Responding to proposed changes in JEA’s annual contribution to the city, JEA CEO Paul McElroy said Tuesday the public utility would be willing to accept a minimum annual contribution of $114.2 million.
The independent authority also is prepared to make a one-time $15 million payment to the city for sewer system expansion and septic tank mitigation.
The City Council JEA Agreement Special Committee submitted its amendment proposals to JEA on Nov. 17. McElroy said when the committee convened a week later he needed time for staff to evaluate the plan.
McElroy has since presented the proposal to the utility’s board members in one-on-one meetings and submitted Tuesday what he called “a few modifications.”
The city proposed a 10-year agreement with a minimum annual contribution from JEA of $114.2 million based on a millage formula and annual increases not to exceed 1.75 percent, based on the Consumer Price Index.
McElroy said a millage-based contribution would work and accepted the minimum contribution, but said the utility favors a five-year agreement and annual increases of 1 percent per year.
Within five years, he said, JEA will be faced with new environmental rules being adopted by the federal government and also evaluating the impact on the utility’s financial position of using different fuels as well as nuclear and solar power to generate electricity.
JEA is “fairly uncomfortable” with predicting what will happen in the utility industry in the 5- to 10-year timeframe, said McElroy.
He said JEA is prepared to give the city $15 million, which would be matched by the city over a five-year period, to be used only for septic tank phase-out and sewer system expansion.
The city’s proposal was for a $25 million payment from JEA to be matched by the city over a 10-year period.
Sam Mousa, Mayor Lenny Curry’s chief administrative officer, said the city would agree to match the JEA contribution at the rate of $3 million per year for five years.
In addition, JEA will continue to contribute $1 million a year in system design fees and $650,000 annually in connection service.
McElroy said the city proposal the utility struggled with the most was that if JEA raises rates for specific charges that affect city budget items, the utility would make an additional contribution to offset the cost increase.
Examples are what the city pays for electricity for street lights and traffic signals.
“We do not have a good solution at this time. It’s a real challenge to have preferential pricing,” said McElroy.
Council Vice President Lori Boyer said the proposal would not create preferential pricing.
She termed an agreement for an additional contribution from JEA if there was a rate increase a way to protect the city from unanticipated costs that would not be appropriated in each year’s budget.
McElroy said discussions of amending JEA’s contribution agreement between the committee, the administration and the utility over the past several months were “good conversations” and “we want to keep this activity as collaborative as it can be.”
Council member and committee Chair Bill Gulliford said the group will resume its deliberations in January and he plans to invite the JEA board of directors to participate in the negotiations.
“In the past, we haven’t taken the time to engage with the JEA board or the other independent agency boards,” Gulliford said.
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