JEA Bill

[Non-RedNeck Westsider]

It's truly stranger than fiction, and is quite the long and sordid tale. JEA's improper dabbling in private equities with resulting spectacular losses stretches back nearly three decades. As early as the early 80s JEA had signed a billion dollar deal to buy floating nuclear generating stations from a joint venture owned primarily by the chairman of JEA's own board of directors. After JEA had advanced some $200mm in upfront payments to outside companies controlled by its own management, the coast guard declined to certify the harebrained floating nuclear reactors because the first hurricane over a category 2 would have caused a meltdown and wiped out the eastern seaboard.

More recently, circa 2004-2007 how's about a computer system that cost $100mm+ installed by a contractor with similar conflicts of interests with JEA management. The system never worked properly despite the company having been paid upfront, and had to be replaced within 2 years. JEA's mainframe they charged to rip and replace with a nonfunctional system had worked fine for 15+ years. Very recently (around 2005) JEA began dabbling in the derivatives market. It started by, paradoxically, writing default/downgrade insurance on its own bonds, something that makes little sense and is very unusual. It then expanded into buying/selling credit default swaps on other companies, with predictable results considering what happened in that market from 2008-forward. Losses were hidden but likely catastrophic.

At this point we're funding a black hole.

While I can't doubt the claims, I also can't just agree.  The basis of their investments would probably mimic the investments of so many other people and corporations whom were severly burned in the collapse of the market 2 years ago.   I can't fault them in investing 'my' money the same way I can't fault myself for putting 'my' money in the same markets.  While many predicted the collapse, I can't think of anyome who actually pulled out prior.  While JEA may be listed as a publically owned non profit, that doesn't mean that they don't follow for-profit trends and try to make money.

[Non-RedNeck Westsider]

I didnt even realized that you had 'posed to me.  Its all so sudden.

I guess the english language has failed you tonight....

posed â€" verb (used with object)
4. to place in a suitable position or attitude for a picture, tableau, or the like: to pose a group for a photograph.
5. to assert, state, or put forward: That poses a difficult problem.
6. to put or place.

"What a Man!" he marvelled.

I guess you're sitll done?

[stjr]

I just couldn't resist trying to create a little perspective with a few observations of my own.

Like any business, public or private, management makes mistakes and bad bets.  Funny, so many want government run more like a business, but when it is, it's criticized for being too business like.  It's hard for any public-related entity to win, it seems.

Fact is, as a regulated business and a monopoly to boot, any utility is going to be criticized by its rate payers as no one likes to have only one choice in buying something they just can't live without at a price that is simply nonnegotiable.  Add, that a utility's consumption is hard to monitor in connection with its applications.  This sets the stage for an inherently unstable and adversarial relationship.

I am neither defending JEA nor attacking it but realize that there are two sides to this coin.  I see two basic components to rates: (1) fuel and (2) non-fuel costs of generation, transmission, distribution, and administration.  We all know from gas prices pretty much what oil is doing.  Natural gas and coal may track oil but may also be impacted by other factors, just as oil may be impacted more by refining capacity than well head pricing.  Overall, it appears fuel rises steadily over the long term so that component isn't likely to trend down over the years.  Likewise, facilities and payroll increase yearly just to keep up with inflation, not to mention any new building code, capacity, environmental, or other mandates.  We have also noted that "growth" rarely pays for itself and I believe existing JEA customers often get stuck subsidizing new ones.

Lastly, JEA foolishly did this with regard to non-fuel costs:

JEA's electric rates have not been increased in 14 years.

That is stupid both business-wise and politically.  It caused JEA to raise alarm bells with the bond rating agencies which don't like to see flat non-fuel revenues and rising non-fuel expenses cause a reduction in the ratio of cash flow to  debt payments (this assumes that all fuel revenues are passed through to fuel suppliers).  And, it is much harder to ask customers for a singe "makeup" increase of double digits over a short period of time after they have become accustomed to no changes for 14 years than it is to have small, inflationary style increases every year that customers can budget for and absorb incrementally.  In this respect, JEA shot itself in the foot, especially having to raise the non-fuel costs while fuel rose significantly, water and sewer rates had to be similarly "retro" raised due to similar deferred increases and investments, and the economy went into the crapper.  Add a very hot summer bookended by two very cold winters increasing consumption and you have the perfect storm.

In the utility business, being the lowest cost provider is mostly a factor of a utility's fuel mixture (unless said utility invested billions in a power plant that was not completed or closed as has occurred in other parts of the country).  JEA once made the mistake of totally relying on oil which looked smart for decades until the first oil crisis of the early 70's.  It then went from lowest to highest overnight and applied it's lessons learned to diversify its sources.  Given there are infinite fuel mixes, JEA may have the optimal choices sometimes, but not other times.  Hopefully, what diversification does offer is more stability and less extreme ups and downs.  No doubt, hydroelectric power is cheapest but we are not close to any mountain streams.  JEA may be able to share in some TVA power, but likely can only access a small share.  Nuclear is limited and presents its own risks.  Wind and solar sound nice but are not currently competitive at today's market prices for energy.  That leaves primarily oil, coal, and natural gas.   Bottom line, hydrocarbon prices are going to control our electric bills for the foreseeable future.  Anytime we see gas rising at the pump, as it is now, expect your electric rates to roughly follow a few months later.

If JEA is otherwise being grossly mismanaged, then the specifics need to be laid out clearly by its accusers.  I will be the first to offer my support once such charges are appropriately documented.  As a consumer and taxpayer, I don't like paying for gross incompetence or malfeasance anymore than the next guy.  Party on.

[Non-RedNeck Westsider]

whats a sitll?

I guess the same thing as 'majic' 

[ChriswUfGator]

I just couldn't resist trying to create a little perspective with a few observations of my own.

Like any business, public or private, management makes mistakes and bad bets.  Funny, so many want government run more like a business, but when it is, it's criticized for being too business like.  It's hard for any public-related entity to win, it seems.

Fact is, as a regulated business and a monopoly to boot, any utility is going to be criticized by its rate payers as no one likes to have only one choice in buying something they just can't live without at a price that is simply nonnegotiable.  Add, that a utility's consumption is hard to monitor in connection with its applications.  This sets the stage for an inherently unstable and adversarial relationship.

I am neither defending JEA nor attacking it but realize that there are two sides to this coin.  I see two basic components to rates: (1) fuel and (2) non-fuel costs of generation, transmission, distribution, and administration.  We all know from gas prices pretty much what oil is doing.  Natural gas and coal may track oil but may also be impacted by other factors, just as oil may be impacted more by refining capacity than well head pricing.  Overall, it appears fuel rises steadily over the long term so that component isn't likely to trend down over the years.  Likewise, facilities and payroll increase yearly just to keep up with inflation, not to mention any new building code, capacity, environmental, or other mandates.  We have also noted that "growth" rarely pays for itself and I believe existing JEA customers often get stuck subsidizing new ones.

Lastly, JEA foolishly did this with regard to non-fuel costs:

JEA's electric rates have not been increased in 14 years.

That is stupid both business-wise and politically.  It caused JEA to raise alarm bells with the bond rating agencies which don't like to see flat non-fuel revenues and rising non-fuel expenses cause a reduction in the ratio of cash flow to  debt payments (this assumes that all fuel revenues are passed through to fuel suppliers).  And, it is much harder to ask customers for a singe "makeup" increase of double digits over a short period of time after they have become accustomed to no changes for 14 years than it is to have small, inflationary style increases every year that customers can budget for and absorb incrementally.  In this respect, JEA shot itself in the foot, especially having to raise the non-fuel costs while fuel rose significantly, water and sewer rates had to be similarly "retro" raised due to similar deferred increases and investments, and the economy went into the crapper.  Add a very hot summer bookended by two very cold winters increasing consumption and you have the perfect storm.

In the utility business, being the lowest cost provider is mostly a factor of a utility's fuel mixture (unless said utility invested in billions in a power plant that was not completed or closed as has occurred in other parts of the country).  JEA once made the mistake of totally relying on oil which looked smart for decades until the first oil crisis of the early 70's.  It then went from lowest to highest overnight and applied it's lessons learned to diversify its sources.  Given there are infinite fuel mixes, JEA may have the optimal choices sometimes, but not other times.  Hopefully, what diversification does offer is more stability and less extreme ups and downs.  No doubt, hydroelectric power is cheapest but we are not close to any mountain streams.  JEA may be able to share in some TVA power, but likely can only access a small share.  Nuclear is limited and presents its own risks.  Wind and solar sound nice but are not currently competitive at today's market prices for energy.  That leaves primarily oil, coal, and natural gas.   Bottom line, hydrocarbon prices are going to control our electric bills for the foreseeable future.  Anytime we see gas rising at the pump, as its is now, expect your electric rates to roughly follow a few months later.

If JEA is otherwise being grossly mismanaged, then the specifics need to be laid out clearly by its accusers.  I will be the first to offer my support once such charges are appropriately documented.  As a consumer and taxpayer, I don't like paying for gross incompetence or malfeasance anymore than the next guy.  Party on.

Did you miss the examples I mentioned? What about Stephen's article that documents that JEA is the highest cost power producer in the southeast and that manufacturers are locating facilities elsewhere that would otherwise have produced job growth here? You're OK with all that?

[stjr]

And lets review that statement for a minute:

About 14 years ago, Gerdau Ameristeel pushed to get off Florida Power and Light Co.’s electric grid and onto the then-much cheaper JEA, Haley said. JEA’s increase in electric rates over the past five years has been a factor in manufacturers’ choosing other sites over Jacksonville.

For instance, the city’s electric rates helped persuade Spirit AeroSystems Holdings Inc. to build a fuselage plant in North Carolina with access to cheap hydropower instead of in Jacksonville. The aviation manufacturer would have brought 900 jobs to the area and spent $800 million in capital investment.

Stephen, it appears JEA was cheap for much of the last 14 years due to its failure to properly pace its rates to its costs.  This was a "gift" to Ameristeel that appears to have been unsustainable.  JEA will never be able to compete with hydroelectric power, the cheapest power of all, as we lack mountain streams in Florida.  North Carolina and the Pacific Northwest have also attracted huge power hungry internet server facilities by Google and others for the same reasons.  If power is the single largest expense for an industry, we will not be able to compete for such industries against hydroelectric utilities.  Plain and simple.

As a fellow rate payer, I would also object to the idea of JEA offering "below cost" rates to any rate payer.  Why should I subsidize a private company, Ameristeel, with my hard earned dollars?  That the PUC prevents JEA from doing that isn't JEA's fault but, nonetheless, I am glad they can't.

[stjr]

Did you miss the examples I mentioned? What about Stephen's article that documents that JEA is the highest cost power producer in the southeast and that manufacturers are locating facilities elsewhere that would otherwise have produced job growth here? You're OK with all that?

Chris, I noted your examples after making my post.  If they are accurate, then JEA should be reviewed for such actions.  But, as Non-redneck noted, the accusations may need to be put in context.  Why doesn't Stephen invite a JEA representative a chance to respond and let's see what they have to say.  Given that JEA is a public entity, I have to presume that much of what they do is closely watched and somewhat transparent.  So, it shouldn't be too hard to get this all laid out for everyone to see and judge for themselves.

[ChriswUfGator]

And lets review that statement for a minute:

About 14 years ago, Gerdau Ameristeel pushed to get off Florida Power and Light Co.’s electric grid and onto the then-much cheaper JEA, Haley said. JEA’s increase in electric rates over the past five years has been a factor in manufacturers’ choosing other sites over Jacksonville.

For instance, the city’s electric rates helped persuade Spirit AeroSystems Holdings Inc. to build a fuselage plant in North Carolina with access to cheap hydropower instead of in Jacksonville. The aviation manufacturer would have brought 900 jobs to the area and spent $800 million in capital investment.

Stephen, it appears JEA was cheap for much of the last 14 years due to its failure to properly pace its rates to its costs.  This was a "gift" to Ameristeel that appears to have been unsustainable.  JEA will never be able to compete with hydroelectric power, the cheapest power of all, as we lack mountain streams in Florida.  North Carolina and the Pacific Northwest have also attracted huge power hungry internet server facilities by Google and others for the same reasons.  If power is the single largest expense for an industry, we will not be able to compete for such industries against hydroelectric utilities.  Plain and simple.

As a fellow rate payer, I would also object to the idea of JEA offering "below cost" rates to any rate payer.  Why should I subsidize a private company, Ameristeel, with my hard earned dollars?  That the PUC prevents JEA from doing that isn't JEA's fault but, nonetheless, I am glad they can't.

JEA is an Operating Unit of a county government, and as such is outside the regulatory authority of the PUC.

They can set whatever rate they want, they just don't want to cut Ameristeel a break. Speaking personally, I wouldn't mind JEA breaking even on large manufacturers if it means bringing jobs into the local economy. I'm a little surprised at your position on this, actually. Nobody said anything about "below cost" either, I don't expect them to give it away below cost, but they certainly make less profit on the account to attract jobs to the community.

[stjr]

JEA is an Operating Unit of a county government, and as such is outside then regulatory authority of the PUC.

They can set whatever rate they want, they just don't want to cut Ameristeel a break. Speaking personally, I wouldn't mind JEA breaking even on large manufacturers if it means bringing jobs into the local economy. I'm a little surprised at your position on this, actually.

Chris, I think the implication was JEA was expected to LOSE money by selling BELOW cost.  Breaking even shouldn't affect me one way or the other, but losing money would.  I think the bigger issue is if JEA is expected to compete against hydroelectric utilities, that battle is lost before it is fought.  If Ameristeel is going to stay here, as noted by the quoted site selection analyst, its going to based on more than simply its electric bill.  Maybe labor, taxes, location to suppliers, customers, transportation, etc.  If all they care about is electric, they will be moving to Carolina or Tennessee and we can't change that.

[ChriswUfGator]

Did you miss the examples I mentioned? What about Stephen's article that documents that JEA is the highest cost power producer in the southeast and that manufacturers are locating facilities elsewhere that would otherwise have produced job growth here? You're OK with all that?

Chris, I noted your examples after making my post.  If they are accurate, then JEA should be reviewed for such actions.  But, as Non-redneck noted, the accusations may need to be put in context.  Why doesn't Stephen invite a JEA representative a chance to respond and let's see what they have to say.  Given that JEA is a public entity, I have to presume that much of what they do is closely watched and somewhat transparent.  So, it shouldn't be too hard to get this all laid out for everyone to see and judge for themselves.

I think you'd really be shocked. They have zero accountability to anyone, after their charter revision. They are a structured as self-controlled independent operating unit of a county government, and enjoy an extension of sovereign immunity and as a taxpayer owned utility run as though it's a private business are situated in a loophole under which no regulatory body has any control over them aside from COJ's control as a shareholder, which they never use.

[ChriswUfGator]

JEA is an Operating Unit of a county government, and as such is outside then regulatory authority of the PUC.

They can set whatever rate they want, they just don't want to cut Ameristeel a break. Speaking personally, I wouldn't mind JEA breaking even on large manufacturers if it means bringing jobs into the local economy. I'm a little surprised at your position on this, actually.

Chris, I think the implication was JEA was expected to LOSE money by selling BELOW cost.  Breaking even shouldn't effect me one way or the other, but losing money would.  I think the bigger issue is if JEA is expected to compete against hydroelectric utilities, that battle is lost before it is fought.  If Ameristeel is going to stay here, as noted by the quoted site selection analyst, its going to based on more than simply it's electric bill.  Maybe labor, taxes, location to suppliers, customers, transportation, etc.  If all they care about is electric, they will be moving to Carolina or Tennessee and we can't change that.

If you reread the article, it wasn't that JEA was going to lose money on Ameristeel's account, it was that JEA expected them to pay the same high rates they charge everyone else and wouldn't even discuss the possibility of an industrial rate structure. Which prompted them to move elsewhere. Also I think we need to recognize that coal is low cost, its just dirty which is the drawback. There is no reason that JEA should have the highest rates in the southeast, to the point where businesses are locating elsewhere. Also, many resellers and co-ops that buy power from JEA (GRU and Clay Electric come to mind) buy power almost exclusively from JEA but actually have lower rates. What does that say about JEA's margins on what they're charging us Duval residents?

[stjr]

If you reread the article, it wasn't that JEA was going to lose money on Ameristeel's account, it was that JEA expected them to pay the same high rates they charge everyone else and wouldn't even discuss the possibility of an industrial rate structure. Which prompted them to move elsewhere. Also I think we need to recognize that coal is low cost, its just dirty which is the drawback. There is no reason that JEA should have the highest rates in the southeast, to the point where businesses are locating elsewhere. Also, many resellers and co-ops that buy power from JEA (GRU and Clay Electric come to mind) buy power almost exclusively from JEA but actually have lower rates. What does that say about JEA's margins on what they're charging us Duval residents?

Here is the quote from the Chamber rep that led me to thinking there was an expectation to sell at below cost to appease Ameristeel:

Some Southeast utilities, however, charge key manufacturers less for the electricity than it costs to produce and transport, said John Haley, vice president of business recruitment for the Cornerstone Regional Development Partnership. The reasoning is that the economic impact of jobs and capital investment created by manufacturers outweighs the additional costs that are passed on to other utility customers.

“In other [Southeast] states, it resonates very well,” Haley said. “The state of Florida is very consumer-oriented, so I don’t think you’d find that acceptance in the general populace.”

Which prompted them to move elsewhere.

Just to clarify, Ameristeel is definitely leaving?  Where to?  I note on their web site, Jax is still listed for both rebar and steel products.

[stjr]

http://www.jaxdailyrecord.com/showstory.php?Story_id=531927

According to Dickenson’s report, Gerdau accounts for 3 percent of JEA’s electrical load but its payment for electricity accounts for 9 percent of JEA’s debt service[/b].

I would agree, based on this article, that something would be out of whack for Ameristeel here.  But, if they are paying reduced rates on non-fuel, and the fuel rates pass through to fuel vendors, I don't see how this math arises.  There must be more than meets the eye.  I do know that large industrial users also face special fees for high peak demands and/or impacting the stability of the electric grid.  Maybe these charges include a portion of debt service allocatable to capacity and stabilization infrastructure supporting Ameristeel's activities and not represented by average usage.   Who can explain it in more detail so we can follow the math?

[uptowngirl]

Got my bill today- over $900 dollars and I have not used an central heat. I called and asked for a manual reading as was told I got one- which is complete BS no one has been here. They lady argued with me that yes they came to my house and read the meter. Since I have FOUR LARGE dogs outside I would like to know when that occurred. I asked her to tell me what she had on my meter for last month and what she had for this month. She could not tell me, only what my supposed usage was. Are there any attornies out there for this stuff??? I mean if not we are stuck with this *junk*

[Dog Walker]

OUCH!

That she could not tell you what the meter reading was for the past and current months is complete BS.  It's printed right on your bill next to your meter number under "current reading".  You can do the math yourself if you pull your bills out and compare them.  You can look them up online too.

One other thing to check;  find the number on your meter and compare it to the number on your bill.  Make sure it's your electricity that you are paying for not someone else's.  This error usually occurs in multi-unit housing, but has been known to occur almost anywhere.

$900?  OW! OW! OW!