GRU Authority hears update on budget, deadlocks on moving City fees off utility bills

BY JENNIFER CABRERA

Updated on May 14 with additional information about billing the City fees on GRU bills and statement from the Gainesville City Manager.

GAINESVILLE, Fla. – At the May 13 Gainesville Regional Utilities Authority meeting, CEO Ed Bielarski explained how the utility evaluates its assets and previewed the budget; the Authority deadlocked on the question of moving City stormwater and solid waste fees from utility bills to property tax bills, leading the City to announce that these fees will appear on property tax bills in the future.

GRU has received a $42.9 million grant for grid resilience

After a member of the public asked about volatility in oil and gas prices and “aging equipment,” Bielarski gave a presentation about the utility’s continuous efforts to evaluate its generation assets.

Bielarski announced that GRU has received a Grid Resilience and Innovation Partnerships (GRIP) grant of $42.9 million, which will be used over the next five years to replace substation transformers and outdated circuit breakers, replace wooden poles with ductile iron poles, implement an advanced distribution management system, harden distribution lines, and upgrade a line that currently runs between Archer and the Parker substation. Bielarski said GRU received the grant “because of the strength of our programs and how much we adhere to reliability and safety.”

Bielarski said the utility has “a proactive and predictive maintenance program” with a “track record of retrofitting and extending the longevity of assets.” He said 102 people at GRU work on the reliability of the utility’s generating assets and the continuous improvement of its plants. These employees replace critical electric control systems and perform tests such as thermal imaging of breakers and transformers, oil analysis, vibration analysis, load testing, ultrasonic boiler testing, generator partial discharge analysis, high-energy piping support, and cybersecurity upgrades.

In 2020, GRU extended the life of the combined cycle unit at Kelly by 30 years by replacing a steam turbine generator. In 2021, GRU converted Deerhaven 2 to dual fuels, which improves the reliability of the plant and adds fuel diversity. In 2022, the condition of Deerhaven 1 was assessed to determine the necessary steps to extend its life. In 2023, GRU conducted an inspection of Deerhaven Renewable’s steam turbine, and cracked turbine blades were replaced before they failed. Bielarski said that both the Kelly and Deerhaven 2 investments had paid off within three years, and the dual-fuel conversion avoided a million tons of CO2 emissions.

Recently, the utility has entered into short-term Power Purchase Agreements to take advantage of lower-cost power and availability, enabling the older plants to run at a lower rate and extending their lives.

Bielarski said, “I hope you’re getting the idea that these folks aren’t Homer Simpson, sitting behind the control booth in one of the plants. [Our people] are engaged, and they’re out there giving us the best value that the community can have.”

Bielarski also said that the former IRP (Integrated Resource Plan) is “irrelevant now” because of increased costs for equipment and the backlog for turbines due to data center demand. He continued, “I mean, we’re not even in the same ballpark with the pricing in the former IRP.”

Bielarski said the utility sold over 5,000 megawatts to Seminole in April for $55 a megawatt.

In response to a question from Director Jack Jacobs about how rising oil costs affect the utility’s costs, Bielarski said that biomass fuel is delivered by diesel trucks, while natural gas comes through a pipeline. He said the utility constantly shifts back and forth between generating plants, depending on which one is more economic at any time. For example, they can use coal or more biomass if natural gas prices go too high: “We have all these levers that we can pull, because we have the diversity [of fuels].”

In addition, Bielarski said, GRU has been able to buy solar power “on the cheap” because FP&L “overbuilt solar plants all around us… It’s always better to use somebody else’s money.”

Director Chip Skinner asked Bielarski for a spreadsheet that would allow the Authority to see how staff is planning for the future and making trade-offs between maintenance, improvements, and new plants. Bielarski said the energy supply group already has that, and he said he would share it with the board at a future meeting. Bielarski also said they would do an IRP in “another couple years.”

Director David Haslam said he is a “huge fan of keeping machines running,… rather than throwing [things] away.” He also said he thought the data center demand would peak at some point, so they could “bide our time until then… instead of paying triple for a RICE engine… All this stuff can be retrofitted, fixed, updated,… a lot of times on a huge savings… Building another billion-dollar power plant isn’t a great idea right now.”

Budget preview

In a budget presentation, Bielarski recommended no base rate increases for electricity or gas, for the third consecutive year; assuming the Authority approves the recommendations at their June meeting, water rates will increase 2%, and wastewater will increase 1.75%.

Bielarski said he is focusing on reducing O&M expenses, and interest expense has dropped by $10.6 million per year since FY24. He also presented a slide showing the heat rate and cost per megawatt-hour for each of GRU’s plants.

GRU will also continue to pay down debt and has paid down $123 million more than planned since 2023.

Moving stormwater and solid waste fees to property tax bills

The board was asked to approve an agreement that had been negotiated between the City of Gainesville and GRU, increasing the reimbursement from the City to GRU from $821,000 to an estimated $979,000. The City Commission has an upcoming agenda item on May 21 to consider ordinances that would allow them to place these fees on the annual property tax bills instead of billing them monthly through GRU.

During a lengthy discussion, Jacobs and Haslam argued that removing the fees from GRU customers’ bills would improve customers’ perceptions of GRU because those fees would not inflate bills. Chair Eric Lawson and Skinner argued that the utility would lose about a million dollars in revenue without reducing costs. Lawson also argued that HB 1645 prohibits Directors from making decisions on any basis other than “appropriate pecuniary factors and utility industry best practices [that] solely further the fiscal and financial benefit of the utility system and customers.”

Because the board was divided 2-2, any motion would fail, so the board took public comment and did not act on the agenda item.

Gainesville Interim City Manager Andrew Persons sent the following statement: “For some time, the city has been working with Gainesville Regional Utilities CEO Ed Bielarski to draft a new agreement for stormwater and solid waste billing that would continue the practice of placing those charges on customers’ utility bills. That system is outlined in a 2023 Memorandum of Understanding (MOU) between GRU and the City of Gainesville. Although the MOU was intended to remain in place until a new agreement was signed or either side opted to end the arrangement with 24 months’ notice, yesterday’s GRU Authority Board discussion appeared to indicate there is not support for continuation. Because of this uncertainty, the city is taking necessary steps to shift the solid waste and stormwater charges to an assessment that would appear on the tax bills of property owners.”