into your program so quickly and readily. I wonder how the rest of the VP's, Managers and Assistant Managers feel about two of their own getting some of the largest raises in the history of MLGW, raises that actually violate the MLGW Personnel Policy by their magnitude, while they all got nothing? Great management technique there, no doubt. What part of the MBA program covered that technique. Never let it be said that "sucking up" and "going along to get along" won't get you ahead in the Joe Lee utility world!

By the way, how much of that $1.3 million dollars from that bogus contractor audit, the one that Liz Moore directed and wrote, and Leon Hurt signed, did you ever collect? Last I heard from my sources, not one penny. So lets see, you ordered an audit of a contractor of MLGW, one with a legitimately awarded contract, had 8 staff and 4 management working on it for over 5 months, at a cost of over $800,000 in professional time, and you didn't get one dime back in revenue recovered?? And that's before you add in the $13,000 raise (15%) that you gave Leon Hurt between August and April. Is that the going rate for signatures on an audit report on which the signing individual did little or no actual work???

Let's recap this---Mark Heuberger spreads your Crap, Crap and Crapola, (3 C's) with some half-truths and lies sprinkled in for good measure, and he gets a $12,000 raise. Leon Hurt signs a bogus, $800,000+ audit on which he did no substantive work, one that produces no tangible revenue or results, and he gets a $13,000 raise. Wonder how your Union buddies will feel when they find out about these double-digit raises for your "Pets", when they only got 3%, and you now intend to impact their pension, insurance and other benefits?

Last question, and this is a tough one---If you and Willie and Keith are not planning a change of control transaction for MLGW, why aren't you, as president of MLGW, leading a charge to support and pass Senator Cohen's bill protecting the rights of the ratepayer owner's to vote on any sale or change of control of a municipal utility. Your respected predecessors, Papasan, Crawford and Morris, would all have been at the forefront of that bill. If stockholders get to vote before a private company can be sold, what is wrong with ratepayers' having the final say on the disposition of the utility that they built and own?

And, how about a personal response this time--the party line from your paid-for mouthpiece is getting lame.

Make it a nice day!!

Michael D. Whitten, CPA, CIA, CBM

TO: Mike Fleming
From: Sherry Whitten

Mike,

I am married to Mike Whitten. I appreciate all the great things you said about him on your show Wednesday – I agree wholeheartedly. For every time he and I and others have spoken out publicly, MLGW’s response has been, ‘They’re lying, and they’re attacking Joseph Lee personally’, but MLGW has never refuted anything we said, because they know we are telling the truth. They are the ones who have resorted to lies to attempt to discredit us. So I appreciate your support of Mike and your help in informing the citizens about the real story.

I am attaching my belated response to Mark Heuberger’s board presentation and press release where he was so critical of the ‘small yet vocal group’, of which I am a proud member. I hope you will consider publishing it as the rant of the week. I need a voice for my response.

Thank you once again.

-----Original Message-----

Mark Heuberger of MLGW recently presented a Statement to the MLGW Board of Commissioners to the board and the media.  Attached to the document were copies of various letters to the editor of the Commercial Appeal and copies of email exchanges concerning gas prices and recent rate increases between MLGW staff and rate payers.  I was specifically identified in the communications, along with my husband, Michael (former general auditor of MLGW), and other rate payers in the community.

MLGW seems to have four main complaints concerning this ‘small, yet vocal and persistent group’ of rate payers.  Those complaints are:

1. MLGW perceives that we are criticizing Joseph Lee personally.
2. They disagree with our perception that employee morale is at rock bottom at the utility.
3. They object to our attempts at getting information out concerning the true structure of gas pricing.
4. They assert that we are distributing misinformation.

My response to these complaints is as follows:

1. Our comments concerning Joseph Lee are not personal; they are professional.  Through political wrangling on the part of the mayor, Lee was given a job for which he has few qualifications and no industry experience.  In private industry, no reasonable, profit minded company would have hired him as CEO for this position; in our government, it appears that who you know is more important than whether or not you’re qualified.

   Our criticism of Lee appears to be well founded.  Thus far he has not shown us any revolutionary changes in the operations of our utility.  Many of his ideas have come from paid consultants, which he needed to hire because he has forced out many of the key management employees who were the brain trust of the utility.   Lee will assert to you that he ‘has only asked one person to leave’.  Make no mistake – many others were forced out using tactics of intimidation and harassment.  And many others are on the verge of leaving; the brain trust of MLGW has been significantly eroded.  Lee is the one who has made many of these battles personal, not us.  We have taken and will continue to take the high road in our criticisms of Lee’s performance and actions at the utility.   But we will continue to be vocal.

2. Our comments made concerning morale at the utility are based on many, many communications with employees who are either still employed or have already left because of the deplorable conditions.  These employees have described morale as ‘the worst I’ve seen in 30 years’, ‘like a morgue’, ‘nobody cares about anybody anymore’, ‘nobody trusts anybody’, and many other such comments. 

   Granted, these discussions have been primarily with non-union employees who have been told they will have no pay raises and who are constantly fearful of their jobs, having watched their colleagues be railroaded out the door.  These employees are being subjected to increased surveillance and are certainly fearful of reprisal if they speak out.  I hardly see how Lee has ‘worked hard to build positive relationships with his staff.’

   However, union employees certainly have reason to be happy; they’ve been told they will get their raises and are guaranteed job security, even if the utility is sold.  Concerning the ‘survey of employees’, MLGW could hardly expect honest answers to a questionnaire that was distributed with bar codes attached (for identification?) to employees who are scared for their jobs.

3. We did obtain information concerning gas rates directly from the budget and rates department at MLGW. And I submit to you that as rate payers, we are certainly entitled to that information.  In fact, we were referred to budget and rates by customer service, where we went first to try to obtain information.  We have only sought to pass on these facts to other rate payers who are asking the question, ‘Why did my bill go up so much?’  The facts are:

   The service charge (the base rate you pay no matter what) increased 106% from $3.40 to $7.00.  The bas rate - per ccf usage charge increased from a two tier structure under the old rate program of $0.6458 per ccf for the first 15 ccf used and $0.4439 for usage over 15 ccf to $0.71922 in a single tier structure for all usage.  The base rate increased 11% for the first 15 ccf of usage and a whopping 62% increase for usage over 15 ccf. 

   We challenge MLGW to refute our claims, and we challenge MLGW to justify the statement in the recent Customer Connection flyer sent with bills that says, ‘Natural gas bills averaged $153.52 in January, with approximately $7 being the result of the recent gas rate increase . . .’  The service charge alone increased $3.60!  How can they possibly assert that only $7 of recent utility bill increases are due to changes in the base rate?   They should not claim that the huge increase in the base rate is the result of price increases in the gas market; the purchased gas adjustment already accounts for the commodity price changes.  The base rate is fixed and will NOT decrease if gas prices go down; rate payers pay that rate for their gas usage no matter what happens to gas prices.

4. In MLGW’s communication, they accuse this vocal group of ratepayers of lying no less than seven times and make every attempt to discredit the group.  They discuss the ‘abundance of misinformation’, the ‘influx of misinformation’, ‘irrational behavior’, a lack of ‘truthful constructive criticism’, ‘inaccurate information’, and ‘distorted and inaccurate information’.

   Our communications have been accurate in every way, and we challenge MLGW to refute any claims – point by point - that they deem to be misinformation or inaccurate.  We make very sure that anything we say or publish is based on fact, not rumors or intentional misinformation.  We understand that the information we’ve disseminated has not been favorable to MLGW, but it has always been justified and truthful.  If we stated opinions, we clearly identified them as such.  And we will continue to be vocal with both facts and opinions.

   Additionally it has come to our attention that in an attempt to discredit us, key members of MLGW management are spreading rumors that are personally hurtful to us and are completely inaccurate.  My husband is not and has never been in Lakeside, and we have not and are not getting a divorce.  

   Perhaps if misinformation is hitting the streets, it is the result of communications from MLGW, not from this group.

For as long as I can remember, MLGW has been subject to scrutiny and criticism from both rate payers and the media.  If their actions are fair, honest, and in the best interest of the rate payers, they should not be fearful of this scrutiny.  I find it highly interesting that MLGW is so concerned about this ‘small group’.  We are not even an organized group; many of us don’t even know each other.  We are simply highly concerned rate payers who are trying to open eyes in the community to what’s going on at the utility.  If we are ‘building alliances with other individuals who empathize and support their viewpoints’, it is only because there are many others in the community, including current MLGW employees, who see the truth and also want to get the word out. 

In Memphis, government officials seem to be allowed to do or say whatever they please with impunity.  I, for one, believe these officials, including Joseph Lee and Willie Herenton, should be accountable to those they serve.  I will continue to voice my thoughts and opinions wherever and whenever possible.  It’s too bad that reasonable, thoughtful voices of criticism are seen as a distraction at MLGW instead of as a guiding beacon for ways they might improve.

Sherry Whitten