An Open Letter to all JEA customers

[Lunican]

An Open Letter to all JEA customers
June 2008

The rapid rise in the cost of oil has dominated headlines for months, and the impact is being felt in many areas of our daily lives, most notably at the fuel pump. Businesses, from grocery stores to offices to landscapers, are also faced with these rising prices, and are forced to pass higher costs along to their customers as well. JEA is no different. However, for JEA the effect is even more dramatic because 43% of our operating budget goes to pay for fuel to generate electricity. There is no way we can absorb the type of fuel cost increases in oil, petroleum coke, natural gas and even coal that we have seen in the last few years and particularly in the last six or seven months.

We know that no increase is good and that for many of us it will demand that we make choices and even sacrifices that we haven’t had to do before. And with the experts’ projections for even higher fuel costs and increased requirements to meet environmental regulations, prices will likely be even higher in the future. We know the impact it will have on our community including our 2,200 employees who will be paying more, just like you.

JEA is your community-owned, not-for-profit utility. What does that mean? JEA’s sole reason for being is to provide electric, water and sewer services to the residents of Northeast Florida. Our challenge is to achieve a balance between providing reliable services, supporting the economic health of the community generated by growth, having as little impact on the environment as possible, and maintaining the lowest rates possible. Through that all, we do not make a “profit.” We merely recover our costs.

Let me say again, JEA is your community-owned, not-for-profit utility. We are here to serve the community, so even when we have to raise rates to maintain a stable and financially sound utility, we also are committed to educating you about the ways you can actually use less of our products.

Click here to view our conservation tip sheet which gives you some very important low cost or no cost activities that you can do to help reduce the cost of your electric, water and sewer utility services. On average, your heating and air conditioning account for 50% of the electricity you use. You can save a lot by keeping your house warmer in the summer and cooler in the winter. Turn off all electrical equipment that you are not using. Get rid of that extra refrigerator in the garage. And when you get ready to buy any new electrical item, be sure to check the energy requirements before you buy. If you have access to a computer, there is more information on jea.com, our website. If you don’t, the library is a great resource.

We have all gotten used to taking things like low cost electricity and plentiful water for granted. We may not have a choice about the changes around us, but we do have a choice about our own behavior and how wisely we use those products going forward. The two hardest things about conservation are 1) educating ourselves and 2) building new habits. We can help you with the first, but the second you have to do yourself. If everyone conserves even a little, it can make a huge difference for our community and the rates we have to charge in the future.

Sincerely,



Jim Dickenson
CEO

[walter]

While I'm sure that "educating the public on conservation" is important to you, perhaps during these tough times you might say cut your advertising budget?  I mean how many times do I have to see those god awful commercials on TV and then I have to hear them on the radio, how many millions do you spend on this?

How about "investing" in some new non-fossil fuel based technology?  We've got this huge river that flows every single day, the current is amazing, install a few turbines perhaps?  We are a coastal city with a very good breeze that blows almost every day, see wind turbines all over the US, not here, nope rather use coal.  Then there is solar.  Now I understand that perhaps we don't have the same cost per KWH as other parts of the US making solar expensive, but you know there's going to come a day right?

We're Floridians, we're going to use A/C, heck the statue in the US capitol building representing Florida is the guy who invented A/C....sometimes I think I work just to keep my house airconditioned, so I for one am not cutting back there and the fridge in the basement allows me to keep bulk items, saving trips to grocery stores and cutting down on food costs, so I'm not giving that up either. 

What I find ironic is it that you ask us to "conserve and cut back" but does JEA?  Bonuses are still huge, your ad budget is still over the top... yeah, sounds like Angelina Jolie lecturing me on going green and cutting down on my "carbon footprint" and then piling into a gulfstream jet and flying to Africa to pick up another kid.  Sorry for the cynicism, but you know just seems a little... well you know.

[Midway ®]

Just goes to show, all politics is local.

Anyway, he asked you to cut back. Didn't say anything about him.

[David]

I think people should give JEA slack on this one. Overall energy cost have soared over the past year, so it's not too surpising the cost of electric is going up also.

FPL just jacked their rates up by 16% as well

http://www.city-data.com/forum/florida/345984-fpl-raising-rates-16-residential.html

People complain about the bonuses jea employees get but it's pretty insignificant compared to the cost of fueling the power grid. Jea's a corporation, sometimes large corporatey corporations reward their employees just for working for them, the same way other evil corporatey corporations reward  their employees  for working for them as well.  The only difference is whatever company you might work for that gets a bonus isn't on public record, jea is

The ad campaign is bs though and i wont deny they have a monopoly mentality, but If they get a bonus this year i'll be surprised.

[second_pancake]

Too bad those of us in Jax don't have a choice when it comes to our energy provider.  FPL has had the option to use alternative energy for years.  Something tells me that their increases will be less significant than those imposed by JEA.

[Jason]

FPL's increases are More significant.  Up 16% in this latest jump.

http://www.metrojacksonville.com/forum/index.php/topic,2414.0.html

[downtownparks]

I think the only logical solution is free power for everyone.

[Jason]

Amen!

There is some great technology out there that could change the way we get our power.  Its just up to the market to implement it over time.  These things take decades.

[David]

If this keeps up i'll have to give up living alone. I just got my electric bill....160 for a small two bedroom in riverside? Yikes.

That's more than my cable now!

But hey, JEA is looking into alt energy sources. For example, they  use E-85 for their work fleet which is somewhere around the 5 dollar a gallon price range AND it gets 30% less fuel efficiency!

I think that's one alternate energy that won't catch on.

[Downtown Dweller]

I think people should give JEA slack on this one. Overall energy cost have soared over the past year, so it's not too surpising the cost of electric is going up also.

FPL just jacked their rates up by 16% as well

http://www.city-data.com/forum/florida/345984-fpl-raising-rates-16-residential.html

People complain about the bonuses jea employees get but it's pretty insignificant compared to the cost of fueling the power grid. Jea's a corporation, sometimes large corporatey corporations reward their employees just for working for them, the same way other evil corporatey corporations reward  their employees  for working for them as well.  The only difference is whatever company you might work for that gets a bonus isn't on public record, jea is

The ad campaign is bs though and i wont deny they have a monopoly mentality, but If they get a bonus this year i'll be surprised.

My open letter I got in the mail states "JEA is your community-owned, not for profit utility."

uhmmm not a big evil corporation, even though they ARE acting like one. If they are a "not for profit" then they shouldn't get ANY bonuses. Why are they driving new trucks? Why is it I see four or five trucks at a site, all with ONE person in them? between the gas and upkeep that has got to add up, and only ONE person in each truck, all at the same place? Just like the rest of the city, learn how to work within your budget, then if you absolutely need more come back to the us....

[David]

well that's why they don't make any profit, because they give out bonuses

Regardless, you think the money set aside for employee bonuses really jacks up the bill that much? Maybe .50 or so, a dollar tops. I find the anti-bonus argument amusing because companies do sometimes give those out and it's not a bad thing, profit or not for profit. There's no jea "stock" they're not on the dow jones, employee pay is an operational cost.

And carpooling doesn't really work when you have linemen who get called to/from various parts of the city at anytime. Let's start asking JSO why they don't have 4 officers to a squard car!

alright, i'm done playing devil's advocate.  ::goes back to not caring::

[Downtown Dweller]

Good points, my company gives out bonuses based on performance, tied to earnings and our stock. So how does JEA figure out how to give a bonus? I agree it most likely does not impact a bill enough for you or me, but for some people, especially elderly people on a fixed income it can mean a lot, especially with rate hikes, and summer heat coming on and now the addition of the "special storm fee run off" . On my morning walk yesterday I saw five JEA trucks parked Klutho Park, and several others drove by all with one person in them. Perhaps it is time to figure out a way to do more with less like all the other coporations. It isn't just JEA, it is the city overall. I see city cars driving all over with one person in them...what for?  How about the garbage trucks> They drive down the street picking up trash on one side of the rode, then drive back picking up trash on the other side WTF?! You can not really compare JEA workers with officers? JEA does not have to race to a site all day and night to save someone's life. But then again, I am for foot, bike, and mounted patrols for JSO so yeah, I do have an issue with a bunch officers doing drive by policing, some yes, all of them no.

[Jason]

Regardless of JEA's operational costs, new technologies and methods take big money to implement and maintain.  Coal fired plants make up the majority of this planet's power generation for one reason, they are cheaper to build, operate, and maintain than the others.  Now that fuel prices and quality coal products are becomming more and more scarce and mincreasingly expensive we will likely start to see a shift to other forms of power generation.  That shift will happen over decades as the fossil fuels are phased out and other more environmental friendly systems are implemented.  Without Government intervention and subsidies, I don't think the free market will push this country towards greener energy production fast enough to keep our power bills from going even higher.

JEA, FPL, TECO, Gulf Power, etc all want to go nuclear and have been wanting to do so for quite sometime.  The problem is that the state will not allow it. 

Furthermore, JEA has had some of the lowest rates in the south and are still lower than the three or four other large players in Florida.  They are staffed by very qualified engineers, planners, linemen, etc because of the payroll system and bonuses.  Sure, you could cut the paychecks of hundreds of employees but you should also be ready to see many of them leave and be replaced by less qualified workers.  JEA is not for profit but are constantly investing millions in system upgrades, maintenance, and expansions.  Not to mention they fork over a massive amount of money to the city and are one of Jacksonville's largest contributers to the yearly budget.  So in some way shape or form all of the money you give JEA is comming back.  That's the beauty of a publicly owned utility.

[walter]

Furthermore, JEA has had some of the lowest rates in the south and are still lower than the three or four other large players in Florida.

no so anymore:

http://www.jacksonville.com/tu-online/stories/052208/met_281510196.shtml

"A $15 monthly fuel charge increase coming in July will thrust the Jacksonville-owned utility's prices above those of Florida Power and Light, Gulf Power and Progress Energy, according to a Times-Union review of state records. As well, the coming price for 1,000 kilowatt-hours, $110.93, will rise above a state average Jacksonville has for years sat well-below."

and with over 6 billion in debt.....man pretty scary.

[Jason]

TECO in Tampa is about to go higher (if they haven't already). This article if from Feb

tampabay.com
Utilities request increases

Tampa Electric, Peoples Gas don't have specifics.

By ASJYLYN LODER, Times Staff Writer
Published February 6, 2008

TAMPA - Expect higher bills from Tampa Electric Co. and Peoples Gas.

TECO Energy Inc., parent company of both utilities, said Tuesday that it wants to increase prices at both. The company isn't ready to specify exactly how much it will seek or when, said John Ramil, TECO's president and chief operating officer.

"We think it's going to be a reasonable increase," Ramil said Tuesday.

Ramil said the utilities will probably ask for the increase in 2008, so that it could be applied starting sometime in 2009. The increase will likely amount to less than 10 percent of the monthly bills for Tampa Electric's more than 666,000 customers and Peoples Gas' more than 330,000 customers.

Based on current price and average customer use, that could add up to roughly $4 a month for Peoples Gas bills and up to $14 a month for Tampa Electric bills.

Tampa Electric last asked for a base rate increase in 1992. Its current base rate is $51.92 for 1,000 kilowatt-hours, including an $8.50 customer charge. Its fuel cost is $52.41 for 1,000 kwh, and the total bill is about $114.38 for 1,000 kwh.

Peoples Gas has a total rate of $38.04 for 20 therms, which includes $20.21 for fuel, a small conservation charge, a $10 customer service charge, and a nongas energy charge covering other costs of $7.53. A rate increase would apply to the customer service charge and the nongas energy charge. Peoples Gas last won a rate change in 2002. Its customer charge rose $3 from $7, and its nongas energy charge decreased from $8.22.

The total rate includes the utilities' costs for fuel - a charge that customers have seen sharply escalate on their monthly bills in recent years, especially after the 2004 hurricanes caused natural gas prices to soar. That price is a pass-through, reflecting what utilities pay for fuel. Utilities don't profit from it.

Since its last rate increase, Tampa Electric has added 1,100 megawatts of generating capacity, 17 substations, 100 miles of transmission lines and more than 200,000 customers - a 42 percent increase in its customer base, said spokeswoman Laura Duda. In those 16 years, the consumer price index has risen 48 percent, labor costs have increased 77 percent and prices for steel and concrete soared more than 70 percent.

Prices have surged for materials and labor, while the company faces new costs from new federal and state regulation, Ramil said. Tampa Electric plans to spend $20-million a year shoring up its transmission system against hurricanes, a cost that didn't exist before the 2004 storms. It needs to spend $120-million this year on new natural gas peaking units. The cost of supporting growth and reliability has grown to $270-million, an increase of 35 percent in the past four or five years.

The utility managed to control costs as it grew and to stave off any rate increases. But those days are over, Ramil said.

"We see a lot of things building that mean we really can't do it anymore," Ramil said.

Progress Energy Florida Inc., the bay area's other major utility, last sought a rate increase in 2005. The company settled the case without a base rate increase, but was allowed to increase fuel rates and charge a surcharge for storm damage costs.

Unless Tampa Electric reaches a settlement with state regulators, its petition for a rate case will be heard before the Florida Public Service Commission.

How do base rates affect your bill?

Your electric bill has two big pieces: base rates and fuel.

Fuel is the biggest chunk of your bill, but the utility doesn't make money from it. It's a pass-through. Every year, the utilities estimate costs to fuel power plants. At year's end, those costs get reviewed by the state. Lower-than-expected costs can mean refunds.

The second big piece of the bill is base rates. This is the piece that Tampa Electric and Peoples Gas want to increase. Base rates include a monthly customer charge that covers services like meter readings. The bulk of the rate pays for things like power plants, maintenance and operations. It also includes an agreed-upon rate of return - basically, the utilities' profit.

TECO earnings
The Tampa utility company announced its 2007 results Tuesday morning. It more than tripled its net income and share price in the fourth quarter of 2007. That includes the $146.1-million after-tax gain from the sale of TECO Transport. Despite that bright spot, the company is coping with higher operating costs, higher capital demands, slower growth and lower per-household energy use at both Peoples Gas and Tampa Electric. GAAP results excluding synfuels and the TECO Transport sale give a clearer picture of the company's performance:

4th Qtr Year ago
Net income $47.7M $37M
Per share 23 cents 18 cents

2007 2006
Net income $223.7M $201.5M

Also FPL will be higher if their increase passes..  from the article I linked earlier in the thread....

"As a result (of higher fuel prices), FPL predicted it needs $746 million to cover these additional costs through the end of 2008," FPL's release said. "The company is proposing to recover these costs through an increase of $16.28 in the pass-through fuel charge, which will increase a typical 1,000-kilowatt-hour monthly residential bill from $102 to $118, or approximately 16 percent."

Progress Energy was just below TECO in April....

Source: http://www.publicpower.com/pdf/rates/2008/2008_april_rates.pdf