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JEA terminates CEO, adjusts inquiry for restructuring Fla. municipal utility

Florida municipal utility JEA's board of directors moved to terminate Managing Director and CEO Aaron Zahn and voted to present all possible ownership models under consideration for the utility at its next board meeting.

JEA's board members unanimously voted Dec. 17 to place Zahn on paid leave while the utility's office of general counsel negotiates through Dec. 30 to see if the CEO can be terminated with cause, which would save the utility significant severance pay. JEA President and COO Melissa Dykes will serve as interim managing director and CEO.

Zahn's firing comes after an employee incentive plan faced questions from Jacksonville City Council members over whether it was set up to give employees who participated a large cash windfall if JEA was sold. In addition, Zahn also faced backlash for failing to disclose a business partnership related to a potential land sale of nearly $2 million, which board members said potentially violated JEA and the city's rules on secondary employment.

"Each one of us should be personally embarrassed," JEA's board chair April Green said during the meeting. "This has been a show."

Zahn was a key driver behind the utility's ongoing solicitation for alternative ownership structures, which includes potentially privatizing the company. The utility launched its inquiry in August after board members and senior leadership forecast that JEA could face a $2.3 billion cash gap in 2030 if it maintains a "business as usual" approach and fails to prepare for technology disruptions in the power sector.

Local leaders, including Mayor Lenny Curry, have criticized JEA for a lack of transparency related to the solicitation process, saying JEA is already leaning toward selling the utility over other options, such as a cooperative model or initial public offering.

"Given leadership changes and lack of transparency issues ... it might make sense we take a break on the [solicitation] while we finish a full evaluation of strategic options," said board member Henry Brown, who was among several board members, city councilors and residents to suggest either pausing or restarting ongoing negotiations with parties.

Instead, the board unanimously voted to present all possible scenarios that JEA could pursue at its Jan. 28, 2020, board meeting, rather than just the solicitation team's recommended offer. The board also plans to assess all nine negotiating offers from the remaining participants, which includes investor-owned utilities Duke Energy Corp., Emera Inc. and NextEra Energy Inc.

Additionally, the board decided to ignore Curry's suggestion to consider a sixth potential outcome in which the independent utility is moved into a municipal department with city council oversight.

Green said continuing the solicitation will allow JEA to "kick the can down the road" without prompting interested companies to withdraw from the process or triggering credit downgrades.

"Slowing down the process ... would leave uncertainty," Green added.