JEA board Secretary Camille Lee-Johnson had a description Tuesday of the public utility’s latest response to declining revenue and shrinking sales: “It’s scary.”
The plan would lay off 30% of JEA’s workforce, raise electric rates by 26% and reduce long-term capital investment.
The first scenario, released in May, proposed larger rate increases on JEA customers and a reduced contribution to the city budget.
CEO and Managing Director Aaron Zahn emphasizes these are scenarios. They could be JEA’s future but may not be the final outcome. The difference with Tuesday’s “traditional utility response,” as JEA staff coined it, is the plan is backed by a board vote.
It’s meant to catch public and City Council attention.
The JEA board’s two-part motion ordered staff to develop an implementation plan for the layoffs, cost cuts and rate increases.
It also authorized staff to detail what changes to the City Charter and Florida law JEA leadership considers necessary to grow beyond a traditional public utility and avoid a bleak outcome.
After the meeting, when asked if the layoffs were inevitable, Zahn said if JEA can’t figure out how to grow its business, the cuts will happen “100 percent.”
The cut list includes 10 of JEA’s senior leadership team, including vice presidents of JEA’s energy and water systems. Zahn said he’d be “going first.”
“If you were figuring out how to grow and to distribute generation and storage, you need a really talented team,” Zahn said. “If all you’re doing is just raising prices, paying off debt, cutting costs and balancing the books, you don’t need a CEO. You don’t need a COO, you don’t need a CFO. You just need to control it.”
Zahn said Tuesday what needs to change has not been determined, but a categorized list of JEA’s “contemplated initiatives” and the charter and legislative “constraints” are included in board materials.
Some examples that JEA said it cannot do now because of state law or the charter include developing a utility system in counties not bordering Duval; providing warranty and protection services to HVAC and electric services; and acquiring and operating nonutility businesses, like software or artificial intelligence companies.
“In order to avoid the layoffs, JEA needs to have the authority to go grow into businesses that it doesn’t currently have the authority,” he said.
There is no definitive list of markets JEA wants to enter, but monetizing energy efficiency appears to be a top goal.
The business Zahn often cites as an example is subscription services for products like energy efficient water heaters. He suggests offering to replace a customer’s $1,500 water heater for a monthly fee could be a revenue source, similar to a two-year lease on a smartphone through a carrier.
He thinks that could mitigate a loss of energy sales when a homeowner replaces an older unit using $550 per year in energy with a new model using $100.
Zahn suggests these types of services could take JEA’s energy sales from $1.2 billion to $2 billion per year.
“How do I turn energy efficiency into a profit engine for JEA? How do I start moving distributed generation and storage into a profit engine? How do I start moving electrification both on road and off road into profit generation?” Zahn asked.
Zahn expects an implementation plan will be ready by July. As the city’s Charter Revision Commission is set to meet this year, JEA’s senior leadership has the challenge of convincing council that it can develop the right business model.
The Downtown Investment Authority will pay incoming CEO Lori Boyer $180,000 per year as part of a three-year employment contract the board approved June 19.
Her contract begins July 1 and she is eligible for two one-year contract renewals, according to the document.
Boyer, who has represented Jacksonville’s District 5 on City Council since 2011, is term-limited and will leave office June 30.