When City Council President Greg Anderson introduced legislation last month to calculate JEA’s annual contribution based on a set percentage of the utility’s average gross revenue, with a minimum contribution of $114 million, he described the plan as “a pretty simple way to look at it.”
Based on a proposal presented Wednesday to the council’s Special Committee on the JEA interlocal agreement, it might not be that simple.
The only common element between Anderson’s bill and the latest plan is the minimum annual contribution.
The new proposal also addresses how much the city pays for electricity for public buildings, streetlights and traffic signals and it includes a one-time contribution from JEA to be matched by the city to expand sewer service.
The contribution calculation would be based on millage rates charged on how many kilowatt hours of electricity (5.5 mills) and cubic feet of water (2.1 mills) are sold annually.
Council Auditor Kirk Sherman said that would mean if the rates charged by the utility changed, it would have no effect on the contribution, since it would be based on production rather than revenue.
Committee Chair Bill Gulliford pointed out that JEA has experienced a decline in sales during the past few years due to conservation efforts, but that doesn’t automatically mean revenue would decline.
“A lot of businesses experience reductions in sales but improve their net revenue,” he said.
While JEA’s consumption per customer may be decreasing, the utility’s customer base is growing, which could result in a net increase in revenue, said council Vice President Lori Boyer.
Gulliford added that looking for ways to make more money while selling less of its products is the responsibility of JEA’s board of directors.
The latest proposal includes an automatic increase in JEA’s contribution to the city budget. If unit sales do not increase in a given year, the contribution could go up by as much as 1.75 percent, based on the Consumer Price Index.
Regarding streetlights and traffic signals, Chief Administrative Officer Sam Mousa said the city received a discount on electric rates beginning in 1995.
But under the terms of the existing agreement, JEA can adjust or cancel the discount at any time based on whether the rate charged covers the cost of providing the service.
The latest proposal includes a provision that if JEA raises rates for specific charges that affect city budget items, the utility would be required to make an additional contribution, essentially a credit equal to the increase, to balance the budget.
“We don’t want to budget based on certain amounts. If charges change, we need protection,” Mousa said.
Extending sewer lines throughout Duval County to allow the elimination of septic tanks and associated groundwater pollution is estimated to cost $300 million. The city budgets $2 million each year for sewer line installation and phasing out septic tanks.
The new proposal calls for a one-time contribution to the program of $25 million from JEA to be matched by the city over a 10-year period.
Boyer said the septic tank issue is “a big challenge without a solution.” Despite the proposed contribution and match more than doubling the current budget for the work, many property owners who have septic tanks would not be able to pay the $3,000-$7,000 connection fee if new sewer lines were installed near their property.
She suggested the city lobby the state and federal governments to find a program that would cover the connection cost for customers.
There could be a funding source already used by other municipalities.
“We’re not unique. Somebody has figured out how to pay for it,” she said.
The committee is scheduled to meet at 10:30 a.m. Tuesday in the Lynwood Roberts Room at City Hall, when JEA representatives are expected to respond to the new plan.
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