by Joe Wilhelm Jr.
Staff Writer
Smiles aren’t normally associated with budget talks, but JEA staff gave the utility’s Finance and Audit Committee something to be happy about Monday.
The JEA has until July 1 to submit its budget request to the Jacksonville City Council and the committee was informed that both the electric and water and sewer system budgets would not include new debt issuance for capital funding in the 2012 fiscal year budget. The utility plans to use existing capital cash balances to fund the “bond funded” qualified projects in its capital plans. This will mark the first time in about 15 years — since 1996 for the electric system and 1997 for water and sewer system — that neither budget called for borrowing money for capital outlay. JEA acquired the water and sewer facilities in 1997 from the City.
“We will be able to go into this next budget year without any new money down,” said Paul McElroy, chief financial officer. “It’s been a long 5-6 years getting there, but we have finally turned the battleship to sort of a balance.”
Another item on an even keel is the fuel rate.
The JEA is projecting that the rate for budgeted fuel cost will remain at $45.59 per megawatt hour for the 2012 fiscal year, despite continuing fluctuations of the price of fuel.
“There is no rational reason why those prices continue to go up. The reality is (the prices) continue to increase,” said Jim Dickenson, JEA Managing Director/CEO. “Our recommendation is not to do an increase (in the fuel rate for customers) as we move into the next year. We believe we have the resources to do it and we will see what next year brings as we try to hold down pricing as much as we can.”
This irrational behavior has recently affected JEA’s purchase of petroleum coke, a fuel for power generation.
“Prices for petroleum coke are at an all-time high, which is almost an understatement. It’s an inconceivable all-time high for a waste product,” said McElroy. “Because of the market price, we are running gas units instead of the solid fuel units.”
The balancing act continued with the Fuel Recovery Charge.
“In a perfect world you collect as much as you spend from the customers,” said McElroy, referring to the JEA fuel fund. “But in 1997, for example, we spent about $20 million more than we collected and ran a deficit.”
That trend continued, except for a surplus in 1999, until 2005. The JEA instituted a fuel charge recovery project in April 2005 and developed a variable fuel rate, fuel recovery charge and fuel reserve charge to recoup the funds. The fuel recovery charge is spread equally to all customers as part of the per megawatt fuel charge.
By the 2012 fiscal year, the program will have achieved its goal of recovering $252 million. The fuel recovery charge is scheduled to sunset after the first four months of the 2012 fiscal year and JEA will transition to a base rate system that will not increase electric charges, the JEA stated Monday.
These issues will be presented at the next JEA board of directors meeting May 17 at 21 W. Church St.
356-2466