Konish: GRU ratepayers are stranded on an energy and financial island
Letter to the editor:
A former GRU General Manager used to refer to GRU electric generating plants as an “arsenal.” This arsenal runs primarily on 19th-century fuels: coal and wood. Some GRU electric generating plants are almost 50 years old.
All electric utilities are required to be interconnected through an integrated electric transmission grid. Generating utilities such as GRU buy and sell wholesale electricity. GRU only owns transmission lines within its own service territory. Duke owns the transmission lines that allow GRU to purchase and sell wholesale from other generating utilities.
Duke has transmission lines that extend to the UF campus and its adjacent service territories. GRU only has access to available capacity on these Duke lines. The current infrastructure would not allow GRU to buy all of its electricity wholesale from other generating utilities. The City of Alachua and Clay Electric buy all of their electricity wholesale – they do not generate. Current generation pollutes the air.
GRU accordingly is locked into its current arsenal of electric plants, unless GRU builds new plants. GRU would have a hard time financing new plants. The current modest GRU “Net Position” stated on its belatedly-prepared Balance Sheets is totally dependent on the dubious claim that the biomass plant was worth what GRU actually paid for it. Ernst & Young, in the wake of the Enron debacle, quit working for GRU rather than advance this proposition. So did GRU officials.
If GRU were to mothball any of its antiquated plants, that plant would come off the GRU Balance Sheet as an asset and the GRU Net Position could immediately go negative.
This accounting reality additionally locks GRU into its current arsenal. GRU claims on the upper façade of the downtown John R. Kelley electric generating plant that this plant “is owned by the citizens it serves.” The R in GRU stands for “Regional”.
GRU is solely owned by City residents, who have been disserved. GRU does not belong to County residents in the unincorporated area, the City Commission, or our City Commissioners. In 2000, with GRU debt at $200 million, the City Commission that was supposed to govern GRU began to systematically breach their duties to the GRU owners, and they continue to do so to this day.
GRU owners/ratepayers are now castaways marooned on a barren utility landscape in need of a rescue.
City residents own GRU, the City Commission is supposed to govern the utility, and the GRU General Manager is supposed to manage the utility. Instead, GRU was used as a political ATM.
The proposed governor–appointed board would both govern and manage, and City Commissioners would become no more than pundits, seated in the peanut gallery with the concerned citizens.
There are very good reasons why any City or County Commissioner holding office since January 2000 is to be disqualified from sitting on the proposed new board. There is little chance that the current governor would appoint them.
Jim Konish, Gainesville
The opinions expressed by letter or opinion writers are their own and do not necessarily represent the views of AlachuaChronicle.com. Letters may be submitted to email@example.com and are published at the discretion of the editor.
Pretty simple explanation for the current financial state. Unfortunately, unless your letter is pinned on someone’s forehead they’ll never get it. Even then, the liberal lunatics will only deny it.
It’s really no wonder why the city and GRU are in such fiscal disarray – the same idiot voters keep voting for the same idiot candidates.
A few simple facts are in order here:
1) Signing the original 30 year GREC PPA did the most damage. ExMayor Hanrahan spearheaded that and the last serving approver/signer was commissioner turned failed mayor Lauren Poe.
2) Buying the GREC plant to get out of the PPA made sense. My pre-purchase analysis showed it saving at least $28 million annually
3) Actual savings varied depending on use and price of competing fuels, likely >$35m to north of $40m annually (for 26 years, then after that increased cost of $45m annually for 4 years as the PPA would have ended) . Buying the plant was a no brainer, the monstrous contract with various attached or written documents was impossible to get out of, we were told many times by different attorneys.
4) Signing another PPA (solar) at this time adds yet another fixed cost that must be paid on top of all the debt. Yes, I know it’s not labeled debit. But if we must take feed or pay anyway, it will be treated as debt for financial statement analysis. Ask any second year finance student.
5) The city was just advised at JLAC to make large cuts, adding fixed payments only adds to the problem (especially without hearing any large cuts being planned, only superficial ones) . Ex City Auditor Carlos L Holt
Since 2000, the cIty has siphoned $750 million out of GRU while GRU’s debt has grown from that $200 million to $1.7 Billion. You can’t make it up.
Mr. Bielarski, although many of us appreciate your efforts on a Monday morning, I’m sure there are just as many who wonder why those efforts were not made during your early career in Gainesville.
Not doubting your numbers and in fact, I gave my support during your campaign. Unfortunate you didn’t succeed but still, if given the opportunity to elect a candidate who can right this ship and make change, that person will get my vote over someone who by some interpretations, appears to have had more of a personal vendetta against his employers than the interests of residents. Not saying the BioMass purchase was a bad instrument in an attempt to make things better because it was at the time. It sure beats renting a property and not having any equity. Problem is we bought a junker that wasn’t worth anything near or brought any value to the community. We never should have constructed it in the first place.
Again, I appreciate your late inning heroics but the city/GRU is still going to go the way of the recent bank failures. That’s liberal policies.
The way it is: well put.
The City & GRU need to throw overboard anything to do with climate change, and DEI social justice
in order to save this sinking ship…Hanrahan needs to go down with the ship…what a disaster she and democrat leadership was for the city & GRU going biomass and sticking us with that bad 30 year purchase agreement contract….Bielarski and Skop are both right about we need to abandon “net 0 by 2045”
Because it will triple our debt…
I have a strong feeling it will be when the Governor appoints a new board to over see it. In last 4 years they transferred 68 million dollars more than the profit GRU made no way in hell this City commission will cut that much in spending
I agree with both Ed and Jim K that buying the biomass (or any other type) was needed to increase the GRU assets — even though they both oppose it now— because the older plants were not going to last another 30-50 years. Imagine how the creditors would see that.
Of course if we had crystal balls it would have been a coal-gas plant. Then fusion nuclear in 30 more years.
I don’t think anybody needed a crystal ball to see that the biomass plant was a bad idea at the time. Whatever FP&L would have done, that’s what we should have done. Instead, our redheaded mayor was easily seduced by the climate cult in lieu of exercising good judgment.
We had no choice but to buy our way out of a $75 million a year obligation. I converted it into a $36 million a year obligation. Don’t understand why folks can’t see that.
Thanks, I think. Let me help you with some more facts. Three (3) law firms told us that the $2.5 billion power purchase agreement couldn’t be abrogated. GRU was on the hook for $75 million a year whether the plant ran or not. I negotiated out of it for $36 million a year. It didn’t matter what the plant was worth – it was about the $2.5 billion obligation ($2.1 billion when we bought it). That was in 2017, 18 months after being hired. Not late inning heroics at all. From 2018 until 2022 I fought, cajoled and protected the interests of customers. do much so, I was fired. Again, that’s not late innings heroics. it was a daily fight that I will continue.
Ed – save your breath, you’re trying to win the hearts of a bunch of morons here. It didn’t work with the 7 that fired you either.
Sadly, another voice in the darkness. Hopefully it will shine a light that will be visible to the electorate in Gainesville.
The county is in a financial pickle, too. Because the county treasury depends on the “west Gainesville” suburban taxpayers. If the state were to annex them into the city limits because they use GRU, then there goes the county’s golden wish lists, too.
That’s why UF should be forced, so GRU can be saved.
Absolutely not state can save GRU by taking over cutting all transfers to the city of Gainesville. UF should not have to pay the ridiculous rates that GRU charges if they can get electricity cheaper from Duke I wish i could but I stuck just outside of Gainesville when the city has to max out property taxes maybe the voters will get tired of having a left wing ran city and vote in some common sense commissioners that will cut the idiot ideas such as market place paying felons money put cops back on the streets and back them
The immediate solution would be to move to an area outside of GRU utilities. Thank goodness the citizens of Haile refused to be annexed into the city as their bailout.
The Biomass generator was pushed by former Mayor, Pegeen Hanrahan. Evidence shows that Hanrahan’s interest in Biomass generation was influenced or assisted by the ROCKEFELLER BROTHERS FUND RENEWABLE ENERGY PROGRAM. Without claiming any conflict of interest, Hanrahan listed herself as a “consultant” for the Rockefeller Brothers Fund. Assemble this link to see the details – tinyurl(dot)com /3a5fsuee
Hanrahan should be investigated by the FBI and jailed if she got a kickback for bankrupting us…what a bad deal…Bielarski keeps tooting his horn on how he saved us money on buying the overpriced junker…Bielarski: I don’t remember you being very vocal about not wanting to comply with UN climate change stuff..now you say it will triple our debt…
Mr. Bielarski’s job was to manage the utility and he took ORDERS from the commision. He was not allowed to say no to his bosses. When he did, he was fired. So lets stop with the lies Mr. Floyd.
I engineered a buyout of a 30-year $2.1 billion power purchase obligation and got ownership of the power plant in the deal. That 30-year deal was unbreakable, as determined by 3 sets of law firms. The $680 million of bonds saved the city $770 million in financing costs and another $250 in operational costs for over $1 Billion.
I don’t know where you were when I sat with the Utility Advisary Board night after night telling them the Net Zero by 2045 plan was unworkable and would cost $3.6 billion. You are going after the wrong guy.
And, GRU sells electricity to the city of Alachua cheaper than it does to the citizens of Gainesville.