The county on Tuesday, Dec. 20, moved to pull out of a contract with the Orange County Power Authority ending, for now, the possibility for 130,000 residents and businesses who live and work in unincorporated parts of south county to choose to buy cleaner electricity starting next year.
The 3-2 vote by county supervisors comes as the Orange County Power Authority – a ratepayer-funded public agency – faces mounting public criticism. No fewer than three independent audits – one released earlier this year by the Orange County Grand Jury, a second released earlier this month from a contractor hired by the county and a third released last week and conducted internally by the county – raised questions about Power Authority management, its public communications and pricing strategies.
The Power Authority also has faced a so-called “opt-out rate” – meaning customers who are choosing to revert to traditional electric bills – that’s roughly three times higher than the state average. Fewer customers means less leverage in negotiating energy contracts, which can translate into higher prices over time.
But officials from the Power Authority, including Chief Executive Brian Probolsky, have noted that the agency is succeeding at its basic mission of providing clean energy options to households and suggested that much of the criticism could be lobbed at any new, fast-growing entity. Probolsky told supervisors on Tuesday that his organization could adjust its operations to accommodate some of the recommendations from the audits.
And, previously, Probolsky and others for the Power Authority have pointed out that their prices now match, and soon will be cheaper than, their traditional energy competitors, a shift that they believe will lead to long-term acceptance.
The Power Authority issued a statement late Tuesday, expressing frustration with the county’s vote.
“By joining Orange County Power Authority (OCPA) for the first time in its history, the County of Orange brought renewable energy choice, competition, and local control to its constituents on where they get their energy. We are disappointed by today’s vote by the County Board of Supervisors, which has now taken choice away from residents and businesses. OCPA’s renewable energy choices result in the equivalent of removing 200,000 cars off the road every year.”
But those defenses have come too late to convince a majority of county supervisors.
“It boils down to trust and transparency,” said Supervisor Katrina Foley, who starting next year will represent the swath of unincorporated south county that includes the 130,000 households who would have been able to buy electricity through the Orange County Power Authority starting next summer, as she cast a vote to pull out of the deal.
“I don’t trust that we’ll be able to fix what I think are systemic problems.”
Outgoing Supervisor Lisa Bartlett, who spearheaded the push to get out of the Power Authority contract, also raised the issue of trust. She suggested that the concept of creating more clean energy by boosting demand does not recognize the complexities energy producers face as they shift to producing a greener product, and she feared local consumers could wind up paying for something they aren’t getting.
“In the end, county residents were at risk if we stuck with the Power Authority,” she said.
It’s unclear what the vote means for the future of the Orange County Power Authority, one of 24 community choice agencies in California that, since 2012, have been created to help speed up the state’s switch to clean electricity.
For one thing, it’s possible the county’s bid to get out of a contract might face legal challenges.
But even if the county’s move isn’t challenged, its decision to opt out before starting the contract could be problematic for an agency that relies on public support to succeed.
Residents in communities that contract with the Power Authority can opt to use up to 100% clean electricity, sometimes by paying slightly more than they would if they use the electric mix (typically about 38% of which is considered clean) provided by a traditional power company, such as Edison or Pacific Gas & Electric.
The Orange County Power Authority launched two years ago, making it one of the newest community choice agencies in the state, and it now provides electricity to about 250,000 residents and businesses in Irvine, Huntington Beach, Fullerton and Buena Park. Probolsky said prior to Tuesday’s meeting that the county contract would be welcome, but isn’t essential to the agency’s future.
But Supervisor Don Wagner, who along with Supervisor Andrew Do voted to stay with the Power Authority, suggested the vote might have dire consequences for the new agency.
“The question is whether the OCPA is a sustainable, going concern,” Wagner said. “This is a healthy organization; it can do the things it exists to do. The only risk is if we pull out.”
Another risk could be to taxpayers. The latest audit, focused on financial operations, found that the Orange County Power Authority’s balance sheet is healthy. But the report noted that the cost to the county for pulling out of the deal could run as high as $65 million, although the vast majority of that money will be refunded as the Power Authority resells energy contracts currently earmarked for its future customers. The county report did not offer an estimate for the actual cost.
In Irvine, taxpayers have invested an estimated $7 million in the Orange County Power Authority. That money is due to be repaid in the future, but at least some of that could be at risk if the Power Authority isn’t in operation or isn’t making money.
For now, Irvine, Fullerton and Buena Park appear to be solidly in favor of staying with the Power Authority. On Tuesday, council members in Huntington Beach were expected to discuss a possible reworking of their deal with the Power Authority starting early next year.