UF Study Values JEA at $7.5 Billion
Jacksonville FL, December7, 2018 – The Public Utility Research Center (PURC), a University of Florida internationally recognized research center, released Valuing Municipal Utilities — The Case of the Potential Sale of JEA in Jacksonville earlier this week. (Click here for pdf file.)
Commissioned by the Jessie Ball duPont Fund, the research study was designed to answer questions raised by a city council’s special committee appointed by former city council president Anna Brosche and chaired by council member John Cresembini. The committee was originally charged with understanding “all aspects and implications of a potential sale of JEA,” which would include understanding JEA’s financial value. The committee’s charge was later changed to understanding “the future of JEA.” The committee issued a final report in late July. (click here for pdf file)
The special committee was appointed after JEA’s board and the Curry administration released a study conducted by Public Finance Management (PFM) (click here for pdf file) describing what a potential buyer of JEA might pay to purchase the municipally-owned utility. According to duPont Fund interim president Mary Littlepage, the PURC study serves to complement the earlier study by determining the value of JEA, not what some buyer might be willing to pay for the utility.
The PURC study assesses three separate businesses of JEA — the electric utility at $4.5 billion, water from approximately $1.5 billion to $2.6 billion, and District Energy Systems at $37 million, for a total value range of $6.3 billion to $7.5 billion.
The PFM study did not assess the value of JEA. Rather, it focused on what a potential buyer might be willing to pay for JEA, determining a range of $7.5 billion to $11 billion for the combined businesses.
The PURC study shows that 95% of Floridians receive water and sewer services from municipally-owned businesses while a large majority receive electricity from privately-owned businesses. According to the study’s principal investigator Ted Kury, water is treated differently from electricity by the Florida Public Service Commission. The inference is that water is more difficult to privatize than electricity.
In recent weeks, JEA’s board has emphatically stressed that it has no intention of selling any part of JEA, despite persistent community rumors.