JEA and its operating partner said Friday they will shut down a landmark electric plant near the port in January, displacing more than 200 employees.
JEA executives consider the closure of what was once the largest construction project in Jacksonville history the end of an era as well as a sign of the changing landscape for power generation.
JEA and Florida Power & Light Company jointly operate the St. Johns River Power Park, visible to those near the port or driving along Heckscher Drive and notable for its cooling towers that resemble those at nuclear plants.
Currently, 204 people work at the facility. JEA planned to begin meeting with those employees at 1 p.m., when the company announced the closure.
In 2016, the coal-powered facility produced half as much power as it did 10 years ago.
“It’s at its economic life’s end,” CEO Paul McElroy said Friday.
JEA is producing less power than a decade ago and has more generating capacity than needed, an unnecessary cost for the city-owned utility that provides power to almost 450,000 customers.
JEA electric sales peaked in 2006 after more than a century of 3 percent annual growth and have since declined 10 percent. Sales this year are at the lowest level in 17 years despite the addition of more than 100,000 customers during the same time.
McElroy insisted this closure is not a sign of financial weakness, but instead a sign of the financial viability of the nation’s eighth-largest community-owned electric utility. He said the utility and its customers will begin to see significant savings beginning in 2020 after two years of decommissioning the plant and mitigating its environmental impact.
JEA executives are uncertain of the cost for decommissioning the plant. FP&L and JEA will share those costs.
The savings will be directed to reducing debt and to needed capital projects, McElroy said.
“This is a play for the future,” he said.
JEA expects the retirement to decrease JEA’s carbon footprint by 30 percent and to reduce nitrogen going into the St. Johns River.
The decision also signifies the change in the industry as natural gas prices dropped to compete with coal. The power park is currently powered 100 percent by coal from Colombia.
The final cost for the project, completed in the 1980s, was $1.45 billion. There is an outstanding debt of $281 million.
“It’s been a critically important part of our power generation for 30 years,” McElroy said. “It has performed well beyond expectations, which is a testament to the men and women” who have maintained the facility.
However, McElroy said, people are reducing their consumption and there have been changes in utility production.
The power park is no longer a cost-effective component for generating power moving forward, he said.
“This agreement is important for JEA and will allow us to right-size our power generation capabilities while offering significant environmental benefits to the community,” McElroy said. “… We regret that this move will result in job displacements for many dedicated, knowledgeable and skilled employees.”
This is the first time JEA has laid off full-time employees, although some part-time and contract workers were laid off during the Great Recession.
McElroy noted the utility is giving the employees nine months of notice.
McElroy and Chief Human Resources Officer Angelia Hiers said JEA will offer outplacement and training services for employees. She said employees will receive between 20 and 52 weeks of severance pay. They said they will assist some of those employees who are the suitable age in retiring early. Thirty-five percent of the employees will be eligible for early retirement, according to JEA.
“These are never easy,” Hiers said. She said the leadership is trying to be sensitive and to provide as many services as possible to those employees and their families.
“Some have been there since the beginning,” Hiers said.
The employees are not city employees or JEA employees. They work for the power park as a joint venture between JEA and FP&L. Those employees have the same medical benefits as JEA employees, but different retirement plans. Employees also will have continued health services, she said.
JEA and FP&L are also giving those laid-off employees priority in hiring for open positions at those utilities, he said.
The power park is on 1,600 acres of key real estate off of Heckscher Drive near the port. Much of the structure will be torn down, although some facets could continue to be utilized and would remain. JEA executives are uncertain of what would be next for the land.
FP&L proposed the early termination of the joint operating agreement between the two. The agreement was set to expire in four years.
While FP&L has been proud to partner with JEA at the park for three decades, FP&L CEO Eric Silagy said, “now, however, it makes financial sense for all of our customers to close this coal plant.”
“Closing the plant early results in enormous value for FPL customers – saving millions of dollars annually as well as continuing to significantly reduce greenhouse emissions for all of Florida—another major step forward in our affordable, reliable and clean energy strategy.”
Executive staff will brief the board at its Tuesday meeting, although the board will not take any action at the time. The JEA board must approve the final agreement.
Sebastian Kitchen: (904) 359-4161