GRU Authority discusses agreements with the City, hears updates on GRU referendum lawsuit and Deerhaven Renewables outage

BY JENNIFER CABRERA

GAINESVILLE, Fla. – At their November 6 meeting, the GRU Authority discussed agreements with the City; heard an update on the Authority’s lawsuit against the GRU referendum; and approved a gas prepayment contract, a debt management policy, and an investment policy. They also heard an update on the Deerhaven Renewables outage.

Agreements between GRU and the City

During Chair Comments, Chair Eric Lawson asked for a motion “that all costs incurred by the GRU associated with defending House Bill 1645 should be passed through to the City.” Director David Haslam made the motion, and Director Jack Jacobs added, “It’s clear in the bill that they were supposed to support a smooth transition, and that hasn’t happened. So, you know, that really leaves us no recourse.” The motion passed unanimously.

CEO Ed Bielarski spoke about the six major Service Level Agreements between GRU and the City (a total of about $17 million) and recommended honoring GRU’s signed agreement to provide Information Technology (IT) services to the City at a $3 million loss for FY24. However, he said, the City also signed an agreement with the previous GRU General Manager to pay $1.3 million a year for County streetlights, “so we’ve paid $2.6 million that the City should have paid.” He recommended honoring the agreement for IT services but charging the City $1.3 million a year in the future for County streetlight services and withholding $2.6 million from GRU’s latest payment to the City.

Director Craig Carter made a motion to honor the agreement for IT services for FY24, recoup $2.6 million for the streetlights, and charge $1.3 million a year to the City in the future or withhold that amount from the General Fund Transfer to the City. 

Carter pointed out that they were honoring their signed agreement and “just asking [the City] to do the same. We’re not being punitive here; we’re being corrective.” The motion passed unanimously. 

Costs to get federal grant

Bielarski also addressed some information that has been posted on social media about a $47.5 million grant that was recently awarded to GRU. Carter asked how much GRU paid to Holland & Knight to introduce GRU staff “to some of the main players” in Washington, D.C., and Bielarski said it cost $300,000. Carter said, “So $300,000 got us $47 million… I would like someone to tell the whole story. I sort of suspected that was the case.”

Update on the lawsuit on the referendum

During an update on the Authority’s lawsuit requesting a temporary injunction prohibiting the City from taking control of GRU based on the referendum that passed yesterday, Authority Attorney Scott Walker said a proposed order has been prepared by his firm and reviewed by the City, and the order will likely be submitted to Judge George Wright tomorrow. At the October 23 hearing on the temporary injunction, Judge Wright said he could hold a hearing on the merits of the case on December 19 and 20, but Walker said that schedule “doesn’t work,” so instead he and City Attorney Daniel Nee have agreed to file a Motion for Summary Judgment. Walker explained that this can be done when there is no disagreement on the material facts of the case but only on the law; after documents are submitted by both sides, the judge rules on the law. Walker said this will likely happen in January or February.

Carter added, “I was asked last night by TV20, what happens now? Well, what happens now is we still do the good work of the utility. We still have a great General Manager/CEO, we have a wonderful board chairman and amazing employees, we’re still going forward until we’re told otherwise by a judge.”

Gas prepayment contract

The board also approved a gas prepayment contract that promises savings on gas purchases by the utility; the savings will be used to reduce the fuel adjustment charge on customers’ bills. CFO Claudia Rasnick said the utility had previously not been permitted to enter into this type of contract because of the City Commission’s Net Zero resolution and  “the move away from natural gas, and so we weren’t able to execute these transactions to save money for our customers – and that’s what we’re trying to do here.” Rasnick estimated that the contract would save the utility about $2 million a year. 

Debt management policy and investment policy

The board also unanimously adopted a debt management policy and investment policy. Rasnick said GRU has paid down an extra $40 million in principal payments in FY24 over the amount that was planned, including paying down $26 million of the debt incurred when the biomass plant was purchased. She said the outstanding principal dropped almost 4% between FY23 and FY24, and “if we continue on this path into 2025, it should drop another 4%, so in two years, we’re going to pay down $140 million of principal payments.”

Carter said, “This is exciting, and I pray that our ratepayers actually look at some of this. This isn’t a political move… This is truly getting back to business and putting business and clients first.”

No electric rate increases for the next 10 years

During a discussion on the budget calendar, Rasnick said there are no base rate increases in the electric system built into the budget for the next 10 years. Lawson pointed out that GRU has kept electric rates flat without sacrificing planned debt reductions. 

Deerhaven Renewables outage update

Energy Supply Officer Dino De Leo told the board that Deerhaven Renewables is currently in an outage that was scheduled for September to November, and a 10-year inspection on a steam turbine found 35 cracks in the dampening wire that need to be repaired. The turbine blades cannot be purchased, so a fabricator was found in Switzerland, and the new blades will need to go through customs before they can be used to repair the turbine. De Leo said they hope to have the repaired turbine back by mid-January, and it will take another 2.5 weeks to install it. He said it will cost about $1.1 million, on top of labor costs and the delay in resuming operations. 

Bielarski said they’re producing power from natural gas during the outage, and that’s currently cheaper than biomass, so “we’re actually saving some money that will pay some of that million dollars, as well.”