Eleven billion dollars. That’s how much money the latest political infighting has cost the residents of Jacksonville, Florida. A great city with a lot going for it, Jacksonville over the last decade has gotten bogged down far too often in partisan political fights. These fights have cost the city opportunities, time and money, but possibly none have cost the city as much as the most recent fights over the potential sale of the Jacksonville Energy Authority (JEA).
The city’s attempt to sell JEA has been a hot topic, and the utility’s controversies have sadly overshadowed their real issues — like aging water, sewer and electrical infrastructure in need of repair, or the mounting financial obligation owed for a bad deal made over the Georgia nuclear generation facility known as Plant Vogtle. Unfortunately, political infighting and bad management, and we’re talking about really bad management, has resulted in the city squandering their opportunity to sell JEA, and it appears to have cost Jacksonville big – eleven billion dollars big.
Sixteen companies took part in the city’s “Invitation to Negotiate” process to buy JEA, including Duke Energy, Amera, and NextEra. Yesterday the city made public the amount of what should have been the winning bid of $11.05 billion. That was the offer for JEA’s electric, water, and sewer systems by NextEra Energy, the parent company of Florida Power & Light. While other companies also submitted sizable bids, NextEra’s bid of more than $11 billion was the highest.
Had JEA accepted the offer and sold to NextEra it would have netted the city more than $6 billion in pure profit after JEA debts were paid, which could have been used to pay off city debt and fund infrastructure projects, all without raising taxes. The sale could have been game changing for the city, even before COVID-19 hit and the economy came to a screeching halt, which will now likely cause serious funding holes at all levels of Jacksonville city government well into the future.
Unfortunately, the city’s ability to sell JEA got mired down in controversial and highly questionable attempts by then-JEA executives to create programs that would pay out untold millions of dollars for themselves in bonuses and incentives if the utility was sold. So now, instead of being able to clear nearly $5 billion in debt while keeping another $6 billion in cash reserves, Jacksonville residents now have the pleasure of watching their tax dollars go to waste helping to pay for the continually delayed and way over budget Vogtle nuclear plant. All the while as they try to figure out how to pay for desperately needed investments in water, sewer and electric projects.
Unfortunately for Jacksonville, local political infighting combined with actions by a few bad actors ended the process before city residents had a chance to even see the bid offers for JEA or hear about the benefits that could have been seen by the entire community, much less vote on them as local law requires.
The only thing they may get to vote on is the upcoming rate increase to pay for the Vogtle boondoggle. Except…Jacksonville residents don’t actually get a voice in that decision either. They’ll just get the bill, and they can rest assured that it’s going up.
You do realize that the cost of Vogtle would have been passed onto the citizens and not acquired by the purchaser. Additionally it was only 5 billion, not 11. And BTW the company is called JEA, never been called Jacksonville ENERGY Authority. This whole thing sounds ghostwritten by the Curry Administration.
No.. no no no.
FPL and whoever else was bidding was going to expect a return on that investment.
That means higher rates – forever. Less public accountability – forever. Selling JEA would be like taking out a loan that literally never gets paid off.
There were also several polls of Jacksonville residents about this deal, and only 23% of the city’s people were willing to sell at a $10 billion price point.
The sale was always going to be a bad deal for the people. It was a big pay day for the executives and would’ve provided Curry & Khan with a huge development slush fund, but the rest of us would be paying for it indefinitely.
Yup! This is a Leonard Curry ghost writer piece. Sell JEA pay higher energy bills.
No matter how you try and spin it stopping the process before having all the information was a fools game played by political fools emotions instead of good business analytics. Even trying to argue that the Vogel debt (3 billion) still would need came out if the 6.5 billion proceeds, by simple math that still leaves 3.5 billion for upgrades to the city. And as far as the aspect of FPL making a return, yes the would have and still been able to keep rates in check by utilizing the synergies and economy of scale that JEA alone can’t produce.
This is a perfect example of an uninformed vocal minority lead by the media with personal vendettas, and supported by jealous old management has-beens that are try to relive they’re glory days, creating enough noise that the ignorant masses followed.
The sad part now is the Jacksonville consumer will get to pay the price!
Oh and by the way, on the infamous PUP bonus program, do some research and you will see that almost every major deal that happens in the business world, management builds in some advantage program for themselves. Right or wrong, if this would have been a private company no one would have even questioned it.
True no extra taxes, but an increase in billing. All the same. Jea was for the people not a bail out for lenny curry and his cronies. How much were they going to profit from the sell. Jacksonville people were getting screwed anyway you cut it and curry was up to his eyes with the back room deals.
That’s ridiculous pseudointellectualism, “Amazedatthestupidity.” Each one of JEA’s plants is in the flat part of the economies of scale curve. It could theoretically be split up even further, in to smaller entities, without sacrificing economic efficiency.
And what synergies, exactly, would we benefit from? Without defining specific examples, synergy is just a cheap buzzword thrown out by even cheaper business “leaders” who scammed their way up the consulting ladder.
“Oh and by the way, on the infamous PUP bonus program, do some research and you will see that almost every major deal that happens in the business world, management builds in some advantage program for themselves. Right or wrong, if this would have been a private company no one would have even questioned it.”
This really seals it though, and proves why it’s important to keep such a critical operation publicly owned. If FPL already owned it, this massive theft by the executive class would’ve just been business as usual! What a great reminder of why we will fight so hard to keep JEA ours!
PS: Good luck with the sentencing, I guess.
Bad faith dealing, political in-fighting and sensationalist reporting guaranteed Jacksonville never got to consider the costs and benefits of a sale. I lived with FPL for 30 years and was always impressed with its abilty to post the best utility rates in the country and an aggressive pre- and post-hurricane recovery capabiltiy. I do not know how JEA compares; the other municipal systems I have observed during recovery (Lake Worth and Lakeland) were smaller and did a poor job. The idea of a sale is now poison, so we will never have an objective view and must now make the best of JEA.
Selling JEA was not a good idea. Gone would be what their PILOT payments for city operations each year. Gone would be the local board.
As a person with friends and family in Jacksonville, and who frequently visits and loves the area, i wili say this. We have one small city here in south florida .its lakeworth and they own and operate lake worth utilities. It highly mismanaged,overpriced, and generally corrupt, if Jacksonville is in the predicament, selling is almost always better in the long run for the consumer.
@Bill, @Kevin:
I don’t know how publicly run utilities fare in the rest of the state, but JEA is great. Their storm recovery is incredibly fast and there are rarely any brownouts, surges, flickering, or non-storm related outages. Rates are competitive (although the nuclear deal was a bad one that costs more than expected) and a large sum of money is returned from the utility to the city’s operating budget each year.
The most buyers would agree to was a 3 year rate freeze before increasing prices, and none of them showed any interest in returning their profits to the city like JEA does.
Jacksonville makes a lot of dumb political decisions, but fighting to keep JEA ours wasn’t one of them. No one here regrets the outcome except Criminal Curry and his band of GOP grifters. Local Democrats, Republicans, and Independents all polled with strong majorities in favor of retaining public ownership.
Jacksonville residents were always going to foot the bill through either taxes or rate hikes … and we know it. No one’s buying the idea that a for-profit conglomerate might be more responsive to the public’s interests than elected leaders. Try a different defense (your article is a trial balloon, right?) because this “it was good for Jacksonville” argument isn’t cutting it with anyone.
JEA is not an acronym for Jacksonville Energy Authority and never has been. JEA used to be the Jacksonville Electric Authority but after they acquired the city’s water and sewer system it’s just been JEA, which officially stands for nothing and is an orphan acronym.