Is the Orange County Power Authority Imploding?

On April 1st, the Orange County Power Authority (OCPA) debuted with much fanfare, initiating electricity service to business customers in Irvine and elsewhere. As it launched, OCPA board chairman, Irvine Councilmember Mike Carroll, declared: “We’re right where we want to be!” But just two months later, by May 31st, it appears the OCPA has begun to implode.

Just days after Carroll’s declaration and the OCPA’s announcement that it had already procured enough energy for the summer and beyond, the California Public Utilities Commission (PUC) levied a nearly $2 million fine on OCPA for failing to purchase enough electricity to ensure that its customers are provided with uninterrupted service this summer.

According to sources at the PUC, the Power Authority is appealing the fine — saying the unusually large penalty would cause OCPA “financial difficulties.”

The OCPA is a grouping of four Orange County cities — Irvine, Huntington Beach, Fullerton and Buena Park — and the County of Orange. Its purpose is to take over from Southern California Edison (SCE) as the electricity supplier in those jurisdictions and provide power from renewable sources, with the promise that profits would go back to the communities rather than to SCE shareholders.

The Power Authority was organized by Irvine, with Councilmember Carroll and Mayor Farrah Khan taking the lead in the effort. Carroll and Khan persuaded the previous City Council to agree to have Irvine fund OCPA through 2022. So far, Irvine has advanced $7.7 million cash and guaranteed a $35 million loan to OCPA to cover its start-up costs. (According to the OCPA website, the Power Authority projects a $42 million loss in its first two years of operation.)

A number of critics saw red flags from the start. Irvine City Councilmember Larry Agran has been the lone critic on the Council since his election in 2020.

“From the beginning, I have questioned the viability of OCPA as an enterprise and the potential liability to Irvine taxpayers and ratepayers,” said Councilmember Agran. Agran has repeatedly questioned the Power Authority’s financial models, pointing to Irvine’s large and singular commitment of taxpayer dollars to OCPA. None of the other OCPA member-cities were asked to contribute financially to join.

Throughout the past 18 months, Agran has sought to put a comprehensive review of OCPA operations on the Irvine City Council’s meeting agenda; but he has not received a required “second” from his Council colleagues, even though Carroll chairs the OCPA board and Khan also sits on the board as Irvine’s representative. A Public Records Act request for documents and information that Agran filed months ago has effectively been ignored by OCPA.

Agran stated: “Irvine taxpayers and ratepayers are funding this thing. As members of the City Council, we have a responsibility to ask questions and demand answers. That’s what transparency and accountability is all about. When an agency refuses to provide detailed financial information, that’s never a good sign.”

There are other signs suggesting an impending implosion:

• Although Khan and others had promoted the idea of the Power Authority by saying it would provide greener electricity at lower rates, the fact is that OCPA is charging ratepayers as much or more than SCE, depending on what mix of renewable energy they sign up for.
   
• To meet financial projections, OCPA is automatically enrolling all ratepayers in the member cities into the highest-cost tier of service, unless they specifically opt for lower tiers.
   
• When the OCPA began enrolling business customers in April, there was a raft of complaints from business owners that they were not properly notified and did not know their options. As the month went on and there was more public discussion and information, more and more opted down or chose to opt-out of the program altogether, including the Irvine Ranch Water District and Irvine Unified School District.

Meanwhile, OCPA has scheduled all Irvine households to be transferred from SCE and automatically enrolled in OCPA in October.