Bielarski: City commission’s “Net Zero by 2045” goal would triple GRU’s debt

OPINION

BY ED BIELARSKI, Former GRU General Manager

As I tuned into the Joint Legislative Audit Committee (JLAC) hearing on February 23, I was overcome with a wave of emotion. On a visceral level, I was sad to see Gainesville Regional Utilities (GRU), the erstwhile venerable utility, thrust into the state spotlight, represented by Mayor Harvey Ward and GRU General Manager Tony Cunningham, who looked more like deer in headlights than anything else. On an intellectual level, I thought it was about time that the City Commission was called on the carpet for their governance of the utility. You see, for the almost seven years of my tenure as the General Manager of GRU, I fought desperately with the City Commission to stop them from playing politics with GRU and get them to treat it like a business, not a piggybank. In return, they undermined me, threatened me with termination, and told me to avoid public discussions of the General Fund Transfer, until their fourth attempt to fire me succeeded.

My story starts in 2017 when I negotiated an agreement to terminate the Mayor Pegeen Hanrahan-era Biomass Power Purchase Agreement (PPA) with GREC. The Biomass Buyout, as it became known, ended GRU’s absurd and onerous $2.1 billion 27-year obligation to a Boston developer, replacing it with $680 million of bonds, and granted GRU ownership of the biomass plant. The Biomass Buyout saved GRU approximately $1 billion, as an annual $75 million PPA payment was converted into a yearly $36 million bond payment. Along with reducing the total future pay-out, GRU gained control of the power plant, enabling it to operate more efficiently and avoiding the need to replace an aging gas plant. On the date of the closing of the deal, November 7, 2017, I thought the City Commission had seen the error of its ways and would return to running GRU as a low-cost utility. I found out I was wrong, when one month later, on December 7, they tried to terminate my employment: I was an obstacle to their continued use of GRU as their piggy bank.

Over the next 4 years, the City Commission forced GRU to remit more than $152 million to city coffers in General Fund Transfers–$68 million more than GRU earned. At the same time, the City Commission adopted a resolution to attain Net Zero carbon emissions by 2045, with no consideration of how they would fund it. A Utility Advisory Board (UAB) had been formed with appointees employing no fiscal responsibility as they pushed GRU towards restricting natural gas service and incentivizing electric vehicles (EV), EV chargers, and rooftop solar arrays. Despite having no available funds and reduced borrowing capacity, the City Commission ignored GRU’s fiscal dilemma and enabled the UAB’s push for unfunded climate action.

My staff and I conducted an Integrated Resource Plan (IRP) in 2019 with refinements in 2020, which calculated the need to spend $3.6 billion to reach Net Zero carbon emissions by 2045. This amount was conservative in that it didn’t consider where the 7,000 acres of land might need to be acquired and at what cost. The IRP also determined that a second biomass plant would be required to reach the Net Zero goal. When I submitted the plan to the City Commission, I heard nothing, simply crickets. No public meetings, no discussions, no discourse, no consequences. The Net Zero train just rolled on.  

My hope is that the JLAC and the Florida Legislature will keep pressure on the City Commission to do the right thing. They expect a plan. GRU customers deserve a plan. With over $1.7 billion of debt, GRU cannot afford unfunded mandates of at least $3.6 billion in the future for its Net Zero plan. It is a travesty that there is no plan to reduce the current $1.7 billion of debt, much less stop the future $3.6 billion.  

Unfortunately, the City Commission does not seem to have lost its appetite for bad deals. Before I was fired, I entered into a 50-megawatt solar deal with Origis Energy at a price below GRU’s cost of weighted cost of generation – $35 per megawatt at the time. The deal was wrecked by a 3-to-2 vote at the County Commission, and GRU was forced to hold Origis to the contract as they searched for a new location.

Under Mayor Ward’s leadership, rather than just walking away from the contract, the City Commission has approved an amendment to the original deal at a 33% increase in price and a 50% increase in volume (74.9 megawatts). Although the price is claimed to be a trade secret, I have contacts within the industry that disclosed the numbers to me. Frankly, this is unacceptable, particularly in the face of what needs to be done.

I recommend the current City Commission incorporate the following actions into their plan:

• Greatly reduce the GFT until the GRU debt reaches a reasonable level.
• Lay off many of the General Government (GG) employees added over the past five years to City Hall suites (almost 300 more than GRU added).
• Walk away from the amended solar deal with Origis (there is an unanswered question as to whether GRU can handle 30 megawatts of rooftop solar and 74.9 megawatts of commercial solar with its current generation profile).
• Consider selling the telecommunications business, along with an arrangement to exit the generation business. GRU can no longer support the losses from GRUCOM. Customers can no longer afford GRU power generation costs.

Ed Bielarski was General Manager of GRU until he was fired on January 27, 2022, in an effort led by now-Mayor Harvey Ward.