Dueling lawsuits filed over one-sided JEA nuclear plant deal

by | Sep 12, 2018

Jacksonville residents have a real mess on their hands – one so significant that state lawmakers are now getting involved, if for no other reason, to try to limit the damage. Back in 2008, JEA, the city’s municipally owned power company (formerly known as the Jacksonville Energy Authority) entered into a terrible deal – with the full knowledge of the Jacksonville City Council – which put residents on the hook to buy electricity from an obsolete Georgia nuclear power plant at prices that that have spiked twenty times higher than what residents were promised a decade earlier. The power plants are still under construction, and worse yet, they may never be completed.

Today, dueling lawsuits with the JEA and Jacksonville City Council on one side, and the Municipal Electric Authority of Georgia (MEAG) on the the other, seek to resolve the matter, but not peacefully. JEA wants out of the deal, while the Municipal Electrical Authority of Georgia (MEAG) wants to force JEA to pay up and meet their obligations. MEAG owns a large stake in the Plant Vogtle nuclear power station that is now several years and billions of dollars over budget.

But the JEA’s deal with MEAG is so bad, so one-sided, that two weeks earlier, a Republican lawmaker from central Florida, state senator Debbie Mayfield, formally requested state auditors to step in to sift through the wreckage to see what could be salvaged.

To his credit, JEA’s interim CEO Aaron Zahn has led the charge for JEA to cut their losses. Zahn took over as interim CEO after Paul McElroy, who was CFO when the bad deal was cut back in 2008, resigned just months after disclosing the full financial impact of the deal with MEAG. Today’s lawsuit was the first concrete step in a long process designed to extract JEA and it’s stakeholders from the disastrous deal made back in 2008 that committed JEA to purchase a fixed amount of electricity from the Plant Vogtle nuclear facility, while the dealmakers inexplicably failed to negotiate a cap on the price they would pay for the electricity.

In the ten years since the deal was inked, JEA’s share of the cost to build the nuclear facility has increased from $140 million to $2.5 billion, and that doesn’t count the actual price JEA would pay for electricity, which would add another $1.5 billion. From the lawsuit filed by JEA:

“The substantial, open-ended, and unlimited obligations borne by JEA’s ratepayers are not balanced by either ownership or management control in the project,” the suit said. “There is a complete absence of any JEA oversight or discretion, which constitutes an improper delegation of JEA’s spending power.”

So there you have it in their own words: an admission by a government-run utility that they negotiated a terrible contract that would significantly overpay for electricity while netting neither themselves nor their customers (i.e. taxpayers / ratepayers) any zero ownership in the deal.

On the bright side, JEA’s lawyers are using the lack of ownership as a legal loophole to now try to extract themselves from the deal.


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