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Saturday, December 03, 2022

City, GRU buy biomass plant for $750 million

With a buyout worth three-quarters of a billion dollars, the City of Gainesville evaded one of its most expensive and hotly contested contracts in recent history.

After years of back-and-forth contemplation, the city closed a deal with Gainesville Regional Utilities Tuesday morning to buy the Gainesville Renewable Energy Center biomass plant for $750 million.

The city entered a 30-year contract with the plant, located at 11201 NW 13th St, in 2009 to help supply the area with renewable power. Over three decades, the city would have had to pay more than $2.1 billion to the plant.

Instead, the city will pay $750 million in bond payments over the next 30 years for the plant, which was renamed Deerhaven Renewable Generation Station on Tuesday, District 3 City Commissioner David Arreola said.

In getting out of the contract, GRU and city officials repeatedly claimed residents could save between 8 and 10 percent in their electric bills if the buyout went through. Mayor Lauren Poe said the decreases would come as early as January.

In a July public forum, GRU General Manager Ed Bielarski acknowledged some residents’ savings would be as low as 6 percent depending on where they live in the city, according to Alligator archives. GRU later announced that, by 2022, electricity rates could increase as much as 7 percent.

Commissioner Arreola assured the new deal’s savings would outweigh any rise in GRU rates. The original contract from 2009 with GREC would have the city paying $74 million each year, whereas now the city will shell out about $38 million annually, Arreola said.

“To imagine that rate increases would eat into those savings is pure fantasy,” he said.

Projected rises in utility rates over the next five years would start from the newly reduced monthly cost, Bielarski wrote in an email.

“(Yes) these rates will rise, just as every utility’s rates will rise,” he said. “No utility guarantees against future rate increases.”

Other options that were considered for the city to get out of its original $2.1 billion contract included arbitration, a process by which a third party reviews the deal and contract. Poe said arbitration talks in summer were limited to clarifying business terminology in the contract.

“People that believe that arbitration would’ve led to some silver bullet that would’ve greatly reduced our cost or gotten us out of the contract I don’t believe they really understood that process,” he said.

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Some longtime residents take issue with the city contracting GREC altogether.

Retired nurse Debbie Martinez has spoken before the City Commission numerous times against the GREC contract. Martinez, who’s lived in Gainesville since 1965, said she feels officials wanted to appear pro-environment by acquiring a renewable energy plant.

“They had no reason to go forward with the contract in 2009, it was no longer in demand,” the 66-year-old said. “We never needed to purchase more power from anybody.”

Even with the new $750 million purchase, Martinez said she worries about debt piling up and falling on taxpayers’ shoulders.

“We’re not Naples, we’re not Fort Myers. It’s not chump change we’re talking about here,” she said. “Our county can ill afford to get ripped off like this. What happens when we have to borrow money for the next emergency? We’ve maxed out our credit card here.”

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