Konish: How GRU was financially ruined by a failed political agenda

Letter to the editor

When speaking about GRU, it is important to understand that decent, highly-skilled, and hard-working GRU employees work around the clock in difficult, dangerous, and often unpleasant circumstances for us. Their toils have been disrespected by the City Commission. Keep in mind, these are the ultimate victims because many GRU employees get the same GRU bills we see. Many also live outside the GRU service area since they cannot afford their own products. They are not responsible for our high GRU bills. 

In 1973 I moved from a UF dormitory into an off-campus private apartment and became a GRU customer. After the 1973 Arab oil embargo caused the price of oil to suddenly rise from $3 to $42 per barrel, the then-fleet of Florida Power and Light (FPL) oil-fired electric generating plants became uneconomical. So did other oil-fired plants around Florida. FPL had promoted the “all electric” “gold medallion” house in the late 1960s during a time of cheap oil, cheap electricity, and explosive growth and development in South Florida.

At the very last minute, GRU changed the design of its overly large Deerhaven power plant from oil to coal. After a UF interdisciplinary study that then cost $1 million, a very tall stack was built to best disperse the massive pollution from this unnecessarily large, dirty plant that sold lower price electricity, heavily to GRU customers and wholesale around the state to FPL and others. We got the pollution. Our lakes were acidified. Mercury contaminated our fish. At one point, GRU burned 2,000 tons of coal per day.

I distinctly remember a conversation with my parents in 1975 regarding their $100/month FPL electric-only bill for a small one-bedroom apartment in South Florida. My bundled, aggregate GRU bill was $30 for a two-story “sad sister” Victorian house in downtown Gainesville. 

In January 2000, a former city commissioner with a sophisticated knowledge of local government was elected mayor with around 7% of the possible votes. Using a parallel command of the local Democratic Party, this mayor orchestrated waves of political cronies to march GRU off the financial cliff in lockstep with her wishes. Republicans went along with it as well.

Around 2002, GRU announced a plan to “get ready for deregulation.” Initially, we were told GRU had to cut costs, which is always a good idea. The fact of the matter, however, was that deregulation was never coming to Florida. Beyond the Enron debacle, Florida is an energy island that cannot receive significant out-of-state electricity. Deregulation would pit Florida electric utilities against each other, and that will never happen. This is fortunate for GRU, which would never survive deregulation due to high costs.

The red herring called deregulation was utilized to justify a “business partner discount“ on GRU nonresidential electricity. To get this benefit, a business had to apply and agree to an unenforceable contract to purchase only GRU electricity. 

While such a discount was not necessarily a bad idea, the false narrative disturbed me. The issue of the GRU electric rate structure is far too complex to merely give a certain class of electric customers a sham discount that many businesses were not aware of. 

Next, the same former mayor’s husband-to-be chaired a county “clean air committee” formed in response to the Florida Rock cement plant. After the committee was finished, GRU installed very expensive pollution controls on its large, now aging, coal plant. Again, not necessarily a bad idea, in and of itself.

During the eight-year reign of this former mayor, both GRU’s overall debt and the GRU transfers of ratepayer money to the City increased dramatically. Politicized and expensive pet projects were stuffed into the GRU and City budgets.

Simultaneously, our GRU bills also began to rise dramatically. While before January 2000 my tenants’ GRU bill would be less than 20% of their rent, now it can be 33% or more.

In a “white paper” issued by a former GRU General Manager, he focused on two transformational bad decisions: 

1. The solar “feed-in” tariff;
2. The biomass plant.

While I agree in principle, where we stand today is the result of a thousand cuts to the GRU financial well-being. The enablers are culpable, as well as the former mayor.

Solar Feed-In Tariff: GRU pays a former mayor and many well-known cronies an exorbitant price for all solar electricity produced on their private property and then fed into the GRU electric grid. Our former mayor’s solar panel is larger than her sumptuous pool. The price GRU pays is far more than the price these GRU “customers” pay for the GRU electricity coming in. GRU is said to lose $6 million annually for 20 years under this scheme. 

Biomass Plant: The overly large biomass plant was sold to GRU ratepayers under another false narrative. GRU claimed that if we did not build another plant right away, our lights would go out. This was false. The previously mentioned GRU pollution controls were utilized by the private “partners“ to permit the biomass plant over vigorous citizen challenges. A requisite PSC Need Determination was barely obtained by a 3-2 vote, even though the PSC had never denied such a determination. All improvements to our air quality were squandered, along with the very solvency of GRU. The biomass plant is the mother of all GRU financial disasters, and one person is directly to blame for it. 

In order to obscure the scope of the biomass financial disaster, GRU illegally overcharged electric customers for fuel and used the ill-gotten funds to cover the cost of the biomass plant. GRU also borrowed and then refinanced, backloading debt to further obscure the financial realities of the biomass plant. The brunt of this backloading may not yet have been felt.

GRU had claimed that the biomass plant would run on curbside waste. This was also false. Our biomass plant runs on whole trees only – not leaves and limbs. To equate the combustion of wood with solar power under the misleading banner of being “renewable” is a very expensive hoax. All fossil fuels are “renewable” as a matter of fact. 

After paying exorbitant prices of up to 400% more for $72 million of biomass electricity annually for years, whether needed or not, and providing massive direct and indirect financial subsidies to a private firm who built and owned the biomass plant, the City bought the depreciated biomass plant for twice what it cost to build.

The bond attorneys had a field day, and our state Auditor General mentions this in the state GRU audit report. 

Our former GRU General Manager was nominated for a Wall Street award for pulling off the financing of this disastrous purchase. The biomass plant was nearly 100% financed.

Now, four years later, GRU has exorbitant electric rates, is buried in debt, and is locked into uneconomic, dirty electric generating plants. GRU’s 2023 debt of $1.7 billion remains unchanged from 2019. The individuals responsible have so far faced no accountability. The biomass plant purchase was done to stymie a closer look at the biomass contract, which would have accompanied any legal challenge to the validity of the initial Power Purchase Agreement (PPA).

GRU ratepayers were sold into economic slavery and are now beholden to out-of-town bond holders, bond attorneys, and rating agencies. This is despite the fact that any possible Court Judgment years into the future against the City in regard to biomass could not be collected by statute. Instead of private biomass plant owners going to the Florida Legislature to collect any potential Court Judgment, the City will eventually need a bailout either brokered or funded by “Tallahassee,” i.e., the State of Florida Legislature.  

Jim Konish, Gainesville

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