16 bids to purchase JEA opened under shroud of secrecy

Jacksonville-owned utility exploring privatization

By Jim Piggott - Reporter, Steve Patrick - News4Jax digital managing editor

JACKSONVILLE, Fla. - The bids of 16 companies interested in buying Jacksonville's city-owned electric and water utility -- or any piece of it -- were opened Monday, but it may be months before we know who the bidders are or how much they are willing to pay for the JEA.

The sealed bids were due Monday morning and were opened at 2 p.m. amid a shroud of secrecy. We'll know how many bids were received, but not the companies involved or how much they are willing to pay to acquire the JEA. Only a handful of top officials will know the identities and amounts, which the JEA board said will keep the process more competitive.

It is known that Florida Power & Light will be one of the potential buyers because its president and CEO, Eric Silagy, has said FPL is interested.

The Florida Times-Union reported that Duke Energy, of North Carolina, and Emera, a Canadian company that recently purchased TECO Energy and Peoples Gas, also submitted bids.

All morning, representatives of various utility companies dropped off bids or proposals at City Hall.

The only bidder that would talk with News4Jax on Monday was an international water management company that is interested in partnering with others to buy the water side of the utility.

"I think it is a real unique opportunity. You don't see many of these go on in the United States, so it's really creative and it's something very different," said Rob Nicholas of Veolia Group. "We are attracted to it because of the water business. We manage water and wastewater systems across the country."

The next step in the process is for JEA to determine which companies meet the qualifications.

The JEA's board voted in July to put out feelers to see how many companies would be interested and how much they would be willing to pay. Various entities have valued the 125-year-old public utility at near $7 billion. The terms of the bid process require the city to receive at least $3 billion in proceeds from the sale, existing customers will receive rebates and be guaranteed that rates would not go up for at least three years, JEA employees' compensation and pensions are protected, plus and other terms.

This is the beginning of a monthslong process and any eventual sale of JEA would require City Council and voter approval.

Councilman Michael Boylan said he doesn't feel enough groundwork has been laid to even begin taking bids.

"In my personal opinion, we should've had those kind of conversations prior to JEA embarking on the ITN (Invitation to Negotiate) process, so I think it's time for us to take ownership," Boyland said Monday morning. "I don't think in any way shape or form it's a done deal."

JEA's board chairwoman, April Green, sent a letter to council members on Friday explaining the process and the reasons for the privacy.

"The ITN process and subsequent 'cone of silence' is not meant to keep anyone -- especially City Council members -- in the dark," Green wrote. "Our goal with every procurement -- and paramount with this uniquely important, complex one -- is to preserve the integrity of this process and ensure a fair, defensible and maximally competitive progression throughout the ITN evaluate and negotiation phases."

For more than a year there has been debate about selling JEA. Voters have said in a nonbinding referendum last year that they want a say in the matter. 

Since then, JEA has been pushing the idea of a sale. In numerous board meetings CEO Aaron Zahn laid out JEA's position that it needs to look for alternatives to keep the city-owned utility afloat. One main idea has been selling off all or part of JEA to a private utility.

The bids submitted Monday will remain secret during the negotiation process. JEA's staff isn't talking and City Council members have been advised to keep mum.

Council President Scott Wilson told News4Jax last week that council members don't want to interfere in the bidding process and possibly give a company an edge.

"It's very rare that government is moving through a process that taxpayers don't have a full scope of where the government is going," Wilson said.

Wilson said the "cone of silence" limits what council members can say.

"Rest assured, if and when a recapitalization event is presented to the Jacksonville City Council, we will ensure public participation," he said.

Wilson said at that time, council members would be able to ask questions about the sale.

The City Council is also looking to hire an outside attorney to advise it on the matter and council members will meet Tuesday. Zahn sent a letter to Wilson on Monday night ahead of that meeting.

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