A recent state audit of Orange County Power Authority (OCPA), a problematic sustainable energy business, revealed opaque marketing and financial services contracts. The agency’s financial stability was also thrown into doubt by the audit.
California’s state auditor, Grant Parks, wrote to the governor and leaders of the state legislature that “OCPA demonstrated a pattern of noncompetitive contracting procedures that decreased accountability by routinely dodging and breaking its own standards.”
The Tuesday results, according to Parks, raise concerns about whether OCPA customers are receiving the finest professional services possible.
The OCPA, a community choice energy supplier, obtains a major amount of its energy from renewable sources for the benefit of its clients in Buena Park, Fullerton, Huntington Beach, and Irvine. The Orange County Board of Supervisors wanted to sign up citizens of the county’s incorporated areas for the OCPA as well, but they abandoned that plan in December due to a lack of confidence in the agency’s management.
According to its supporters, the OCPA is a powerful weapon in the battle against climate change since it invests in renewable energy and reinvests earnings from energy sales back into the community through programs such as energy efficiency projects and grants for environmental justice.
Despite this, it has recently faced considerable obstacles. Several previous audits, as well as a grand jury report, were highly critical of the agency’s management, openness, and contact with the public and member communities.
Last year, a number of Orange County state legislators, including state senator David Min, who represents Irvine and a portion of Huntington Beach, requested the audit. According to Min, the latest audit is “shocking but incomplete,” and he has committed to persuade the OCPA board of directors to authorize a private inquiry of the agency’s contracting methods.
He believes they need to conduct a more thorough inquiry into these transactions. They, in my opinion, raise serious questions concerning civil and criminal liability.
Furthermore, Min told LAist on Tuesday that OCPA CEO Brian Probolsky should be fired immediately or resign.
Probolsky said that he was delighted with the agency’s accomplishments and planned to continue leading it.
“We’re now a $300 million agency, running in the black, building reserves, making the biggest dent in climate change for Orange County — in fact, we’re the only agency doing it — and succeeding by all criteria,” he said.
What did the audit reveal?
The OCPA “demonstrated a pattern” of noncompetitive procurement, which includes partitioning contracts in order to avoid demanding board of directors approval.
The agency’s budget forecasts have proven incorrect due to weaknesses in planning and data.
Consumer opt-out rates three times the state norm are exceptionally high and could have a significant impact on the agency’s bottom line. The OCPA’s chief financial officer stated that the organization may be able to remedy this problem by unloading power and purchasing less in the future to compensate for overestimated demand.
Audit Suggestions
- Improve communication with current and future clients by redesigning OCPA’s website.
- Improve record request handling and tracking.
- Hire a power purchase director to oversee contractors, evaluate power purchase contracts, and determine power needs.
- implement corporate policies requiring contract oversight by the board
- Simplify contractor performance and contract bid tracking.
- Establish a procedure for informing member cities about electricity purchases.
- Strengthen the OCPA’s risk oversight committee and make sure that the board of directors is regularly informed about the agency’s market and credit problems.
What the audit failed to notice
The audit neglected to investigate a critical concern presented by local public officials, state legislators, citizen watchdogs, and previous audits: Is the OCPA sustainable in the long run? The report cites budgetary constraints as its justification. The auditor said that cost constraints prevented them from adequately probing the situation as asked by state legislators.
According to Tiffany Law, the OCPA’s chief financial officer, reserves will be around $53 million by the end of 2023.
Furthermore, the audit did not address the legislators’ initial question about the agency’s hiring practices for OCPA officers. The board was given with only two candidates for each job in January 2021: CEO Probolsky and the outgoing COO.
Probolsky told LAist that there have been several candidates for every job position since then.
Strategies for Improvement
In response to the state audit and previous county reform proposals, Probolsky announced that his staff is developing an improvement plan. He stated that roughly 40% of the recommendations had already been implemented. The strategy will be considered at the OCPA board meeting in March.
The mayor of Fullerton and chairman of the OCPA Board of Directors, Fred Jung, voiced his optimism about the agency’s success since the current board took office in January.
“Were there any mistakes made? Yes, in terms of the OCPA’s early years of operation “Jung replied. He went on to say that the board had recently made substantial changes, including the decision to seek new legal counsel, and that the agency now had a solid workforce.
He stated that “the board will make any reform that is necessary” to ensure that the agency is developing public trust in real time. Fullerton and Buena Park have no plans to leave the group.
The Irvine City Council will vote on whether to remain a member of the OCPA during its board meeting on Tuesday evening. Huntington Beach is also considering leaving the company.
