Orange County Power Authority: The Perfect Crime (Part 3)

Cows are seen grazing near a wind turbine at the Altamont Pass wind farm in Livermore, California on May 16, 2007. Justin Sullivan/Getty Images

Commentary

Orange County Power Authority (OCPA) is imploding following a Grand Jury’s scathing report about the agency’s policy and personnel shortcomings. Buena Park is reportedly considering ditching the energy upstart, and other OCPA member cities are calling for an audit, all while the agency is whispering that its prices are now headed up.

While everyone is playing politics to oust OCPA’s inexperienced chief executive—new arrival Brian Probolsky—no one is looking at the agency’s inherent business flaws that have nothing to do with Probolsky’s one-year tenure, and which could put OCPA and its consultants in the crosshairs of ratepayer litigation.

OCPA’s Claims

Contrary to marketing claims that you can buy (and receive) a blend of cleaner electric power than your neighbor, everyone whose electricity is transmitted across the state’s electric grid receives the same mix of generation. Everyone.

There are no dedicated wires carrying “green energy” to your house, or anyone else’s for that matter.

Electricity data from the California Energy Commission shows slightly more than 30 percent of California’s overall energy mix on the electric grid was renewable energy, as shown here:

This contrasts with OCPA’s claim to provide everyone in Irvine, Huntington Beach and Buena Park with 100 percent renewable energy, while providing Fullerton with 69 percent renewable.

OCPA’s representations are technically infeasible.

As much as California wants all of its electricity to be 100 percent renewable, that will not be achievable until battery storage technology limits are overcome. Today, gas and coal-fired electric generation cover the void left by wind and solar whenever the wind stops or clouds block the sun. Without coal and gas-fired resources, California would experience constant blackouts.

Wind and solar are intermittent, meaning the electricity is produced at random times—not just when needed. Solar’s daily wave of energy (and wind to a lesser extent) is visible here (pdf).

In other words, no matter how badly you may want to save the planet, and no matter how many OCPA-type organizations pop up, the California electric grid is not going to provide 100 percent renewable energy (or even 69 percent renewable) just because someone builds more solar farms or windmills.

Much of OCPA’s Power Won’t Get to Market

Part II of this series identified that energy input (supply) to the electric grid must always equal, or balance with, California’s aggregated energy demand from the grid second to second.

The over-supply of OCPA’s intermittent wind and solar is literally rejected or “curtailed” by California’s grid operators to prevent blackouts—an unfortunate reality for OCPA as it tries to push maximum solar power onto the grid to support its untenable advertising.

Curtailment can be seen in this chart:

Given that the state regularly curtails the over-supply of intermittent solar energy (and again, wind to a lesser extent), OCPA’s added intermittent renewable energy to California will either: (i) be curtailed along with California’s other curtailed energy, or (ii) take available space on the grid while forcing an equal amount of intermittent energy from other suppliers into curtailment.

So much for OCPA Board Chair Mike Carroll’s naïve declarations that OCPA is the greenest energy company in the nation. [1]

Renewable Numbers Game

Some portion of OCPA’s renewable energy is likely delivered to the grid, but to achieve the appearance of delivering advertised volumes of renewable energy to its ratepayers, the balance of the agency’s renewable power entails inexpensive renewable energy certificates (RECs) and sleight of hand, perfected after years of practice by OCPA consultant Pacific Energy Advisors.

RECs are simply a receipt showing energy production. In many cases that energy is sold to someone else, someplace else, but OCPA often retains the REC and reports clean energy deliveries to state regulators and customers.

This practice deflates California’s carbon emission numbers because the state is frequently not getting deliveries of clean energy that are associated with the REC. [2]

There are variations of the REC scheme. The following diagram illustrates how dirty power is re-labeled as, in this case, wind.

What is OCPA procuring for your business or home if the renewable energy is merely a REC? High-carbon emitting brown power (pdf), aka unspecified power, system power, or generic power, which is loaded with gas-fired and coal-fired power.

Any claims that OCPA is greening the grid are pure fiction.

OCPA engages in RECs even though its consultants implied to Irvine OCPA board representative Farrah Khan that the agency would not engage in illicit activities.

The video of OCPA’s December 21, 2021 board meeting reveals that its consultant with Pacific Energy Advisors (Kirby Dusel) merely defined “REC,” which Khan accepted as addressing her objection rather than confirmation that RECs would not be used surreptitiously. [3]

OCPA declines to provide its largest member, City of Irvine, with contract information about the agency’s energy, likely because OCPA would have to address why it is purchasing so much brown power after representing its energy is almost entirely renewable.

You can gain an understanding of community choice energy’s stealth reliance on dirty power by looking at the brown power expenditures (pdf) of long-running Marin Clean Energy (MCE), a “success” after which OCPA patterns itself.

$50,000 Annual Payments

OCPA’s largest commercial and industrial ratepayers pay upwards of $50,000 extra per year for the agency’s 100 percent renewable energy, which, as previously discussed, is not delivered to you.

The extra cost for OCPA’s uber-renewable products does little more than fund energy wholesalers, consultants, and OCPA’s self-preservation “reserve account,” while ratepayers receive the same nominal 33 percent renewable energy volume that all other Californians receive from the electric grid.

Further, OCPA’s core metric—its electric supply’s ostensibly near-zero greenhouse gas intensity (emission rate)—is exempt from audit for 3 years due to a statutory carve-out, leaving ratepayers unable to confirm the legitimacy of OCPA’s carbon reductions. [4]

Businesses should reduce their electricity costs with one of the following actions. (Residential customers will be enrolled into OCPA this October):

• You can opt out of OCPA by calling [phone]. You will need your Southern California Edison bill. OCPA’s operators are trained to keep you from departing the program. You will receive Edison’s default basic service, which is compliant with California’s annual renewable energy mandates.
• If you do not want to opt out, you can enroll in OCPA’s lower-priced Basic Choice (advertised as 38 percent renewable), which reportedly cuts your price to “at parity” with Edison. However, OCPA reports its prices will increase more than 5 percent next year to help meet milestone funding requirements buried in its credit agreement, which puts at-parity in jeopardy. Of note, part of the premiums collected from OCPA’s 100 percent Renewable and Smart Choice products are used in convoluted internal accounting to subsidize the Basic Choice product’s at-parity pricing with Edison.

In the interest of full transparency, even OCPA’s Basic Choice (38 percent renewable energy) claim is not achievable to the extent: (i) it exceeds renewable content in California’s overall annual energy mix as reported by the California Energy Commission and (ii) its wind or solar energy is curtailed.

Read Part 1 here and Part 2 here.

Notes

[1] OCPA board chair Mike Carroll at April 5, 2022 board meeting (https://vimeo.com/696260108/3d898d4215 — elapsed time 54:46): “But I just wanted to say what really jumped out at me, other than all the detail and the sheer breadth of the fact that we’re going to be, or that we are, the greenest or one of the greenest electric providers in the nation … which is really fun as that … rolls off the tongue.”

[2] A 3-year carbon reporting exclusion for new community choice agencies was negotiated during the roll out of California energy reporting law AB 1110, before commencement of its multi-year implementation workshop. The 3-year audit exclusion is identified in codified AB 1110, §398.4 (k)(2)(F)(ii) and reads: “Any new community choice aggregator formed after January 1, 2016, shall not be required to report data on greenhouse gas emissions intensity associated with retail sales until at least 24 months, but shall be required to report that data no later than 36 months, after serving its first retail customer.”

[3] OCPA December 21, 2021 board meeting, https://vimeo.com/662129739 — elapsed time 16:32.

[4] OCPA letter to Mayor and City Council Members of Irvine, June 14, 2022, Question/Answer number 3, in which OCPA replies to Irvine’s request for energy contract details. Rather than supply redacted contract copies, OCPA declines all responses, claiming it is bound by “law.” OCPA’s policy contrasts with energy and contract information from its sister Community Choice Energy agencies Marin Clean Energy, Clean Power Alliance, and Sonoma Clean Power.