by Joe Wilhelm Jr.
Staff Writer
With a July 1 deadline to submit its proposed fiscal 2011-12 budget for review, the JEA board of directors voted Tuesday to send its $2.2 billion budget to City Council.
The budget can be broken down to $1.9 billion for its operating budget and about $313 million for its capital budget. The JEA provides services to 417,000 electric customers, 305,000 water customers and 230,000 sewer customers.
Some of the highlights from the proposed budget included no increases in customer electric charges, no new debt issued, a reduction of the electric system outstanding debt by $83 million and the water system by $47 million.
The 2012 budget is for the fiscal year that starts Oct. 1 and ends Sept. 30. It was the first not to include new debt since 1996 for the electric system and since the water system was acquired by JEA in 1997. The outstanding debt for the electric system stands at $4.2 billion and $2.1 billion for the water system.
“They’ve done a great job, reducing debt by $83 million on the electric system and $47 million on the water system,” said Stephen Joost, Council president-elect and the Council liaison to the JEA.
Council has to approve the budget before it takes effect.
The capital projects budget includes $165 million for the electrical system, $146 million for the water and sewer system and $1.9 million for the district energy system. Improvements for the electrical system include transmission, substation, distribution and generation projects and reliability and safety improvements.
The board, as the rate-making authority for JEA, met Tuesday to discuss changes to its electric rate document. These changes included converting the fuel recovery charge to a base rate, instituting an incremental economic development program and a commercial net metering application fee.
The fuel recovery charge was created in 2005 to recover base revenues that were spent before April 2005 for fuel expenses. The board authorized the charge to remain in effect for seven years, or until $252 million was collected. The fee collects $38 million a year and is applied to debt service and reduction.
The charge is projected to reach $252 million in the second quarter of the 2012 fiscal year. The conversion to a base energy charge has been included in financial projections since December 2007. The change will not increase the total electric charge to any rate class.
An incremental economic development discount program also was developed to provide an incentive to large manufacturing customers to increase their energy usage. JEA’s interruptible class includes 24 customers and that class has seen a 25 percent decrease in usage since 2008.
The decrease creates unused capacity, so the JEA developed a discounted rate to avoid the loss of economic activity.
“We’ve met with 6-7 different customers in this class and we received favorable response,” said Paul McElroy, chief financial officer of JEA.
Joost joined the board in recognizing the program for its attempt to encourage business.
“It’s an excellent program, very innovative. It’s the type of public-private partnership we need for the economy to rebound in Jacksonville,” said Joost.
The First Coast Manufacturers Association sent JEA board members a memo in September asking for a different pricing structure for 25 businesses identified as larger users so that they could remain competitive. The largest user was the Gerdau steel mill in Baldwin.
Joost made a plea at a September JEA board meeting for a reduction in the price that Gerdau pays for electricity, asking for JEA’s help with economic development.
“Gerdau had an issue with electricity rates here because they weren’t competitive with other markets,” Joost said Tuesday.
“We had a lot of extra capacity in our plant, so it made sense to offer these customers an incentive to increase their usage,” he said.
The discount program awaits review from the Florida Public Service Commission.
The board also approved a commercial net metering application fee of $1,000 for the installation of photovoltaic energy production systems greater than 100 kilowatts.
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