A scathing new audit obtained by Voice of OC is calling out the Orange County Power Authority, saying the agency’s staff failed to follow best practices, lacked expertise, failed to inform the public and has seen almost three times the statewide average number of customers opt out.
The report was written in part by Paul Fenn, who co-authored the first ever laws in the country for community choice energy programs and was the sole author of California’s laws that govern green power agencies like the Power Authority.
To review the full report, click here.
In a statement released Tuesday morning, power authority staff said they were reviewing the report and would “provide context, clarity and correct any misinformation in the findings.”
“No other California (community choice energy program) has faced the likes of the political misinformation campaigns that have been waged against OCPA,” staff wrote. “We encourage customers to get the facts and decide whether community choice energy is right for them.”
To read the full statement, click here.
Agency CEO Brian Probolsky and chair of the board Mike Carroll did not respond to requests for comment on Monday evening.
The report was commissioned by county supervisors in August when they were weighing exiting the power authority, following up on a grand jury report titled “Orange County Power Authority: Come Clean.”
[Read: County Demands Investigation of OC’s New Green Power Agency, Under Threat of Withdrawing]
In addition to the county, the cities of Irvine, Huntington Beach, Fullerton and Buena Park are members of the agency.
The grand jury report credited reporting from the Voice of OC as one of the reasons they started looking at the agency’s operations, and said they found a concerning lack of transparency and inexperience among staff.
To review the grand jury report, click here.
“The real issue here is that there is some trust broken. There is a community concern that it was not working the way it was intended to work,” said Supervisor Katrina Foley at the August meeting when she called on the audit, saying they’d make a decision on whether or not to stay in once they saw the results.
In a phone call Tuesday morning, Foley said she was “very concerned,” about the audit.
“It exposed what we think is a poorly operated and dysfunctional power authority that’s not serving the best interests of the community,” Foley said. “I do not have confidence in the leadership over there.”
The report was compiled “from late September to mid-November,” and paints a grim picture on the agency’s operations after reviewing agency records and 25 interviews with “OCPA staff, Board members and other participants.”
Auditors were not allowed to review un-redacted copies of the power purchasing contracts agency leaders had signed, and specifically noted the pricing was part of the information redacted.
Board Members Unable To Review Spending
According to the report, even the agency’s board members who approved the contracts weren’t able to review the price they were paying for electricity.
While the agency’s legal counsel claimed that all board members were provided with secure hyperlinks that gave them the chance to review records, some board members claim that’s not true in the report.
“Other board members did not recall ever seeing the links and claimed to have never had opportunities to view unredacted power contracts,” auditors stated in the report.
Those contracts are some of the biggest expenditures the agency has made, but under state law the details on pricing are kept confidential, with only rough estimates provided to the public.
In September, while objecting to the grand jury report calling them non transparent, the board of the agency approved over $200 million in power purchases with almost no public discussion.
[Read: OC Power Authority Disputes Accusations of Secrecy, Completes $200 Million in Power Purchases]
Failure to Inform the Public
Nearly a quarter of the report focused on how the agency failed to effectively inform the public of the power authority’s mission, despite every resident in the participating cities being automatically opted in.
While the agency sent out mailers notifying customers of the change, auditors found those mailers contained almost no information.
“There is no information about rates or renewable levels, nor about the default premium product and impending rate increase,” auditors wrote. “The required information about how to opt out is given in small print in the corner and includes confusing information about the negative consequences of opting out.”
To review a copy of the flier, click here.
[Read: OC Businesses and Public Agencies Left in the Dark As Power Authority Rolls Out]
They also pointed out how the website set up for residents was much less efficient than similar websites from other community choice energy programs, burying the information in a complicated process.
“Best practice is no layers; the rate page, alone, should display enough information for customers to make informed decisions about joining,” auditors wrote. “Inadequate communication with customers may have harmed OCPA’s public credibility.”
That damage to credibility was also listed as one of the possible reasons for why the agency has seen one of the highest opt-out rates in the state, with over double the expected customers opting out according to the report.
“Just halfway through OCPA’s residential opt-out process, its current opt-out rate is already significantly higher than the average.”
Auditors
Auditors also wrote that the higher level of opt-outs could lead to potential issues or outright failure of the agency as the program generates less revenue than projected, but said that was a “worst-case” scenario that OCPA staff claimed was unlikely.
The report also criticized the Community Advisory Committee, the primary resident group set up to inform the board, as effectively defunct, as it has no way to report to the board without going through the CEO.
“The OCPA (Community Advisory Committee) as created lacks a mandate to independently influence the Board or staff and has no independent way to communicate with the board,” auditors wrote. “Though formed to advise OCPA’s Board, (the committee) is substantively under staff control when it should be independent.”
Auditors Say Staff Lack Relevant Experience
Another major complaint brought up by the auditors was the inexperienced staff inside the agency.
The one hire praised in the report was Chief Financial Officer Tiffany Law, who was hired in 2021, but there were multiple concerns about the past staffing of the agency and its current staff.
“Other staff, however, do not have the level of expertise needed to manage electricity procurement and energy activities,” auditors wrote. “These gaps present continuing under-managed risks for participating consumers.”
The report also singled out CEO Brian Probolsky, whose lack of experience in the electricity industry has been a source of concern since he was hired at the end of 2020.
But auditors also pointed out that his role as the Secretary of the board meetings has created some issues, and that it’s not a best practice for the CEO to both run the meeting and serve as secretary.
“There was irregular coverage of Board meeting minutes – some meetings are highly detailed while others are de minimis, omitting or cursorily summarizing comments, questions or requests by members of the public,” auditors wrote.
Board members also raised complaints that staff ignored their requests for a public discussion on multiple issues.
“Failure of staff to follow through on Board requests or directives could be harmful to the integrity of the board as it attempts to make decisions concerning the public,” auditors wrote.
What’s Next?
While the county has now released a report, there are still ongoing audits from the state auditor and the city of Irvine, whose leaders kicked in the starting cash for the agency.
County supervisors Lisa Bartlett and Doug Chaffee had already asked to discuss leaving the agency before the release of the report, and supervisors are set to make the decision at their meeting on Dec. 20.
The board of the power authority meets today at 10 a.m., and their meeting can be viewed here.
Noah Biesiada is a Voice of OC reporter and corps member with Report for America, a Groundtruth initiative. Contact him at nbiesiada@voiceofoc.org or on Twitter @NBiesiada.