Jacksonville's electric utility and City Hall filed a lawsuit Tuesday seeking to void a controversial decade-old agreement obligating local ratepayers to help build and eventually buy power from two planned nuclear reactors in Georgia, a significant escalation in a fight over the future of the only active nuclear power project in the United States.

The Municipal Electric Authority of Georgia, one of the co-owners of the Plant Vogtle nuclear expansion project, also filed a federal lawsuit against JEA on Tuesday accusing the Jacksonville electric agency of having "a clear intent to breach its contract, abandon its obligations" and to "undermine and disrupt" the future of the project.

The dueling lawsuits cap off weeks of tension between the two agencies.

JEA has sought for months to get out of the 2008 purchase-power agreement it signed with the authority, the subject of acidic letters the two agencies have traded in recent weeks. Since the project began — a run of years during which the federal government supported nuclear power, and the industry's prospects seemed much brighter — the Vogtle expansion has seen a number of cost overruns and delays. JEA's obligations have ballooned with it.

JEA's financial obligations likely top $2.25 billion over the 20-year life of the agreement.

"The citizens and ratepayers in northeast Florida rely on JEA to manage the electric utility system in a prudent manner and to protect them from unjust, ill-considered, or extortionate contracts," lawyers for JEA and the City of Jacksonville wrote in their lawsuit.



But, the lawyers wrote, under the purchase power agreement with Georgia authority, "ratepayers are burdened for 20 years by the obligation to fund a project in which JEA retains no ownership interest, over which JEA has no management or budgetary control, and from which ratepayers may never receive any electricity or capacity notwithstanding the massive unconditional financial obligations incurred."

In a nutshell, JEA's lawsuit argues the board of directors overstepped its authority when it signed off on the 2008 purchase-power agreement. Neither state nor local law allows a Florida public agency to enter into the kind of agreement JEA has with the authority, the suit said. JEA wants a judge to void the contract.

The agreement locks JEA into paying construction debt whether the reactors are eventually built or not.

"These 'hell-or-high-water' contracts specifically provide that the buyer has no right, under any circumstances, to abandon the contract or be relieved of its contractual obligations," the authority's attorneys argued.

The authority is asking a federal judge to impose the purchase-power agreement on JEA and is also seeking an unspecified amount in damages.

"JEA's actions in denying the enforceability of the (agreement) have already created uncertainty in MEAG's ability to fulfill its own obligations under the (agreement), as well as uncertainty in determining whether to proceed or cancel the Vogtle Project," the agency's lawyers wrote. MEAG has been forced to expend money, time, and attention to deal with that uncertainty."

Plant Vogtle’s co-owners — the private utility Georgia Power, the authority, the City of Dalton and Oglethorpe Power — recently said the cost of Vogtle had increased by $2.3 billion, pushing the project cost up to about $27 billion and triggering a requirement that the co-owners vote to continue the project. MEAG's vote is Sept. 24, though JEA has pushed for the owners to delay voting until Oct. 31 or later.

MEAG's lawsuit showed no indication that vote will be delayed.

CHANGING CIRCUMSTANCES

JEA argued the circumstances surrounding the Plant Vogtle project have changed substantially since the former general contractor, Westinghouse Electric Company, filed for bankruptcy last year.

Westinghouse had agreed to absorb most of the cost overruns for a project that was initially projected to cost $9.5 billion. Since the bankruptcy, however, the co-owners must reimburse the new construction contractor for overruns, making JEA's own financial obligations open-ended.

"There appears to be no end in sight to the ever-increasing cost and delays plaguing the construction" of the project, JEA said.

JEA had no say in the new structure of the Vogtle project.

The authority, however, argued that JEA has experienced some changing circumstances of its own that might be driving the need to exit the Vogtle contract. MEAG's lawsuit draws attention to the contentious talks at the end of 2017 and earlier this year over possibly selling JEA to a private operator.

Those talks aligned with the time the authority says JEA informed the agency it wanted to exit the Vogtle project.

OVERSTEPPED AUTHORITY?

JEA and city lawyers said the purchase-power agreement violates the Florida constitution and that the utility never had the authority to sign off on it in the first place.

In short, they argued the law doesn't allow a public agency to "jeopardize their financial stability by becoming financially entangled with private enterprise." The one exception is if that agency has joint ownership of the venture, which in the case of Vogtle, JEA does not.

Although JEA is obligated to help pay construction debt, purchase power for 20 years and provide short-term liquidity at the authority's demand — up to $75 million, which doesn't have to be reimbursed for up to two decades — Jacksonville ratepayers have none of the rights of a co-owner in the project.

The suit said the Jacksonville City Council should have also signed off on the agreement back in 2008.

"The substantial, open-ended, and unlimited obligations borne by JEA’s ratepayers are not balanced by either ownership or management control in the project," the suit said. "There is a complete absence of any JEA oversight or discretion, which constitutes an improper delegation of JEA’s spending power."

As a result, the utility and city lawyers said, the Vogtle agreement is "imprudent, ill-considered, and injurious to the public."

Read the lawsuits:

City of Jacksonville, JEA vs. MEAG

MEAG vs. JEA