JEA pushed to accelerate plan to sell power company to change narrative after public backlash, investment banker says

Jacksonville, Florida – Monday marked the ninth day of the federal trial of former JEA Chief Executive Officer Aaron Zahn and former Chief Financial Officer Ryan Wannemacher, who are charged with conspiracy and fraud.

The court was told that the sale of JEA would have resulted in billions of dollars in profits. The majority would have gone to the city to insure the JEA employees’ pension plans and pay retainage to the employees.

But prosecutors said much of the money may have also gone toward a controversial bonus scheme that pays out $345 million to top executives.

more: Former JEA executive says he didn’t speak out about controversial bonus plan because he thought board members knew | Former JEA board president didn’t know the plan he voted for would result in a $345 million bonus if utilities were sold: Testimony | City council auditors have asked for answers about the controversial bonus plan, but have received no response from JEA executives. | FBI agents continue detailed investigation into former JEA executives indicted in conspiracy case on third day of trial | FBI agent details investigation into former JEA executives accused of conspiracy on second day of trial | Former JEA executives accused of leading defense of Jacksonville’s largest fraud scheme on first day of federal trial

Morgan Stanley’s Eddie Manheimer testified that Morgan Stanley became aware of JEA’s desire to accelerate the sale process in late November or early December 2019. He testified about a conversation he had with then-JEA COO Melissa Dykes, who urged him to act sooner. Mannheimer explained the reason for their change was the fact that “the tide of public opinion was turning” against the process, and they wanted to change the narrative. But the investment banker said he told Mr. Dykes that this was problematic because he did not believe that speeding up the process would result in the best outcome for the utility.

Investment bankers said they had attended numerous meetings regarding JEA’s financial situation but did not believe it was in crisis or needed to be sold.

NextEra Energy executive Mark Hickson testified about how the company put together its bid for JEA. He said if NextEra acquires JEA, JEA customers will pay the same rates as other FPL customers. But it will also pay an additional fee to address JEA’s commitment to buy power from Georgia’s Plante Bortle nuclear power plant.

Hixson explained that NextEra may have acquired Plant Bogle power, which is more expensive than other sources, to supply to JEA’s customers or perhaps sell it on the open market at a loss. FPL would make up the difference with an additional fee, which he said was only for JEA customers.

NextEra is preparing to provide just over $11 billion in funding to JEA, but Rickson said JEA’s service area is surrounded by FPL’s service area, which includes much of the east coast of Florida, so there are many People say it’s called the “donut hole.”

The trial is expected to continue for several more weeks.

At the end of the day, after the jury was excused, there was a discussion between the judge and lawyers about the list of additional witnesses that prosecutors had submitted over the weekend, including former JEA Executive Director Herschel Vineyard, former Chief Justice John Kendrick, Director of Human Resources, and Camille Lee Johnson, former Director. Defense attorneys objected to allowing them to testify, in part because they said in opening statements that the jury did not intend to hear from them.

The judge said he would consider the matter under advisement.