by Mike Sharkey
Staff Writer
Ten years ago, former Mayor John Delaney successfully lobbied for the $2.2 billion Better Jacksonville Plan. That ordinance included an extra half-cent sales tax for 30 years but it also produced a new baseball park, arena, equestrian center, main library and branches, a courthouse and miles of sidewalks, roads and infrastructure.
Next month, the board of directors of JEA will likely approve a $2.2 billion budget for the 2010-11 fiscal year alone.
JEA annual budgets
What will taxpayers get? Lights, running water and toilets that flush.
Tuesday during the May board meeting, JEA officials talked about the budget, why it is growing and will continue to grow and how it will affect JEA customers.
“The budget we present will achieve our financial metrics,” said JEA Chief Financial Officer Paul McElroy, adding the budget will “incorporate conservative sales” and “continued rigorous expense control.”
In addition to the rising cost of coke and coal, the primary fuels JEA burns to produce electricity, McElroy said human resources and retirement issues will also play a role in the budget for the foreseeable future.
“We will deal with this as an organization over the next several years,” he said, adding it will cost about $5 million for the next few years.
Rates will go up, said McElroy. The increase of $6.48 per megawatt hour will mean an average increase of $7.70 per month for JEA customers.
“This adjusts the fuel rate to meet expenses,” he said. “We will collect what we spend.”
JEA will also increase its direct transfer to the City by 5.5 percent, or $12 million. Since 2008, JEA has increased its annual contribution to the City by 30.5 percent, which equates to $54 million.
Jim Dickenson, JEA’s managing director and CEO, explained why it was necessary for JEA to continue basing its rates on a variable formula that takes into account the current price of fuel.
“In 2005, the board made the decision to put in a variable fuel rate,” said Dickenson. “The previous 20 years, fuel had remained relatively stable. There were some ups and downs, but it stayed relatively flat. We have seen tremendous increases.”
Dickenson said in 2004, JEA spent $280 million on fuel. This past year, that figure jumped to $600 million.
“We have built up our fuel reserves,” he said, adding when fuel prices rose over the past several months, JEA was able to tap into those reserves and avoid an emergency rate hike.
“Fuel is such a tremendous cost to do business and we have to pass it through to our customers. Fuel has been extremely volatile and we think it will remain that way and we will adjust as necessary,” he said.
Dickenson also talked about pending national legislation that could have a major impact on utilities across the country. He isn’t sure what will pass and what won’t, and which regulations will be enforced and which won’t.
If those bill pass and Environmental Protection Agency regulations are enforced, JEA customers could see their bills double or triple within the next several years, he said.
That scenario may not affect those in Jacksonville with what he called “adequate resources,” but he does worry about the JEA customers who are struggling to pay their bills right now.
The JEA board is expected to approve the final 2010-11 budget at next month’s meeting. It must be presented to the City Council by July 1.
This chart, provided by JEA, shows the impact of the fuel rate increases on the monthly bill of JEA customers. Next month, JEA’s board of directors will vote to approve the 2010-11 budget, which contains these rate increases.
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