After sending a budget for fiscal year 2012 to City Council that didn’t include any new debt issuance, the JEA was able to gain ground on reducing its overall debt with a bond principal payment of $278 million in October.
“We were able to go to ratings agencies in New York last week and report our best year operationally to them,” said Ashton Hudson, vice chairman of the board of directors and chairman of its finance and audit committee.
“From those great operations flowed great financial results which, Mr. Chairman, allowed us to reduce our debt $278 million,” he said.
The JEA makes two principal payments each year on its outstanding debt, which sits at about $6.05 billion after the last payment. Those payments occur in April and October. The difference with the November bond principal payment was the lack of new debt issued that normally accompanied the payment.
“Over the last 10 years, when we would make payments we would issue new debt. We are now at a point where we are not issuing any new debt, so we are able to move forward in paying off old debt,” said Paul McElroy, chief financial officer for JEA.
The principal payment was distributed to the JEA systems and was broken down as follows: $86 million to the electric system debt of $2.9 billion; $133 million to the St. Johns River Power Park debt of $1.1 billion; $58 million to water and sewer system debt of $2 billion; and $1 million to District Energy debt of $50 million.
While the debt level may appear high, energy generation is an expensive business, according to Managing Director and CEO Jim Dickenson.
“You can’t operate this business without debt. It’s too capital intensive,” said Dickenson. “When you are not building generation facilities, you are lowering debt.”
JEA isn’t currently building generation facilities, but it is considering investing in nuclear power with a $7.5 million option on a 20 percent interest of the power generated by Duke Energy’s Lee Nuclear Station in Cherokee County, S.C.
The station is under construction and scheduled to be online near 2020. JEA also has an eye on its aging Northside Generation Station.
“We have to build generation at some point and Northside is getting old,” said Dickenson.
“We have a position to get into nuclear, if the board decides,” said Dickenson. “We could go to natural gas, which would be less than nuclear. We will just have to wait and see what the board will decide.”
Earlier this year, the board of directors did decide to support sending some of its linemen to the International Lineman’s Rodeo & Expo in Kansas City after they brought some trophies back from a regional competition in Ocala earlier this year.
“We thank you for allowing us to go. We love to compete, but we also get an education at these events. When you start competing with people from all over the country and the world, it really makes you think about the best ways to solve the problems they put in front of you,” said Chris Richards, a third-generation JEA lineman who competes with and coaches the team.
The JEA team earned a fourth place finish in the “Journeyman Hurtman Rescue” competition, which simulates rescuing a journeyman who has been injured while working on a power pole. The JEA team competed with 172 other teams. Results and information on the event can be found at www.linemansrodeokc.com.
JEA presented the competitors with pins to thank them for efforts to improve their job skills. JEA spent $28,000 sending 20 employees to the Oct. 12-15 event.
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