Heads roll as JEA cancels privatization effort

Register now

The chief financial officer at JEA has been terminated since its board abruptly canceled a controversial process to find companies interested in buying Jacksonville, Florida's city-owned utility after spending at least $10 million.

Melissa Dykes, who was named interim chief executive officer and managing director in December, gave no reason why she fired Ryan Wannemacher via email on Dec. 27.


“This email serves as notice of termination from JEA,” Dykes wrote. “Thank you for your service and contributions.”

Wannemacher signed a waiver giving up his employment agreement rights and benefits. Joe Orfano, JEA’s treasurer, has been appointed interim CFO.

JEA has called a special meeting for Jan. 7 to discuss negotiations on an exit package with Aaron Zahn, the managing director who was fired by the board on Dec. 17 due to issues that developed with 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.

Zahn had also backed a legal challenge along with the city of Jacksonville to void JEA’s power purchase agreement with Georgia’s MEAG, which requires JEA to pay debt service on bonds issued by MEAG to pay for a portion of its share of two new nuclear reactors under construction at Plant Vogtle.

JEA and the city have argued that the contract violates Florida’s constitution and that the utility didn’t have the authority to enter into the contract, even though JEA’s own attorneys signed documents stating that the utility could enter into the power purchase agreement.

MEAG filed a motion for summary judgment Dec. 27 asking a federal judge to rule that the power purchase agreement is valid. The lawsuit is pending in the U.S. District Court for the Northern District of Georgia.

Gina Kyle, spokeswoman for JEA, said Thursday that she had no information about whether the utility and the city will continue to pursue the litigation.

“I believe interim Managing Director/CEO Melissa Dykes is primarily focused right now on employee safety, ensuring business excellence and restoring community trust,” Kyle said in an email.

In addition to Zahn and Wannemacher, JEA’s governmental affairs officer Sherry Hall submitted her resignation on Dec. 28, saying that she had accepted a position in the Duval County Tax Collector’s office where she was employed prior to working for JEA.

The controversial procurement process intended to determine interest in buying JEA blew up on Christmas Eve when the board of directors called an emergency meeting and voted unanimously to end it.

Dykes told the board more than $10 million had been spent on the effort, though further due diligence was necessary to refine exact costs.

During a public hearing, a speaker who identified himself as an employee and ratepayer of JEA said the procurement process was “tainted with a political bent” and that employees hadn’t been considered in the process. “You all have lost our trust,” he said.

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

Morgan, in a comment referring to Aaron Zahn, also said a review was needed to determine why JEA hired a chief executive officer with “no experience” in the electric, water and sewer business and paid him $500,000 a year. Zahn, previously a board member, was hired as interim managing director in 2018, a position later made permanent.

In addition to ordering that all bids be rejected, the board also ordered the release of all documents regarding the procurement, including proposals submitted by 16 respondents. The proposals are posted on the website whatsnextjax.com.

JEA determined that nine respondents were qualified to enter negotiations, and held a series of meetings with them in Atlanta in mid-December. All but two respondents wanted to purchase JEA’s water and electric divisions.

For reprint and licensing requests for this article, click here.