Bielarski: Fact or Fiction, Part 1

Letter to the editor

As the general manager under the Gainesville City Commission for several years and the CEO under the nearly new GRU Authority, I am uniquely qualified to provide perspective on the rhetoric you may be hearing about GRU’s current governance. To help navigate this rocky road, I plan to write a series of articles addressing talking points that I think need to be clarified or, in some cases, are simply untrue. If you have specific questions about GRU or want to clear up something you’ve heard, please feel free to email me at bielarskiej@gru.com.  

Claim

At a June 12, 2025, City Commission meeting, Commissioner Bryan Eastman stated that the city is raising property taxes “not by our own volition… What we’re doing is simply taking the pain that has been imposed upon us and finding a way to solve the problem, right?” He went on to cite the new GRU Authority Board as the cause of that “pain.” 

Facts

GRU was turned into the city’s piggybank:

The reality paints a much different story. The past 21 years of city commission actions have placed today’s city commissioners in their untenable position. Between 2003 and 2023, commissioners systematically and unapologetically stripped GRU of resources that should have gone to utility system modernization and reduced customer rates.  

GRU was compelled to turn over 96% of its profits to the city in what was labeled a general fund transfer, or GFT – to the tune of $713 million. Imagine owning shares in a company that paid 96% of its profits in dividends to its shareholders. I can’t. Profits should be first used by companies and enterprise funds, like GRU, to 1) pay down the principal on its debt, 2) modernize its assets, 3) attract and retain employees in future years, and 4) maintain the organization as a sustainable business. Instead, $713 million of customer-funded GRU monies were diverted to the City of Gainesville’s ever-growing budget.

Key Point: Because GRU had to pay such a large amount of money to the city, utility rates had to be inflated to cover that transfer. Today, with a new GRU Authority reducing that transfer from its peak of over $38 million to approximately $8 million, GRU electric customers have seen no base rate increase since the city commission last raised rates in 2023, and no increase is planned for FY26.

What’s particularly disturbing is that between 2018 and 2023, after city voters rejected a referendum to create a separate board to govern the utility, the city commission escalated its assault on GRU’s financial health, when, against my advice, the city took $221 million from GRU on $147 million in profits (see chart).

As I wrote in my book, “The City that lost control,” former Mayor Lauren Poe seemed to telegraph this escalation when he told a reporter at the Gainesville Sun during a late-night celebration, “It’s been a major distraction and it’s been a major anchor around our staff and our elected officials for many, many years. We’re turning the page.” Indeed. 

Digging a little deeper, as the following chart reflects, in three of those years between 2018 and 2023, the city took more than 200% of GRU’s profits. In comparison, GRU’s peer group of utilities – Jacksonville Energy (JEA), Orlando Utilities (OUC), Tallahassee, and Lakeland – transferred between 30% and 70% of their profits during the same periods.

City Commission forced GRU into ill-advised biomass PPA:

In 2009, the City of Gainesville entered into an unbreakable, ironclad power purchase agreement (PPA) with an outside contractor (Gainesville Renewable Energy Center) to build a 102-megawatt biomass power plant; the agreement obligated GRU to pay $2.5 billion over 30 years, whether the plant ran or not. When the plant went into commercial operations in 2013, the die was cast.  

Key Point: Through a series of 5 bond downgrades, GRU struggled to maintain its financial health while its expenses skyrocketed, along with its debt, which almost quadrupled from approximately $500 million in 2008 to just under $2 billion in 2015 (see chart).

While GRU was able to negotiate a way out of the biomass contract in 2017, saving $1 billion from its PPA’s obligations, the utility was still left with considerable debt and scant ability to continue paying such a high general fund transfer. The city commission at the time wouldn’t heed the warnings from GRU management and staff, resulting in S&P’s issuance of GRU’s first-ever historic double-rate downgrade of its bond ratings in 2021.   

Summary

The idea that the city is somehow the victim in the city’s budget crisis is preposterous and devoid of any historical context. The proverbial chickens are simply coming home to roost at city hall – city commission misfeasance, fiscal laxity, and failure to exert its fiduciary responsibility to the utility have placed the current commission in its current budget bind.  

House Bill 1645 took the governance away from a city commission with a documented track record of fiscal abuse of its captive utility, along with the disenfranchisement of almost 40% of its non-city customers, starting long before this budget year.

Key Point: If not for the city commission’s misguided two-decade-long series of actions, GRU could have a much more manageable debt today, leaving it in a healthier financial condition. Seriously, imagine: 1) not having to pay $750 million to get out from under the original biomass PPA and 2) limiting transfers to the city to 40% of GRU profits ($400 million savings). That’s approximately $1.15 billion in debt that GRU wouldn’t have to carry.  

The city only has itself to blame for the financial state in which GRU was left before HB 1645 became law (which will be another topic in my series).  

As American politician and diplomat Daniel Moynihan once wrote in the Washington Post, “Everyone is entitled to his own opinion, but not his own facts.”

GRU CEO Ed Bielarski, Gainesville

The opinions expressed by letter or opinion writers are their own and do not necessarily represent the views of AlachuaChronicle.com. Assertions of facts in letters are similarly the responsibility of the author. Letters may be submitted to info@alachuachronicle.com and are published at the discretion of the editor.