Orange County cities are on the cusp of learning that their general funds are exposed to liability claims due to the Orange County Power Authority’s (OCPA) activities. [1]
Supporters of community choice aggregation (CCA) champion its “financial firewall” as a catch-all safety net against financial loss. However, CCAs—which automatically switch consumers into their programs amid questionable claims about greener energy [2] at lower prices—aren’t telling cities the whole story.
That firewall doesn’t extend to OCPA’s alleged illicit activities, including misrepresentation of its energy products, gaming, bait and switch, and conflicts of interest, leaving untold liabilities hanging over OCPA, city members, and ultimately taxpayers and voters.
For instance, OCPA’s false advertising—which is reviewed by a board of directors comprised from its city members—invites class action lawsuits.
That’s technically impossible.
When questioned about home delivery even OCPA’s consultant says “I can’t do that.” [3]
OCPA also ventured into potential fraud around its written commitment to supply required emergency back-up power to California’s electric grid. This power—known as “resource adequacy”—combats blackouts associated with intermittent wind and solar energy that OCPA puts onto California’s power grid.
To advance its regulatory approval and to garner public support for its business launch, OCPA submitted implementation planning documents stating it would “meet or exceed” its resource adequacy obligation. [4] Consultants and salespeople know stopping an OCPA-type program after business launch is akin to putting the genie back in the bottle.
However, OCPA already knew its commitment was unachievable despite that guarantee. [5]
- First, in its appeal of its fine from state regulators, OCPA cast itself as a victim of an “unconscionable” electricity market [7] even though it was aware of conditions many months before its business launch, enough time to have halted its plans and left ratepayers in Southern California Edison’s bundled service;
- Then, OCPA’s board of directors boasted that it was money-ahead by gaming consumers and the grid, paying a lower amount via a fine for non-compliance rather than shelling out $80 million for its committed emergency power; [8]
- Finally, its board threw the utility commission under the bus, claiming OCPA’s decision to blow off its compliance was much ado about nothing because regulators’ emergency power mandate was a bunch of “made up numbers.” [9]
Gavin Newsom is scrambling for out-of-state energy to cover California’s looming summertime shortages. He remembers twenty years ago when then-Governor Gray Davis’s political career abruptly ended while Enron and Shell Energy gamed Californians by manipulating electricity prices and creating rolling blackouts.
Today, OCPA is gaming California. Ironically, Shell Energy is one of OCPA’s largest energy suppliers.
Another page in OCPA’s problematic record involves apparent conflict-of-interest with its energy portfolio consultant Pacific Energy Advisors (PEA) and OCPA’s general counsel.
Both were aware of OCPA’s resource adequacy shortcomings well before OCPA’s business launch, which—if postponed or decertified—could have jeopardized their earnings [10], as well as the anticipated dole for OCPA staff. This occurred after board members awarded a contract to EES Consulting, putting it into an apparent conflict-of-interest. [11]
OCPA’s on-going problems dwarf those of California’s nearly thirty other CCA programs, and are compounded by OCPA’s board chair, Fullerton Mayor Fred Jung, who trumpets that OCPA has satisfied nearly all parts of the agency’s improvement plan. That plan falls well short of addressing serious issues.
OCPA continues on a troubled path, steered by a board of directors that is largely oblivious to its own culpability.
Notes:
[1] Alter ego doctrine.[2] OCPA member City of Huntington Beach desired to determine actual dirty power content in OCPA but was denied access to all requested energy invoices and CAISO Settlement Statements even though it executed a nondisclosure agreement.
[4] OCPA Implementation Plan and Statement of Intent, Dec. 28, 2020, page 18: “The OCPA resource plan will meet or exceed all of the applicable regulatory requirements related to resource adequacy and the RPS” (renewable portfolio standard). Page 18 of OCPA’s subsequent December 21, 2021 Implementation Plan and Statement of Intent Amendment No. 1 reads: “The Program will meet or exceed all the applicable regulatory requirements related to resource adequacy and the RPS.” Also note that OCPA failed to meet its RPS obligation, per SB 350 (de León, 2015).
[5] OCPA’s business launch was April 1, 2022. Upon learning of its impending resource adequacy (emergency back-up power) shortfall, OCPA requested a waiver from its obligation on Nov. 1, 2021. Then, a month later, OCPA released its Implementation Plan and Statement of Intent, Amendment No. 1, stating it would “meet or exceed” its resource adequacy regulatory requirement. (OCPA included the same “meet or exceed” statement in its original Implementation Plan a year earlier). OCPA was fined $1.96 million for delinquent procurement of resource adequacy by the utility commission, per Citation E-4195-0116 on April 20, 2022, (three weeks after OCPA’s business launch).
[7] OCPA Appeal of Citation E-4195-0116 to California Public Utilities Commission, authored by OCPA general counsel Ryan Baron, dated May 20, 2022, page 1.
[10] Pacific Energy Advisors received a not-to-exceed $2.388 million contract by OCPA June 9, 2021. General Counsel Ryan Baron’s (Best Best & Krieger Law LLP) first-year contract with OCPA was $240,000, approved Dec. 16, 2020. OCPA’s Annual Budget for legal, through June 30, 2022 was $799,000; through June 30, 2023 is $580,000. Baron resigned under pressure from OCPA Feb. 6, 2023 and was replaced by Best Best & Krieger’s Nicholaus Norvell.
[11] After authoring the original community choice energy Feasibility Study, dated June 18, 2019, for the City of Irvine, OCPA’s largest member, EES Consulting received a not-to-exceed $150,000 contract from OCPA, Dec. 16, 2020, for community choice energy Implementation Services.
