UPDATE: Oct. 15, 2019: Nine of 16 bidders for JEA made it through the first round of consideration, the utility announced Oct. 14. They include Duke Energy; NextEra Energy; Emera; Macquarie Infrastructure and Real Assets; JEA Public Power Partners, a consortium of Emera, Barnhart Capital Partners and Suez; American Waterworks; American Public Infrastructure and IFM Investors Pty, Florida Headline News Radio reported. The ninth bidder remains anonymous.
Dive Brief:
- Bids were unsealed Monday and JEA officials will now spend several months assessing offers and determining the market value of Jacksonville's municipal utility, with a whole or partial sale as one possible outcome.
- JEA is looking for bids ranging from $6.8 billion to $7.3 billion for the combined water and electric utility, though the components could be sold separately, The Florida Times-Union reports. JEA's Invitation to Negotiate (ITN) document puts the net capital assets of the utility at $5.4 billion, equally divided between the electric system and water and wastewater systems.
- JEA is planning to keep a tight lid on bidding details, including the names of suitors. However NextEra Energy, which owns Florida Power & Light, told Utility Dive it submitted a formal response to the ITN process.
Dive Insight:
JEA launched the open solicitation process in August, pointing to "critical, industry-wide challenges," including revenue losses from energy efficiency and distributed energy resources.
Combined with restrictions on publicly-owned utilities, the challenges "make it impossible for the utility to optimally address changing customer demands and capitalize on the forces that are reshaping the industry today to create value," JEA said.
For instance, while a major U.S. utility can earn up to 20% of its revenue from unregulated sources, laws restricting governmental entities hold it back from new businesses, JEA noted. The utility is also restricted to operations in its existing service territory.
Now two months later, JEA is expected to spend until February sorting through bids. The utility will keep names of bidders and details of bids confidential, a move aimed at helping solicit the highest offers. But NextEra in an email confirmed that it submitted a formal response to JEA’s qualification stage, though a spokesperson added, "we intend to respect the ITN process and rules and have no further comment at this time.”
JEA did set some minimum requirements for any deal, including greater than $3 billion of value to the City of Jacksonville, and more than $400 million of value distributed to customers.
The deal would also need to include a commitment to develop and provide Jacksonville and the Duval County Public School system with 100% renewable electricity by the year 2030, and to develop a new downtown headquarters for the utility.
