Saturday, February 3, 2018

Kill the goose?

Once again, as it has periodically for the past 50 years, the idea of selling the JEA is up for discussion.
I have no dog in the fight. If it is worth $2 billion and some private utility wanted to pay $5 billion for it, we should listen. (The city calculated the value of the JEA to a private utility at around $1.2 billion as of late 2011.)
But the idea that any amount would be a great windfall we could use to hire policemen or pay schoolteachers more money is fanciful.
The electric utility is an asset. It produces income -- a lot of it. That money is used "in lieu of taxes," which means property taxes would have to soar if it were not there.
It is controlled by an independent authority and run, in theory, like a business. Politicians appoint the authority members.
But when you sell a revenue-producing asset, you forfeit the future revenue it produces.
If a private company owned the utility it would pay property taxes and franchise fees, and federal income taxes.
For years, the City Council had an annual argument over how much money it would squeeze from the electric utility -- commonly called the "goose with the golden eggs."
The amount generally was set to represent what a private utility would pay, plus.
That was ended some years ago by an agreement to take a fixed percentage of the gross.
If a private company ran the utility, it would set rates approved by the state Public Utilities Commission, one level removed from local control. JEA has for years had some of the lowest rates in Florida.
The JEA has considerable debt. Any revenue from the sale would have to pay that, either up front or over the future years.
Jacksonville would lose a revenue stream of some amount, forever, and lose local control of rates and regulation.
The JEA has lower debt costs because it issues tax-exempt bonds. A private utility's customers would pay more to borrow. They also would pay more in property taxes because they would pay school taxes.
In short, there are a lot of factors. Let's not get ahead of ourselves.



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