JEA won’t be in retail LNG business, partner might
JEA will not go into the business of selling liquefied natural gas to trucking companies or other retail customers.
Board members emphasized that point Tuesday before they approved a development agreement with Sempra U.S. Gas & Power to design an LNG plant on JEA property. The contract is to perform site selection, pre-engineering design and permitting.
“I want us to be clear,” JEA board member Wyman Winbush said, “because I’ve heard some concern about us getting into a retail sale business and us competing as a government entity with private businesses, and that’s not what this [agreement] does at all.”
Indeed, that seems to be the concern of Clean Energy Fuels Corp., which is planning to build an LNG plant in Jacksonville. At a meeting of Northeast Florida Logistics Advisory Group earlier in the day, Clean Energy’s Greg Roche said his company has opposed similar competition on the West Coast.
“We’re always in front of the California public utilities commissions, fighting back the utilities’ efforts to get into the commercial business,” said Roche, the company’s vice president for national accounts.
JEA is seeking a partnership in an LNG plant to ramp up its natural gas infrastructure, CEO Paul McElroy told board members. As environmental regulations become stiffer, clean-burning natural gas has become a compelling alternative. Also, having an abundant reliable source of natural gas would aid JEA during peak electric use.
From the private side of the partnership, Sempra sees Jacksonville as a potential regional hub for the natural gas market.
“You have the ability to reach multiple markets here,” said Sue Bradham, Sempra regional vice president.
She attended the same logistics meeting as Roche.
“You have marine, … rail and on-road transportation. And Jacksonville is positioned perfectly for sales to the [Caribbean] islands,” she said.
Those markets are the same ones, however, that Clean Energy plans to tap. The company intends to sell its fuel to LNG- powered ships and trucks and also will be a supply site for Clean Energy’s national network of LNG fueling stations.
“There are a finite number of companies in Jacksonville that would use LNG, whether it’s operating ships, operating trains or exporting to the Caribbean market,” Roche said. “The only part of the market we would not participate in is as a utility peak shaver.”
JEA and Sempra have been examining the Jacksonville LNG market for a few months, but even the development agreement approved this week would not bind JEA to a final partnership with Sempra, General Counsel Cindy Laquidara told board members.
City Council liaison Bill Bishop, though, advised JEA to seek an open solicitation for the project and to make sure any tax advantages will only apply to components that serve JEA customers.
“We do not want to be in the business of picking favorites.” he said.
JEA board member Peter Bower said the final LNG agreement would likely not be a 50-50 venture, but rather some other type of relationship that benefits both entities.
“Everyone is just jumping to the conclusion that … JEA is going to be selling LNG — we might not be. That could be Sempra doing that,” he said. “Sempra is a public company and they have every right to come into our market and sell natural gas.
“If they want to lease the land from us and buy electricity from us, and help guarantee a certain amount of natural gas that helps our needs, then that’s a huge benefit to us. And we would provide that to anyone else.”