Municipal Utilities Spur Regional Economic Development

Paul Mitchell, Vice President, Economic Development, JEA

Paul Mitchell, Vice President, Economic Development, JEA

From an economic development perspective, the 2020s are off to a great start in Northeast Florida, and our local municipal utility is leading the way with a contribution of more than $1 billion so far, in this decade, in the total economic impact.

Late last year, JEA, Jacksonville’s community-owned utility, commissioned an economic and workforce analytics firm to assess the impact of our operations and capital improvement expenditures on the Jacksonville, Fla., economy. As a municipal provider of energy and water services to more than one million customers in Northeast Florida, we worked with the firm to collect the detailed spending data, necessary to account for JEA’s economic impact to the region’s bottom line.

Key findings included:

• JEA spent about $838.7 million in total direct operational and capital improvement expenditures in 2021

• Payroll (including benefits) for JEA’s 1,968 direct employees: $253.9 million

• Procurement spending on day-to-day expenses to operate and maintain JEA and its infrastructure: $229.5 million

• Capital improvement expenditures to build new utility infrastructure: $355.3 million

• Those direct expenditures supported approximately 8,140 total direct, indirect and induced jobs throughout the Jacksonville metropolitan area, and generated roughly $1.088 billion in total economic impact as measured by gross regional product.

• In 2021, JEA contributed just over $120 million in financial support to the City of Jacksonville, providing additional benefits for area residents.

These numbers, we believe, underscore the value of municipal utilities as economic drivers in particular regions.

Economic Value of Municipal Utilities

For one, municipal utilities impact the local economy by generating revenue for the local government. Community-owned utilities, like JEA, are structured as not-for-profit entities, thus allowing them to reinvest profits back into the utilities or the local community via municipal services. This revenue typically funds such essential investments as healthcare, safety and infrastructure improvements.

"Community-owned utilities, like JEA, are structured as not-for-profit entities, thus allowing them to reinvest profits back into the utilities or the local community via municipal services"

Additionally, municipal utilities generally offer, on average, lower residential rates than investor-owned utilities (IOUs). According to a February 2023 electric bill comparison by the Florida Municipal Electric Association, across the state of Florida, 1,000 kWh residential customers living in municipal service areas paid nearly 11% less than the average IOU customer. In April and May, JEA was the lowest-cost provider in the state.

Municipal utilities can also have a positive effect on the environment, which can benefit the local economy. Many are investing in renewable energy sources, such as wind and solar power, which reduces greenhouse gas emissions and promotes sustainable development. In fact, JEA’s recently revealed Electric Integrated Resource Plan (IRP)includes, among other things, a power supply portfolio of 35% clean energy, plans to retire less efficient generating assets, and an expansion of our energy efficiency programs, all by 2030.

Lastly, because these utilities are accountable to the local government, they are more likely to involve local residents in decision-making processes and provide opportunities for community input and feedback. This was certainly the case across our months-long IRP development process. Engaging with our customers builds trust and transparency between the utility and the local community, which can in turn support economic growth and development.

Role in Economic Development

By providing essential services and competitive rates that enable businesses to thrive and operate, JEA and other municipal utilities play an important role in area economic development. Utilities are one of the few economic agents that directly support each new household and business, including expansions or relocations to the region. Here’s how:

• Attracting new businesses: New businesses may not relocate to Jacksonville specifically because of utilities, but we demonstrate the accessibility, transparency and focus on excellence in customer service that help new business gravitate to our area.

• Supporting existing businesses: Municipal utilities also play a critical role in supporting existing businesses by sitting down with them to understand their growth and future needs

• Creating jobs: Municipal utilities generally create more local jobs and spur economic activity when compared to IOUs. Since IOUs are accountable to shareholders, their incentive is to reduce operational costs, which has the potential to reduce payrolls and purchases from the local economy— both of which drive down employment. Also, infrastructure projects—power plants, water treatment facilities—create both construction and operations and maintenance jobs.

Our economic development plan focuses on strategic asset management, site readiness, downtown revitalization and an enhanced incentive program to attract meaningful growth in Northeast Florida, with the latter being of particular benefit to our commercial customers.

The 18 current customers in the incentive program enjoy a six-year declining discount on services starting at 30%, with an additional 5% discount for those that have excess capacity or located in the downtown Jacksonville area. It applies to customers with new and expanding electric loads of 300Kw or more and who commit to adding at least 15 full-time employees. Since its inception in 2013, JEA customers who have taken advantage of this incentive have reported creating 6,228 jobs.

A proposal to create an additional tier to the existing program is currently under consideration by our board of directors. The enhanced program, designed to attract larger, more competitive projects, includes a new nine-year declining discount starting at 45%, with the same 5% additional discount for those a locating or expanding in a downtown location or certain industrial areas. It will apply to customers in one of Florida’s targeted industry sectors like aerospace/defense, advanced manufacturing and life sciences, have a new or expanding load of 500kW or more, and commit to adding at least 50 full-time employees.

To sum it up, the value of municipal utilities is measurable and real. Whether we’re giving money back to our local governments, providing low-cost services to our customers, or bolstering job creation through our support of new or existing businesses, municipal utilities are the backbone of growth and prosperity for local communities and economies.