The chairman of the Orange County Power Authority board blasted Huntington Beach officials Wednesday for voting to withdraw from the fledgling agency and said he believes it remains viable.
But Fred Jung, chairman of the agency’s board as well as Fullerton’s mayor, told City News Service that he hopes his own city council will not entertain a withdrawal from the authority.
“If you believe the impacts for climate change are real and we as adults have a duty to the next generation to mitigate the negative impacts on climate change then this is the biggest move we’ve made as a city in a very long time if ever, so I am perplexed at some of my council members that may look at this,” Jung said.
“Even if you don’t believe in the agency and the management thus far you have to believe in savings and choice and climate change to some extent. I hope they stay and hope we can make it.”
No one has put the move to withdraw on the agenda of the Fullerton City Council, Jung said.
The authority’s officials earlier calculated the effect of Irvine exiting the agency when there were multiple discussions of doing so last year, Jung said.
“This isn’t foreign to our staff,” he said. “Irvine at the time was the largest entity and we found it was viable at the time for the agency even without Irvine.”
Jung warned that Southern California Edison had plans to “increase electricity rates another 45% by 2020. By choosing to stay with OCPA, Huntington Beach businesses and residents have the ability to select OCPA’s Basic Choice renewable energy plan, which costs 2% less than SCE and offers more renewable energy.”
The board chairman added that for many small businesses such as restaurants, which operate on razor-thin profit margins, “That 2% savings could be the difference between letting go an employee or keeping one.”
For seniors on a fixed income, “That 2% savings could be the difference between affording a medication or not,” Jung said.
“And you also have choice,” he said. “I don’t think monopolies are a good thing. Offering choice does tend to build competition and, as a result, you get a better product and a cheaper product.”
Huntington Beach Mayor Tony Strickland issued a statement saying the agency “has been a disaster from day one.”
He added, “I don’t need to reiterate all of the problems, first and foremost being the agency’s lack of transparency and unqualified leadership, which is evidenced by both the state and county audits, as well as whistleblower complaints.”
Strickland said the agency “doesn’t even meet the state’s minimum Renewables Portfolio Standard. They can say their energy is green, but the facts show otherwise. After disagreeing with county officials, who also decided to opt out of the OCPA, I believe this is the right time to withdraw. I have an obligation to protect the residents of Huntington Beach and to act in their best interest, whichever way you look at it, the OCPA isn’t good for Huntington Beach.”
The city council voted 4-3 on Tuesday night to withdraw. Council members Gracey Van Der Mark, Pat Burns and Casey McKeon sided with Strickland. Council members Dan Kalmick, Natalie Moser and Rhonda Bolton voted no.
The move came weeks after Brian Probolsky was pushed out as the agency’s CEO and replaced by interim CEO Joe Mosca, who had been a public relations director of the agency.
Kalmick said the special meeting was unexpected.
“No one knew this was coming, which is horrible for business,” Kalmick said. “Businesses don’t like surprises and this is a surprise to everyone.”
The move to exit the agency was surprising “now that they’ve fixed 90% of the issues enumerated in the audits,” Kalmick said. “And there’s new management coming on board.”
Kalmick said he believes the city cannot get out of the agency until July 2024 and added that the move could cost the city money and invite lawsuits.
“And is Edison ready to take back Huntington Beach at this point?” Kalmick said.
“If the city pulls out Edison would be 2% more expensive — at least,” Kalmick said. “I have no idea what this would cost. And there’s a whole set of legal stuff that has to happen for us to withdraw.”
It was easier for the county to withdraw in December because it had not yet taken any power from the authority, Kalmick said.
“I think the power authority is in good shape and the fundamentals have always been good so I don’t quite understand what the need is to leave,” Kalmick said. “There’s no staff report so it’s unclear what is actually going on here.”
Orange County Board of Supervisors Chairman Don Wagner, who also serves on the power authority’s board, said he understood the request.
“I certainly understand the desire to withdraw,” Wagner said. “The county’s analysis following our giving notice of withdrawal shows that the power contracts are more valuable now than when purchased, so can be sold without a loss to the agency. That means it’s the right time for any city to get out of an organization that is, unfortunately in my view, no longer sustainable.”
The other cities in the agency are Fullerton, Buena Park and Irvine.
A state audit of the agency was critical of how many customers it was losing and cited issues with transparency. The state audit followed two other critical audits.
The agency was founded as a Community Choice Aggregator, which aims to increase the use of renewable energy and scale up to reduce costs. The authority was criticized in the state audit for not making it clearer to customers on how they can opt out and make informed decisions.