The fledgling Orange County Power Authority — just two months removed from losing the county as a client — was dealt another blow Tuesday by state auditors critical of the agency’s hemorrhaging of customers and issues with transparency.

The state’s audit follows two other audits critical of the agency’s operations. Those two audits prompted the Orange County Board of Supervisors in December to vote 3-2 to withdraw from the power authority, which got started just last year.

The agency also serves Buena Park, Fullerton, Huntington Beach and Irvine.

In a letter to Gov. Gavin Newsom and legislative leaders, California State Auditor Grant Parks said, “Despite its relatively recent formation, OCPA has been the subject of scrutiny and criticism from members of the media, members of the public and certain other entities that have raised concerns about OCPA’s contracting practices and transparency.”

Since the agency started in April “more customers than expected have opted out of its service. As a result, the proportion of potential customers receiving services from OCPA is below the rates of other similar programs in California, a fact that could hinder its ability to operate efficiently.”

Parks faulted the agency for contracting services that were “noncompetitive” and “reduced accountability by repeatedly circumventing and violating its own policies, raising questions about whether its customers are receiving the highest quality professional services available.”

Parks also said the agency should “improve the way it shares information with its customers and the public.”

The agency was founded as Community Choice Aggregator, which the goals of increasing the use of renewable energy and to scale up to reduce costs. The authority has been criticized for not making it clearer to customers how they can opt out and how to make an informed decisions.

The state’s audit showed that residential customer participation dropped to 77% within a few months after it started proving service.

“Some OCPA practices lack proper board oversight and could contribute to negative public perception,” according to the state’s audit.

The audit also concluded that the authority “has avoided competitive bidding processes by repeatedly amending some contracts.”

The audit also found that the authority has failed to hire the necessary staff to oversee the consultant that manages its procuring of energy.

“It could not demonstrate that a committee intended to mitigate market and credit risks has fulfilled its responsibilities,” the report said.

The authority said in a statement that it “takes this and all audits seriously and sees them as a resource for OCPA and our board of directors as we strive for continued improvement… We are committed to working with our board of directors on an improvement plan that will include consideration of the recommendations contained in the state audit.”

The authority added that “With 80% market share, OCPA is financially strong and operating in the black.”

Sen. Tom Umberg, D-Santa Ana, said the audit’s findings are “numerous and troublesome and should worry the residents, businesses and elected officials of Orange County.”

Umberg was particularly concerned about the authority’s “misuse of marketing funds.”

Umberg accused the authority of using taxpayer dollars to “craftily conceal vital information from consumers. To make matters worse, those same taxpayer dollars have been used to manage the agency’s struggling reputation via the hiring of a public relations firm whose principal chief strategist is none other than former State Auditor Elaine Howle.”

Sen. Dave Min, D-Irvine, said he was “disappointed” and that the audit “raises serious questions of potential fraud, self-dealing, and corporate malfeasance…”

Min called on the authority’s CEO Brian Probolsky to resign.

Sen. Josh Newman, D-Fullerton, said the audit “revealed what appears to be a disconcerting pattern of deception and a level of mismanagement bordering on misconduct, to include opaque contracting processes, deficient transparency and accountability to ratepayers, and an overall poor fiscal state that calls into question whether the agency’s actions have been conducted in good faith or in the public’s best interest.”

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