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Jax Daily Record Tuesday, Sep. 22, 202004:20 PM EST

JEA says rates to remain stable despite expenses from Plant Vogtle

The city-owned utility said a 1% annual increase could be offset by customer growth and a reduction in fuel and other costs.
by: Mike Mendenhall Associate Editor

JEA says it will keep electric rates stable at least through fiscal year 2022. 

Utility executives said during JEA’s Sept. 22 board meeting that a 1% annual increase from fiscal years 2023-25 could be avoided with a reduction in fuel cost and expenses. 

A Sept. 10 interoffice memorandum published in the board meeting packet states that JEA’s electric generation operating expenses will continue to increase from 2020-25, with the largest single contribution coming from a $174 million to $200 million annual expense from the Georgia nuclear power Plant Vogtle Units No. 3 and No. 4.

The memo states those expenses will be partially offset by retiring coal-fired generating units like Plant Scherer’s unit No. 4 in Juliette, Georgia, along with the increased use of natural gas and purchase power agreements.

“JEA customer rates are projected to remain near the median of Florida benchmarked utilities during the five-year projection period, where the projected revenue requirements can be met fully or in a combination of increased unit sales, expense reductions or rate increases,” the memo said.

Brian Roche, the utility’s interim chief financial officer, presented the five-year financial projections assuming flat energy sales from 2020-25. 

He said the need for 1% revenue growth includes a slow increase in operation and maintenance costs, as well as an increase in the electric system’s contribution to the city’s general fund from $94 million in 2020 to $99 million by 2025.

JEA will contribute about $120 million to city coffers in fiscal 2020-21 between its electric and water systems.

JEA interim CEO Paul McElroy said he thinks the revenue growth projections are conservative and expects electrification of automobiles and commercial fleet vehicles to add more to JEA’s bottom line.

Board Chair John Baker II noted that the projected 1% electric rate increase beginning in 2023 is “so much less” than previously predicted. 

In May 2019, the former senior leadership team led by fired CEO Aaron Zahn, predicted a 26% rate increase, blaming grid parity with residential solar and growing energy efficiency as the executives pushed the city-owned utility toward privatization. 

Roche’s presentation showed JEA added 27,000 electric accounts from 2017 to 2020, rising from 462,000 to 489,000.

“The key to the future in keeping rates where they are is growth. It would be worth, Paul (McElroy), at some point coming back with an economic development plan. Because if Jacksonville grows, JEA makes these numbers easy to work,” said Bobby Stein, JEA board vice president.

McElroy and Baker will travel to Georgia on Sept. 23 to tour Plant Vogtle and meet with Georgia Power, Southern Nuclear and Municipal Electric Authority of Georgia executives.

JEA and the city announced a settlement in July in their fight with MEAG in federal court over a purchase power agreement for nuclear Plant Vogtle.

McElroy said a filing from Georgia Power with the Georgia Public Service Commission confirms energy from the nuclear plant’s Unit No. 3 will start flowing to the power grid in November 2021 and November 2022 for Unit No 4. 

He said JEA plans to help MEAG and its Plant Vogtle partners lobby in Washington, D.C., for tax legislation and bond financing opportunities to lower the cost of the overall project.

McElroy did not provide details Sept. 22 on how changes to tax laws could impact the nuclear power project. 

The board voted 7-0 to approve McElroy and Baker’s travel to Georgia. Baker said he will use his personal plane to reduce costs. 

McElroy said city Director of the Office of Ethics, Compliance and Oversight Carla Miller recommended JEA reimburse Baker for the cost of a first-class commercial seat to Atlanta for the trip.

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