JEA considering cutbacks

[David]

A Message from Jim Dickenson - October 7, 2008

Yesterday I shared with you my concerns about the effects of financial market changes on JEA. Last Friday, I worked with the EMT to identify options for mitigating these effects. Today, the JEA Board of Directors met to consider options to reduce the impact of current financial market changes on JEA. We went through a detailed review of the historic cost and availability of capital, changes in tax exempt fixed and variable interest rates, and our combined outstanding debt.  We also presented capital funding plan options. As a result, the following options were discussed by the Board to address our current financial crisis:
•   Reduce/ freeze capital spending
•   Reduce/freeze hiring, including replacements for the next twelve months
•   Reduce temporary and contract workforce
•   Reduce or redeploy staff where possible
•   Freeze consulting contracts, evaluate and reduce/eliminate where possible
•   Cut non-mission critical expenses
•   Defer non-mission critical repair and maintenance expenses
Later today, I will meet with the entire management staff to discuss these changes.  Then, over the next few days and weeks, you will receive additional information. 
Technology and the globalization of economies have changed our world over the last ten years.  Now, changes in global financial markets are once again forcing us to change the way we do business. This process will be challenging for sure and even painful at times. It will require every one of us to reevaluate the way we do our jobs. We will have to be more inventive, more efficient, and more collaborative while maintaining service levels for customers and our community. But I believe that we have some of the brightest and best minds in the utility industry here at JEA and I am confident that together we can do the work that must be done for JEA to be financially secure.
Jim

For me it's hard  at times to see through the exaggerations the media puts out there, but when a utility such as JEA is considering lay offs, it starts to sink in that this isn't hype.

[uptowngirl]

I wonder who they will layoff? Most of their workforce is older, they are already concerned they do not have enough younger employees. If they lay off older employees prior to retirement that will be horrible, if they lay off younger employee's what happens when the older employees retire? Good reason to have a nice equal mix, but bad time to start thinking about that!

[David]

Their workforce is extremely advanced in years, but most of them are on board with civil service and unionized so they'll probably be safe. Unfortuantely, it does look like the younger workers are vunerable. Especially those who are employeed through staffing agencies. Also, the Greenland energy center might become a temporary victim of this as well. I doubt they'd move forward with those plans if they're looking to freeze spending right now. It's still too early to tell though....

[Jason]

Good point.  I wonder if the new power plant is considered "Mission Critical"?  My guess is that the new plant is mission critical and that construction will move forward.

[David]

It will boost JEA's electric output by 17%, so it's possible. As of right now the site is just an office trailer off a dirt road but construction is supposed to start next year, finishing up around 2010, probably closer to 2011. We'll know more by the week's end.

[David]

A good portion of our Ranstad "temps" were let go today. I use the term "temps" loosely because some who were let go were here for 10 years. My group (technology services) is next on the list and then the next layer from there. What do you all think of the nickname "Trucker Dave"? I may get to try out that daydream of a job pretty soon here.

http://www.jacksonville.com/tu-online/stories/100808/met_341409953.shtml
this is the main reason for all of this: "About 30 percent of JEA's $6.5 billion in debt has a variable interest rate, and those rates more than tripled at the end of September"

The sad thing is, there's no way they can cover the cost of the jacked up interest on 30% of 6.5 billion in debt by doing lay offs. They say they're not raising rates, but after they cut back staff and other non-essential projects they'll probably come after the customers saying "look, we cut back staff, but it's still not enough.... we need more money"

Anyway, If you guys see an almost 30 year old guy with scruffy facial hair delivering pizzas in a beat up VW hatchback in the urban core area.....please, tip well if you can 

[Doctor_K]

Sorry to  hear about it, David.  Keeping my fingers crossed for you and your future endeavors.

Another thing here is that JEA (as well as other utilities in other areas) have a near-monopoly over the region.  No serious competition means they don't have to fight to attract customers.  Kind of sad result of the centralized power grid/generation system.

[jaxnative]

Not to get off the subject of little, but in light of the financial problems facing all of us, why did JEA decide on expensive natural gas over clean coal technology at the new facility?

[David]

Because they're not too sharp! I've never had a straight answer when I've asked some of the higher ups that question.

[David]

Sorry to  hear about it, David.  Keeping my fingers crossed for you and your future endeavors.

Another thing here is that JEA (as well as other utilities in other areas) have a near-monopoly over the region.  No serious competition means they don't have to fight to attract customers.  Kind of sad result of the centralized power grid/generation system.

Thanks, I apperciate that.

JEA definitely has that monopoly mentality. You can tell things haven't changed in ages, nor has the company really been challenged by anything. This may end up being a good thing overall, after we  get through all this.

[stephElf]

this is the main reason for all of this: "About 30 percent of JEA's $6.5 billion in debt has a variable interest rate, and those rates more than tripled at the end of September"

YIKES!

and yea, i'm sure they are gonna start doing 15% rate increases every 6 months.... this last one really made an impact on my bill

[Doctor_K]

and yea, i'm sure they are gonna start doing 15% rate increases every 6 months.... this last one really made an impact on my bill

Same here.  You look at the bill post-rate-hike and you just exclaim "when will it end?!?"

I'm literally counting down until solar PV panels are affordable/marketable... can't wait to put a dent in that JEA bill.

[Jason]

Because they're not too sharp! I've never had a straight answer when I've asked some of the higher ups that question.

Coal is very much hated by the environmentalists and the price is rising daily.  Natural gas is much cleaner and easier to get through permitting, although the technology is a bit more expensive.  Natural gas is also more of a local commodity, whereas most of our coal comes from South America where there is heavy competition with China and the rest of the world.  Coal is dirty from beginning to end, and its mining devastates landscapes.  Natural gas is much easier and cleaner from beginning to end, however, it costs will rise as more electric utilities make the switch from coal to gas.

[David]

What Jason said! I really don't know enough about that issue, i'm just the computer geek. Thanks for clarifying sir.

[BridgeTroll]

What Jason said! I really don't know enough about that issue, i'm just the computer geek. Thanks for clarifying sir.

Except it is wrong.  Our coal is produced domestically.  We do not import coal.  We are a big exporter of coal.