Bielarski responds to HB 1645 claims from Commission Bryan Eastman and others

OPINION

BY ED BIELARSKI

It’s shameful, really. After voting to approve bonds that cost $2.9 million more than they would have a few months ago, Commissioner Bryan Eastman self-righteously told the Gainesville Sun, “It’s unfortunate that it’s come to this. This bill [HB 1645] is costing our ratepayers more money already and it hasn’t been signed yet.” 

What Eastman didn’t say, but was just exposed, is that on March 15, 2023, GRU was directed by Mayor Ward to hold the request for approval of a debt issuance until the State Legislature ended on May 5 and to bring the new money debt issuance to the commission in June. If not for a public records request asking for “any written communication regarding who advised GRU to wait to issue the debt originally scheduled for April,” the Gainesville City Commission would have gotten away with the whole charade. 

Now is the time to correct the misinformation being spread by Eastman, the Mayor, and the other commissioners:

Hoist with his own petard, Eastman is doubling down on his rhetoric, taking to social media to explain that the delay was simply an example of prudent governance. In the Facebook post shown above, Eastman claims that Rep. Clemons is “mad” that the commission didn’t “rush forward” to take out the debt in April, as planned. 

Why should the commission have approved the debt in April? Because the need is real and delaying the financing didn’t eliminate that need. The debt was issued, anyway, and the only result of delaying it was that GRU lost the window of financing opportunity, which cost ratepayers $2.9 million. Funny how Eastman hasn’t acknowledged the delay as the real source of the higher borrowing costs.

Mayor Harvey Ward was quick to tell the public he doesn’t have the power to direct employees or Charter Officers. Nothing to see here, just move along. 

The reality is that Charter Officers and employees live and work with the constant realization that they must take heed of whatever a mayor or commissioner tells them. If not, at any commission meeting, the Charter Officer may be terminated. I know this from experience, as my termination was considered at three commission meetings over almost seven years, and I received individual advice from the seven members of the commission regularly outside the direction of the commission as a body.

Mayor Ward’s logic that he can’t direct a charter officer since he is only one of seven members is akin to a thief saying he couldn’t steal because it was against the law. It’s obvious that Ward directed the GRU finance staff. They listened to him and changed their direction. That’s the definition of directing people. 

Eastman and others say there’s no real financial crisis, just plans for a state takeover. 

In an April 30 Substack article, Eastman wrote, “So what do they think of GRU? They think GRU is doing fine! Moody’s rates GRU AA3, which is higher than most other municipal utilities in Florida. Fitch has us at A+. These ratings are higher than Florida Power & Light and Duke Energy.”

The reality is that GRU’s credit rating has been downgraded five times in the last decade, costing the utility over $60 million in additional interest costs. A utility that once had one of the highest municipal bond ratings has fallen dramatically because of high debt, high general fund transfers, and high rates.  Oh, and there’s this little resolution signed in 2018 that calls for the city to get to Net Zero Carbon emissions by 2045. At an estimated cost of over $3.6 billion and no way to fund it, that’s called a financial crisis. 

Eastman claims GRU’s bond credit ratings are higher than FPL’s and others and says that proves that GRU is strong financially. 

The reality is that while it’s true that GRU’s bond ratings are higher than FPL’s, what Eastman doesn’t tell you is that this is expected because they aren’t bound by the Florida Public Service Commission (FPSC) for utility rate increases, as FPL and Duke are. GRU’s governing board (the city commission) can raise rates and siphon off excess general fund transfers with no interference by the FPSC. 

Bond agencies love that freedom. The rating agencies work for the bondholders, not GRU customers or Gainesville citizens. GRU’s bond ratings are only as high as they are because the commission has repeatedly shown that it is quite willing to raise utility rates – not always a good thing for the customer.

As for whether GRU is strong financially, the electric division has five power plants that are over 40 years of age, with no sinking fund established to pay for replacement generation. Additional borrowings on top of the current $1.7 billion will be needed. The power plants are no longer competitive with those of others who have invested in the right technology, not a biomass plant that produces up to 33% of the utility’s load.

Eastman claims the voters already voted against a new governing board in 2018 and that Clemons’ HB 1645 is an attack on the voters in Gainesville. 

The reality is that it’s been the City of Gainesville, not Clemons, that has been attacking voters by taking money from suburban customers without giving them the ability to vote in the city commission elections. Approximately 40% of GRU customers live outside of city limits and aren’t allowed to vote in city elections. While I am on the record stating that this isn’t an unusual practice, the commission’s actions since the referendum vote have dramatically changed my opinion.

Since 2018, GRU has been forced to remit $68 million more than its earnings to the City in a general fund transfer – an unsustainable and highly irregular practice. Commissioner Eastman told me that I had made up these numbers in my head. Actually, I lifted them from GRU’s audited financial statements.

Eastman and the city’s public relations arm, the Gainesville Sun, are touting dropping utility rates. 

The reality is that GRU’s utility rates, specifically the electric rates, haven’t fallen since 2018 when I asked for and the commission approved an 8-10% reduction in GRU electric base rates because of the biomass buyout. Eastman and the Gainesville Sun are conflating the fuel adjustment charge with electric rates; the fuel adjustment charge rises or falls based on GRU’s actual cost of power plant fuel, such as natural gas or biomass. The fuel adjustment is under the control of the general manager, not the commission, and it dropped in April and will drop again on July 1 (great news for GRU customers that did not result from any action of the city commission). The base rates are under the control of the commission and are generally set each year when the budget is adopted; the commission has already approved increases through 2027, at a minimum, and GRU’s recently-approved debt reduction plan requires the rates to increase as promised.   

When he was challenged by the Joint Legislative Audit Committee (JLAC), Mayor Ward committed to bold action. In the months that followed, the commission committed to the public that they would reduce the City budget by $19 million for fiscal year 2024. 

The rest of the story is that since that commitment, the City government has, instead, backtracked and instituted a plan to raise property taxes by $1 per thousand dollars of assessed value, in order to collect some $14 million from property owners in Gainesville. In a City budget that grew $30 million just between 2017 and 2022, City Managers couldn’t find $19 million a year to cut. Instead, the mayor and commissioners are coming after your money to fix a problem they created.  

Worse yet, the commission just approved appropriating $250,000 from GRU’s budget to fight the implementation of Clemons’ HB 1645. Think about it: that money should come out of City funds, not the monies GRU collected from up to 40% of customers living outside of the city.

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Ed Bielarski is a former General Manager of GRU.

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