Turmoil at JEA: The story so far at the city-owned utility

A look at what happened the past 25 months.

  • By Max Marbut
  • | 5:10 a.m. January 3, 2020
  • | 5 Free Articles Remaining!
JEA headquarters at 21 W. Church St. in Downtown Jacksonville.
JEA headquarters at 21 W. Church St. in Downtown Jacksonville.
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The prospect of selling Jacksonville’s customer-owned utility has been discussed every few years since 1968, when the city Electric Department became the Jacksonville Electric Authority as part of the consolidation of city and Duval County governments.

The latest attempt led to major changes in leadership at what now is called JEA. Its board halted sales talks Dec. 24.

Here’s what happened the past 25 months.

Suggesting privatization

On Nov. 28, 2017, at his final meeting as a member of JEA’s board of directors, businessman Tom Petway asked:

Would JEA’s customers and the people of Jacksonville be better served if the utility was privately owned, and whether JEA and the city should consider the financial benefits that would come from privatization?

The following January, JEA staff began a “strategic planning process” that led to issuance of an “invitation to bid.”

That procurement process is similar to a request for proposals or a call for bids, but with more flexibility in terms and conditions.

Responding to the public’s reaction, City Council, unanimously approved a measure April 10, 2018, to place the question of how Council might authorize the sale of more than 10% of JEA’s assets on the ballot in the next general election.

Voters went to the polls Nov. 6 and approved a nonbinding straw measure.

Three weeks later, Council enacted an amendment to the City Charter to require approval of a referendum to authorize the sale of more than 10% of the utility.

Aaron Zahn
Aaron Zahn

Leadership: The rise and fall of Aaron Zahn

In February 2018, Aaron Zahn was appointed to the JEA board by Mayor Lenny Curry to replace Petway.

Two months later, Paul McElroy, who had been with JEA as CFO and then for six years as CEO and managing director, stated he would not renew his contract that was set to end in September.

McElroy said he would immediately step away from day-to-day operations. The board appointed CFO Melissa Dykes as interim CEO.

Two days after McElroy announced his departure, Zahn resigned from the board and stated his intention to compete with Dykes to be interim CEO.

At its April 17 meeting, the board selected Zahn over Dykes as interim CEO and managing director, effective immediately. Zahn’s first action was to appoint Dykes as chief operating officer, in charge of day-to-day operations.

A search firm was engaged to recruit a permanent CEO and on Nov. 27, Zahn was chosen over two other candidates.

Zahn’s performance came under scrutiny soon after his appointment and calls for his removal led to his termination without cause on Dec. 17, 2019.

He remains on paid administrative leave, pending the outcome of severance compensation negotiations that remained unresolved as of Dec. 31, despite the board putting a Dec. 30 deadline on that process when Zahn was terminated.

Invitation to negotiate

At the May and June board meetings, while he was interim CEO, Zahn reported that JEA would have to lay off about one-third of its workforce and raise electric rates by more than 25% if the utility remained publicly owned.

The cuts were part of a “Strategic Planning Overview” report prepared by JEA and McKinsey & Co., a consulting firm hired by the utility in September 2018 to assist with the strategic plan.

On July 23, the board voted to allow Zahn to begin an invitation to negotiate with private companies that could lead to the sale of the utility.

The invitation released Aug. 2 included a “cone of silence” to keep the bidders’ identities and offers secret until the top bid was selected.

JEA announced Oct. 14 that nine private companies would move into negotiations to possibly purchase the utility.

Pushback from the public

With public pressure growing for transparency, JEA revealed the identities of eight of the nine companies, including the parent company of Florida Power & Light Co.

On Oct. 28, City Council announced it would hold public hearings to examine the possible sale and that it would appropriate $1.85 million to retain an independent law firm to advise Council on the matter.

Jacksonville Civic Council CEO Jeanne Miller appeared at the Nov. 6 hearing to refute JEA’s claims of financial distress and said there was insufficient evidence to warrant the sale.

The Council Auditor issued a memo Nov. 18 warning that a stock option-style Long-Term Performance Unit Plan for JEA employees, enacted by JEA’s board along with the invitation to negotiate, could cost the city more than $600 million if the utility was sold.

The next day, Zahn notified Council President Scott Wilson that he would recommend to the board at its next meeting that the plan be rescinded.

The board did rescind the plan, the same day it terminated Zahn, who was represented at the meeting by his attorney.

‘End this now!’

Public skepticism of selling JEA grew during the invitation to negotiate process.

Former Mayor Jake Godbold took out full-page ads in late November in the Jacksonville Daily Record and The Florida Times-Union.

In an open letter to Council, Godbold criticized Curry and JEA for considering selling the utility and asked Council for a no-confidence vote in the board and Zahn.

Godbold suggested that the board and Zahn be removed and he blamed Curry for replacing former board members with “hand-picked cronies” with the specific purpose of selling the utility.

“End this now! Don’t be on the wrong side of history. And, for God’s sake, don’t fail Jacksonville,” Godbold wrote.

On Dec. 23, at the end of a news conference called to award a scholarship to Florida State College at Jacksonville’s Fire Academy of the South, Curry revealed he had asked JEA board Chair April Green the day before to end the ITN process.

Within hours, the board noticed an emergency meeting at 9 a.m. Dec. 24. By the time the meeting adjourned about an hour after it began, the ITN was rescinded and JEA pledged to make all of the related documents open to the public.

What’s next?

Questions remain about the privatization process and the actions of those involved.

On Dec. 11, Isaiah Rumlin, president of the Jacksonville branch of the NAACP, called for a federal investigation of the ITN. On Dec. 15, Council member Matt Carlucci asked for a grand jury investigation.

The Jacksonville Civic Council sent a letter to city and state officials Dec. 17 calling for a grand jury investigation into the invitation to negotiate, Zahn and city officials who were involved in the process.

State Attorney Melissa Nelson said Dec. 18 that she was “looking into” matters involving JEA.

Asked for an update, the State Attorney’s Office responded Dec. 31: “The last public update was the comment from a couple of weeks ago.”

On Dec. 23, Rumlin sent a letter to Nelson urging her to open a criminal investigation into the matter.

After the ITN was canceled Christmas Eve, Council President Scott Wilson said he supports Council conducting a public investigation with full disclosure of documents and witnesses testifying under penalty of perjury.

“There’s an expectation that that’s going to happen. It’s important for the Council to get to the bottom of this,” Wilson said.

“The great thing about the Council doing it is that it will be in the sunshine so the public will get a strong understanding about it as well,” he said.




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