JEA’s board of directors voted Tuesday to consider privatizing the city-owned electric and water utility, a move that its chief executive officer Aaron Zahn spent months setting the stage for as he campaigned to convince the public that JEA needed to embrace fundamental changes to avoid mass layoffs and future financial ruin.

At the high-stakes meeting attended by anxious rank-and-file employees and media outlets anticipating a major announcement, Zahn and his senior leadership team told board members they had two choices: immediately terminate 574 of the utility's 2,000 workers, or allow JEA to find a path to the private sector.

Board members embraced Zahn’s belief that JEA must find new ways to make money in order to survive the existential threat that solar power technology and heightened energy efficiency standards pose to the utility industry's business model, as well as his assertion that it would be all but impossible to do so under the constraints of government ownership.

“Other utility’s boards are sticking their heads in the sand. I believe JEA has a long tradition of foresight, being ahead of the industry and this is just the latest example,” said departing board member Alan Howard. “We’re talking about options to explore and grow JEA to protect it from what would be a slow, but certain, death spiral.”

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With the board’s unanimous blessing, JEA can now begin a competitive selection process and accept bids from outside suitors — and likely reignite the bitter political fighting that erupted when the utility began exploring privatization in 2017.

JEA hasn't set a timeline for the process yet. Any final decision would need to be approved by the JEA board, the Jacksonville City Council and Mayor Lenny Curry. A privatization deal could also be subject to a special election, as the city’s charter requires voters to approve the sale of 10 percent or more of JEA’s assets.

The resolution approved by the board provides mandatory benchmarks. The deal must be worth more than $3 billion to the city of Jacksonville and produce more than $400 million in rebates for customers. Utility rates would freeze for three years, and employees would also receive short-term job security and pay and benefit guarantees.

Besides those requirements, the resolution provides wide latitude for the structure of any potential deal. JEA officials say they are open to a number of possibilities, like converting to a customer-owned group, becoming a publicly traded corporation, or selling to a bigger investor-owned utility.

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Privatizing JEA, which has been a function of Jacksonville’s government since its inception in 1895, would be a historic decision with major consequences to City Hall and ratepayers.

JEA’s annual contribution to the city’s general fund budget, which is currently $117 million, is a major source of cash that is not only insulated from the economic pressures that can squeeze property tax revenue but is also guaranteed to grow for the next several years.

Selling JEA would likely eliminate that annual contribution, although a $3 billion or greater purchase price would be an unprecedented windfall for the cash-strapped city.

Although JEA is an independent authority of the city, City Hall can exercise significant influence on its decision making. The mayor appoints all seven of its board members, who hire the utility’s chief executive officer and senior leadership team and approve major decisions, including electric and water rates.

City Councilman Matt Carlucci, a mainstay of local politics who returned to office earlier this month, said he has long believed residents are best served by a utility that belongs to their government, not stockholders.

“I am opposed to selling JEA. I made that promise during the campaign, and intend to keep it,” he said. “I think public utilities across the country are facing problems, and the problems are very legitimate. But at the end of the day, I want a public utility taking care of our taxpayers.”

Tuesday’s meeting abruptly resumed discussions about privatizating JEA that surfaced last year, a controversial, albeit short-lived, issue that sparked bitter political fighting between labor leaders, City Council members, JEA officials and the mayor’s office.

Curry spent the first half of last year fighting accusations that he was secretly pushing a privatization plan — the issue surfaced after Tom Petway, a former chairman of the JEA board and one of Curry’s biggest campaign contributors, requested the utility to explore selling itself to a private company, and former City Council President Anna Lopez Brosche said Curry’s chief of staff asked her to introduce emergency legislation to move the privatization process forward.

In April 2018, Curry pulled the plug on the contentious debate after he said he wouldn’t submit any legislation to sell JEA. He doubled down on that pledge during his re-election campaign earlier this year.

The privatization issue remained dormant for the rest of the year and was hardly discussed during this spring’s local elections, although political insiders quietly wondered when the issue would resurface.

In May, Zahn made a surprising presentation to the board of directors that outlined a bleak future for JEA that sharply contrasted with the shorter-term outlook of the utility, which had kept rates stable for the year and was moving forward with plans to build a new downtown headquarters.

In his presentation, Zahn predicted a number of gloomy scenarios that would be caused by customers using less energy and adopting solar technology that would allow them to produce their own power.

He said JEA would either quit making annual payments to City Hall after 2023, or customers would see their rates jump by double digits. The presentation also contained a disclaimer advising investors that it was not a projection of JEA's future financial performance, and therefore, shouldn’t be used to make investment decisions.

Zahn spent the next few months warning of dire consequences if JEA continued to cling to the “status-quo." When journalists asked whether he would pursue privatization, he dodged the question.

At the end of June, he told the board of directors that JEA may need to abandon its downtown headquarters for a cheaper space in the suburbs and reduce its workforce by 574 employees over the next decade. Zahn and his staff also hinted at a “non-traditional utility” approach that would allow JEA to grow by entering new types of energy-related businesses, although they lamented the constraints put upon them by regulations in the city's charter, the Florida Constitution and state law.

On Tuesday, Zahn and his team revealed privatization to be the crux of that approach.

It's unclear what JEA's next step will be. Zahn, who became the highest-paid city employee on Tuesday after the board approved a contract that provides him a $524,000 annual salary, an $850 monthly car allowance and seven weeks of paid vacation, walked past reporters without answering their questions after the meeting.

Although Zahn said he would meet with individual reporters later that afternoon, JEA Spokeswoman Gina Kyle said he instructed her not schedule an interview with the Times-Union staff writer who covered the meeting.

Christopher Hong: (904) 359-4272