MLGW presents $11.9 million fiscal consent package and details how data centers will affect system capacity

Memphis Light, Gas and Water (MLGW) presented a set of fiscal consent items to the City Council on June 24 calling for roughly $11,900,000 in individual requests that MLGW said are part of about $257,000,000 in total planned spending for 2025. Doug McGowan, MLGW senior staff, described purchases ranging from high-voltage circuit breakers and transformers to vehicle replacements and radio-network support services.

The items included a not-to-exceed $1,000,000 purchase for five high-voltage circuit breakers to replace end-of-life devices at several substations; a not-to-exceed $8,500,000 purchase for four NexSys power transformers to support capital plan expansions and system reliability; a five‑year support contract for the utility's MPLS radio network; modeling software renewal for gas system engineering; emergency ratification for water-main repair work near Union/Flicker Avenue; and routine fleet purchases including pickup trucks, compact track loaders and concrete mixer trucks.

Why it matters: Council members pressed MLGW on how the purchases fit into a broader master plan to recapitalize and expand the electric distribution system, and how that plan intersects with several large prospective data-center projects that are seeking substantial power allocations.

McGowan said the typical service life for the circuit breakers is about 30 years and that MLGW has reduced the average age of its circuit breakers from about 40 years down to roughly 29 years through an ongoing replacement program. He told councilmembers the master plan budgets for replacing 10 breakers and two transformers per year to maintain resiliency across about 65 substations. The proposed breakers and transformers will support load centers including Summer Avenue, Cordova and Southeast Shelby County, and also provide spares where needed.

Council members repeatedly asked how incoming hyperscale customers would be accommodated. McGowan showed a master-plan map of substations and load conditions that uses a red/orange/yellow/green/white scale to indicate relative capacity; red means a substation is heavily laden. He said MLGW is planning new substations (for example, an upcoming Summer Avenue substation and recent Substation 83 in Collierville) and has engineering paths for downtown congestion but that very large customers require site-specific planning and major capital work that in many cases must be paired with Tennessee Valley Authority (TVA) commitments for bulk supply.

On XAI's requests, McGowan said TVA has committed 150 megawatts for one XAI site (President's Island) conditioned on specific substation work and transmission improvements; TVA has not yet committed additional allocations in other areas. He said XAI and similar customers typically plan battery storage and on-site backup (including gas-fired turbines) to preserve facility operation when they must curtail grid use; battery capacity limits and emergency-use permits affect when onsite generators would be used.

Council members sought more detail on how MLGW forecasts growth, whether the utility has modeled multiple hyperscale arrivals, and how costs would be apportioned. McGowan reiterated that MLGW forecasts normal residential, commercial and industrial growth in its master plan and maintains capacity for native growth; he said hyperscalers (hundreds of megawatts) are evaluated case-by-case because such projects require very large, location-specific capital investments and a committed revenue stream before the utility or TVA would build the needed infrastructure.

Actions and next steps: MLGW concluded its presentation and fielded questions; the items were presented as the utility's fiscal consent package. Council members requested additional follow-up information, including more granular location-based capacity data for prospective large customers and clarifications about emergency-response work (the water-main emergency was presented as an emergency ratification). McGowan told councilmembers he would provide follow-up answers offline and bring more detailed siting questions to the next meeting when requested.

Ending: The council and MLGW agreed to continued briefings. Councilmembers who asked for more detail said they would submit specific questions for staff to address at a future meeting so the body could evaluate trade-offs between serving large new customers and protecting service and rates for existing customers.