With Eye On Privatization, JEA Chairman Asks CEO To Evaluate Utility's Market Value

Dec 5, 2017

One week after the board of the JEA raised the possibility of selling the city-owned utility to a private company, the process of privatization is picking up speed.

JEA board member Tom Petway suggested the idea of selling the utility near the end of last Tuesday's meeting. The JEA provides electrical service to 455,000 customers, water services to 337,200 homes and business and has 261,000 customers connected to its sewer system.

On Tuesday, Alan Howard, chairman of the JEA's board, emailed McElroy, formally instructing CEO Paul McElroy with evaluating the prospects of a sale and to come up with the market value of the utility over the next 60 to 90 days.

"Following receipt of that analysis, the JEA Board, the Mayor, and City Council will be in a position to debate the merits of proceeding with the privatization of JEA's utility systems," Howard wrote." If, after what I anticipate will be a healthy debate, a decision is ultimately made to pursue privatization, that process will be open to all bidders so that we can achieve the best result possible for the citizens of Jacksonville and JEA's customers."

In 2012, City Council explored the option of selling the JEA and the council’s auditors estimated that JEA would be worth $2 billion to $2.5 billion over a 30-year period to the city, but investors would probably only value the utility between $1 billion and $1.2 billion. The auditor's report also suggested that a sale to a for-profit company could cause rates to rise.

In Howard's letter, he acknowledged that the JEA has discussed this option before and it was rejected.

"Therefore, I ask that you and the entire JEA team remain focused on continuing to deliver the excellent service and values our customers have come to expect and appreciate," Howard wrote.