JEA cancels process that could have led to privatization

After spending more than $10 million on a process to find companies interested in buying the eighth-largest public utility in the country and the largest in Florida, JEA canceled the search on Christmas Eve.

In an emergency meeting Tuesday, the board of directors for the utility voted unanimously to stop its procurement process in midstream and to release all documents regarding the procedure, including proposals submitted by 16 respondents.

A lineman working for the utility JEA in Jacksonville, Florida.

Melissa Dykes, who became interim managing director and chief executive officer recently after the board voted to fire CEO Aaron Zahn, said more than $10 million had been spent on the effort, though further due diligence was necessary to refine exact costs.

“So we’ve spent over $10 million and we’re here today,” said Dane Grey, who was appointed to JEA’s board Nov. 12. “I share the community sentiment that this is a waste.”

JEA faced backlash from the community and utility workers opposed to a sale and concern about missteps in the procurement process, which began Aug. 8 with the release of an invitation to negotiate a purchase price.

A business group called the Jacksonville Civic Council requested that State Attorney Melissa Nelson convene a grand jury to investigate JEA’s board and senior management, focusing on the legality and appropriateness of potential sale.

A speaker, who identified himself as an employee and ratepayer of JEA, told the board Tuesday that the utility is “tainted with a political bent” and that employees hadn’t been considered in the process.

“Sure JEA has issues,” he said. “You all have lost our trust, I mean the leadership team and this board.”

Jacksonville City Council woman Joyce Morgan called JEA a “house of crumbling cards” because of the negative issues revealed during the potential sale process.

“There were things being done that were absolutely wrong,” Morgan said. “We have to be very careful not to let anyone get away with anything.”

Morgan told the board there wasn’t any community engagement. She also said more review was needed to determine why JEA hired a CEO with “no experience” in the electric, water and sewer business and paid him $500,000 a year. She was referring to Aaron Zahn.

Jacksonville, Florida City Council member Matt Carlucci. Elected to current term in 2019.

On Dec. 17, the JEA board voted to terminate Zahn due to issues that developed in the recapitalization strategy, as well as a proposed controversial incentive pay plan some people compared to stock purchase options. If JEA had been sold, the pay plan could have cost the utility up to $600 million.

The board gave attorneys until Dec. 30 to negotiate an exit package with Zahn, who earned $520,395 annually plus perks during his employment. His contract qualified him for $842,925 if terminated without cause. Zahn also stood to earn a retention bonus of about $1.36 million if the utility was sold.

Jacksonville City Council President Scott Wilson said Tuesday that the process undertaken by JEA started in a bad way and that he encouraged the utility’s leaders to include public involvement up front.

“It didn’t happen and we see the results of that,” he said. Wilson also recommended that JEA conduct a wide search for the most qualified CEO and that all salaries of the leadership team be reviewed.

City Council member Matt Carlucci said even though challenges remain in JEA’s future, the utility had a “banner year” budget-wise. He, too, recommended that the board conduct a nationwide for a new CEO.

“As you do your jobs,” Carlucci told the board, “please remember that public utilities are still a very viable entity all around the country.”

Jacksonville Mayor Lenny Curry, who had supported the recapitalization process, held a press conference on Monday to say that he requested the JEA board to meet and end the sale process.

Although Curry said JEA continues to operate in an “incredibly aggressive and changing market” for publicly owned utilities, he also said the public’s view of the process had eroded.

Shortly after Tuesday’s meeting ended, JEA released a notice canceling its invitation to negotiate and rejected all proposals that had been submitted.

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