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Paul McElroy Is Resigning As JEA's CEO As Privatization Debate Continues

JEA CEO Paul McElroy shows the news media documents he presented to Jacksonville's City Council last Thursday.


JEA CEO Paul McElroy is stepping down amid growing debate over whether the city should privatize the municipal utility company. He didn’t cite the controversy as a reason for his resignation, though — instead, he cited wanting to spend more time with his family and the need for organizations to evolve over time.


“The path forward for JEA, at least for the next period of time calls for a different set of leadership skills, not better or worse, just different,” he said. “Over the past five months I have given careful consideration to a contract extension and have concluded it is simply not in the best interest of the parties, me personally and professionally, my family or the community to extend the contract.”

Board members agreed to pay him for services related to a transition and search for his replacement. He’ll continue to advise members of the senior staff until the expiration of his original contract in September and will not seek a two year extension.

Current Chief Financial Officer Melissa Dykes will serve as interim CEO at least until the board’s next meeting April 17.

Board chair Alan Howard said the search for a new chief executive will be more complicated than usual.

“I’m very concerned. Obviously the current political atmosphere in addition to the baseline discussion about a potential privatization or recapitalization of JEA would make any search difficult,” he said.

“I don't think you can attract a highly-qualified CEO candidate to a situation that may be a short-term employment opportunity. So, it definitely puts us in a difficult position.”

The board has also agreed to continue paying for his private legal counsel, as McElroy could still be asked to testify about his tenure at city council. He’s retained lawyer Dan Bean, who is also WJCT’s board chair.

The JEA board has also agreed, over the apparent objections of the city’s general counsel, to extend city legal defense to McElroy should he be in the future be named in a complaint stemming from his time at the utility. Howard said it didn’t denote potential wrongdoing, but is standard practice for a person in McElroy’s position.

“It’s very common in private organizations for directors and officers, who might be named in a lawsuit — we do live in a litigious society — personally, to be indemnified by their employer,” Howard said. “That was not in his prior agreement, although it’s always been a practice of the city to defend any of the individual officers of their various independent authorities.”

In a statement tweeted by his chief of staff Brian Hughes, Mayor Lenny Curry said that his office “appreciates [McElroy’s] years of service and dedication to the citizens of Jacksonville” and that he has “full confidence that the board will select an executive to move this asset forward.”

McElroy’s departure comes as a growing controversy over whether JEA should be a private company has eclipsed other work at city hall and a day after he revealed to a special City Council committee investigating the possibility of a sale that theutility is on the hook for hundreds of millions more in a Georgia nuclear deal inked in 2008 when he was JEA’s financial chief.

According to a 2017 financial disclosure he presented to council members Thursday, JEA’s liability in a $19 billion nuclear power plant project could total roughly $2.5 billion. That’s $1.3 billion more than an estimate fromProfessional Financial Management, who was tasked by JEA’s board with creating a valuation report for the utility, and around $550 million more than a Wall Street analysis from late last year.

Under its agreement with a Georgia utility, JEA is responsible for paying for a portion of construction costs and is obligated to buy power from Plant Vogtle for 20 years after its completion, which, after delays, is scheduled for four years from now.

One of its two reactors could be finished a year earlier, but JEA will continue paying a portion - no matter how far over budget and behind schedule the project becomes. JEA’s 2017 financial disclosure includes its power-purchase and construction cost obligation.

At the Thursday committee meeting, he said Vogtle nuclear power is projected to eventually make up 13 percent of JEA’s overall generation, but because of higher nuclear fuel costs it won't net the utility a profit.

“At this time because of the cost overruns, if we were to get that power today — I can't project four years in the future — if we were to get that power today, it would be above market,” McElroy said.

As privatization talks continue, the Plant Vogtle deal is casting a shadow on the possibility of finding a buyer should a supermajority of council vote to sell. McElroy said it’s possible JEA could sell the power-purchase obligation to another utility down the road, though.

A week ago, he endured a five hour grilling from members of a city council special committee investigating a potential sale of the utility. He turned over 22,000 pages of documents in response to their questions, but some members said they didn’t contain everything they asked for.

Though the special committee was stripped of subpoena and oath powers — and expanded to include all 19 council members — McElroy announced last month that he hired Bean to represent him.

Ryan Benk is a former WJCT News reporter who joined the station in 2015 after working as a news researcher and reporter for NPR affiliate WFSU in Tallahassee.