GRU Authority hears updates on lawsuits, Kelly plant outage

BY JENNIFER CABRERA

GAINESVILLE, Fla. – At the July 1 GRU Authority meeting, the board heard updates on the Kelly plant outage, GRU’s litigation with the City of Gainesville, and rate increases of other municipal utilities.

CEO Comments

CEO Ed Bielarski began by responding to some concerns that were brought up during public comment on the consent agenda. He said the outage at the Kelly plant has cost the utility $8 million, leading to the increased fuel adjustment charge; Bielarski added that he would like to reduce that charge, now that the cost of natural gas is lower, but because the Kelly plant, the utility’s cheapest power source, is still not running, the utility is still incurring added costs.

Bielarski compared GRU’s base rate increases with other municipal utilities: “We had no electric rate increase for 2027. We don’t have anything planned for ’28 and ’29; it’s still to be determined by the board when we go through our budget.” In contrast, he said, JEA just increased base rates by 8.2%, due to a $108 million shortfall in operations. Lakeland has announced a 3.75% increase for this year and each of the following three years, OUC has shifted to a model of rates that are based on demand level and time of use, and Tallahassee has not announced its FY2027 rates. 

Bielarski said he prefers to work on retrofitting the utility’s plants because the costs of new construction are so high right now, and he pointed to JEA, which is building new plants and “[doesn’t] know when these rate increases are going to stop… Nobody wants to see higher electric bills, and we’re doing our best to try to minimize those, but we have to have reliability, at the same time… [All utilities are] trying to maximize our reliability, optimize our costs, and GRU is doing it through retrofitting its plants, making them work as efficiently as possible, and I think we’re doing a pretty good job of it.”

Attorney comments

Authority Attorney Scott Walker said the appellate court for the First District Court of Appeal issued an order after the governor signed a law preempting governance of GRU to the legislature; the order stated that the appellee, the City of Gainesville, had 20 days to file a supplemental brief indicating what effect that law has on their appeal. In its brief, filed on June 23, the City argued that the law cannot be applied retroactively to change the consequences of the City’s charter amendment ballot referendum, and even if it is found to be retroactive, it does not expressly mention the City’s ability to change its charter, so the court “may and should find simply that [the new statute] has no effect on this appeal.” The Authority’s response is due on July 13.

Walker said, “I believe that the original law, HB 1645, has to be read in its entirety, and the legislative intent associated with that law, in conjunction with this law and the argument of preemption… To say it briefly, we think they’re dancing on the head of a pin in a lot of these arguments, and we’ll flesh all of that out… We believe the legislative history and intent of law is very clear and very express, and the intent is as stated in law. So that will be our response.”

Chair Eric Lawson said, “I read their response, and it looked to me like they messaged early in their response that they believe this positions them, if they lose, for continued litigation,” and Walker responded, “I think that’s a fair interpretation.”

Lawson added, “So I think, from a board perspective, this is going to be an ongoing issue, potentially, even if the Authority prevails,… and unfortunately those costs will come out of the [general fund] transfer.” Walker again agreed, “I think that’s a fair assessment.”

GRU Attorney Derek Perry said, “I do feel that there’s a lot of tension [in the community], but I think in years and generations to come, people won’t know… this even happened. I mean, back in the 70s, the County and the City ran GRU. Most people don’t know that. So I think it’s tough right now, but I don’t think this is a forever issue, and we remain very confident that the legislature has spoken a number of times, and… we are in the free state of Florida.”

State of the Utility

Bielarski said the fuel adjustment charge will remain at 50 mills in July because the Kelly plant is still offline and the utility is “not able to partake of some of that cheap power.” He said the Kelly plant’s retrofitted internal components make it the utility’s second-newest unit, and it’s unfortunate that they’ve had a problem with the rotor, but sometimes complex systems have mechanical problems, and “you just need to fix them, and that’s what we’re doing.” The projected end date for the outage is now late July or early August.

Bielarski said the utility has a contract with FP&L for up to 75 MW in the summer, priced between $23 and $29 per megawatt: “It’s not in the teens, like we could get with Kelly, but it’s certainly cheaper than what we’re able to produce at any of our facilities right now.” He added that purchasing power, as recommended in the IRP, allows the utility to extend the life of DH1 by not running it as much.

Bielarski said they’ve been running DH2 as a gas plant, up to 220 MW, and “when you’re running Deerhaven 2 at 220 MW,… you’ve got to have spinning reserves [in case you that plant goes down], you’ve got to have the firm contract [to] get that power back [at a moment’s notice], which is why I always chuckle when people say, ‘Boy, we should have had the solar deal, we’d be just fine if we had the solar deal.’ Well, not really, because if you had the solar deal, FERC (the Federal Energy Regulatory Commission) doesn’t consider that to be reliable power, so you would have to back that up with another contract, so we’d be in worse shape in that particular situation.”

Bielarski said he’s instructed his staff to produce daily reports on potential water leaks, so the utility can call people and notify them. He had said earlier that the goal is to have automated notifications, but the utility is still trying to get two software companies to share data across their systems, and he thinks that won’t be available for nine to twelve months. He said he would also like staff to let customer service know when a customer’s electricity usage has dramatically increased so the customer can be notified.

Free water for UF?

Responding to a comment from Director Chip Skinner about the perception that UF gets free water, Bielarski said, “UF does not get free water. UF goes through a calculation with us, and we charge them our cost of water, including our overhead, and we just revised that calculation to ensure that we were capturing everything… We also haul their sewage; we also serve UF Health.”

Bielarski concluded his comments by saying, “We haven’t increased the electric rate for three straight years — no base rate increase at a time when others are increasing theirs by three, four, five percent… JEA just increased theirs 8%, and they’re going to be increasing it more, and we paid down almost $200 million in debt; that’s never occurred in the history of GRU, to have paid down $200 million in debt and not increase the base electric rates during that period of time.” Turning to the board, he said, “So, congratulations, folks. You know, for people that seem and are called unqualified, you’re doing a damn good job.”

Lawson thanked the board members for their service and adjourned the meeting.