A new report commissioned by the county says the Orange County Power Authority, which gives about 800,000 homeowners and businesses an option to buy renewable energy, is failing on several fronts.
Specifically, the report dated Dec. 9 by Local Power LLC, says the 2-year-old Power Authority’s problems include:
• Customers opting out at twice the rate once envisioned.
• Costs for basic service plans don’t match the rates offered by Southern California Edison for similar service.
• A top manager who lacks “energy market” experience.
• Poor communication with customers, including failing to make it clear that they can opt out.
• Relying too much on outside contractors, contrary to the practices used by most other community choice programs in California.
The report comes as county officials are considering pulling out of a deal, slated to kick in next year, that would make the Power Authority the energy provider for about 130,000 people and businesses in unincorporated Orange County. The Power Authority already services customers in Irvine, Huntington Beach, Fullerton and Buena Park.
In August, when county supervisors voted to commission the independent audit, they did so in lieu of breaking away from the Power Authority deal. And a new draft letter from the county, dated Dec. 7 and addressed to Power Authority Chief Executive Brian Probolsky, would formalize that move, starting July 1, 2023.
It’s unclear if supervisors will vote to implement that decision.
“It’s a very concerning audit,” said 2nd District Supervisor Katrina Foley, who starting early next year will represent the 5th District, which includes much of unincorporated south Orange County.
“There are little to no protections for ratepayers. And I don’t have a lot of confidence in current leadership.”
Local Power LLC OCPA Performance Audit for Orange County Executive_ (1)
In response to the new audit, the Power Authority issued a statement addressing many of the findings.
Among other things, the Power Authority said it is providing clean energy to its customers and that its rates, starting next year, will be lower than those offered by Southern California Edison.
The Power Authority also suggested much of the criticism it is facing is based on politics, not fundamentals.
“No other California (community choice agency) has faced the likes of the political misinformation campaigns that have been waged against OCPA. Some in Orange County have chosen political gain over a healthier, more resilient community for our children and future generations. We encourage customers to get the facts and decide whether community choice energy is right for them.”
The Orange County Power Authority, which is funded by ratepayers, is aimed at helping homeowners and businesses buy cleaner energy, boosting demand for renewables at a time when the state is pushing on several fronts to reach 100% clean energy by 2045.
Though the Orange County agency was formed in 2020 and only recently started selling electricity, community choice agencies have been operating in California since 2002. Statewide, about 11 million people and businesses in 200 cities and counties buy their energy through about two dozen community choice agencies.
But not all of those agencies have worked as planned.
In June 2021, Riverside County’s Western Community Energy declared Chapter 9 bankruptcy, saying at the time that everything from the pandemic to an extreme heatwave prevented a successful rollout. In the filing, Western Community listed debts of about $100 million and assets of just $50 million. The agency’s 113,000 customers were transferred back to Edison.
Months later, the Orange County Power Authority was facing criticism, even from people who support the idea of using market demand to boost clean energy production.
Though critics questioned the Power Authority’s management and operations at the time, some were particularly frustrated over what they viewed as low goals for clean energy generation. They noted that the Power Authority was structured to charge slightly more (about 4% for a typical electric bill) without generating significantly more clean energy than if customers simply stuck with Edison or Southern California Gas and Electric.
“The goals are not even remotely consistent with what the community has asked for, which was an aggressive plan to address climate change,” said Kathleen Treseder, who co-founded OC Clean Power, a group that helped build support for community choice energy, in a story with The Orange County Register dated Aug. 8, 2021.
“This is in no way aggressive,” Treseder added. “We worked so hard to set this up, and now its goals are even lower than the state mandate.”
The new report, which was based on more than two dozen interviews and a review of Power Authority contracts, focused on the agency’s operations. A second report, conducted by county staff, will focus on the Power Authority’s finances. In its statement responding to the Dec. 9 report, the Power Authority said it is “financially strong” and operating “from a position of strength.”
The new audit also comes about four months after the Orange County Grand Jury issued a report that also raised flags about the Power Authority. Among other things, the Grand Jury report suggested Probolsky, as chief executive, was given too much power.
“The CEO, who had virtually no employment experience with CCEs or energy purchase and trading prior to joining OCPA, was left in charge with a $34 million budget, significant signing authority, little meaningful oversight, and no OCPA governing bylaws.
“With so much authority bestowed on the CEO, the OCGJ is concerned about what it found to be a continuing pattern of failing to follow the best hiring practices.”
County supervisors are expected to discuss the Power Authority contract during their Dec. 20 meeting. At that time, the financial report is expected to be complete.
Foley suggested it is possible the county could vote to pull out of the Power Authority, for now, and rejoin at a later date.
“It’s a shame,” Foley said. “This is an opportunity to move forward on cleaner energy that, for now, isn’t being implemented.”
