Federal regulators deny JEA’s bid for oversight

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Federal regulators said they don’t have the legal authority to oversee a power purchase agreement between Florida municipal utility JEA and the Municipal Electric Authority of Georgia.

The Federal Energy Regulatory Commission, in a unanimous vote Thursday afternoon, made the determination in a 21-page order that concludes the commission only has authority over such agreements with investor-owned public utilities, and not nonprofit entities such as JEA and MEAG.

JEA filed a petition in September asking the FERC to take jurisdiction over the PPA.

“In sum, none of JEA’s arguments overcome the fact that, because MEAG is not a public utility, the commission has no authority under [the Federal Power Act] to review or approve or alternatively disapprove the wholesale sales of electricity in interstate commerce from MEAG to JEA pursuant to the PPA,” the ruling said.

JEA, a municipal utility in northeast Florida with nearly 500,000 customers, slammed the commission for its decision.

In a statement, JEA said customers were denied a “just and reasonable hearing” about the soaring costs of the PPA, which are tied to the construction of two nuclear reactors in Georgia.

“While JEA has stood up for the customers of JEA, to see federal officials in Washington D.C. vote in such a manner not only sends a message that the ratepayers in Florida don’t matter, it should send shockwaves to public power around the nation,” said JEA Managing Director Aaron Zahn. “The vote clearly shows a preferred support for corporate interests over customer concerns.”

JEA’s petition resulted in dozens of public power agencies and related trade associations across the country filing motions to intervene in the case to oppose FERC taking jurisdiction over nonprofit utilities. They also expressed concern that it would open them to new oversight and business risks.

MEAG President James Fuller said he was pleased with the commission’s decision.

“We were confident this would be FERC’s ruling, as the law is clear that FERC does not regulate [nonprofit] public power utilities,” Fuller said.

MEAG, a statewide wholesale power agency with 49 member communities, contended that JEA filed the petition in an attempt to block a federal lawsuit filed in September in which MEAG is “seeking to force JEA to perform under the power purchase agreement.”

JEA and the city of Jacksonville have also filed a lawsuit challenging the legality of the PPA.

If FERC had agreed to oversee the agreement between the utilities, the maneuver would have put the lawsuits on hold.

Under the agreement, JEA is paying 41% of MEAG’s cost to finance the two new nuclear reactors being built at Plant Vogtle in Georgia.

MEAG, which owns 22.7% of the project, has $4.09 billion of outstanding debt consisting of bonds and Department of Energy loan guarantees related to financing for the project. Of the debt, $1.42 billion of bonds and $340 million of loans are backed by the JEA power purchase agreement.

Under the current cost schedule, MEAG estimates it will spend $6.5 billion for construction, start-up and financing costs for its share of the project, although additional funding needs and reserves will push the total to about $7 billion.

The PPA entitles JEA to the first 20 years of electricity generated by the project. Unit 3 is expected to come online in November 2021 followed by unit 4 in November 2020.

The total cost of the project is projected to be $27.3 billion, up from the original cost estimate of $14 billion in 2009. Investor-owned Georgia Power Co. is overseeing construction and is in the midst of revising cost estimates and the completion schedule.

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Energy industry Revenue bonds Lawsuits JEA Municipal Electric Authority of Georgia Florida Georgia Washington DC