Two Paths for GRU: Privatization vs. Local Renewables

The GRU Authority CEO is clear - he wants GRU to "exit the energy generation business". The Commission is clear - we are committed to locally owned, renewable energy. How do these stack up?

GRU is at a crossroads.

There are a few times in the utility’s history where big decisions need to be made, and those decisions will determine the future of the utility. This is one of those times.

The City Commission, with Tony Cunningham as GRU General Manager, was clear about our direction. We were hiring outside experts, getting data, and doing community engagement to analyze what the future of GRU should be. We were balancing the need to be sustainable, affordable and reliable as a utility. We were committed to investing in renewable energy whenever feasible.

The GRU Authority’s leadership has also been clear about the direction it wants to go. Ed Bielarski has told them his direction: he wants GRU to “exit the generation business,” and the Authority soon fired Tony Cunningham and appointed Ed to lead them.

So now ratepayers have to decide what direction GRU will go:

Will GRU invest in affordable renewable energy, or will it spend millions more to privatize that energy generation? Will GRU invest in our assets and keep our utility producing power locally, or will it hand that over to a private utility like Florida Power & Light?

The Big Decisions in GRU’s Future

The next ten years will decide GRU’s future for the next century. How will GRU produce power? Will it produce power at all? What will the costs be?

It’s a critical time. In the next ten years roughly half of GRU’s generation capacity at summer peak is scheduled to go offline. In the next five years roughly 1/4, 111 MW, is scheduled to retire. We are looking at a gap of roughly 200 MW of energy generation that needs to be filled by 2032 to reach peak summer power generation¹.

Here’s a graph from GRU staff made in February showing what those retirements look like:

See that white space between the pretty colors at the bottom and the line at the top? That’s the amount of new electricity generation we have to plan for between now and then. With high debt and high rates there’s not much room for error.

That’s a challenge, but it’s also an opportunity. The plants that are going to be retired are old, inefficient natural gas plants that drastically increase GRU electric bills.

These three plants, Deerhaven CT1 (1976), Deerhaven CT2 (1976), and Deerhaven 1 (1972) are some of our most expensive and inefficient plants in the GRU system. I don’t agree with Ed Bielarski on much, but we both agree that this is the core reason why GRU rates are so high. From his book:

The reality was that GRU’s higher electric rates were primarily driven by the higher costs of operating five power plants that were passing thirty years of age, and the missed opportunity of replacing them with more efficient natural gas plant.

I think that’s basically accurate. So today GRU is planning to retire these inefficient natural gas plants that cause our rates to be so high.

The question GRU has been struggling with is how to fill that energy gap. To find that, every few years the utility hires outside energy experts and, working with engineers at GRU, they model what the options are for the utility over the next 25 years.

This is an industry-standard best practice called the “Integrated Resource Plan” and the goal is simple: what is the cheapest option GRU has to power our homes? Take all the costs into consideration: fuel, operations, capital, debt service payments, risk. Take all of it, spit it through complex modeling, and see what the cheapest option is that still keeps energy reliable.

Well the GRU Authority did that, and in February they got their results back. Here’s what it said:

The Solar/Battery/Gas Plan

The results of the study were unequivocal: solar energy is far and away the cheapest option for GRU’s generation for the future. GRU has the capacity to continue generating its own electricity, and doing that is far and away the best option for us.

This was a sea change compared to past data.

This chart tells you all you need to know. These are the 19 scenarios the experts modeled. The “Baseline” is the “Solar/Battery/Gas Plan” highlighted here, “Market Reliance” is the privatization plan Ed Bielarski has been promoting for years. Privatization is $380 million more expensive.

The same company, the Energy Authority, has done GRU’s IRP for years. The Energy Authority is one of the leading entities in the United States for this kind of work, managing over 50 utilities across the US, and every IRP had a slightly different recommendation depending on the market forces at that time. The 2003 IRP recommended a 220 MW coal plant. In 2019 it recommended an almost entirely natural gas investment with 80 MW of solar and 5 MW of battery.

But the new data is totally different, it recommends GRU ramp up its solar capacity with battery and “flexible natural gas” as backup. And not just a little bit of solar, a ton of it.

In the next 25 years they recommend ramping up 475 MW of solar, 250 MW of battery, and 102 MW of natural gas. They recommend 150 MW in the next six years alone, powering Gainesville with 37% solar at peak by 2030. That number would steadily climb from there, making solar energy and batteries a majority of GRU’s generation by 2050.

Here’s how the energy experts both inside and outside GRU recommend filling that gap over the next 25 years.

It’s hard to overstate what a change this is from just five years ago. The marginal cost of going to “Net Zero by 2045” dropped from $591 million in 2019 to $127 million today, a 78% decrease.

If GRU refuses to do solar the numbers show it will cost GRU ratepayers $2.4 billion, an additional $321 million over the solar/battery/gas plan.

But what if the assumptions are wrong? What if solar energy becomes more expensive in the future? The experts tested three scenarios where solar was different prices, and in all of them solar was cheaper than investing in natural gas only or in privatizing energy generation.

So what happened here? Well the cost of a utility-scale solar PPA has plunged in recent years, dropping in price by 88% since 2010, according to Berkeley Energy Lab.

At the same time the cost of natural gas has been volatile and is estimated to rise. The current price, $2.07, is estimated to rise to $3.50 by 2025 by the World Bank.

The Plan For Solar Expansion

GRU is already on track to bring 75 MW of solar power on the grid by July 2025, thanks to a vote of the Gainesville City Commission in 2020. The plan after that is that every three years a new solar plant of 75 MW will go online.

For every 2 MW of solar that goes onto the grid there needs to be 1 MW of “firm” power, meaning battery or natural gas as backup. So every year some new electric plant needs to be built - either gas, solar, or battery.

Here’s the timeline:

2025: Sandbluff Solar PPA (+27 MW)
2027: New Flexible Gas (+29.5 MW)
2028: Battery (+50 MW)
DHFS1 Retirement (-76 MW)
2029: Solar PPA (+27 MW)
2032: New Flexible Gas (+72.4 MW)
Battery (+50 MW)
DHFS2 Retirement (-232 MW)
DHGT1&2 Retirement (-35 MW)

Why all the natural gas? Well because solar isn’t as simple as other forms of generating energy. Solar energy is “intermittent”, meaning it goes in and out at the whims of the sun. That means a utility needs some kind of power to “back up” the solar energy when the sun’s not shining.

Batteries are ideal for this, but they can’t carry the whole grid. There needs to be some fossil fuel in case of a worst-case scenario where the solar energy can’t replenish the batteries. Say there 4-5 days of cloudy weather? You need those backups ready to go.

But experts have basically figured out how to do that. That’s why this isn’t just GRU’s best plan of action: it’s every utility’s best plan of action.

GRU actually has a more moderate plan than some of the other utilities. Duke Energy is planning to put 6,000 MW of solar and 2,700 MW of battery by 2031. Florida Power and Light is putting 20,000 MW of solar and 2,000 MW of battery on their grid in the next ten years. Orlando will expand their renewables from 346 gWh to 3,198 gWh, which is 39.6% of their generation.

This is very good news for ratepayers and our environment. For a utility that has invested early in renewable energy we are set to reap the benefits of a few hard years at the utility.

The Privatization Path

The new GRU CEO has a very different vision for the future of the utility, and he’s been consistent about this vision for years now. Here’s what he put on his “City that Lost Control” slideshow in his very first meeting at the Authority:

The electric system must seek expanded transmission access to outside resources

• Explore such expansion with FMPA, FPL and/or Duke

• Transition to more of a T&D organization may be required

He called this plan “our lifeline to wherever we want to go”.

What he means here is that GRU will essentially stop producing power and buy it wholesale from a utility like Florida Power & Light. GRU would then become a “Transmission and Distribution organization”, meaning we would just service the electric wires, collect bills from ratepayers, and just pass through their charges to the ratepayers. GRU would “exit the generation business”.

This has been a consistent theme of Ed’s ever since he lost his election for Mayor: GRU can’t afford to invest in its generation fleet any longer, so the only option is to “partner” (privatize) that to an outside firm².

Over 2023/24 he was constantly advocating for this path, telling the Alachua Chronicle that, “GRU needs to look at expanding its transmission interconnections to access more low-cost power. Ultimately, there needs to be a plan to exit the power generation business”.

He then advocated for this path at length after being appointed to the GRU Authority by Ron Desantis, practically yelling at GRU CEO Tony Cunningham on May 29th for not going forward with generation privatization and mad that the IRP showed it’s financially infeasible.

The GRU Authority, under pressure from state Republicans³, apparently liked Ed’s line of reasoning, because they fired Tony Cunningham and hired Ed to the position. The first thing Ed did as CEO was dissolve the department in charge of the Integrated Resource Plan and “pause” any new data. He has since advocated on conservative talk radio to not invest in any new generation for the utility.

Of course, not investing in new generation isn’t an option, the assets we have are over 50 years old. They aren’t going to last much longer. We either need to be planning for new generation now or we will, by default, just be buying our power from an investor-owned utility like Florida Power & Light:

The impacts of that would be huge: roughly 100 employees will be laid off from the energy generation system, GRU would have no control over our electric generation, and prices would be at the whim of an outside corporation. Once we lose our ability to generate our own electricity we lose our leverage to negotiate a good deal with them. GRU ratepayers would still be stuck with $1.7 billion in debt, but without the margins to help pay that down as easily.

But the biggest problem is this: it will cost ratepayers significantly more money.

The Energy Authority already analyzed privatizing energy generation, which they called the “Market Reliance” scenario, and the costs were exorbitant. Compared to the solar/battery/gas plan above it would cost ratepayers $2.46 billion, or $380 million more than the plan outlined above. It is the single most expensive path that GRU has, more than triple the marginal cost of going “Net Zero by 2045”.

Why is this cost so much higher? Because on top of paying for the bulk electricity costs from these other providers, all of whom are either more expensive (Duke) or just a little cheaper than GRU (FPL), ratepayers would need to pay big fees on top of that.

A “capacity charge” would be assessed, a “non-fuel energy charge” would be assessed, fuel charges would still be on your bill, and “wheeling costs” would be assessed.

At the end of the day the numbers just don’t work out - like at all. GRU already has the expertise, equipment, and land to create our own energy for a much lower price, so there’s no reason to subject ourselves to these inflated costs.

Ed’s seen these numbers and is still advocating for it. So what is Ed’s argument for why we would do this? It’s mostly a mix of right-wing conspiracy theories and inflated numbers.

Ed claims that Joe Biden has essentially banned new natural gas plants through some new EPA rule (absurd). He claims that the cost of creating our own power isn’t $2 billion but actually $3.6 billion (what?!). He claims we’ll need “7,500 acres” to make solar work (it’s nowhere near that). He claims that the IRP is tainted by the “Net Zero by 2045 Resolution”, no IRP could possibly recommend that much solar. He’s still stuck on the idea that solar needs backups, even though every utility in the nation is going in the same direction.

To understand Ed’s stubbornness on this subject you just need to look at his history:

Ed’s Long History of Privatization

This isn’t the first time Ed Bielarski has tried to push generation privatization. In January 2020 Ed rapidly tried to push through the same plan, called the “GRU Generation Transition Plan” to privatize our electric generation over to Florida Power & Light.

The plan called for GRU to “exit the generation business” over time. To do this GRU would contract with Florida Power & Light to build a transmission line of 450 MW to GRU, enough to buy all of our power from them for the foreseeable future. We would no longer be a “balancing authority” meaning we would be enveloped into FPL’s system. All of the energy generation employees would be fired as the plants age out, but that would create “savings.”

In hindsight, the whole thing was very odd. Ed came to the Commission on January 16th with a representative from Florida Power & Light by his side, requesting the power to unilaterally negotiate this over $2 billion agreement with no further oversight from the Commission or anyone else. He claimed this needs to happen “immediately” or the deal will die. There would be no outside review, no expert analysis, and the public would have just one meeting to review this wholesale change to GRU’s future.

The Commission pushed back, for obvious reasons, requesting time to review. Then, just 8 days later, Ed paused the deal citing a “change in price” from Florida Power & Light⁴.

But there was no change in price. The Alachua Chronicle, to their credit, found out that Ed either lied or didn’t do basic due diligence on the deal. The $2.10 OATT rates he cited as the basis of the entire financials had been increased by FERC in a public meeting 5 months earlier. Now we have the actual numbers in from outside experts on what the real costs would have been, and they would have been hundreds of millions more than Ed projected. He missed numerous other charges.

There was pretty universal condemnation of Ed’s plan. The City Commission was shocked by how rapidly Ed was trying to change the carefully planned direction of GRU at one meeting. The employees at GRU were in an uproar. Both conservatives and Democrats decried it as untransparent and fiscally irresponsible. It was one of the things the Commission brought up when they fired him two years later.

Ed has since admitted that the deal would have been bad for the ratepayers. He’s even compared it to “another GREC deal” on Facebook. Here’s what he told the Gainesville Sun in 2022:

First, I pulled back on the deal with the FPL because they didn’t and wouldn’t lock in their rates. GRU would have been locked into, not a 30-year deal like the biomass power purchase agreement, but a forever deal through which FPL could go to the Federal Energy Regulatory Commission and be granted increases to our bills— bills, by the way, which we estimated would top $12 million a year. As if to prove my point, FPL was recently granted a 20% increase.

Even worse, to make the deal work, GRU would have to give up its balancing authority — the ability to balance its internal power demands. System control employees would most likely be terminated, plants would likely be mothballed and the utility that was born out of the community’s desire to be independent would be joined at the hip of FPL.

That sounds really bad! But as per usual, Ed has flip-flopped on this again. At the May 29th GRU Authority meeting he spun the deal as a philanthropic venture by Florida Power & Light that would have helped GRU ratepayers.

They were literally investing in GRU and the future of GRU, and it was because they were taking a route up through into Gulf Power when they bought that, so they were looking to provide their own power up, you know, for a rate base that was paying extremely high numbers.

He later told the Gainesville Sun that the deal wasn’t paused by him, like everyone who was there knows and he’s talked about in the press frequently, but because of the Gainesville City Commission: “The partnership with FPL (interconnection agreement) fell apart because the city commission wouldn’t reduce the GFT to fund it.”⁵

This is obviously absurd, but it’s very telling about where his head is. He has already come clean about the negative impacts that deal would have had on ratepayers but is now trying to revise that through a new narrative.

A Better Planned Future For GRU

In 2006 the Gainesville City Commission decided to change direction from the years of analysis and recommendations of the Integrated Resource Plan by going all in on a 102.5 MW biomass plant.

A great report by Navigant investigates all of the decisions that led us to that power purchase agreement. But here’s where it says the main issue happened:

In essence, the City Commission’s directive on April 12, 2006 was a wholesale change in direction for GRU’s energy supply planning . . . . The shifting priorities should have necessitated a new, or alternative, planning study rather than continuing to evaluate the current planning study (i.e., IRP) under a different set of priorities.

This is exactly the mistake Ed Bielarski and the Authority are making all over again if they follow through on privatizing energy generation. The numbers are clear: GRU should own its own generation, it should invest in renewable energy, and it cannot afford Ed Bielarski’s plan to privatize energy generation.

Ed couldn’t be any clearer with his ideas, and neither could the commission. So ratepayers need to decide which direction they want to go: ignore the experts, move toward higher rates, privatization, and layoffs? Or do the fiscally responsible thing, own our generation, build renewable energy, and follow the cheapest path that GRU has to keep rates stable?

1. There are two ways the IRP measures “MW” which can be confusing. The main one is “Contribution to Summer Peak Load”, this means these are the plants that will be providing power at the absolute heaviest use day. This “peak” is what the utility plans around. The other is just straightforward how many MW are created by a plant. For solar there can be big discrepancies between these numbers, since peak tends to happen at or after sundown when solar isn’t working or is weak.

2. Ed has gotten cagey about this since being appointed CEO, and when it’s brought up he’ll try to misdirect and say you can’t “sell the utility without a referendum vote”. This is a red herring. Privatization can happen in multiple ways, including contracting out major portions of the utility. In 2020 when he tried this same plan he did not ask for it to go to a vote of the electorate.

3. Chuck Clemons called for Tony Cunningham to resign, and when Ed’s contract to be paid $332,016 came up for a vote Clemons aide, Mike Murtha, came to the meeting to lobby for it, saying that the Republicans in Tallahassee are in favor of the direction the GRU Authority is going.

4. Much more likely than Ed’s story is that bigger issues were coming to light about FPnL and their schemes to privatize municipal utilities. Just 2 days after Ed’s pause, the entire Jacksonville Electric Authority Board resigned after fraud was found in the rapid rush to sell JEA to FPL. Gainesville was just one municipal utility they were trying to expand to, all through very shady and untransparent methods. Today the CEO of JEA is serving 4 years in prison for the scheme and FPL has been embroiled in legal troubles ever since.

5. As I outline in my article “Correcting (More) Misinformation on GRU” Ed Bielarski didn’t ask for a GFT reduction in 2020, he requested the GFT stay flat along with GRU electric rates.