The JEA plans to use better-than-expected returns from fiscal year 2011 to help pay down its $6.3 billion debt and keep it from borrowing more money in fiscal 2012.
At its meeting Tuesday, the JEA board of directors approved four budget line item transfers totaling $53.2 million. The leftover funds were attributed to higher-than-expected water sales and lower expenses.
JEA has to provide the City Council auditor a final year-end revised budget by Nov. 30.
“It really is taking the leftover funds from having a great year in operations that allows us to be able to transfer some money and move it to operating capital,” said Jim Dickenson, JEA managing director and CEO.
“This allows us to go into this year without having to borrow any additional money and also allows us to pay down some debt,” he said.
JEA also provided customers with some relief. Paul McElroy, JEA chief financial officer, predicted no increase in electrical residential base rates over the next fivc years and for water and sewer rates to level off by 2013.
Lower operating and maintenance and non-fuel purchased power expenses in the electric system allowed JEA to transfer $25.8 million from the two line items and transfer $23.3 million to capital outlay and $2.5 million to working capital.
Lower debt service expenses for the water and sewer system gave JEA the ability to transfer $5.9 million from debt service to capital outlay. These transfers will help JEA avoid borrowing money during the 2012 fiscal year.
“Compared to last year, we experienced higher water and sewer sales due to extreme weather,” said McElroy.
“Our sales were up 6 percent this year, and that generated a little higher revenue than expected,” he said.
That 6 percent translated into a $22.5 million budget balance at the end of the fiscal year for the water and sewer system because of the unexpected increase in sales.
The JEA proposed to retire $16.5 million of water and sewer debt in the first quarter of fiscal 2012 and the remaining $6 million to deposit into the debt service reserve fund to fund a portion of the surety replacement plan in fiscal year 2012.
JEA also held an electric generation planning workshop Tuesday for board members to discuss the future needs of the utility.
“We are well positioned for the next 10 years,” said McElroy. “Beyond that, we start to look at, both in terms of replacing the existing fleet and possible new facilities, when we look out now given where we’ve come from in the past five years prospectively we probably have the most uncertain planning horizon we’ve ever had in this business from an economic and regulatory standpoint,” he said.
Regulatory uncertainty involves greenhouse gases and air pollution standards. Fuel costs are also a question as prices continue to reach historic highs and lows. Capital costs and markets and technology will also figure into JEA’s plans for the future.
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