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Jax Daily Record Thursday, May 3, 201805:50 AM EST

Interim JEA CEO brings changes

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Aaron Zahn explains how he landed job, and his role at the city-owned utility.
by: David Cawton Staff Writer

By David Cawton
Staff Writer

Since Aaron Zahn was appointed JEA interim CEO on April 17, the city-owned utility has changed its organizational chart, cooled in-house privatization talk and created a new structure for board meetings.

Those changes are just the first for Zahn, the 38-year old investor and entrepreneur who JEA board members chose to run the city’s electric, water and sewer utility over Melissa Dykes, the long-time chief financial officer.

“We hit the ground running,” Zahn said Tuesday in what was once Paul McElroy’s CEO suite.

McElroy stepped down April 6 from the day-to-day operations of the company and will remain away even though his contract expires in September.

City Council confirmed Zahn as a JEA board member in February to replace former board Chair Tom Petway.

A week after McElroy’s departure, Zahn resigned and submitted his qualifications to run the utility.

He said he wants to keep the job and is prepared to interview for it along with other potential candidates.

“I wouldn’t be sitting here if I didn’t want the permanent spot,” Zahn said. “But if I’m not the one, then that’s because we’ve found a great candidate.”

JEA issued a Request for Qualifications last week to select an executive search firm to help find McElroy’s replacement.

Zahn said if he’s not selected, he would be interested in a different role with the company.

“Maybe there’s another seat on the bus,” he said.

Zahn said after the April 17 board meeting he went straight into another meeting with JEA senior leadership, including Dykes.

He said the outcome was JEA “recalibrating” its focus away from privatization and back to customer service and the utility’s core businesses.

“They left that meeting with marching orders that it was back to business,” Zahn said.

Zahn immediately reclassified Melissa Dykes’s role in the company, naming her chief operating officer and president.

“Her day-to-day task is making sure our customers are No. 1. She’s my partner in this and I couldn’t do this job without her providing that stability,” Zahn said.

The new CEO role essentially splits the duties of the chief executive, Zahn said, to give him more flexibility to deal with overall strategy and to manage external relationships with what he refers to as “shareholders.”

Dykes will be offered a new contract later this month and her compensation evaluated.

McElroy had an annual salary of more than $500,000. Dykes’s is around $330,000 as CFO.

Zahn declined to disclose details of her new contract, other than to say, “you’ll be pleasantly surprised by the outcome.”

“It will indicate everything in terms of how I like to lead as well as demonstrate to people that we’re a partnership and a team,” he said.

Over the past two weeks, Zahn met with the 19 City Council members one-on-one, as well as Mayor Lenny Curry – individuals he includes as shareholders.

“I think those conversations were fair and constructive,” he said. “They have a lot of questions and I’m here to answer them.”

He twice addressed a special council committee studying the future of the utility and said he’ll make himself available to do so until the committee sunsets in June.

A fast rise

Zahn acknowledged criticism that he isn’t experienced enough or doesn’t possess the qualifications to run the nation’s eighth-largest municipal utility, especially in a time of uncertainty.

“Those criticisms are fair,” said Zahn, who resigned as managing partner and CEO of Pascal Partners after being named interim JEA CEO.

Pascal primarily focuses on investing in energy storage and generation infrastructure.

Zahn also was the subject of a Florida Times-Union article detailing a failed business venture when he was chairman and CEO of BCR NuTerra. The company provides solid waste management.

Under Zahn in 2016, BCR NuTerra opened a facility in Haines City to compost the area’s solid waste, turning it into soil.

According to the Times-Union article, the Haines City Commission suspended the contract with BCR NuTerra in 2017 after residents complained of foul odors and health problems.

“Look, ultimately we were unsuccessful in our efforts,” Zahn said.

He said the company worked with Haines City officials to remediate the situation.

“That is an example of a project where a company and a CEO went above and beyond, both financially and personally to try and resolve an issue,” he said.

He said lost in the criticism of his previous business ventures is the company’s successful endeavors.

“Right now, I’m focused on JEA and our customers, our employees and our stakeholders,” he said.

Zahn understands that his rise to the interim role was quick.

“I spent a lot of time talking with my wife about the fact that the community needed a bold leader to step up and actually demonstrate some character, integrity and leadership in order to get the train back on the tracks,” Zahn said.

He added that is not a critique of McElroy, but an opinion that someone needed to come in and maintain stability in his absence.

The board selected him after debating publicly for minutes, not hours, during the April 17 meeting.

Florida Sunshine Law prevents active JEA board members from discussing company business outside of public meetings, which is why Zahn said he stepped down from the body to apply for the job.

Zahn said that after resigning April 12, he spent the weekend and part of the next week meeting with board members individually, “articulating my qualifications, going through interviews, helping them understand how my experience is relevant.”

“I can’t control how five members go through a discourse,” he said. “I must have done a convincing job in terms of articulating my points, and where I thought where the company needed to head in the next six to 12 months.”

Changes to the board

Zahn said beginning this month, board meetings are changing.

The structure, he said, will feature three distinct sections, to make sure the board is clear about the decisions it makes and what are and are not action items.

He said the changes are to make sure the public and policy makers understand the utility’s intentions.

“What I can promise is that as long as I’m sitting in this seat, we are going to change the means and methods in which we communicate to our elected officials, the public and our employees,” he said. “That starts at our board meetings.”

The first section will focus on operational updates, followed by strategy discussions and finally a “deep dive into different subject matter.”

“In June, for example, we’ll talk about storm preparedness,” he said.

Pivoting away from Privatization

After Petway’s exit from the board in November, city officials, along with civic and business groups began to study the impact of selling the public utility to a private company.

Those conversations began after Petway suggested JEA take a detailed look at the strategic future and financial viability of the utility, including, but not limited to, privatization.

A Feb. 14 report on the company’s financial value on the open market suggested the city could receive between $2.9 billion and $6.4 billion from a sale, sparking debate and council legislation, both for and against exploring the viability of pursuing a transaction.

Zahn said privatization talks have stopped inside JEA’s Downtown headquarters.

“All the conversations going on outside these walls don’t impact the continued execution of our 2013 strategic plan,” he said.

Instead, Zahn said he’s putting together a “bold” shareholder framework for the company as it begins to look at the future of the electricity and water industries.

For years, JEA’s profits have remained flat while its footprint continues to increase. Zahn said his job as interim CEO is to prepare JEA for the next century.

“JEA has a real need to be a part of the future and not just watch the future,” he said. “That’s not going away.”

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