JEA plans to pay down $480 million in debt over the next fiscal year, according to a new asset realignment plan approved Tuesday by JEA board members.
The JEA board of directors approved the first year of a five-year strategy that will see the public utility further reducing its liabilities by $1 billion through 2023.
With the electric and water systems, JEA has about $2.8 billion in debt.
Chief Financial Officer Ryan Wannemacher said Tuesday the asset realignment will allow the city’s electric, water and wastewater utility to invest about $1.9 billion in capital projects during that time without raising customer base rates because the company will be able to increase cash flow.
Wannemacher said the additional debt payments will yield about $80 million in extra cash each year, although that amount could fluctuate.
“The shift has been about capital allocation,” Wannemacher said. “We’re trying to run the business in a way that’s consistent with what the community expects.”
JEA is scheduled to make about $175 million in debt payments in the next fiscal year. Between the electric and water systems, JEA will accelerate an additional $305 million in payments.
Altogether, the utility plans to make $676 million in additional debt payments through 2023.
Each year the executive leadership team will return to the board of directors to approve additional payments.
Wannemacher estimates that debt tied to the electric side of the business will be at a 40-year low after 2023. For the water and wastewater operation, debt could be at a 20-year low.
The strategy is the first major undertaking for new Chief Executive Officer Aaron Zahn, appointed in November by the board.
Zahn said JEA will “recalibrate the plan” each year.
He said the company is planning ahead for the financial challenges the company sees over the next decade, including increased operating expenses, flat electricity sales and payments connected to the Plant Vogtle nuclear power plant expansion in Southeast Georgia.
“This is a management team that by managing profitability and return on equity is looking out five years from now and saying how do we position the business to deal with the risks we see on the horizon,” Zahn said.
For the first time in the utility’s 123-year history, the water and wastewater operation is expected to be more valuable and profitable than the electric side of the business.
JEA provides water services to four North Florida counties. The electric business is offered in Duval and parts of Clay and St. Johns.
Zahn said the utility will try to make up for what are expected to be flat electric sales in the next decade by increasing JEA’s solar energy footprint and exploring other ways to electrify services that run on fossil fuels.
“This does not take into consideration additional penetration of distributed generation like solar,” Zahn said.
The ability to spend more on debt is no coincidence.
JEA Board Chair Alan Howard said JEA no longer needs to hold cash reserves to maintain a AAA credit rating.
Moody’s Investor Services and S&P Global downgraded JEA electric system bond ratings this year in reaction to the company seeking to cancel a power purchase agreement connected to the Plant Vogtle.
Bonds connected to the water side of the business were unchanged.
Over the summer, Zahn attempted to remove JEA from a 20-year power purchase agreement the utility entered with the Municipal Electric Authority of Georgia, which is building two nuclear reactors at the existing power plant.
JEA was to cover 41 percent of MEGA’s expenses during that time, including construction costs, which have increased to an estimated $27 billion from the initial $9 billion.
The resulting debt obligation is estimated between $2 billion and $3 billion.
The Republican Party of Duval County selected Dean Black as chairman Monday night.
He takes over from Chair Karyn Morton, who lost by three votes, 58-55.
“My goals are simple ones: Unity, Focus, and Growth,” said Black through an emailed statement.
“Today we took a new step forward to ensuring that Republican candidates for both the 2019 and 2020 elections will have a strong local party helping them achieve victory.”
Morton often was considered combative with local Republicans and was critical of Gov. Rick Scott and his successor, Gov.-elect Ron DeSantis.
She also had issues raising money for the party, something City Council President Aaron Bowman and Mayor Lenny Curry mentioned when asked about her job this week by FloridaPolitics.com.
Bowman told Florida Politics that it had been a “tough year” for the local party. Curry, who conducts most of his fundraising through a political action committee, told the outlet he hopes the local party has a fundraising and finance plan “that will allow them to do the most basic thing parties should be doing.”
Duval Republicans selected Jim Davis as vice chair, Rose Nettles as secretary and Lauren Stonacek as treasurer.
