GRU looking to forge ahead in an effort to purchase GREC

In an effort to save GRU and the city of Gainesville an estimated $200-600 million, Gainesville Regional Utilities General Manager Ed Bielarski announced in early February the utility company is again gauging the viability of an actual purchase of the controversial Gainesville Renewable Energy Center biomass plant (GREC).

According to GRU’s website, GREC was developed as an effort to reduce cost over time as Gainesville’s energy needs increase. “When needed, GRU may utilize power from the Gainesville Renewable Energy Center. GREC generates biomass which is a renewable fuel source from a local supply of leftover clean wood waste generated by forestry for paper pulp, chip and saw timber and urban wood waste,” states the site.

The site continues to clarify, “GRU does not own or operate the plant, but purchases and owns 100 percent of the energy produced.”

Under the previously negotiated agreement, GRU must pay out a $2.1 billion contract over a 30-year period for the ability to access the energy, so far resulting in increased fees to its customers.  Currently GRU is just over three years into that 30-year commitment and the biomass plant has yet to be fully utilized.

According to the Florida Municipal Electric Association, Gainesville and surrounding Alachua County customers are currently paying the highest energy bills in the state (when adjusted for fuel and costs). Therefore, any cost savings GRU may find should be favorable to customers, both residential and commercial.

As stated during a February 2 meeting with city commissioners, and reported in the Gainesville Sun, Bielarski cannot change the contract. “I can’t make it go away unilaterally, so one of the best options is to purchase it because that allows us many more options going down the road,” said Bielarski.

Currently, GRU is in the process of gaining a memorandum of understanding, or MOU. This would establish a shared communication between GREC and GRU regarding a potential proposed price for some type of beneficial transaction between the two.  

Bielarski further explained, “At that point we could then take the MOU to the city commission and Utility Advisory Board and gauge public opinion.”

Bielarski continued to stress that as things move forward, the entire process will be open with full vetting and information to the city commission as well as the public.

“It is important for GRU and the city of Gainesville to feel comfortable with this process. We want no surprises. We plan to have a lot of transparency and public vetting,” said Bielarski.

He continued to explain that the MOU would not be a legally binding agreement and that through public forums, people would have access to himself as well as the GRU leadership team to ask questions and voice concerns. Further public forums would be held should the plan come to fruition and the city commission proceed to execute a contract, according to Bielarski.

“We are in an interesting time,” said Bielarski, citing GRU’s increased borrowing capacity due to low interest rates, the newly built negotiable position with GREC, and the potential opportunity to modify the GREC facility which could potentially replace Deerhaven, GRU’s largest plant which is already in need of upgrading.

“Our goal from the start was to bring GRU rates to the state medium for our customers, to manage the GREC contract to get the bargain we negotiated for and holding GREC to the high standards we expect,” said Bielarski.

On February 15, GRU proposed and the city commission approved in favor of retaining Norton Rose Fulbright for the review of legal issues associated with a potential purchase of GREC.

According to their website, Norton Rose Fulbright is a global law firm with strengths in the energy industry as well as financial institutions, infrastructure, transport, technology and innovation as well as life sciences and healthcare.  

General Manager Bielarski hoped the memorandum of understanding would be developed sometime in the upcoming month.  

By Kathryn Pizzurro

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