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JEA narrows applicant pool to 9 in solicitation for new ownership structures

JEA has whittled its list of applicants for new business strategy proposals down to nine companies, bringing the Jacksonville, Fla., utility one step closer to picking a suitor to overhaul its business.

Three investor-owned utilities with Florida operations — Duke Energy Corp., Emera Inc. and NextEra Energy Inc. — remain in the running for the Florida municipal utility's request for alternative ownership structures, including privatizing parts or all of JEA. Emera is also involved in a separate bid with private equity firm Bernhard Capital Partners Management LP and Suez SA, a global operator of water and wastewater systems.

The other participants that still qualify for the solicitation are American Public Infrastructure LLC, a Chicago-based financial infrastructure firm; American Water Works Co. Inc., which recently expressed an interest in JEA's water and sewer business; Australia-headquartered investment manager IFM Investors Pty Ltd.; asset manager Macquarie Infrastructure & Real Assets Inc., part of Macquarie Group Ltd.; and a respondent that did not consent to releasing their name.

Facing a projected $2.3 billion cash gap in 2030 if JEA maintains a "business as usual" approach to its electric and water businesses, the utility's board of directors voted July 23 to allow JEA senior leaders to solicit interest in various ownership structures. JEA, which considered privatizing the utility in late 2017 and then ceased talks in May 2018, said it is keeping all options on the table for ownership structures, including becoming an electric cooperative or launching an initial public offering.

In its solicitation documents, JEA said all respondents should propose initiatives to "future-proof" the business, such as investing in distributed generation and renewables and adding new services. JEA's minimum requirements for bids include keeping the utility's value to at least $3 billion, distributing at least $400 million to customers and protecting certain employee retirement benefits.

If the bidding results in JEA being fully or partially sold, parties would need approval from various state and federal parties, including the Florida Public Service Commission and Federal Energy Regulatory Commission. The city of Jacksonville would also need to conduct a referendum and win a majority vote to approve the transaction.

While the utility is releasing names of respondents who agree to disclosing their identity, JEA's legal advisers and management said in a Sept. 24 board meeting that the utility will not disclose the organizations behind a particular bid to ensure one party does not have an unfair advantage over the other.

JEA's negotiation phase with respondents starts on Oct. 15. The company expects to have a recommended contract to review in late February 2020.