Jacksonville Electric Utility, the 125-year-old Florida-based municipal which lately has engaged in a legal battle over its agreement to buy power from the financially troubled Vogtle nuclear expansion, announced it has hired financial and legal advice in what looks like a move toward privatizing the electric and water services.
Earlier this week, the JEA board voted to consider selling the utility. Two days later, JEA revealed its hiring of J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC as financial advisors to “assist the utility with the execution of a competitive and open solicitation process.”
In the same release, JEA also announced that Pillsbury Winthrop Shaw Pittman LLP and Foley & Lardner LLP will be its legal advisors. The municipal utility will begin a competitive process looking for potential suitors.
“JEA is embarking on a once-in-a-generation opportunity to secure the utility’s future and take care of its employees, customers and the greater Jacksonville community,” JEA CEO Ryan Wannemacher was quoted as saying in the release. “When the stakes are so high, it is critical to bring all experts to the table.”
Local news report indicated the deal might generate $3 billion from the sale. JEA, which calls itself one of the largest Florida municipal utilities and 10th biggest nationwide, has 466,000 electric, 348,000 water, 271,000 sewer customers and 11,000 reclaimed water customers, according its websites.
JEA had signed on to a long-term power purchase agreement with Municipal Electricity Authority of Georgia (MEAG Power) for energy eventually produced by the expanded Vogtle nuclear plant in Georgia. An ownership group led by Georgia Power, MEAG and Oglethorpe Power is guiding the massive project to build two new reactor units at Vogtle, despite billions in cost overruns, a bankruptcy and delayed schedules.
Last year, JEA and MEAG sued each other as the former wanted to get out of the PPA due to the financial costs of the Vogtle project, at that point adding another $1.5 billion in costs to reach an anticipated price tag of around $25 billion. That legal fight has gone now to the U.S. Court of Appeals.
Work at Vogtle began earlier this decade and was due to be completed by now, according to reports. The ownership group, which survived the bankruptcy of original contractor Westinghouse, now hopes to complete Units 3 and 4 sometime in the first half of the next decade.
The city of Jacksonville has operated its water and electric systems since the 19th century. In 2016, it was tops in JD Power’s utility customer satisfaction study of midsized south utilities.
Last year, JD Power ranked JEA fifth among the same segment of utilities for residential customer satisfaction.