As the JEA board of directors prepares to invest as much as $4 billion for capital improvements to meet future demand for electricity, water and sewer service in the region, the board’s recent past is influencing how it is going about its research and decision-making.
The looming investments include $2.3 billion to upgrade and expand the water and sewer system and a new natural gas plant to offset electrical power that will be lost as JEA decommissions a portion of the coal-fired Northside Generating Station.
During its March 26 meeting, the board agreed to hire its own consultant to inform and advise board members as they consider the expenditures. The consultant would be independent of the management staff and its third-party experts, on whom the board would normally count on for information and recommendations.
It’s an arrangement that may not have happened if not for the recent federal trial of former JEA executives Aaron Zahn and Ryan Wannemacher.
On March 15, Zahn was found guilty and Wannemacher not guilty of conspiracy and wire fraud charges stemming from allegations that they schemed to skim tens of millions of dollars in undeserved bonuses through an incentive plan that would have been triggered by the sale of the city-owned utility.
Board members who were in place in 2019, the time of the alleged conspiracy, testified during the trial that they were unaware of the magnitude of the potential payouts when they approved the incentive plan and voted to explore the possible sale of JEA. The trial raised questions about whether the board was too compliant in following recommendations from Zahn and his executive team to explore privatization of JEA and approve the incentive plan.
Those board members are no longer seated. Their successors said the questions that were raised about board oversight during the trial affected their decision to hire the consultant.
“What we’ve learned (from the trial) is that the board was not totally informed on the decisions that they were asked to make,” said board Chair Robert Stein. Likening the consultant to a doctor giving a second opinion, Stein said he suggested making the hire in order to show the community and City Council that the board was exercising due diligence in its decision-making.
Stein suggested that the trial had increased the community’s focus on the board to responsibly oversee the utility and protect the community’s interest in it.
As he put it, the board is under “a bright light in a dark room.”
JEA board member John Baker said the size of the projects facing the board also spoke to the need for expert consultation.
“We’re talking about building a Jaguars stadium’s worth of dollars,” he said. “And if we didn’t get a second opinion, we’d be drawn and quartered.”
Following the board meeting, JEA issued a solicitation for participation for business excellence consulting services – basically an invitation for bids from consultants.
In a related matter, the board also hired Vickie Cavey to serve as a liaison between the board and JEA management. Cavey, who served 32 years at JEA in high-level roles, will evaluate the responses to the solicitation for participation and work with JEA CEO Jay Stowe and his team to review overall operations.
Cavey, who worked with Stowe as a board liaison in 2021, will serve up to six months.