Most of JEA’s commercial customers would see their monthly bills increase under proposed rate changes set for a June vote by the utility’s board.
At its May 19 meeting, the board of the city owned utility called for a June 30 hearing to discuss changing the rates for electric, water and sewer service. The May meeting following discussion about the potential changes during an April workshop.
The seven-member board voted 6-0, with Kawanza Suarez absent, in favor of calling for the hearing.
If approved in June, the changes for commercial customers would include 2.8% to 4.2% rate increases for electricity.
JEA staff proposed the new rates for both commercial and residential customers to address revenue deficits due in part to large capital projects the not-for-profit utility says are necessary to meet increased demand and modernize systems,.
“We’re hitting a big bump (in capital expenditures),” board member John Baker said during the May 19 meeting.
“That’s why we need to get the rate increases to strengthen our balance sheet, so that we can afford to move forward and spread out the impact of those increases.”
Ted Phillips, JEA’s chief financial officer, said that during the rate hearing, board members would hear alternatives to approving the rate changes and what the effect of those options would be.
“I think given our experience and the information that’s been shared with us, we have clarity on the why,” board member Arthur Adams said. “But I think we owe it to the community to offer a preview of what a world would look like if we don’t reinvest in the infrastructure.”
JEA CEO Vickie Cavey said the utility faced a critical need to upgrade or replace aging components of its systems.
“You cannot run utility infrastructure to failure,” Cavey said.
“The amount of time to get it in, to get it permitted, to buy it, to build it is a very long, long time,” she said.
“Utilities plan 20 and 30 years in advance. We have to, or we will not meet the level of service that we are accustomed to.”
Some would pay more, some less
JEA charges commercial customers at different rates depending on their demand for energy, with size classifications being small, large and and industrial.
Demand, measured in kilowatts, is defined as the maximum amount of energy that a customer can use at any given moment.
JEA also imposes different energy charges per classification. Those charges, measured in kilowatt-hours, are based on how much energy a customer uses over a period of time.
In April, JEA staff said the recommended changes would affect customers bills as follows:
• JEA’s 53,800 small commercial customers would see bills increase 1% to 2%, which includes an increase of one-tenth of a cent in the cost per kilowatt-hour. JEA defines small commercial customers as those with demand fewer than 75 kilowatts.
• Bills for JEA’s 3,900 large commercial customers would decrease 2.7% to 2.8%, with a 27-cent increase per kilowatt for the demand charge, and energy and fuel charges falling around half a cent per kilowatt-hour. A demand charge, which applies only to large and industrial commercial customers, is a usage fee per kilowatt to recover some of the costs related to generation, transmission and distribution, according to JEA.
JEA defines large businesses as having a demand between 75 kW and 1,000 kW.
• About 150 industrial customers, defined as those demanding more than 1,000 kW, would see their bills decrease 2.9% to 4.2%. Demand charges will increase by 9 cents per kilowatt, and combined fuel and energy charges decreasing by about four-tenths of a cent per kilowatt hour.
The effect on JEA’s revenue
JEA said its recommendation for small, large and industrial customers would increase the utility’s revenue in fiscal year 2027 by, respectively, $9.1 million, $4.5 million and $1.6 million.
The reason that JEA’s revenue from large and industrial customers will increase despite those customers’ bills declining involves what JEA calls its fuel costs, which is what it pays for coal, natural gas, purchased power and other means to generate electricity.
Those costs, which JEA passes through to customers, are expected to decrease in fall 2026, which will result in a savings for all customers.
But because the fuel costs are revenue-neutral for JEA, the increased demand and energy charges will generate additional revenue for the utility.
For small commercial customers, the projected fuel cost decrease is less than the increased energy charge.
Deputy Chief Financial Officer Joe Orfano said in April that fuel costs would decline in the next year because of JEA’s hedging strategy, which he said has saved customers $95 million since 2019.
Hedging is the practice of purchasing natural gas at preestablished prices to manage cost uncertainty. JEA, which has hedged some of its consumption through early 2031, hedges its natural gas supply to reduce exposure to volatile and potentially rising fuel costs.
Staff told board members that without rate changes, it expected a deficit of $45.3 million, equal to 8%, in revenue required for a balanced budget for its electric operations next fiscal year.
Water and sewer
JEA staff proposed an increase to its water volume charge by 30 cents per 1,000 gallons and its sewer volume charge by 65 cents per 1,000 gallons for commercial customers.
A volume charge is rated per 1,000 gallons and aims to recover costs associated with treating and delivering water and to customers, according to JEA. Staff did not detail what commercial customers could expect to pay with the increased charge.
JEA said it would not raise its basic monthly charges for water service to commercial customers and would raise sewer charges only for customers with 20-inch meters, which services the largest quantity of water volume available to JEA customers. Those customers could expect an increase to their bill of $4,103.59, staff said.
JEA’s basic monthly charge is fixed and is designed to recover 50% of JEA’s average daily costs, including maintenance of systems, as well as administrative costs such as customer service, billing and collection and meter reading, according to the utility.
A final vote on the rate changes is expected during the June 30 board meeting, which would follow a June 19 board workshop on the utility’s fiscal year 2027 budget.