The announcement comes two days after the board voted to give its CEO authority to research possible ways to privatize the city utility.
JEA announced Thursday it hired global financial firms J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC to assist in its move toward possible privatization.
The city-owned utility also said it contracted with Pillsbury Winthrop Shaw Pittman LLP and Foley & Lardner LLP as legal advisors to assist in the "competitive and open solicitation process."
The announcement comes two days after JEA’s board of directors voted to give CEO Aaron Zahn authority to explore methods of privatizing JEA, including becoming a privately held or investor-owned company; evaluating an initial public offering making JEA a publicly-traded company; or converting into a customer-owned utility.
JEA is the 10th-largest publicly owned energy utility in the United States and one of the largest water utilities.
The plan was “Scenario 3” of a strategic planning process rolled out over three months, meant to find solutions to shrinking energy sales and declining revenue. Zahn and his staff say the slow declines are due to increases in energy efficiency and falling costs of home generation of renewable energy.
Zahn said in an interview at 1:30 p.m. Tuesday, immediately after the noon board meeting, that he has not done any groundwork to pursue privatization.
“Let me be quite clear, I have not done any work to pursue anything under Scenario 3, and would not do so until such time as the board authorized me to do so,” Zahn said. “ We’re not actually pursuing privatization. What we are doing is finishing our strategic planning with different scenarios.”
“Scenario 1” detailed in May would have put in place a 52% electric rate increase, a 15% rise in water rates and a reduction in JEA’s city contribution from a projected $118 million in fiscal year 2020 to nothing by 2023.
“Scenario 2B”, or a “traditional utility response,” would have cut 574 jobs at JEA and raised electric rates 26% by 2030.
Zahn and JEA leadership have been trying to make the case since May to the public and the utility’s board that a pathway to privatization is the most attainable way to avoid laying off employees and increasing rates for its customers because of shrinking sales.
According to the news release, over the next several months JEA will request responses from the financial, technology and energy and water industry sector. The statement says JEA will work with its financial advisers and legal counsel “to review and recommend the best solution to maximize value for JEA and all of its stakeholders.”
“JEA is embarking on a once-in-a-generation opportunity to secure the utility’s future and take care of its employees, customers and the greater Jacksonville community,” said Ryan Wannemacher, JEA CFO, said in the release.
“When the stakes are so high, it is critical to bring all experts to the table. J.P. Morgan Securities LLC, Morgan Stanley, Pillsbury Winthrop Shaw Pittman and Foley & Lardner will serve as JEA’s trusted advisors throughout his process in order to ensure the best outcome for its stakeholders.”
The resolution approved Tuesday and the news release say any deal to privatize JEA would have to include these minimum guarantees:
• Provide the city $3 billion as a supplement to future JEA annual contributions.
• $400 million to customers as a rebate.
• A 3-year contractual rate freeze.
• Fund and provide the city and the Duval County Public Schools with 100% renewable energy by 2030.
• Fund and provide 40 million gallons daily of alternative water capacity for Northeast Florida by 2035.
• Guarantee protection of certain employee retirement benefits.
• Maintain employee compensation and benefits for three years.
• Make retention payments to all full-time employees at 100% of their current base compensation.
• Lease a new headquarters and retain employees in Downtown Jacksonville.
A $72.2 million deal between JEA and Ryan Companies US Inc. to build a high-rise headquarters Downtown was also retained as part of Tuesday’s vote.
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