The Orange County Power Authority has now failed its fourth audit, this time from state auditors who found the agency’s CEO circumvented the board’s oversight in approving $1.8 million in contracts and that the agency repeatedly failed to be transparent.
The biggest concern the California State Auditor Grant Parks’ office had with the agency’s operations centered on a lack of board oversight in CEO Brian Probolsky’s contracting process.
State auditors found Probolsky single handedly approved around $800,000 in “marketing and financial services contracts,” out of public view, apparently undercutting the agency’s own rules in the process.
He later encouraged the board to increase those contracts, bringing the total to $1.8 million, without looking for other vendors.
“OCPA’s staff repeatedly circumvented key elements of its contracting policies. As a result, OCPA cannot demonstrate that it acted in customers’ best interest,” auditors wrote.
Since the agency launched a few years ago, Probolsky has faced repeated questions over whether or not he’s qualified to run the agency given his lack of a college degree or experience in the electrical industry.
In their 45 page report released Tuesday morning, auditors laid out a laundry list of recommendations to improve the agency over the coming months, including improving the board of director’s oversight, processing public records requests faster and hiring more qualified staff.
But it remains unclear just how many of those will actually be implemented, with the power authority’s staff pushing back against the audit’s findings.
“OCPA indicated that it did not agree with all of our conclusions, although it did not identify any specific areas of disagreement,” auditors wrote. “Nevertheless, it stated that it would consider implementing our recommendations.”
It’s a similar response to the scathing audit issued by the County of Orange last December.
In a Tuesday interview with Voice of OC, agency leaders said they’d be unveiling a new plan to address all the audits at an upcoming board meeting, with an opportunity for board members to address every issue raised by the four audits.
“We look forward to partnering with our board to put policies in place,” Probolsky said, adding they’ve already finished 40% of their proposed plan. “Focusing on continuous improvement will allow OCPA to reach our goals.”
In January, the agency also hired Balance Public Relations to handle the fallout of the various scathing audits, bringing on former California State Auditor Elaine Howle.
“The audit released today is a very thorough analysis,” Howle said. “I think this improvement plan will work as a roadmap for staff and the board … there is going to be some accountability here.”
While the agency was originally started in 2020 by the cities of Irvine, Huntington Beach, Buena Park and Fullerton with the goal of bringing more renewable energy options for residents, questions lingered over how well its being managed.
After two county audits and a grand jury report that highlighted many of the same issues as the state auditor’s report, the county government jumped ship at the end of last year, and the cities of Irvine and Huntington Beach are mulling doing the same.
[Read: Cloudy Contracts, Audits and Lost County Support: A Rough Year For OC’s Green Power Agency]
The agency has also had one of the highest opt-out rates of any similar program in the state, with only 77% of residents in the participating cities jumping onboard.
Auditors Zero in on Contracts, Transparency
State auditors found that while Probolsky approved the agency’s original marketing and communications contracts on his own, he couldn’t provide any documentation to back up which firms he selected.
“Without this documentation, it is not clear what factors OCPA evaluated when making its selection, and it cannot demonstrate its rationale for selecting the winning proposal,” auditors wrote.
The report found Probolsky then split up the marketing and communications contract into smaller contracts that allowed him to approve them without bringing them before the board, since he has the power to approve any spending less than $125,000 on his own.
“OCPA reduced the value of the individual contracts to a level that did not require several key oversight mechanisms that would have applied had it executed a single contract,” auditors wrote. “The effect of OCPA’s awarding separate contracts in this way was to bypass the requirements … that require the board’s approval.”
The auditors also found that two of the marketing contracts later had their contracts increased from $50,000 to $125,000, which Probolsky did not report to the board, a violation of the agency’s rules.
All three marketing contracts were eventually brought before the board at Probolsky’s request and increased again, with a combined value of nearly $1 million. Auditors found no evidence of the agency looking to find another bid for those contracts.
[Read: OC Green Power Agency Expands Contracts Established Behind Closed Doors by CEO Last Year]
To fix the problem, auditors said staff need to bring more purchases before the board, track the work that contractors are doing and ensure there’s a competitive bidding process on any contract or proposal.
Auditors also raised concerns about the agency’s failure to communicate with the public, an issue that’s been highlighted by every audit of the power authority to date and multiple members of the public, with a spotlight on the agency’s glacial process for reviewing public records requests.
[Read: Orange County Power Authority Criticized For Lack Of Transparency]
“Although our review of OCPA’s public records requests generally did not identify violations of state law, OCPA was limited in its ability to quickly and clearly demonstrate that it had appropriately responded to public records requests,” auditors wrote.
Voice of OC filed a request for all communications between Probolsky, then Chief Operating Officer Antonia Castro and the rest of the board, for the first seven months of 2021 in July 2021.
The agency has still not completed that request, turning over the most recent batch of records on February 23, 2023.
Auditors said they did not have the resources to figure out whether or not the agency appropriately handled records requests, only whether or not the agency replied to them.
They also found there is no written procedure to track how the agency processes records requests, something they recommended changing in the near future.
Auditors also recommended the agency immediately hire someone with experience in purchasing power, highlighting how the staff’s lack of experience has made it harder to purchase power, forcing them to rely on outside contractors.
While the agency is in the process of hiring someone to oversee power purchases since 2021, the auditors said they need to speed it up.
“Because OCPA has not yet hired this staff member, it still does not have the technical capacity to effectively oversee certain aspects of its power consultant’s work,” auditors wrote.
How Will The Power Authority Address Concerns?
Power authority staff hosted a news conference on Tuesday morning after the release of the audit to announce all their proposed improvements, but many precise details are still being worked out.
Staff largely pointed to issues they’re already working on to improve transparency, including a revamp of the website, documenting their existing rules for processing records requests and more in a 19-point plan they say will be made public in the near future.
They also pointed out the audit supported their decision not to release many of their power purchasing contracts, adding that they were creating non-disclosure agreements for some member cities to review those contracts, but declining to say who they were.
Agency board members will also have a chance to add more to the plan at their next meeting, with spokesman Joe Mosca pledging the board would have a chance to respond to every critique raised in the audits.
“Anything delivered as a recommendation, we’re putting in front of the board of directors,” Mosca said.
But they had no answers on what would be done to increase oversight of contracts going forward, saying it was still in development.
“There were very few contracts overall, the agency hasn’t executed many,” Probolsky said when asked why they weren’t reported to the board. “It was an oversight on staff’s part … we’re going to update our practices going forward.”
Probolsky also said they’d be looking at providing a quarterly report on their contracts to the board of directors.
When asked if they’d done enough to communicate with the residents, Probolsky said there was “always an opportunity to add,” and Mosca pointed out how they were expanding their existing marketing contracts in the near future.
The community advisory committee could also see a bigger role, with the board set to approve a new plan for their activities in the coming months.
When asked about previous concerns in the county audit that the community advisory committee was too restricted by the CEO, Probolsky said the committee’s former chair Jose Trinidad Castaneda helped him craft the agendas and they were the ones in charge.
“The committee had full input on what they discussed.”
Castaneda backed up Probolsky, confirming that he helped create every agenda in a text to Voice of OC.
Irvine is set to discuss pulling out of the agency tonight at the request of Councilman Mike Carroll, who was the former chair of the agency’s board during the time Probolsky approved many of the contracts called out by auditors.
But it’s unclear if he’ll have the votes to move forward with pulling out after Councilwoman Kathleen Treseder said she wanted to stay onboard.
[Read: Irvine Councilwoman Reverses Course, Plans to Stay in Controversial OC Green Power Agency]
Noah Biesiada is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at email@example.com or on Twitter @NBiesiada.
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