- (female announcer) Production funding for Behind The Headlines is made possible in part by the WKNO Production Fund, the WKNO Endowment Fund, and by viewers like you, thank you.

- Power, water, and the future of utilities in Memphis, tonight, on Behind the Headlines.

[intense orchestral music] I'm Eric Barnes with The Daily Memphian.

Thanks for joining us.

I'm joined tonight by Doug McGowen, President and CEO of MLG&W.

Thanks for being here again.

- Sure.

Glad to be.

- Sam Hardiman is a reporter with The Daily Memphian.

Thanks for being here again.

- Hi, Eric.

- And Scott Schoefernacker is Science Director for Protect Our Aquifer, a nonprofit 501(c)(3) dedicated to preserving and protecting Memphis' drinking water.

- Yes.

Thanks for having us.

- Absolutely.

So we'll talk about a lot of things, a lot of things where y'all's roles intersect somewhere.

We'll just talk about some things that don't affect, aren't the purview, I should say, of Protect Our Aquifer, and vice versa.

But let's start with, I think, some of the the bigger news of the last month or two, and I'll start with you, Doug, has been the xAI facility down on President Island, what will be, or is now the biggest supercomputer in the world, owned by Elon Musk, affiliated with, you know, Twitter, SpaceX, Tesla, et cetera, et cetera.

And one of the things that's come out of that that is notable is the speed with which the project has happened.

We're used to projects that take incentives and planning and a whole lot of public input and a lot of leaks to the press, and then they come out.

And this happened, I think it was, it happened before, I think anyone had reported on it, it was well underway.

But one of the things I want to talk about to both of you is there's now a facility like that, like many industrial facilities, but this one is a computer, takes a tremendous amount of water.

And initially, it's gonna pull water, I believe, from MLGW.

You're gonna correct me where I get this wrong, which is water coming up from the aquifer.

But there's also talk of a gray water plant that would take treated water, purify it to the point that they could use it in their machines.

What is the state, let's just focus on water first, of the use of water, aquifer, MLGW, gray water facility, as you see it?

- Well, there's a lot to unpack there, Eric.

So let me just start with the speed with which the project happened.

And largely, that's because there was already a very modern manufacturing facility there that was paid for by the taxpayers of Tennessee and local taxpayers here to the tune of about $120 million when Electrolux came to town, and there were no clawbacks when Electrolux decided to shut the door.

So that plant had been sitting vacant, generating really no value for the community, but it represented a real opportunity, I think, for our community.

Because it's in the industrial park, the Frank Pidgeon Industrial Park, there was significant amount of utilities present, in the street, as I call it.

So we had a 20-inch water main, we had a 16-inch gas main, and we already had a substation that could provide up to 50 megawatts of power to the facility.

All of those were readily available to the site, just waiting for a tenant to come in.

And so it became very easy to say, "Yes, we can provide you with the water, the gas, "and the initial load of electricity that you need, because we already have the infrastructure there."

Now, you asked about water.

That 20-inch water main provides water to all of the tenants down there, from TVA to the City of Memphis, to Nucor Steel, to many of the other folks that are located in that Pidgeon Industrial Park.

In that pipeline, there was at least 2 million gallons of excess capacity that we could provide to someone.

We built that out so that we could provide water to additional customers in that area, and so it wasn't a question of whether we had the capacity to serve either.

Now, the question about should we be using aquifer water to cool machines and equipment, that is something I've been an advocate for shifting away from since my days in the Strickland administration, when we talked to TVA about the possibility of using recycled or gray water for the Allen Combined Cycle Plant.

And we had advanced that pretty far down the road to say, okay, now we have to get an engineering technical study to design it to figure out how we can take the effluent from the wastewater treatment plant and get it to a point where it can be actually used in those kinds of machines, whether it's cooling for computers, or cooling for, evaporative cooling for electric generation.

That became one of the very first things that we mentioned when the xAI project came.

In the very first meeting, they asked about utilities, availability of utilities.

We indicated that we had them.

And I immediately also said that our desire is for you to join us in our quest to build a gray water or a recycled water facility, because it's our collective aim to not use aquifer water for cooling for projects like this.

And so they became very excited, interested, and joined us at the table to help accelerate that.

I would tell you that we've had a continuous partnership between the City of Memphis, TVA, MLGW, and xAI, and now there are some other partners who are exploring whether they might be interested in that.

- Would it be an MLGW plant?

Would it be owned by xAI?

- It will not.

The ownership model is gonna be determined by the partners who are in it right now, so- - Could be a joint venture?

- Could be a joint venture.

So right now, xAI is pushing forward on a design, and they're asking other partners to join them and contributing for the construction of that to the extent that they would benefit from that plan.

- Thank you for all that.

Let me get Scott, and then we'll go to Sam.

So your take when you first heard, when Protect Our Aquifer first heard about this project, and your take about where things are going.

What is the use, estimated use of water will be what, 1.2 million gallons a day?

- 1.3 maximum.

- Okay.

For the plant.

Y'all's take, and where do you, where do you hope things go and where do you see things going?

- So, the fact that they're actually looking at a gray water facility or a recycled wastewater facility is fantastic.

It's a shift in how we've thought in the past.

So if you take the 1.2 million for xAI, the three million per day that goes to TVA, and the 1.5 or whatever to the wastewater treatment plant facility, and if all of them can use that recycled wastewater, then you alleviate almost 6 million gallons of aquifer water that would go to these facilities and recycle it, in a sense.

So you're alleviating stress on the infrastructure for the Davis well field, which, 6 million gallons is about 20% of their capacity.

- It's six million a day?

- Six million a day.

So you would, you know, you would save about two billion gallons of water a year of aquifer water, so.

- To the people who say, "Well, but the aquifer is trillions of gallons," or whatever, you know, "and it's much bigger than Memphis, and there's plenty of water down there."

Your response is what?

- That's true.

There's a lot of water there, but it's not infinite.

There's a limit to what we can pull, And the more stress that we put on the aquifer, the more issues that arise, whether it's young water contamination.

You can drain the water level down to where it can go unconfined, and then you're dealing with subsidence, which causes other issues.

So again, it's in our best interest to preserve and maintain water levels, and, where we can, increase those water levels.

- If I could offer one thing.

Everybody agrees that we think 10 million gallons is the right size for the gray water facility.

So as we contemplate it now, it would be constructed so that it can be built to a total of 10 million gallons.

It may not initially deliver 10 million gallons, but up to 10 million gallons, so that you can have other customers who can come in and make use of that.

And we share exactly the same concerns.

The time for conservation, the time to take action, is before there is urgency because of contamination, before there is a lack of water.

And so that's why we're all coming together to try to do the right thing, to make sure we take every effort to conserve that precious resource.

- Let me bring it in Sam.

- Yeah, Doug, there's been a lot of skepticism, because the report, a lot of the reporting coming from myself and Sophia Sorette has quoted an anonymous source close to the company about plans for the gray water plant.

You're in the room.

With what confidence would you say that this gray water plant is getting built?

- I'm very confident.

- What percentage confident?

- Well, I, you know, today I'll say I'm 90% confident that it's getting built.

So we have heard very strong indication from the company that they heard us loud and clear.

They wanna be good stewards of the environment and of the aquifer, and so they are moving forward.

They're just encouraging other people to join them.

We have also heard very encouraging signs from the Tennessee Valley Authority, who has been with us and has been searching for that solution that will deliver water that is of quality that they can use.

And just to be clear, there are other gray water and recycled water facilities around the country, but the Memphis Municipal Wastewater Treatment Plant has a very heavy industrial load.

And so, while all of the harmful bacteria are removed before it's discharged into the river, there's still a lot of suspended solids there and nutrients that could be, that could feed bacteria.

And that's what has to be removed before it's suitable for use in evaporative cooling.

- If you could explain to people, because people are talking about a gray water plant, many people haven't been down to Frank C. Pidgeon Industrial Park and see what's actually there.

Could you, in someone's mind's eye, explain to people the logistics of where xAI is, the wastewater plant, where the gray water plant would go, and where anything else might happen?

- Yeah, so for the very vast majority of Shelby County, the City of Memphis wastewater treatment plants, there are two, one north and one south, treat all of that wastewater.

It comes through a sewer collection system and ultimately down to those plants.

The Maxson Wastewater Treatment Plant, which is down south, treats 70 million gallons of water per day, that is, wastewater and discharges.

Today, 70 million gallons of waste, treated wastewater, into the Mississippi River under a permit that they have with the Tennessee Department of Environment and Conservation.

In that Pidgeon Industrial Park, across the street from the Maxson Wastewater Treatment Plant is the Tennessee Valley Authority Combined Cycle Plant.

And immediately south of the wastewater treatment plant is the xAI facility.

These are all within 1,000 to 2,000 feet of each other.

You can't get any more proximate than they are.

So if you're going to be able to build a successful recycled plant, this is the optimal place to do it.

- And I'll ask both of you this question.

Why hasn't this happened sooner?

Would it be happening with this speed but for xAI?

- I do not believe it would be happening with the speed but for xAI.

I will tell you, as I said, when I was part of the Strickland administration, the mayor and I and Jerry Collins, my predecessor, worked with TVA to say we want to begin exploring.

And we had been doing that, and we actually had some momentum going because that was exactly the same time that MLGW came forward to City Council and said, "We would like to fund the study of the aquifer."

That was in 2018.

So all of the study that CAESER has done, that we now understand the dynamics of the aquifer, our funding that has come from MLGW, and now the City, to advance that, that's how invested we are in this.

But I will tell you that the COVID pandemic took a little wind out of our sails.

The mayor and I were leading the charge, and Robert Knecht were leading the charge for the City, but we had some other things that we had to do during the pandemic, and so we lost a little traction there.

The first thing that happened when I went to Memphis Light, Gas and Water in December of 2022, I said we're gonna reignite those conversations and get them rolling again.

And so that's exactly what we did, and shortly thereafter, xAI came on the scene.

- So I see xAI is serving as that catalyst to push that forward.

Again, TVA looked at it before they sunk their production wells that they were gonna produce from the aquifer, 'cause they realized that it would take too much to clean up the water with just them alone.

So that's why they decided to drill those wells.

And then we did the study, and now they're on MLGW water because of the contamination between the coal ash pond and the proximity and the breach right next to the combined cycle plant.

- For people plugging into the breach right now, watching this for the first time, explain what's going on there, in general terms, if you could.

- So a breach is basically a gap in our confining unit.

It's not a hole, but it's filled with sand instead of clay.

So clay is more transmissive, it allows water to flow through it, so naturally, well, not naturally, but water from the shallow aquifer flows down through these breaches and enters into the Memphis aquifer.

And that, along with that water, brings poor quality water and, as well, contamination, so.

- I've heard Sarah talk about it and she says like, - And Sarah Houston is the- - Sarah Houston, POA, says, it's kinda like we always thought as lay people that we had this great clay layer that covered, and we imagined that it was a solid clay layer across, all across the county and the whole area.

But we found out that that's not how geology works.

Certainly, it's not continuous, and there are areas where there's not that clay, and that's what's allowing water from the shallow to get to the deep.

- Let's broaden out a bit from just the xAI plant, 'cause there's other things we wanna get to, but what is the state?

He mentioned CAESER, which was a group, I won't do the acronym, but it was a group at the U of M. You were part of CAESER before that when you joined, that you joined Protect Our Aquifer a year ago.

Sarah Houston, the head of Protect Our Aquifer, was at CAESER years ago before she came over to Protect Our Aquifer.

What is the state of the aquifer, that clay layer, all of that, across the whole city?

- So, from the CAESER study, so that's the Center for Applied Earth Science and Engineering Research, it's a group, the formerly Groundwater Institute.

But from what the study showed is that there are a lot more breaches than we knew about.

So we find more in northern Shelby County, and they refer it to as like Swiss cheese.

You could say that, but again, there's just more breaches than we actually knew about.

So... - And are those breaches, I mean, again, lay person, do you go in and fix them, or do you just have to let them heal, or is it a lost cause?

- That's a loaded question.

We looked at the feasibility of actually filling them in, and put it in perspective, it's very difficult to delineate the exact extent of these breaches, but you can see them, whether it be from looking at a water table map, or looking at the chemistry, and so on and so forth.

- Short of going down there and fixing them, what is the next best thing?

- Well, one is to alleviate the strain on the aquifer, so the amount of water.

- And is it still, I mean, I remember when all this stuff came up with, and it was the TVA plant, I think, that really put it on the radar of a lot of people, that you could just, you know, drill a hole in your backyard, or in the backyard of your big industrial plant, or anything in between, go down in the aquifer and take as much money as, what money, as much water as you wanted and not pay for it.

There was no money involved.

Is that still the case?

Did we ever get any regulation on that in place?

- Well, there is regulations for the Shelby County Groundwater board, and they have to make an application to put that well, and there is fees, and they're re-looking at that fee now.

And I know that the Protect Our Aquifer has proposed a plan that would help put some more teeth into that program for inspections and testing and monitoring.

And I think that's something we all support, to make sure that we do that.

One thing I do wanna say, because I don't want folks to just think the aquifer's just under Shelby County.

What we're doing here is we're monitoring what we can control in Shelby County, which is the development, the way in which we tap into the aquifer.

But remember, it reaches way out east.

The recharge area is in Fayette County and east.

It goes all the way into Arkansas, down into Mississippi.

It is a huge area.

And so what people do in other parts of the aquifer are equally important here.

And I know, I don't wanna speak for Scott and the team, but I know POA started here in Memphis, Shelby County, but they're talking about, "How do we make sure "there's appropriate action taken in other places to make sure that we protect that resource?"

- Another quick couple of questions, and then I'll go back to Sam.

But MLGW, Memphis, biggest user of the aquifer, I assume?

I mean, far and away.

- Well, in the Shelby County, we are the largest user, but not the largest user in the aggregate of aquifer water.

- Okay.

And then there's a...

I've heard it before, I may have heard it from you.

I've heard it from economic development officials in town, I've heard it from the business community, Memphis having abundant clean water that requires very little treatment to go into a bottling plant, to go into an industrial use, is an economic advantage.

A lot of communities around the country, they have water shortages, their water is not, it needs a tremendous amount of treatment.

There is a balancing act, I assume.

And you, as MLGW, you're a big part of economic development pitches to a new industrial user, a new anything that comes in town.

How do you balance the protection of the aquifer, which I think you've said is a goal of yours, with this economic development resource that attracts jobs and investment and so on?

- Sure.

Well, I think it's not just an economic resource, it's a quality of life resource.

Anybody who's traveled outside of Memphis knows when they come back, "Boy, I'm glad to be back," 'cause the water's great and there's a quality of life for our constituents and all of our customers.

The balance is that the actions that we have taken collectively in conservation, low-flow shower heads, you know, low-consumption commodes, high-efficiency appliances, have actually brought down the consumption of water that we are pulling relative to history, where we did not have any of those advances.

So we are actually drawing less than we did before, despite having growth.

The trade off with the gray water plant, that's 10 million gallons.

If I can shed 10 million gallons here, that's 10 million I can apply from a different area to a different development and not have any more adverse impact on the aquifer.

- Same question now, I'll go back to Sam.

Do you worry when you see economic, broadly speaking, the economic development folks in Memphis selling Memphis' water as a benefit?

Or is it more complicated than that?

- I think it's a little bit more complicated than that.

However, there's always good and bad, and you know, economic development is a good thing, but to do it in a responsible and sustainable way is the most important thing.

So when we're look, they're looking at developing...

In the recharge zone throughout West Tennessee, you have, like, Blue Oval, that's supposed to bring another a hundred thousand people to the area over the next 10 years.

So how do we sustainably build and develop in that area so that the water can still enter into the recharge zone, identify critical aquifer recharge areas?

It's not all getting in in one spot, you know.

- It's not just the factory, it's also all that development.

- It's all that development that comes along with it.

- And are people, like, I mean, are the communities, Blue Oval, an entity, and the communities around there, are they receptive to y'all's point of view?

- Yes.

They're very concerned about their water, you know, the well fields that they currently have and how it's gonna be impacted by development and the pressures they feel right now.

- We got eight minutes left.

I know Sam has other questions about MLGW issues that you might wanna get to.

- Yeah, sure.

So, Scott, I'll just ask Doug this question.

I don't think you have any.

But, Doug, you joined the utility as CEO right after Memphis Light, Gas and Water completed and decided its request for proposals considering leaving the Tennessee Valley Authority.

It opted not to.

You've faced pressure throughout your entire time as CEO to maybe reopen that process.

What conditions have to be met?

What are your parameters for, you would say to your board, "I think this is the time we should look at bidding out our power supply and considering another power supplier?"

- Sure.

Well, I've been very clear.

Reliability is job one.

And because of lack of investment over the last several decades, because, as I pitched to Memphis City Council, we had had 1 rate increase in 37 years, and now we'll have had two substantial rate increases over 41 years, still totaling only 21% over a 41-year period of time, which, the rate of inflation over that period of time was 257%.

So it's very difficult to keep up with your investments, and that's why our electric grid has suffered from reliability challenges.

I often said that outages were twice as frequent and lasted three times as long.

When I get to the point where reliability is now back in norms, then we'll be in a position to start talking about some things, but that's not going to happen in the near term.

I have a huge challenge in front of us.

We are on a path.

Our reliability this year is better, significantly better than it was last year, and it will get better each of the next three or four years as we replace outdated infrastructure and modernize our electric grid.

So as reliability comes back into norms, we'll be in a position to start talking about things.

But it's important to note that one of the predicates for people asking whether we should look at our power supplies, that we don't generate any of our power and people are dissatisfied with our level of investment in battery storage and in solar.

And as you know, in this year's budget, FY '24, which I'll spend over the next three years, we have $120 million that we're gonna put into utility scale battery storage.

And in the subsequent budgets in '25 and '26, we will have about the same amount to put into solar generation here locally, so that we will have clean energy that we are generating for our customers right here in Memphis and Shelby County.

Those are important first steps before I even consider changing power suppliers.

But we are on a path to improving our reliability and providing additional energy into the grid.

- Speaking of battery storage, sorry, Eric.

- No.

You go.

- Where is the utility on buying some Tesla megapacks from Tesla?

- Well, now I'm in a really good position.

I can't suggest where I'm going to buy them.

That is one of the possibilities that I have.

I expressed to them that if you can get them to me fast, I would love to have that.

We just issued $200 million in bonds as a part of our five-year plan.

That was the first step that had to happen so that I had money to actually begin buying them.

We have a team that's looking at engineers who can help us integrate them into our system, and so I would suggest that we're gonna be underway very shortly with the first increment of batteries.

- Megapacks are what?

- So, what Sam was speaking of, these are very large utility scale batteries.

Memphis Light, Gas and Water, we measure our demand for electricity in megawatts.

Each one of these megapack batteries, which looks like a semi-tractor trailer but slightly smaller, is either one or two megawatts.

And so you install them in about 10 or 20 megawatt increments- - And they're big battery packs.

- Very big batteries that sit there.

You keep them charged up and when you need more energy in the system, you discharge those batteries into the system.

- Let me ask a couple of questions of Scott here real quickly.

When you look at, you know, we got a couple minutes left here, you look at the things Doug is talking about, you look at maybe the, you know, county government, city government, state government, federal government.

In 60 seconds, what is Protect Our Aquifer's wishlist of regulations or laws or best practices that you'd like to see put in place that we haven't already talked about?

- Oh, man!

Well, [chuckling] we would love to see better groundwater management of our aquifer resources in Shelby County and regionally throughout West Tennessee.

There's a lot of unknowns, really.

There's not a lot of data.

The water quality, water levels, it's all kind of missing.

- Water usage.

- Well, water usage is pretty well-documented as far as public water supply and large industrial users have to submit it to the state.

But, like, how much does agriculture actually use, and what's the impact of, how would it look if people started moving in and they started using an additional 15 million gallons, in Fayette County, of water?

How would that impact Shelby County and MLGW's water use?

- And that would be about accountability and transparency and somehow being required to put all this data in one place that people, you all included, can check.

- I mean, the US Geological Survey is kinda like the federal agency that kinda monitors and keeps all that dataset, so they can vet that data and make sure it's good.

- Alright, last question for Sam to whoever.

- Yeah.

And in terms of broader, to follow up on Eric's question, Scott, in terms of concern about the aquifer, the health of the aquifer, the longevity of the aquifer, where are you on a concern level, one being low, ten being very high?

- So my concern is about a seven, I'd say.

- That's high.

- That's high, because there's a lot of issues that are unknown and there's a lot of contamination that is potential.

Some of the wells have been hit with contamination, so how do we address that and where are those sources coming from, and how do we understand how it flows in the system?

As far as quantity, as we further develop, again, you know, what's that mechanism, what's that red line that we don't want to cross that will cause permanent damage to the aquifer and then we can't get that capacity back?

I think developing something in a, you know, like a sustainability, sustainable yield, and understanding in that, per well field, like, you don't want to pass this water level elevation.

And then if you do, you have to make that decision, you won't do X, Y, Z, and, you know, and take those consequences.

- We have 30 seconds left.

Something I didn't get to with you, Doug.

TVA, big rate hike across the system that will hit Memphis.

Did you know that was coming?

- We knew that was forecast, but we didn't know exactly the range that it was gonna be, so- - And then we're going, we're not far from storm season.

Storm season wasn't as, you know, didn't, there weren't as many outages last year, I think, as prior.

Do you feel like you all are ready, as we go into the storms and ice down the road, and so on?

- Significantly more well-prepared, largely because of the tree trimming.

One thing I do wanna come back to is, as Scott said, there's contamination.

I just wanna make sure everybody understands there has not been any contamination in any drinking water wells that MLGW uses for production today for anything.

So he's talking about monitoring wells that we're seeing around, not the MLGW production wells.

- Okay.

Thank you both for being here.

We can do a whole other 26 minutes, thank you, Sam, but we are outta time.

Upcoming shows include Paul Young, Mayor of Memphis, Marie Feagins, the relatively new school superintendent.

If you recently missed any of the shows, Tina Sullivan was on.

You can get all those shows at wkno.org, Daily Memphian, YouTube, wherever you get your podcasts.

Thanks very much, and we'll see you next week.

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