JACKSONVILLE, Fla — JEA customers face the potential for steep, double-digit increases in electric and water rates over the next decade if JEA clings to a “status quo” approach in the face of changes in the utility industry, according to a dire outlook given to the JEA board on Tuesday.
FLORIDA TIMES UNION: JEA predicts huge rate increases over next decade
The base rate for electric bills would increase by 52 percent during that time frame. JEA could hold the base rate increase to 40 percent if the utility stopped making annual contributions to City Hall after 2023, which would blow a huge hole in the city’s budget, according to the report given by JEA administrators.
On the water side, JEA would either have to increase rates by 16 percent over the next decade, or use a 9 percent increase while eliminating financial contributions to the city after 2023.
The bleak forecast contrasts with JEA’s shorter-term outlook. The utility is not increasing rates for its 2019-20 budget. JEA has plans underway to build a new corporate headquarters building in downtown and a handful of solar farms across the city.
JEA and the city recently agreed to extend the annual financial contributions made by JEA through 2023 with annual 1 percent increases, reaching $122.4 million in the final year.
But JEA officials say the utility has gone through wrenching changes that continue to pose stiff challenges. The utility might need the City Council to change City Charter restraints on how JEA operates so it can enter new lines of business so the status quo projection “does not become reality,” JEA Chief Executive Officer Aaron Zahn said.
He said JEA will bring an action plan to the board in the future.
“The first step is status quo — what happens if you do nothing,” Zahn said. “The second step is what happens if you only use the tools in your toolbox, and the third step is to ask yourself what happens if you have other tools. I think that’s what we owe the community and the public.”
He said one potential source of business for JEA could be the growing retail market for energy-efficient technology and renewable energy.
“What happens to our customers, in particular our low-income customers, if we increase their bills by nearly $500 per year?” Wannemacher said. “What happens to our business community, economic development and the quality of life in Northeast Florida if we increase rates by 52 percent [for electric base rates] and 15 percent [for water]? What will happen if we’re unable to provide the kind of financial support that we historically have been able to provide to the city?”
The base rate is a large portion of an electric bill. Other portions of the bill cover the cost of fuel used to generate the power, plus various charges.
A year ago, the city and JEA went through an examination of whether the time was right to sell JEA. A sale of JEA is not part of the scenario the utility is examining in the current study.
Zahn said one potential area for JEA to open new lines of business would be in the field of energy-efficient technology. The status quo study predicts that around 2025, customers will be able to install solar panels and battery storage to produce electricity at a cost lower than JEA’s cost.
JEA Chief Operating Officer Melissa Dkyes said the federal Energy Policy Act of 2005, which resulted in the “Energy Star” ratings for a host of products, created lasting changes in the electric marketplace. The number of JEA electric customers increased by 16 percent from 2006 to 2018, but the volume of electric sales decreased 8 percent over that time frame.
JEA predicts that trend will continue with customers increasing by 16 percent through 2030 while the amount of electric sales falls another 8 percent.
“It is an absolutely staggering impact on our business,” Dykes said. “Our business has fundamentally changed.”
David Bauerlein: (904) 359-4581
