Orange County Power Authority—Paving Easy Street With Your Cash

A view of power lines during a Pacific Gas and Electric public safety power shutoff in Santa Rosa, Calif., on Nov. 20, 2019. Justin Sullivan/Getty Images

Commentary

A review of the Orange County Power Authority (OCPA) identifies how the community is gamed and drained of millions of dollars in benefits, despite promises to save money for residents.

OCPA is a local “Community Choice Energy” government agency that inserts itself into the energy supply chain as a competitor to Southern California Edison, claiming it can deliver higher volumes of clean energy at lower prices than the utility companies.

Drain #1: OCPA’s $22.6 million annual cash grab

Irvine, Huntington Beach, and Buena Park recently enrolled in OCPA’s 100 percent renewable product. According to pricing from Southern California Edison, the cities could have purchased the same 100 percent renewable content from the utility and collectively saved $21.7 million dollars per year.

The average homeowner or renter will pay about $6.50 per month extra, and likely more by the time residential enrollments begin in many months.

OCPA’s fourth city member, Fullerton, remains in the program’s mid-priced 69 percent renewable Smart Choice. Fullerton residents spend $900,000 per year extra to receive 31 percent less renewable energy.

If OCPA loads unbundled renewable energy certificates (RECs) into its “clean” energy, this further devalues ratepayers’ expenditures, although it reduces OCPA’s costs. Inexpensive system power is typically delivered when unbundled RECs show up.

SoCal Edison crews replace power lines in Santa Clarita, Calif., on Oct. 25, 2019. Christian Monterrosa/AP Photo

By choosing Edison’s 100 percent Green Rate offering, the four cities would also have eliminated Edison’s ongoing exit fees and $3 billion in OCPA contract liability.

In a peculiar omission, OCPA’s Proposed Rate Schedule fails to include any reference to Edison’s competitive 100 percent Green Rate, which, if selected, could very likely unravel OCPA’s (protected) business model.

Tunnel-vision enrollment into the OCPA program’s over-priced clean energy products is contrary to Irvine councilmember Tammy Kim’s Feb. 8 kudos for an agency devoid of the following attributes:

• Ratepayer equity—there is zero consideration for sweeping consumers into OCPA’s highest-priced energy programs. Community Choice consultants have honed the enrollment and notification process, designing opt-out notices that are easily discarded by homeowners with junk mail. Community Choice programs control the opt-out process (one agency even bragged about its “retention rate” for opt-out requests). Asserting that consumers can easily exit from these programs is self-serving for an agency representing itself as a transparent advocate for the common person.
• Community outreach—there is zero education that facilitates transparent choice about 100 percent renewable energy programs;
• Reinvesting back into the community—one of OCPA’s first steps was executing power contracts with European oil giant Royal Dutch Shell subsidiary Shell Energy. OCPA not only exports money out of California, it “reinvests in the community” by supporting a company that state and federal regulators have charged with gaming California’s energy market along with Enron.

Drain #2: OCPA disregards $82 million (minimum) commitments per year

Orange County Power Authority was originally sold on the basis of reducing energy prices by 5 to 9 percent compared to Edison’s rates. Huntington Beach’s OCPA Board representative Mike Posey fancied himself a “champion of the taxpayers.”

Few people looked back. Who didn’t want clean energy for an even lower price than Edison’s?

Giant wind turbines near Palm Springs, Calif. David McNew/Getty Images

Then Posey introduced board motions in early January that reversed original commitments.

First, prices for OCPA’s default product, Basic Choice, no longer saved money, giving way to “at parity” (aka mirroring) pricing with Edison. To worsen matters, OCPA’s consultants reported that achieving “at parity” pricing required off-loading costs from Basic Choice into the agency’s pricey Smart Choice and 100 percent renewable products.

To support the cost shuffle, OCPA needed ratepayers to buy its high-cost premium products.

The second switch delivered by Posey’s OCPA board motion involved city enrollments, which would now be default-enrolled into the agency’s more expensive Smart Choice renewable product, along with metered customers within those cities. This instantly fulfilled the accounting scheme’s needed supply of subsidy-paying ratepayers.

Amid OCPA’s self-congratulations, hard questions remain. What happens when the economy tilts and premium-paying ratepayers flee to the lower-cost Basic Choice “at parity” program—who funds the subsidies? What happens then, when large numbers of consumers opt out of OCPA?

In the meantime, OCPA engineered a coup. By upselling its member cities into premium-priced products, the agency achieved a total revenue swing—or economic drain from the community—of $82 million to $101 million per year, depending on whether its original 5 or 9 percent now-lost “savings” is included.

Drain #3: Steamrolling communities with fictitious “price savings”

City of Lancaster and Town of Apple Valley: Both cities operate Community Choice Energy programs that launched amid promises to save consumers money compared to Southern California Edison.

According to the comparative prices on Apple Valley’s and Lancaster’s websites, prices are now so high that Edison’s 100 percent renewable product costs less than lower-priced inferior products from both Community Choice agencies, save for Apple Valley’s entry-level 35 percent renewable product at $1 less per month for an average home than Edison’s 100 percent renewable product.

Telling for OCPA’s future, both agencies employ the same rate-setting consultant with whom OCPA recently executed a whopping $2.4 million contract.

The downtown skyline is seen behind high tension towers in Los Angeles on Aug. 16, 2020. Apu Gomes/AFP via Getty Images

Clean Power Alliance (formerly known as Los Angeles Community Choice Energy): Clean Power Alliance dwarfs all Community Choice Energy agencies. The agency’s lowest-price Lean Power ranges from nearly $110 to more than $450 extra per year per household than Edison’s renewable compliant default energy product.

Clean Power Alliance originally launched as County of Los Angeles executives trumpeted savings of “an estimated $20 million annually in utility bill payments” and could achieve up to $140 million annual savings. To support its assertions, LA County commissioned a 1 1/2 page “review” of its 81-page Business Plan. Today, Clean Power Alliance’s current prices cost its aggregated communities more than $200 million extra per year compared to Edison.

The Alliance’s record includes loading inexpensive certificates into its portfolio to mitigate high energy prices, representing those financial instruments as delivered clean energy to customers rather than the typical underlying dirty power.

Drain #4: “Benchmarking”—regularly siphoning cash from your bank account

OCPA says the new standard for its lowest-price product, Basic Choice, is to “maintain parity” with Edison. The practice is known as “benchmarking.”

While Edison absorbs the public relations fallout as a disliked straw man for increasing prices, the Community Choice Energy agency skates by unnoticed. According to OCPA’s consultant, its current prices are expected to remain close to Edison’s after Edison’s next price hike in late March.

Ratepayers should expect OCPA’s “at parity” prices to eventually exceed Edison’s, as now occurs at many Community Choice Energy programs. Price hikes are inevitable as OCPA proponents come to terms with trying to eke a profit in a commodity market whose net margins are inherently tiny.

OCPA’s lack of delivered benefits is covered up with propaganda and city councils’ failures to scrutinize the agency’s morphing record. OCPA is preparing to steamroll Orange County and pave easy street with your cash.

There’s only one true “Community Choice”—opt out of OCPA.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.