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Under ‘negative credit watch,’ JEA renews plea for Plant Vogtle exit

Jacksonville’s public utility JEA and Georgia’s Municipal Electric Authority are at loggerheads over the future of the $27 billion Plant Vogtle, with lawsuits filed by each side.

The Atlanta Journal-Constitution reports, MEAG contends JEA is trying to renege on its 2008 deal to “cover 41 percent of MEAG’s share of construction costs at the Vogtle expansion for 20 years in exchange for power to service its residential customers in Florida and Georgia.”

On Tuesday, JEA sought resolution on the issue with a letter from its board chairman G. Alan Howard to his counterpart at MEAG.

That letter outlines the unaffordability of the deal for JEA and MEAG, proposes that JEA continues to pay “sunk costs,” and offers alternative, cheaper power sourcing for MEAG and JEA both.

Howard pointed out that Jacksonville consumers can’t afford paying what the board agreed to a decade prior: “But we in Jacksonville have 50,000 families that live at or below the poverty line to protect, making affordability an essential priority for us and our community.”

“And this decision is crystal clear: if MEAG Power’s Board votes not to proceed with this Project, communities across Georgia, Alabama, and Florida could save at least $2.5 billion when compared to at least one alternative power option we have identified: money that makes a meaningful difference in the lives of the people we serve,” Howard added.

JEA has been shopping for better deals, Howard noted, securing a term sheet for 206MW of energy through 2042; if JEA could take this deal, it would save customers more than $1.1 billion “if the project is abandoned and those savings include JEA continuing to pay for sunk costs.”

A similar offer has been secured for MEAG, with 292MW in play there.

“Based upon the MEAG Replacement Offer and MEAG’s financial projections provided to JEA on August 31, 2018, cancellation of the Project, repayment of the sunk Project costs and acceptance of the JEA Replacement Offer and the MEAG Replacement Offer would result in savings in excess of $2.5 billion to MEAG, JEA and PowerSouth Energy Cooperative. MEAG alone would save more than $800 million over the initial 20-year life of the PPA,” Howard writes.

With estimated project costs spiking to $30 billion from a $14.5 billion estimate just 18 months earlier, Howard urges an exit from the deal and is willing to present its replacement offer to MEAG at its board meeting this week.

JEA’s issues with Plant Vogtle, coming after a discussion of privatizing the public utility, have attained national notice of an unwelcome sort.

The utility is on a negative credit watch from Standard & Poor’s.

“In our view, JEA’s assertions that its board acted beyond the scope of its authority raises questions about the quality of the utility’s internal controls,” S&P analyst David Bodek said, according to the Florida Times-Union.

“In our opinion, the utility’s legal claims seeking to repudiate the board’s actions after a decade call into question the utility’s willingness to meet its contractual financial obligations.”

One wonders how the latest gambit will play with the ratings agency.

Written By

A.G. Gancarski has been a working journalist for over two decades, with bylines in national and local publications alike on subjects ranging from pop music to national and global politics. Gancarski has been a correspondent for FloridaPolitics.com since 2014, and has held a column in Jacksonville, Florida's Folio Weekly for two decades. In 2018, he was a finalist for an Association of Alternative Newsweeklies "best political column." Gancarski is a frequent presence on Jacksonville television and radio, including fill-in slots on WJCT-FM's award-winning talk show "First Coast Connect." He can be reached at a.g.gancarski@gmail.com.

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