Walt Bussells is the CEO of JEA, the City’s public utility that provides much of the area with electric, water and sewer service. Bussells met Wednesday with Daily Record Staff Writer Mike Sharkey to discuss the JEA, its role in the Better Jacksonville Plan, how JEA will evolve over the next several years and several other topics.
Question: What’s the state of JEA these days?
Answer: I think things are going very well. The region is growing very rapidly so we are having to make massive investments in infrastructure to stay ahead of the curve, as we say. By and large, things are going well.
Q; Do you make those investments through the bonds that are issued to JEA?
A: In part. It’s a combination of revenues from operations and then some debt-funded capital. A mix of cash from operations and debt is a prudent, wise long term financial strategy.
Q: Apparently, JEA is very “bondable” and this is what allows JEA to borrow hundreds of millions of dollars for capital improvement projects. What makes JEA so bondable?
A: Several factors. One is we have a long, outstanding track record in the eyes of Wall Street. We have consistently delivered on our plans and projections and we paid all of our bond investors on time and in full. So first, reputation and credibility with Wall Street. We serve a growing service territory which is financially beneficial and our strategy for the facilities we are investing in and planning for the future is carefully scrutinized and highly regarded by Wall Street. So, a combination of reputation based on past performance, outstanding strategy — which is closely dissected and well-respected by Wall Street — and then a great service territory.
Q: JEA plays a big role in the Better Jacksonville Plan. Did you have to hire extra people to accommodate JEA’s portion of the $1.5 billion set aside out of the Plan for road and infrastructure work?
A: Most of that $1.5 billion is roads. Some of it is for septic tank phase out that we are leading. We often follow along, as part of that work, and go ahead and put in water lines, sewer lines, electric lines or rehabilitate existing lines in a way that saves money and reduces the intrusiveness to the public. It’s going well. The main thing that we are taking the lead on is the septic tank phase out neighborhoods for which there was $75 million funded through Better Jacksonville. The projects that we are leading for that purpose are on schedule and a little bit under budget at this point. We have contractors and crews working in several neighborhoods right now. We have not hired new regular employees to handle this phenomenal, massive amount of work over the next several years. Rather, we have contracted directly and indirectly with several people for specific and tasks. So, when those jobs are done, their employment will end.
Q: At what point will Jacksonville be essentially septic tank free?
A: That’s a large public policy issue that goes well beyond JEA’s scope of responsibility. It’s estimated there are approximately 100,000 septic tanks spread across our county. The Better Jacksonville Plan is expected to replace about 7,500 existing septic tanks with modern sewer lines and sewer service. It is extremely expensive to retrofit existing areas with sewer lines that were originally constructed with septic tanks. It’s often $10,000 to $11,000 per home or building to retrofit, just to put the lines in the street, and then another $4,000 or $5,000 for the home to be replumbed. This is a very expensive proposition and there are parts of this city where septic tanks are safe environmentally and the economic thing to do. There are many other places where, in retrospect, it would have been better had, when those homes were first built, sewer lines been installed. But that’s a very expensive, long term public policy issues for our community and not just for Jacksonville, but this is an issue across the country.
Q: Does JEA assist the customer financially when they have to replumb their homes in older neighborhoods like San Marco?
A: We have programs to lend customers funding for the connection to the sewer grid. We could not legally actually invest money or lend money for work within someone’s private building or home. But our rates are low once someone does hook up, so it’s less expensive than it would be in many communities once you do get hooked up. And, our hook up costs are relatively low compared to other utilities in other communities.
Q: The Telecommunications Master Plan Task Force is in the process of wiring the city for the future. More than likely, JEA will play a role in that master plan. What role do you see JEA playing in regards to that plan?
A: We’ve been asked by the leadership in City Hall to be one of several parties doing significant data gathering and analysis work for that and we are diligently discharging our role as a result of that. We have been actively gathering current information from a number of cities and utilities across the country that have adopted different public-private partnership approaches to providing great telecommunications services and access to consumers and businesses. The initial report is due in September, three months away, so we are working hard with an open mind and we’ll see where the analysis and facts lead us.
Q: Do you envision the day when a JEA bill includes water, sewer, electric, cable and Internet fees or will there be areas of town that may apply to?
A: It’s early in the analysis so anything we would say would have to be caveated by ‘It’s early in the analysis.’ It seems unlikely to me at this point that it would be sensible for JEA to be an actual retail service provider of these kinds of services. That seems unlikely to me at this stage. JEA assisting in providing a more robust network in the community for private service providers to actually deliver services to consumers and businesses — that might be the area where we find some potential benefit to make some changes in how we do things around here.
Q: The old JEA building is just down the street. It’s been on the market for a while and every now and then you’ll hear that someone is interested in it. What’s going on with that building these days?
A: I haven’t been briefed in several weeks about that. The last time I was we had a buyer. I’ll have to check on that. We may not have actually closed the sale, but I understood we had a viable buyer with the financing that had a business plan for it.
Q: How did you end up as the leader of a public utility? Is it something you always wanted to do?
A: I came to work here 27 years ago at the recommendation of a friend who was involved in a management consulting study to reorganize the then JEA. He told me there was a job that would be a great fit for me. I was 25 years old, I applied and they hired me. I had no intention, 27 years ago, to be here very long. That’s just the way it worked out.
Q: What changed your mind?
A: What happened over the years was each time I got ready to leave and go do something else, they promoted me. To be honest, that’s the way it has worked out.
Q: You just couldn’t say no?
A: Each time it was a job that, at the time, interested me a lot that I wanted to try and thought I could do. After time passes, sometimes you get bored until something else comes along.
Q: If you weren’t CEO of JEA what would you be doing?
A: That’s a great question and I don’t know. In my work life, I like jobs where you get to think about big, complex issues and then figure out a different way to solve the problem. Something where I could that.
Q: JEA must present the perfect big, complex issue for you then on a daily basis?
A: Yes. Our service territory now is about 1,500 square miles with the acquisition of United Water last year. We have the opportunity to be planning and building and maintaining big, complex grids over a big, roaming area. That’s challenging and interesting and we have a chance here to make a difference in the quality of life in the communities were serve. That’s true of us. The choices we have made and are making, it affects people’s businesses and lives every day in a way that people tend not to think of. We are able to make a difference here.
Q: Electric and water rates tend go up, sometimes dramatically, this time of the year. How do you tactfully explain to a customer that it’s not JEA’s fault?
A: Actually, our electric rates today, of the major utilities in Florida, are the lowest in the state and among the lowest in the country. When someone is experiencing a significant increase in their bills — we’ve been holding electric rates at the same low level for 13 years in a row — it’s a change in consumption. We offer, to my knowledge, the broadest array of services to help customers minimize and manage their energy and water usage of any utility in the country. In your hypothetical example, for the energy already consumed we’ll work out a very flexible and liberal installment payment plan. We will offer, for free, very experienced people to go to that customer’s service address and comprehensively look at all the energy and water consuming devices in the residence and we will figure out where the energy is going. And then give the customer concrete recommendations about real world changes they can make that don’t really affect their comfort or lifestyle that will reduce their energy or water consumption. We’ll do that in person. We’ll do it with a tailored, specialized video we produced. It’s appropriate to people living in Northeast Florida. We do it over the web and we do it in the way that best suits the customer. We have enjoyed excellent success in helping customers that want to make changes and do it cost effectively.
Q: From a perspective standpoint, does that leave you with a happy customer?
A: Most of the time, it sure does. Our success rate meeting our customer’s requirements is very high. I’ll give you an example. We are participating in a long established, national customer satisfaction research institute called the American Customer Satisfaction Index. They began doing independent research on customers’ attitudes towards large electrical utilities several years ago. We have joined that group and now they independently, objectively poll our customers at any point in time about how they feel about value and service. We’re in the top 10 percent nationally and very close to the top two or three. I wish it were possible to satisfy 100 percent of any organizations customers 100 percent of the time, but I don’t think it is. Compared to what’s possible, we’re doing better than 90 percent of the utilities out there and we aspire to be the first in the next few years.
Q: Do you find it difficult to do that considering electricity and water are necessities and not a pair of jeans that you don’t need? It would be easy to adopt a monopolistic attitude, but obviously JEA doesn’t?
A: Things work the best among enterprises and their constituents when there’s mutual respect and mutual benefit. The better relationship we have with our customers, the more supportive they are of us and the things we need to do, whether it’s permitting a new facility in an area or reconstructing existing facilities in an area. If they feel like we are doing our honest best to be fair and equitable in serving them in our service relationship, they are much more likely to support us and not oppose a project. In the long run, the better relationship we have with our customers, the more efficient we can be.
Q: You mentioned that JEA has some of the lowest rates in the country. In an area where it’s very warm several months of the year and we can go months without much rain, how do you keep rates so low?
A: Innovation is the key. We focus on always looking for the next better way to do what we do and the next better way in terms of better environmental performance, more cost effectiveness, more cost efficiency. Therefore, at any point we are always investing in changes in how we do our work. We are investing in better technology at our facilities that improve the environmental performance and lower our costs. Some areas of our business, cost increases are inevitable and we are not able to avoid that. We are a significant U.S. Postal Service customer. We send people statements every month, a lot of people. When the U.S. Post Office raises those rates as they have done again recently, that cost increase, we have to find a way to save money some place else to offset that cost increase so our customer sees that same low, stable electric rate 13 years in a row and that same stable, low water and sewer rate six years in a row.
Q: That cost increase goes into effect next month. Do you have a plan to divert that cost from the customer?
A: Absolutely. In fact, yesterday [Tuesday] at our monthly board meeting, we had our annual budget workshop for our fiscal 2003 budget which we’ll transmit to the City Council July 1 and our proposed budget for fiscal 2003 does not require any rate increase of any kind. We’ll keep those low rates stable through 2003 and we’ll offset those increases, like from the Postal Service or higher medical premiums for our employees — things that are going up whether we like it or not — with savings we have generated and changes we have made and are making now in other parts of our operations. For example, we have completed six new generators at three sites. The generators are much cleaner and more efficient than the older models made in the 1950s and 1960s. We are reducing our fuel costs with better technology that was developed five years and is now starting to come on line.
Q: Does that mean your budgets remain fairly consistent?
A: Our budgets have been going up as our system and customer base grows. The budget we are submitting to City Council is about a $1.5 billion budget for 2003 and that’s quite a bit bigger than just a few years ago. Our budgets are growing in part through the acquisition of other utilities and customers like United Water.
Q: Several weeks ago, we had the first city-wide outage in 25 years. It was the result of what was called the ‘perfect’ electrical storm where several elements all came together at once. Is that scenario completely preventable or is there the possibility it could happen again?
A: It’s not realistically absolutely preventable. An event like we had here on April 29 occurs about 30 times a year some place in America or Canada, where at the generation level or transmission level, there is a sequence of failures which happen in such magnitude and so quickly that no system is redundant enough [to handle it]. You can’t afford a system that’s redundant enough with enough excess capacity to just about eliminate the risk of periodic shutdown. We’d have to double engineer everything and double people’s bills so you pay double every month for month after month to have it [an outage] be every 50 years instead of every 25 years. Our record reliability is very good, better than the national average. I’ll say it this way: human beings have not yet been able to create perfect materials that never fail under any circumstance.
Q: So, it was just our turn?
A: An example I’ve heard people in other utilities use is: take airplanes, clearly, commercial airlines don’t want planes to ever crash because it kills people. With all the money, all the technology and all the regulations, we have not yet been able to have airlines fly year after year without a crash from time to time. The probability of that crash occurring statistically is very, very low, but it happens. Fortunately, the result of shutting down an entire system and turning it back on safely, rarely results in catastrophic consequences like an airplane crash.
Q: You’d be happy if it was another 25 years before the next city-wide outage?
A: Let’s hope it’s about 40 years before the next one so we can keep getting better and more reliable.
Q: You mentioned that JEA is in the top 10 percent of utilities in the country. Who’s up there with JEA and what is the best utility in the country?
A: It varies by the measure you look at it. If you combine price or rates, customer satisfaction and environmental performance, if you put all those together in a package, I would argue we are as good as anyone. If you separate it out, say the percent of customers really happy with the current service, one the few utilities that’s doing better than us is Duke Power in the Carolinas and another would be Pennsylvania Power & Light. So, it’s down to just a very few large utilities who have been able to satisfy a little bit higher percent of their customers than we are. We’re getting closer and closer to them and we intend to pass them in about 2004.
Q: How much satisfaction do you take in that?
A: A lot. We’re doing a good job here in Jacksonville and it’s teamwork, not just JEA, but a team effort. We’re doing innovative, good things here and we [JEA] are part of that. Better Jacksonville is part of that. Preservation Project is part of that.