GRU Authority announces no rate increases for electricity and gas next year, Carter announces resignation

BY JENNIFER CABRERA

GAINESVILLE, Fla. – At their meeting on May 14, the GRU Authority adopted a budget with no increase in electric or gas rates, and Director Craig Carter announced his resignation.

Fitch affirms GRU’s bond ratings, praises Authority

During Chair Comments, Chair Eric Lawson congratulated the GRU administration on Fitch’s recent affirmation of GRU’s bond ratings. The announcement from Fitch stated that the rating is “irrespective of [the utility’s] relationship with and the credit quality of the city of Gainesville.”

Fitch’s commentary states, “The combined utility system’s very strong revenue defensibility is supported by its monopolitistic position as an essential services provider to a service area with favorable demand characteristics, coupled with autonomous rate-setting ability and relatively affordable rates… In FY 24, [GRU’s] leverage [ratio] declined to 8.8x following a significant reduction in the utility’s general fund transfer payment, accelerated debt amortization, and a lower pension liability… [T]he board has been functioning effectively since its appointment on May 16, 2024.”

CEO Ed Bielarski said, “They’re banking on the financial plan that we’ve been talking about.”

Water fluoridation

During general public comment, Angela Casteel asked when the utility will comply with SB700, which prohibits fluoride in water supplies in Florida (the bill was not signed when she spoke, but it was signed today and takes effect on July 1). 

Director David Haslam said they would stop adding fluoride on June 30 or when they run out of fluoride, and Director Chip Skinner echoed that: “We’re not purchasing any more additives to put into the water. So if it runs out before, then it will be before, otherwise it will take effect July 1.”

Security deposits

During CEO Comments, Bielarski addressed the additional security deposits that are being charged to customers who fall behind on their payments. He said it’s “a normal course of business” because when customers fall behind, that increases the “exposure for other customers,… so we need to have something that buffers against that loss.” He said there are ways to mitigate security deposits, and “we’re always willing to talk to folks.” He said the additional deposits can be paid in installments, but GRU does not offer that up front because “we want people to call and we want to hear them and talk to them personally about it… Let’s hear what your situation is… It’s the one-on-one communication that’s so important.”

Financial update

During a financial update, Bielarski said the utility has almost doubled its profit “on the heels of controlling expenses and having money available to us because of a reduced General Fund Transfer.”

Budget presentation

During a budget presentation, Bielarski said his budget does not include any rate increases for electric or gas service, for the second year in a row; water rates will increase by 1.75%, and wastewater rates will increase by 1%. Before the utility’s governance was transferred to the Authority, the City Commission was following a 2021 resolution to increase electric rates by 3% a year through 2027.

Bielarski presented a chart (above) showing the gap between GRU’s 1,000 kWh residential electric bill and the average of municipal utilities in Florida; the gap has gone from $32.60 per month in September 2022 to $9.74 a month in March 2025. From October 1, 2022, to March 2025, GRU bills went down 24%, compared to an average reduction of 14% for other Florida municipal utilities.

Bielarski added,”When the rating agencies like Fitch look at our performance, look at the financial plan, they go, ‘Okay, [GRU is ] putting their money where their mouth is. They are really a customer-first organization. They’re trying to take care of the customers, in terms of the bill.'” He said he’s recently spoken with the CEOs of the top five municipal utilities in Florida, and “they’re looking at increases. We’re not.”

Lawson noted that flat rates would not continue forever; he said he expects the utility to “resume a normal operating model” and implement some rate increases after they get “back to where we need to be from a competitive standpoint.” 

Bielarski pointed out that interest expense for FY26 will be about $8 million less than the interest expense in FY24, money that can be used to pay down debt. He said GRU paid down $110 million in debt service in FY23 and expects to pay down $132.6 million in FY26. The green bars in the chart below show the amount of debt reduction that is above the scheduled reduction. Bielarski added that the reduction in debt will “benefit the City long-term. We want us to be an engaged, active City with good financials. We’re not trying to be punitive.”

The City Commission’s 10-year plan to reduce GRU’s debt by $315 million by 2033, which included the rate increases described above, would have averaged about $31.5 million per year in debt reduction.

Bielarski said, “In Fiscal Year 22, Fiscal Year 23, we weren’t paying any of that green portion; that was going to the City in higher General Fund Transfer… Instead, that’s going to Wall Street bankers that have funded us, and we’re paying down debt, and we’re making ourself a healthy organization. And the rating agencies like that. They see it as a healthy trend. They want us to continue… Reducing debt equals declining interest expense equals improved financial health.”

Bielarski explained that the most efficient plant is the Kelly Combined Cycle plant, which has been rebuilt, followed by the Kelly Gas Turbine, then the DH2 Natural Gas plant, with the biomass plant at the bottom. He said, “So you can see that the biomass plant is less efficient than the Kelly Combined Cycle plant… It’s great that we have the biomass plant; it’s a perfect diversity tool to be between the coal and the natural gas.” He said when natural gas is cheap, GRU runs as much natural gas as possible, and “when it gets to $4 and above, the biomass clicks in.”

Resolutions adopting rates and the budget

The board next adopted resolutions setting the utility rates and adopting the budget as presented, with direction to submit the budget to the City of Gainesville, well ahead of the July 1 deadline.

Carter announces resignation

During Director Comments, Director Craig Carter announced that the next meeting will be his last meeting; his term expired in October, and he was hoping the Governor would appoint a replacement, but he hasn’t, so Carter decided to resign.