JEA says it is not the answer to the city’s $40 million-a-year pension question.
In a draft report scheduled to be presented Tuesday to the JEA board, the utility’s staff determined paying the city an additional $40 million a year for 14 years would result in rate increases for JEA customers. Making the additional contribution also could threaten JEA’s bond rating, the report said.
The publicly owned utility’s 2014 contribution is $232 million.
Mayor Alvin Brown’s office requested what it called a “partnership” to help pay down the unfunded liability in the police and fire pension fund. In return, under Brown’s proposal, JEA could spin its employees off into their own pension plan separate from the city.
Earlier this year, the mayor said JEA could save $503 million over 35 years by doing so. Had JEA agreed to the additional annual contribution, it would have paid the city $560 million over 14 years.
The draft goes on to say the utility’s financial health maintains rate stability and it already is facing challenges.
Declining sales is the first indicator, but the contribution it already provides the city “is greater than more than 90% of our peer utilities,” the report said. And JEA’s contribution increases by $2.5 million each year. Additionally, regulatory compliance requirements and operational costs also attribute to the challenges.
The report said the “right thing to do for JEA and the community” would be to remove the utility’s employees from the General Employees’ Pension plan to help solve the pension funding crisis.
The JEA board’s budget meeting starts at 11 a.m. From there, the finalized report will be provided to the full board at 1 p.m.