In the past few City Council meetings, my ears perked up when I heard at least one Council Member mention the City looking into joining the Orange County Power Authority (OCPA). The rates are more competitive than SoCal Edison! Why wouldn’t we put everything on the table that would help the residents with our cost of living crisis?

Good question. But in this case, I think we should tap the brakes.

What the heck is the OCPA?

The OCPA is a strange creature.

Is it a utility? Not exactly: it sells power, but it doesn’t generate any power itself or maintain any infrastructure.

Is it a nonprofit? Not exactly: it is a consortium of governments, but it managed to tally a gross profit margin of 16% in 2023.

So what the heck is it? Technically, it is a “Community Choice Aggregation” program (CCA). A CCA is an alternative to an investor-owned utility (IOU, such as SoCal Edison in our area). It works by aggregating the buying power of customers within a defined jurisdiction to buy energy contracts on their behalf. However, the CCA itself doesn’t generate any power or maintain any energy infrastructure, both of which remain in the hands of power plants and the local IOU.

So what’s the point? The main goals of CCAs have been to either lower costs for consumers or, especially in California, to allow consumers greater control of their energy mix, mainly by offering greener generation portfolios than local utilities. SoCal Edison, for example, gives their customers the ability to opt-in to a “Green Rate” that would allow customers to buy 50-100% of their energy needs from green sources, but the program has been perpetually waitlisted. So the idea behind the OCPA is to give customers more choices in how they buy their energy so that they can opt for more renewable sources, which in turn will incentivize the creation of more renewable power generation.

Or at least that’s the idea. There is one little catch, though: in order to get a critical mass of customers to allow all of these wonderful things to occur, CCAs had to be given the power to automatically enroll customers in member jurisdictions. The “Choice” in CCA, therefore, stands for the customer’s ability to opt out of the CCA programs, not opt into them. Keep that in mind.

The history of OCPA: A case study of politics, politics, politics

In our case, the OCPA hasn’t really worked out that well in practice. And that’s because, surprising to absolutely no one, an opaque super-agency led only by electeds from member cities with the power to compel its customers to participate, and the additional power to procure millions of dollars of power contracts with minimal resident oversight, has been highly political from the start and, until recently, incompetently managed.

First, some political history.

It might surprise you to learn that OCPA started life in early 2021 as a Republican-backed initiative. Mike Carroll and Anthony Kuo — both Republicans and Irvine City Council Members at the time OCPA was being formed — provided key early support. Mike Posey, another Republican City Council Member from Huntington Beach, also sat on the original OCPA board. Brian Probolsky, former Chief of Staff to Republican former OC Supervisors Andrew Do and Pat Bates, was named the first CEO of the OCPA. To offset his lack of experience in utility management or sustainability, Antonia Castro-Graham, a long-time clean energy advocate with extensive experience in the clean energy space, was hired alongside Probolsky as OCPA’s first Chief Operating Officer.

By December 2021, Republicans appeared to consolidate control of the OCPA. First, COO Castro-Graham resigned, citing irreconcilable differences with CEO Probolsky. Then, the Republican-led OC Board of Supervisors announced that the unincorporated areas of Orange County would be joining the OCPA, with Don Wagoner (another Republican) joining the OCPA Board as Orange County’s member representative.

But nothing in political life is certain. In June 2021, Huntington Beach Mayor Pro Tem Tito Ortiz spectacularly resigned, resulting in a Democratic majority on the Huntington Beach City Council and the replacement of Republican Posey by Democrat Dan Kalmick on the OCPA board. Then, in June 2022, the Orange County Grand Jury released a scathing report in June 2022 accusing the OCPA of poor leadership, lack of public oversight and mismanagement.

The 2022 elections rolled around and the political upheaval continued. Democrats wrested supermajority control of the Irvine City Council and managed to also seat a Democratic majority on the Orange County Board of Supervisors. Shortly following the election, Irvine replaced its former OCPA board members Farrah Kahn and Mike Carroll with Democrats Tammy Kim and Kathleen Treseder, the latter having just unseated Kuo by railing against OCPA management and transparency issues. And the newly minted Democratic majority on the OC Board of Supervisors voted to pull the plug on its OCPA membership, with Democrat (and former Costa Mesa Mayor) Katrina Foley casting the deciding vote.

Suddenly the floodgates opened on criticism of CEO Probolsky. A State audit in February 2023 found “a pattern of deception and mismanagement, including suspicious contracts and lack of accountability, lack of staff with sufficient experience to oversee the consultant that manages its power procurement, and insufficient oversight by the board.” Then in April 2023, the CA Public Utilities fined OCPA $1.96 million for failing to purchase adequate electricity to avoid service interruption during the summer of 2022. The OCPA board, now with a solid Democratic majority, fired Probolsky shortly thereafter on what was essentially a party line vote.

In short order, OCPA had gone from a Republican-controlled agency to a Democrat-controlled one, and unsurprisingly this had membership consequences. The 2022 elections also saw a very conservative majority elected to the Huntington Beach City Council (resulting in Kalmick losing his OCPA board seat to Republican Casey McKeon) and the new majority quickly voted to leave the OCPA with the hopes it could destabilize it completely.

That didn’t happen. Now the OCPA seems to have found some of its footing under new CEO Joe Mosca. And the whole agency, dominated now by a unanimously Democratic board, has taken on a particularly blue caste. In fact, Democrats who once railed against the OCPA as an incompetent money pit now sing its praises and are exhorting cities like Costa Mesa to join up.

So what’s the point?

The point is that the OCPA, despite its blandly positive self-descriptions and its mind-numbing nature as an agency led by other agencies, is not a neutral “non-profit” seeking the greening of the Orange County energy grid. Instead, it is an inherently political creature, and none of the “reforms” that have been in place since its Grand Jury and State audit debacles have changed that. And because its politics depend entirely on the politics of its underlying city members, which themselves are highly volatile, it’s likely that OCPA’s leadership will continue to be chaotic.

But, even if it did stabilize, is there any benefit to joining the OCPA?

Honestly… It really isn’t clear. Recently OCPA has boasted that it can provide a slightly better rate than the base rate offered by SoCal Edison (about 3% less), but that’s only when looking at the rate offering the least renewable energy (about 44% renewable). Presumably the choices with higher mixes of renewable energy are more expensive.

Additionally, there are some significant costs for cities that switch to OCPA. First, as I mentioned way at the beginning, every customer in a member jurisdiction is automatically opted into a CCA, with the only “choice” being provided to customers being to affirmatively opt out of participation. So the first cost is that every resident will be switched over to a service they didn’t choose, and which might support policies they don’t like. For example, I can certainly understand why some people might think that handing out grants to climate action nonprofits isn’t a great idea, and they might not want to support that with their utility dollars.

The prospect of such an insta-switch poses quite the problem for the incumbent investor-owned utility, SoCal Edison, who stands to lose tens of thousands of customers at a stroke of a pen. To solve for the fact that SoCal Edison has invested so much money historically in creating the electrical grid that OCPA customers now effectively rent to use, SoCal Edison is permitted to charge an exit fee (nauseatingly termed a “Power Change Indifference Adjustment”, or PCIA). The PCIA can be highly volatile given that nobody seems to really know what the “fair” rate of this compensation is.

To the extent the PCIA is too high, OCPA will be paying too much and likely passing those costs onto OCPA customers. If the PCIA is too low, then SoCal Edison’s customers will be subsidizing OCPA customers, meaning that those who opt out of the OCPA will be propping up those who opt to stay in. This is likely a gross oversimplification but I hope you’ll forgive me as this is a ridiculously complicated subject. Just Google “PCIA for CCAs” if you want to see the mess for yourself.

But what about going “green”?

Here is the wackiest part of all of this to me: even if you select OCPA’s 100% renewable plan, there is absolutely no guarantee that the energy you receive is actually from renewable sources. What you are buying, essentially, is assurance that OCPA has purchased sufficient “Renewable Energy Certificates” to cover the ratepayer’s energy demands (check out page 18 of OCPA’s financial statements). These certificates are generated by green energy producers and then can be sold on a secondary market to dirty energy producers, who then can attach those certificates to the energy they sell. So it is possible that the power you are buying is actually “dirty”, but blessed instead by one of these certificates, such that it is green on paper.

It’s important to note that OCPA does not maintain the distribution infrastructure: SoCal Edison does, and charges OCPA customers for the privilege of receiving its energy on its grid. But electricity, like water, doesn’t stay bundled in a neat little package for each customer as it is transmitted. The energy you actually get coming out of your outlets will be comingled with “dirty” sources, just as it is when you are a SoCal Edison customer. So all any particular OCPA customer does, then, is very slightly nudge the overall electricity soup to be a bit more green. At least, again, on paper.

Bottom line: Until they are more established, CCAs look a lot like an unnecessary complication with a huge amount of political risk.

CCAs are ridiculously complicated. They are strange, basically opaque agencies layered on top of a monopolistic, profit driven utility that itself lacks transparency and is nearly impossible to comprehend. This complication and lack of transparency mean that there is effectively no public oversight while millions of dollars change hands.

And frankly, the fact that CCAs wrap themselves in the flag of green energy makes them more suspect, because it means that political fellow travelers (ahem, Democrats) will be incentivized not to ask too many hard questions, especially when they effectively control them. It also raises the specter of conflicts of interest, when OCPA is in the position to issue grants to climate-related organizations, themselves dominated by Democrats.

For example, OCPA recently gave out grants to climate organizations that educated the public about renewable energy. One of the recipients was Climate Action Campaign, an organization headed by Ayn Craciun. Craciun, as it turns out, is running for the Irvine City Council. And as member of OCPA, Irvine has the right to place two seats on the OCPA board. While the grant and Craciun’s campaign well may be a coincidence borne of genuine interest in renewable energy and activism, it shows how quickly an agency that both is headed by left-leaning politicians and gives out grants to climate nonprofits can get into slippery territory.

And besides, it’s not like California’s existing electricity grid is in good shape such that it can withstand all of this volatility and complication. I think it’s fair to ask whether fracturing the energy market in this way, which calls into question which provider should be the provider of last resort in the event of substantial disruptions or shortages, is causing more harm than good. What would happen, for example, if fiscal mismanagement caused OCPA to suddenly go bankrupt? Members would have to crawl back to SoCal Edison, who would have to take those customers back or turn off their electricity. Is SoCal Edison ready and willing to properly hedge against that possibility? I’m guessing they will, but at taxpayer expense (if they aren’t already do that).

Costa Mesa should be laser focused on providing reliable, uninterrupted electricity service to its residents. OCPA just isn’t there yet, and we shouldn’t be distracted by rate discounts. So I, for one, hope the rumors the city might join up stay just that.