The idea was to create an energy provider that would sell Orange County residents cleaner, less expensive electricity than what they buy from Edison, following in the footsteps of other such community choice energy groups already operating in the state.
But the same activists who spent five years rallying support for the four-city Orange County Power Authority, which became a reality last December, are now criticizing its operations, with the biggest concern being that the authority is not adequately dedicated to clean energy. They point out that the authority’s Implementation Plan includes a timetable that would reach just 57% renewable energy by 2030, less ambitious than the state’s target of 60% renewables by that same year.
Other concerns include a prospective contract for a line of credit they say could leave the agency vulnerable to a bankruptcy, something that happened to a similar power authority in Riverside County. They also complain that the Power Authority’s politically connected CEO Brian Probolsky, who receives a salary of $239,000, has no experience in the energy sector, and that he has too much authority for awarding contracts and buying energy.
Still, the heart of the issue is cleaner energy.
“The goals are not even remotely consistent with what the community has asked for, which was an aggressive plan to address climate change,” said Kathleen Treseder, who co-founded OC Clean Power, a group that helped build support for community choice energy.
“This is in no way aggressive,” she added. “We worked so hard to set this up and now its goals are even lower than the state mandate.”
Treseder has stopped encouraging new cities to become part of the authority and recently told the Laguna Beach City Council that it should not join. In addition to Laguna Beach, the cities of Costa Mesa, Lake Forest and Santa Ana have set aside consideration of joining the Power Authority, which currently consists of Irvine, Huntington Beach, Fullerton and Buena Park.
At least two of the five authority board members share several of activists’ concerns. Board member Fred Jung, a Fullerton councilman, would like a number of changes to current rules and harbors questions about Probolsky’s suitability as chief executive. However, Jung also noted that the authority is in its infancy and he believes it’s still possible to add more aggressive goals, more oversight of contracts, tighter limits on Probolsky’s spending authority, and other safeguards.
“We can add these things moving forward,” Jung said. “I look forward to shoring up any vulnerabilities we have. We are dedicated to responding to what the community is concerned about.
“Climate change is the existential threat of our generation,” Jung added. “This is extraordinarily important to me.”
Birth of choice
Community choice energy, approved by the California Legislature in 2002, was designed to correct problems resulting from the state’s deregulation of the electricity industry in the 1990s and to empower local jurisdictions to establish their own power authorities. Also known as community choice aggregation, the effort has evolved into a tool for environmentalists eager to accelerate the state’s move away from fossil fuels.
There are now 23 such agencies statewide serving 11 million people, a quarter of the state’s population.
When initially established, these municipal providers typically buy electricity from the same sources as Edison and other private utilities. But unbound by long-term contracts many utilities hold, they can adjust the mix of energy sources to take advantage of lower costs or to favor renewable energy — or both. Additionally, they can be more aggressive than private utilities in encouraging and developing clean local power generation and battery storage.
Under the system, private utilities continue to deliver the electricity and manage billing, while the municipal authorities set rates and the energy source mix. Individual customers can opt out and remain with their private utility, though few have taken that course.
The city of Irvine, which anchored formation of the Orange County Power Authority, predicted a 2% decrease in customer costs under the new agency, which is slated to start delivering electricity to commercial customers next April and to residential customers the following October.
The green question
The Orange County Power Authority, like its statewide counterparts, was touted primarily as a way to hasten the state’s push toward 100% clean electricity by 2045. But that issue has transformed into the central bone of contention.
Activists point to the authority’s target of just 57% clean energy by 2030 as evidence of the low bar being set. They also point to imprecise language in the Joint Powers Agreement that established the agency.
That founding document says objectives “may” include “stimulating and sustaining the local economy by developing local jobs in renewable and conventional energy.” Treseder is among those who say the agency should not be developing “conventional energy” — largely natural gas — at a time when the state is phasing it out.
Agency CEO Probolsky said Treseder, a UC Irvine ecology professor who’s running for the Irvine City Council, was reading too much into the Joint Powers Agreement.
“JPA language is designed to be permissive rather than prescriptive,” he said. “There’s nothing in there that says we’re going to develop conventional energy. It doesn’t require that.”
Additionally, Probolsky said the board could step up the agency’s renewable energy timetable in January, when it considers amendments to the Implementation Plan. And while critics complain that there is nothing in the current language to indicate customers will have the choice to get as much as 100% clean energy — as offered by other such agencies — Probolsky said, there’s “a very high likelihood those options will exist” in the future.
But those possibilities haven’t assuaged the concerns of activists like Treseder and Ayn Craciun. Carciun’s group, the Climate Action Campaign, led the drive to create a community choice energy agency in San Diego and then helped push for the Orange County counterpart. She said the current direction of the Orange County authority could result in it being virtually the same as private utilities.
“The point of community choice is to go beyond what SoCal Edison and SDG&E are doing,” Craciun said. “Otherwise, why would we be doing this?”
Community choice energy is touted as good for consumers and the environment, but economic bumps along the way have included the May bankruptcy filing of Riverside County’s Western Community Energy and its subsequent decision to transfer customers back to Edison.
Officials blamed the bankruptcy on a perfect storm of events, according to the Riverside Press Enterprise. The coronavirus pandemic lead to a moratorium on power shutoffs for non-paying customers, even as delinquencies at times ran 10 times higher than previous industry standards, according to Western. An August heat wave led to higher-than-expected demand for power. And the agency couldn’t use pandemic relief money to bail out its finances.
A forensic analysis is underway to determine what exactly went wrong in Riverside. Probolsky said he’s seen no evidence to support activists’ concern that Western’s contract with its line-of-credit lender, Barclays, limits his agency’s ability to weather financial difficulties.
But those activists continue to say that Orange County’s proposed contract with J.P. Morgan could lead to similar problems. And Fitch Ratings, a credit rating agency, pointed to the Riverside bankruptcy as a sign of risk that’s inherent in community choice energy.
“Inadequate risk management, unexpected spikes in demand and compliance with state mandates … can all hinder (community choice energy’s) ability to manage costs and provide competitively priced power supply,” Fitch Ratings said in statement responding to the Riverside bankruptcy.
Treseder and Craciun criticized Probolsky and his staff for seeking autonomy in final approval of a contract with J.P. Morgan for line-of-credit borrowing — as well as for two other contracts — at the the agency’s June 22 meeting. The board then voted unanimously to have all three contracts returned to the board for final approval.
Treseder has also complained that Probolsky’s authority to approve as much as $75 million in energy transactions was disproportionate compared to other community energy agencies.
Meanwhile, board member Susan Sonne, a Buena Park City councilwoman, told the board on June 22 that she would like the agency to closely study the forthcoming forensic analysis into Western, including feedback from Orange County Power Authority consultants formerly employed by Western. The power authority’s general counsel, Ryan Baron, and financial consultant, Public Financial Management, also have worked for Western.
Sonne also expressed concerns with the Joint Powers Agreement and staff’s authority to approve contracts.
“I would like us to take the opportunity to go over the initial JPA agreement and look at a couple of items that are on that, specifically as it relates to designating authority to staff in terms of executing contracts,” Sonne said.
However, authority Chairman Mike Carroll, an Irvine councilman, told the Register that there were no plans to discuss revising the agreement.
While authority board member Jung was part of the unanimous January vote to hire Probolsky, he now says he shares critics’ concerns about the CEO’s lack of prior experience in the energy field.
“A JPA in its infancy needs to have somebody who’s competent in all areas,” Jung said. “I think the scrutiny he’s getting is fair. He should address it publicly and say what his deficiencies are. If he doesn’t, there will be fallout.
“I have a lot of concerns and a lot of those are the public’s concerns.”
Probolsky declined to respond to Jung’s comments. Along with Chief Operating Officer Antonia Graham, he was recommended for the authority job by the agency’s attorney, Baron. Carroll and Jung declined to say how many other candidates were considered for CEO, although Jung said, “We had very limited choices.”
Probolsky and Baron previously worked together for the county of Orange, where Baron was a deputy county counsel and Probolsky was chief of staff for a succession of three county supervisors over seven years. Probolsky then spent four years as a manager for the county’s waste and recycling department. He’s also been a member of the Moulton Niguel Water District Board of Directors since 2008, and is currently its board president.
Jung told the Register he would like a performance review of Probolsky. Several days later, Carroll said such a review had been scheduled for closed session at the authority’s Aug. 10 meeting. Graham would also be reviewed at that time, he said.
But Carroll offered unqualified support for Probolsky, noting that Graham’s background was in sustainability and there were other energy experts on board to help with specific needs. Probolsky’s job, on the other hand, was more organizational, he said.
“His key task is getting a brand new governmental agency off the ground,” Carroll said. “Experience in government and in utilities is paramount, and he has vast experience. (Probolsky and Graham) have done a fantastic job in getting this fledgling organization off the ground.”
As for criticism that Probolsky didn’t have a college degree, Carroll said, “A resume is more important than a diploma.” And he said there’s plenty of time to work out details such as how much renewable energy the authority will use.
“I believe it’s healthy and productive to have advocates pushing us to do better,” Carroll said. “But I question whether the Orange County Power Authority should be attacked for issues it hasn’t even tackled yet.”
Source: Orange County Register