JEA optimistic about December meetings with credit rating agencies

  • By Max Marbut
  • | 12:00 p.m. November 25, 2016
  • | 5 Free Articles Remaining!
"We're looking forward to this one a little more than last year." - JEA board Chair Tom Petway on the December credit ratings meetings in New York
"We're looking forward to this one a little more than last year." - JEA board Chair Tom Petway on the December credit ratings meetings in New York
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What a difference a year can make.

“The December credit rating meetings are going to be a lot of fun,” said JEA Chief Financial Officer Melissa Dykes at the Nov. 15 board of directors meeting.

She had just reported the publicly owned utility in the fiscal year that ended Sept. 30 had outperformed financial projections across the board, including its sales, cash on hand and debt-to-asset ratio.

Dykes also reported JEA is in its “highest debt service position in the past five years.”

In addition, the board approved a five-year base rate stabilization policy that includes retiring early nearly $200 million in debt.

Those will be important factors when a delegation from JEA goes to New York City on Dec. 8-9 for the annual presentations to the Fitch, Moody’s and Standard & Poor’s rating agencies.

The meetings will establish — and hopefully maintain — JEA’s AA and AAA ratings for its electric and water/sewer system senior and subordinated bonds.

Last year when the group presented to the credit agencies, the board had five new members out of seven, the city pension dilemma hadn’t been resolved and City Council was still considering a new five-year interlocal agreement that would set JEA’s annual contribution to the general fund budget.

When board Chair Tom Petway returned from New York last year, he said the experience was “more like an inquisition than a meeting.”

There’s a different mindset for the upcoming meetings.

“We’re looking forward to this one a little more than last year,” Petway said Tuesday.

The group making the trip in a few weeks includes Petway, CEO Paul McElroy, Dykes, other top JEA executives, Mayor Lenny Curry and council President Lori Boyer.

The new board now has more than a year under its collective belt, the agreement between the city and JEA was adopted in March and voters in August approved Curry’s half-cent sales tax pension resolution.

Having the mayor and council president on the trip was an advantage last year and it will be again this year, Petway said, based on the level of scrutiny in terms of the high-level credit evaluation process and the agencies’ long-term familiarity with the city and the utility.

The credit agencies also are familiar with JEA’s executives, particularly McElroy, who was chief financial officer from 2006-12 before he became CEO.

“They have people who have been meeting the Jacksonville principals for years,” Petway said. “We’re prepared and we’re optimistic.”

JEA 2015-16 key performance metrics

ElectricWater and sewer
Days of cash on hand189212140186
Days of liquidity303334245307
Debt to asset ratio66%64.9%52.5%52.5%
System sales3.5% decrease1% increase4.5% decrease5.2% increase
Capital expenditure$160 million$151 million$182 million$147 million

Source: JEA (Data as of Sept. 30)

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