March 15, 2023
Board of Directors Meeting
2 PUBLIC COMMENTS ON AGENDA ITEMS
March 15, 2023
AGENDA ITEM 4
PUBLIC COMMENTS ON NON-AGENDA ITEMS
March 15, 2023
AGENDA ITEM 5
DIRECTOR ANNOUNCEMENTS
March 15, 2023
AGENDA ITEM 6
STAFF REPORT
March 15, 2023
AGENDA ITEM 7
Consent Calendar
March 15, 2023
AGENDA ITEMS 8.1 TO 8.4
ITEMS 8.1 – 8.4 – CONSENT CALENDAR
Recommended Action
Approve the Consent Calendar.
CONSIDER DRAFT BYLAWS AND THIRD AMENDMENT
TO JOINT POWERS AGREEMENT
March 15, 2023
AGENDA ITEMS 9.1
ITEMS 9.1 – CONSIDER DRAFT BYLAWS & 3RD AMENDMENT TO JPA Recommended Action
1. Review draft Bylaws and Third Amendment to Joint
Powers Agreement.
2. Direct staff to provide Member Agencies with a copy
of the proposed Bylaws and Third Amendment and
place the Bylaws and Third Amendment on a future
agenda for final approval.
OCPA DRAFT IMPROVEMENT PLAN
March 15, 2023
AGENDA ITEMS 9.2
DRAFT IMPROVEMENT PLAN
March 15, 2023
TIMELINE
DRAFT IMPROVEMENT PLAN
• November 2020: Orange County Power Authority (OCPA) was formed • Staffed by employees from the City of Irvine and several consultants hired by the Board of Directors • January 2021: OCPA hired the Chief Executive Officer, its first dedicated staff • June 2021: OCPA concluded its first non-operational fiscal year o Engaged an independent auditor, Pisenti & Brinker LLP, to conduct the first financial audit of OCPA for fiscal year ended June 30, 2021 o Outcome was a clean unqualified opinion
• April 2022: OCPA began providing electric service (generation) to municipal and commercial accounts throughout its service area • June 24, 2022: Orange County Grand Jury released a report regarding OCPA’s formation and activities • July 2022: OCPA’s independent financial auditor began its second financial audit of OCPA for fiscal year ended June 30, 2022 o Outcome was a clean unqualified opinion
• October 2022: OCPA began providing electric service (generation) to residential accounts throughout its service area • December 9, 2022: At the request of the Orange County Board of Supervisors, Local Power LLC released an analysis of OCPA’s staff, operational structure, policies, and procedures. The report did not include recommendations but refers to best practices used by some California community choice aggregators (CCA) • December 14, 2022: At the request of the Orange County Board of Supervisors, the Orange County Internal Auditor reviewed OCPA’s business practices, including contracting, disbursements, human resources, payroll, invoicing, and analyzed financial data and costs incurred by OCPA on behalf of Orange County • February 28, 2023: as directed by the Joint Legislative Audit Committee of the California Legislature (JLAC), the State Auditor released its report on OCPA’s finances, projections, and other business operations, including compliance with various statutory requirements
AUDIT RESPONSE TEAM
DRAFT IMPROVEMENT PLAN
Orange County Power Authority
• Brian Probolsky, CEO
• Tiffany Law, CFO
• Joe Mosca, Director of Communications & External Affairs • Owen Lee, Controller
Balance Public Relations
• Dean Florez, CEO
• Elaine M. Howle, Principal & Chief Strategist and former California State Auditor • Bob Alvarez, Vice President
DRAFT IMPROVEMENT PLAN
1.Balita
2.Daily Pilot
3.Epoch Times (Chinese)
4.Epoch Times (English)
5.I Love Irvine
6.KFI
7.LAist
8.Little Saigon TV
9.Rafu Shimpo
10.Spectrum News 1
11.The Orange County Register
12.US News Express
13.US Asian Post
14.Voice of OC
15.World Forum
16.World Journal
STATE AUDIT MEDIA BRIEFINGS
DRAFT
IMPROVEMENT
PLAN
All audit findings are procedural and all the
recommendations are implementable.
One-third of the recommendations
have already been completed.
EIGHT COMPLETED RECOMMENDATIONS
DRAFT IMPROVEMENT PLAN
✓ Include the Community Advisory Committee as a standing item on the OCPA Board agenda and recognize the Community Advisory Committee as an advisory committee.
✓ To demonstrate to stakeholders its compliance with state law requiring open meetings, by May 2023, begin tracking information showing when meeting agendas are made publicly available. ✓ Utilize a member agency clerk or assign a qualified OCPA staff member to handle the agendas and minutes for the OCPA Board and OCPA Community Advisory Committee to ensure that they are prepared properly and posted in a timely manner.
✓ Ensure that new contracts between $50,000 and $125,000 are appropriately reported to the Board. ✓ Ensure the Board approves all contracts of more than $125,000 before execution. ✓ By May 2023 the Board should direct staff to provide reports on at least a quarterly basis that specify the dollar value of each service contract, the amount paid to each contractor to date, and the amount owed to the contractor for work performed but not yet paid.
✓ Maintain a log to document who receives a manual check to establish accountability. ✓ Require large checks to be counter-signed by senior management.
Report findings primarily focus on processes and practices and recommendations are reasonable and implementable.
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #1
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
GOVERNANCE
Implement OCPA by-laws
consistent with those of
other CCEs within
California.
(Grand Jury)
OCPA staff and counsel have
drafted a set of By-laws and
presented it to the Board for
review at its February 15, 2023
meeting.
After Board approval, the By-laws will be posted on the OCPA website.
CEO 2
nd
review
March 15, 2023
Final review and 30-
day member
distribution
April 15, 2023
Final implementation
May 15, 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #2
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
GOVERNANCE Include the Community
Advisory Committee
(CAC) as a standing item
on the OCPA Board
agenda and recognize the
Community Advisory
Committee as an advisory
committee.
(Grand Jury)
As soon as our new Board was
seated in January, we began
the process of receiving
appointments and soliciting
public members for our
Community Advisory
Committee and will start the
2023 series of regular
meetings in March. CAC
committee reports have been
and will continue to be
provided to the Board on a
regular basis.
CEO COMPLETED
March 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #3
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
GOVERNANCE
Risk Management
To provide meaningful oversight of
OCPA’s efforts to monitor, measure,
report and control the market and
credit risks that it is exposed to in
the normal course of business the
Board should:
amend its risk management policy
to include a subset of Board
members,
establish a schedule for the Risk
Oversight Committee (ROC) to
provide reports of its activities to
the full board, and
direct the committee to fulfill it
functions as defined in the OCPA’s
risk management policy.
(California State Auditor’s Office)
In coordination with the Chair, a
discussion will be brought to the
Board including options for
greater Board involvement in
Risk Oversight.
A regular quarterly schedule for
an ROC Board report beginning
with the June 2023 Board
meeting.
While the ROC has been
meeting on a regular basis,
beginning in March meetings
will be formalized and
documented.
CEO Estimated completion
May 15, 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #4
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
TRANSPARENCY To build trust with current
and potential customers,
update its website to
provide additional useful
information about its
operations and
communicate whether and
how it has provided savings
to customers and other
relevant benefits to
member communities.
(California State Auditor’s
Office)
Improvements have been made
over the last several months to
the OCPA website to make it as
user-friendly as possible and to
convey more information about
the cost of energy and the
benefits of the program. A
complete refresh of the website
is underway with the goal of
heightening transparency so
people know who we are, what
we provide, and how we benefit
the community.
Director of
Communications &
External Affairs
July 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #5
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
TRANSPARENCY OCPA’s Board should
develop a policy outlining
the means by and
circumstances under which
OCPA can share key terms
of its power purchasing
agreements with officials
from member agencies
without compromising
confidentiality of those
terms.
(California State Auditor’s
Office)
OCPA has developed a process
and executed an NDA with one
member agency and is waiting
for execution from agreements
with two additional members
who have also been offered
NDAs. We will follow the same
process for similar future
requests from member
agencies.
CEO May 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #6
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
TRANSPARENCY To more conclusively
demonstrate that it is
appropriately responding
to public record act (PRA)
requests, improve its
tracking, and handling of
those requests by
developing and following
written procedures
governing how it processes
them.
(California State Auditor’s
Office)
The SAO determined that OCPA
is largely in compliance with the
PRA. In order to enhance PRA
performance and public
transparency staff will
document our existing process
for tracking and responding to
PRAs, maintain a local copy of
the PRA tracking log currently
managed by our law firm, and
will further pursue
implementing custom PRA
tracking software.
CEO Document PRA
process
April 2023
Implement software
system
December 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #7
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
TRANSPARENCY By May 2023, direct staff
to report no less than
quarterly on the number
of public records act
requests received, closed,
and pending; the average
time OCPA took to
respond, and the reasons
for withholding or not
providing requested
documentation, if
applicable.
(California State Auditor’s
Office)
See PRA item above. Staff will
seek feedback from the Board
and respond with information
accordingly.
CEO Board Discussion
May 2023
PDRAFT IMPROVEMENT PLAN
IMPROVEMENT #8
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
TRANSPARENCY To demonstrate to
stakeholders its
compliance with state law
requiring open meetings,
by May 2023, begin
tracking information
showing when meeting
agendas are made publicly
available.
(California State Auditor’s
Office)
The SAO determined that we
are in compliance with Public
Meeting laws but could
improve by establishing an
auditable trail. OCPA has
updated its server software
which now generates a log each
time a document is posted to
the website.
CEO COMPLETED
February 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #9
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
BUDGETING AND
FORECASTING
Beginning with its Fiscal
Year 2023-24 budget,
OCPA should implement its
plan to use information it
has collected on customer
power usage and opt-out
rates when making
projections of its revenues,
expenditures, and its need
to procure power.
(California State Auditor’s
Office)
Like all CCAs, prior to launching
service OCPA needed to rely on
customer load estimates
provided by the incumbent
investor-owned utility. OCPA
will use our own customer
consumption dataset and
participation rates when
developing the FY2023-24
budget plus 5-year projection.
CFO June 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #10
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
BUDGETING AND
FORECASTING
To allow OCPA sufficient time to
buy and sell the energy
necessary to accommodate
changes in member community
participation, the Board should
establish a policy specifying a
process for member
communities to follow when
changing their default rate that
includes the following:
The number of days of advance
notification a member agency
must provide to OCPA of its
decision to change its default
rate before the change occurs.
Staff will seek feedback at a future
Board meeting, which will guide the
drafting of a policy.
CEO
Board discussion
May 2023
Policy adoption
June 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #10 (CONTINUED)
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
BUDGETING AND
FORECASTING
The maximum number of times
a member community may
change its default rate.
(California State Auditor’s
Office)
Staff will seek feedback at a future
Board meeting, which will guide the
drafting of a policy.
CEO Board discussion
May 2023
Policy adoption
June 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #11
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
STAFFING Hire a Director of Power Purchases
or other qualified staff positions to
oversee Pacific Energy Advisors
and Calpine contractors utilizing
best practices.
(Grand Jury)
Immediately devote additional
effort to hiring a power resources
director with the necessary
expertise to update its projections
of power needs, to better evaluate
purchase agreements, and to
effectively oversee the work
performed by its relevant
contractors.
(California State Auditor’s Office)
OCPA has contracted with one of the
most experienced and respected firms in
the state to provide power procurement
support. OCPA is actively recruiting for a
Power Resources Director. We review
candidate submissions on a weekly basis
and conduct interviews of qualified
candidates on a regular basis. If the
position is not filled by the end of May
2023, Staff will return to the Board with
options including adjusting compensation
ranges and hiring an outside recruiting
firm.
CEO By May 2023 or request
additional resources from
the Board in June 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #12
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
STAFFING Utilize a member agency clerk or
assign a qualified OCPA staff
member to handle the agendas
and minutes for the OCPA Board
and OCPA Community Advisory
Committee to ensure that they are
prepared properly and posted in a
timely manner.
(Grand Jury)
In November 2022, OCPA hired a Board
Clerk and Assistant to the CEO who has
over 20 years of experience. The Board
clerk is responsible for coordinating all
Board meeting agendas, making an
official record of each public meeting,
and publishing those details via written
minutes and meeting videos. She will
also be tracking required FPPC regulatory
filings for Board members and Staff.
All agendas and staff reports are
distributed in accordance with the Brown
Act.
All minutes are approved by the OCPA
Board and are posted as soon as possible
after being approved. All minutes
conform to industry standards.
CEO COMPLETED
December 2022
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #13
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
CONTRACTING
PRACTICES
Policies
Reduce the $125,000 dollar
threshold required for
formal solicitation.
Remove the provisions that
allow the CEO to bypass
existing OCPA purchasing
requirements or revise to
only allow such bypass in
emergencies with
appropriate documented
justification.
(Orange County Auditor)
Research policies that other
CCAs use regarding threshold
and discuss any suggested
change with the Board.
Discuss with the Board whether
to remove the provision allowing
CEO to bypass existing
requirements and if
recommendation is to keep
provision ensure that there is a
process to ensure adequate
documentation of decision to
bypass.
CEO/CFO June 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #14
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
CONTRACTING
PRACTICES
To strengthen its
procurement process, the
Board should amend its
procurement policy and
contract delegation
authority to clarify
whether the thresholds in
these policies apply to
contract amendments.
(California State Auditor’s
Office)
Staff will recommend a policy
revision to the Board creating
clarity regarding contract
delegation authority related to
contract amendments.
CEO/CFO June 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #15
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
CONTRACTING
PRACTICES
Solicitations
To ensure that OCPA enters
contracts with the most qualified
vendor it should do the following:
When appropriate, ensure that
contracts are competitively bid,
Proposals are received and
evaluated, and
Adequately document the
vendor selection process.
When using sole source
procurements adequately justify
and document rationale.
(Orange County Auditor and
California State Auditor’s Office)
OCPA will document its contracting
processes and ensure that the
following steps are included:
Document type of procurement, informal
or formal.
Document process for soliciting,
reviewing, and evaluating proposals.
Document results of proposal evaluations
and vendor selection.
Properly document decision and
justification for using sole source
procurement.
Follow the procurement process policy
that prohibits contract splitting to avoid
competitive procurement requirements.
CFO
Respective Departments
Respective Departments
Respective Departments
Respective Departments
Respective Departments
April 2023
April 2023
April 2023
April 2023
April 2023
April 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #16
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
CONTRACTING
PRACTICES
Ensure that contracts
include sufficient cost
details to clearly support
the services being procured
and establish a maximum
obligation amount.
(Orange County Auditor)
All contracts will include
sufficient cost details to clearly
support the services being
procured and establish a
maximum obligation amount.
Respective
Departments
March 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #17
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
CONTRACTING
PRACTICES
Board Notification
Ensure that new contracts
between $50,000 and
$125,000 are appropriately
reported to the Board.
(Orange County Auditor
and California State
Auditor’s Office)
Since October 2022, all
contracts between $50,000 and
$125,000 have been reported to
the Board.
CFO COMPLETED
October 2022
ONGOING
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #18
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
CONTRACTING
PRACTICES
Board Approval
Ensure the Board approves
all contracts of more than
$125,000 before execution.
(Orange County Auditor)
All active contracts more than
$125,000 received Board
approval.
For all contracts of more than
$125,000 staff will seek Board’s
approval before execution.
Respective
Departments
COMPLETED
ONGOING
PDRAFT IMPROVEMENT PLAN
IMPROVEMENT #19
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
SUBJECT AREA RECOMMENDATIONS
CONTRACTING
PRACTICES
By May 2023 the Board
should direct staff to
provide reports on at least
a quarterly basis that
specify the dollar value of
each service contract, the
amount paid to each
contractor to date, and the
amount owed to the
contractor for work
performed but not yet
paid.
(California State Auditor’s
Office)
Provide Quarterly Contract
Progress Report to the Board
specifying the dollar value of
each service contract, the
amount paid to each contractor
to date, and the amount owed
to the contractor for work
performed but not yet paid.
CFO COMPLETED
March 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #20
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
CONTRACTING
PRACTICES
Perform periodic
evaluations of contractors’
performance and provide
those evaluations for the
board’s review when staff
request approval of new
contracts or contract
amendments with those
contractors.
(California State Auditor’s
Office)
Develop a format for the
contractor performance
evaluations and include it on the
staff report for the Board’s
review when staff request
approval of new contracts or
contract amendments with
those contractors in amount
that exceed $125,000.
Respective
Departments
March 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #21
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
CONTRACTING
PRACTICES
Ensure that a purchase
requisition is completed for
all contracts to document
that purchasing duties are
adequately segregated.
(Orange County Auditor)
The existing OCPA Purchase
Requisition Form, that was
utilized for all non-contract and
non-sole source purchases, will
be completed to ensure proper
segregation of duties being
documented.
Respective
Departments
March 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #22
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
CONTRACTING
PRACTICES
Ensure that requisitions are
completed for all
purchases to document
that duties are adequately
separated.
(Orange County Auditor)
The existing OCPA Purchase
Requisition Form, that was
utilized for all non-contract and
non-sole source purchases, will
be completed for all contracts
to ensure proper segregation of
duties being documented.
Respective
Departments
March 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #23
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
DISBURSEMENTS Maintain a log to
document who receives a
manual check to establish
accountability.
(Orange County Auditor)
OCPA Manual Check Request
Form has been created to
ensure accountability.
CFO COMPLETED
February 2023
DRAFT IMPROVEMENT PLAN
IMPROVEMENT #24
SUBJECT AREA RECOMMENDATIONS COMMENTS AND
PLANNED IMPROVEMENTS
RESPONSIBLE
EXECUTIVE
STATUS ESTIMATED
COMPLETION DATE
DISBURSEMENTS Require large checks to be
counter-signed by senior
management.
(Orange County Auditor)
OCPA Manual Check Process
has been updated to include
the counter-sign requirement
for a manual check that exceeds
$5,000.
CFO COMPLETED
February 2023
CONCLUSION
& QUESTIONS
ITEMS 9.2 – OCPA DRAFT IMPROVEMENT PLAN
Recommended Action
Discuss OCPA Draft Improvement Plan and
provide direction.
APPROVE FISCAL YEAR 2022-2023
MID YEAR OPERATING BUDGET
March 15, 2023
AGENDA ITEMS 9.3
March 15, 2023
9.3 APPROVE FISCAL YEAR 2022-2023
MID YEAR OPERATING BUDGET
PRESENTATION
OCPA FY2022-23 Mid-Year Budget Timeline
FY 2022-23 MID-YEAR OPERATING BUDGET
6/29/2022
Board approved
FY2023-23 Operating
Budget
12/13/2022
Board approved 2023
OCPA Rate Design:
- Basic Choice at a 2%
discount to SCE’s
equivalent generation
rates
- Smart Choice at 1c/kWh
greater to Basic Choice
- 100% Renewable
Choice at 1.5c/kWh
greater to Basic Choice
1/2023
Budget reforecast made
to align with Board
approved 2023 OCPA
rates and proforma
power supply
projections based on
OCPA’s own customer
consumption dataset
and participation rates.
3/15/2023
Board receives and
approves FY2022-23
Mid-Year Operating
Budget
Recommendation and
Approval
Key Highlights
FY 2022-23 MID-YEAR OPERATING BUDGET
Stable Financial Year
• Good Operating Margin at 18%
➢ Increase of 12.6 percentage points from the 5.4% presented in the original budget
• Healthy Contribution to Reserves of $41mil
➢ Increase of $36.3mil from $4.7mil presented in the original budget • Offer Basic Choice at a 2% discount to SCE’s equivalent generation rates Mid-Year Budget vs Approved Budget Comparison
FY 2022-23 MID-YEAR OPERATING BUDGET
$ in thousands
Period Ending June 30
Approved
Budget
% of
Revenue
Mid-Year
Budget
% of
Revenue
Adjustment/
Change Change %
Electricity Revenues 301,750 100% 285,887 100% (15,864) (5.3%) Cost of Energy 285,342 94.6% 234,366 82.0% (50,976) (17.9%) Operating Margin 16,408 5.4% 51,521 18% 35,113 214.0%
Non-Energy Operating and Non-Operating Expenses 11,677 3.9% 10,535 3.7% (1,142) (9.8%) Balance Available for Reserves 4,731 1.6% 40,986 14.3% 36,255 766.3% ✓ Support Basic Choice at a 2%
discount to SCE’s equivalent
generation rates
✓ Began utilizing OCPA’s own
customer consumption
dataset and participation
rates
OCPA Forecast Approach and Guiding Principles
FY 2022-23 MID-YEAR BUDGET ASSUMPTIONS
“7+5” Forecast Approach:
➢ July 2022 to January 2023 Actual
➢ February to June 2023 Re-Forecast to adjust for known costs and trends Guiding Principles:
➢ Renewable contracts to meet the adopted default product offerings:
o Buena Park: 100% Renewable Choice across the board
o Fullerton: Residential and Commercial Accounts will default to Smart Choice.
Municipal accounts will default to Basic Choice
o Huntington Beach: Basic Choice across the board
o Irvine: 100% Renewable Choice across the board
➢ Establish OCPA as a trustworthy resource that is responsive to customers’ needs
➢ Ensure OCPA is financially viable and fiscally responsible OCPA Revenue – Key Assumption Highlights
FY 2022-23 MID-YEAR BUDGET ASSUMPTIONS
Demand Forecast:
• Total retail load consumption is estimated at 2,583 GWh • Successful enrollment of 236,000 eligible commercial and residential accounts 2023 OCPA Rates:
• Basic Choice: 2% discount to SCE’s equivalent generation rates • Smart Choice: Basic Choice rates + 1c/kWh
• 100% Renewable Choice: Basic Choice rates + 1.5c/kWh
• Effective January 9, 2023
Uncollectible Allowance:
• Uncollectible is assumed at 1.25%
OCPA Projected Revenue vs Approved Budget
FY 2022-23 MID-YEAR BUDGET
Key contributors to the reduction in revenue of $15.9 million compared to approved budget:
• Downward adjustment of customers sales volume after using OCPA’s own customer consumption dataset and participation rates for customer load projection
• Approved budget was developed with SCE’s outdated 2019 historical dataset because SCE was unable to generate a correct 2021 dataset for OCPA to use. The change in customer usage patterns since the 2019 period resulted in actual revenues being lower than projected. • Greater than projected opt-outs in the residential sector and the actual enrolled customer mix being weighted more heavily within the smallest commercial GS-1 category than expected • Actual load consumption from industrial TOU-8 customers has been lower than the forecast derived from SCE’s 2019 historical dataset
OCPA Cost of Energy – Key Assumption Highlights
FY 2022-23 MID-YEAR OPERATING BUDGET
Wholesale Purchase:
• Total wholesale load consumption is estimated at 2,738 GWh • Includes 6% distribution system losses
Cost of Energy:
• Clean and renewable energy estimated at $191.8mil or 81.8% • Resource Adequacy (RA) is estimated at $42.6mil or 18.2% Power Hedging:
• Currently 100% hedged for expected consumption through June 2023 OCPA Projected Cost of Energy vs Approved Budget
FY 2022-2023 MID-YEAR OPERATING BUDGET
Key contributors to the reduction in cost of energy (COE) of $51 million compared to approved budget:
• Downward adjustment of sales volume
• Excess procured energy was sold in the CAISO spot market for a gain throughout FY 2022-23 • Levelized price structure of OCPA energy contracts:
➢ Levelized prices increase power costs during the spring relative to the monthly prices assumed in the budget, leading to higher COE
➢ Levelized prices reduce power costs during the summer relative to the monthly prices assumed in the budget, leading to lower COE to be recognized
• The reduced COE has been offset by sharp increase in prices for renewable energy and RA costs arising from increasing market prices and constrained energy supply in the western US OCPA Non-Energy Operating Expenses vs Approved Budget
FY 2022-23 MID-YEAR OPERATING BUDGET
Non-Energy Operating and Non-Operating Expenses: Proposed an overall reduction by $1.1 million Expense ($ in thousands) Adjusting Reason
Approved
Budget
Mid-Year
Budget
Increase/
(Saving)
Data Manager & Utilities Service Fees Favorable adjustment based on known costs 2,371 2,093 (278) Staffing Costs
Longer than expected lead times to hire new positions. One new FTE addition (COO position approved by Board in Feb 2023) in mid-year budget, totaling 21 budgeted FTEs (10 hired + 4 recruiting in progress + 7 vacancies). Total amended staffing costs as a percentage of revenue (1.1%) is lower than the approved budget (1.3%). 4,046 3,070 (976)
Contract Services Aligned with approved budget 1,302 1,287 (15) Legal Services Increase primarily due to unanticipated labor-related investigation costs and the high volume of regulatory and compliance filing services
580 790 210
Marketing & Outreach Decrease primarily due to reduced customer enrollment notification cost 1,597 1,241 (356) General & Administrative Aligned with approved budget 844 800 (44) Energy Programs Aligned with approved budget 500 500 -
Capital Expenditure Decrease due to postponement of an in-house analytics platform development to next FY due to a change of priority in FY2022-23
110 10 (100)
Debt Service Increase due to the timing of loan draws and letters of credit posted for collateral for energy supply and a higher interest rate (current at 6% vs. 2.4% reflected in the approved budget) 329 753 424
OCPA FY 2022-23 Mid-Year Budget Summary
Net Revenue
$301.7
Million
Total Expenses
$297 Million
Net Income
+$4.7 Million
Net Revenue
$285.9
Million
Total Expenses
$244.9
Million
Net Income
+$41 Million
Approved Mid
-Year Update
Proposed FY 2022-23 Mid-Year Budget
OCPA FY 2023-24 Budget Development Timeline
FY 2023-24 Operating Budget and 5-Year Projection
Proposed Timeline Budget Development Tasks
April 2023 • Staff develop operating budget
• Present proposed budget overview for Board
review
May 2023 • Ad-Hoc Budget and Finance Committee Preview
and Feedback
• Board Briefing and Feedback
June 21, 2023 • OCPA Board Approval
July 1, 2023 • Budget Implementation
OCPA FY 2022-23 Mid-Year Budget ($ in thousands)
Period Ending Jun 30
Approved
Budget
FY 2022/23 % of Rev
Mid-Year
Budget
FY 2022/23 % of Rev Change $ Change %
REVENUE AND OTHER SOURCES
Revenue - Electricity Base 261,500 258,486 90.4% (3,014) -1.2% Revenue - Smart Choice Premium 5,573 4,145 1.4% (1,428) -25.6% Revenue - 100% Renewable Premium 38,498 26,876 9.4% (11,622) -30.2% Less: Uncollectible Accounts (3,820) (1.3%) (3,619) (1.3%) 201 -5.3% Net Revenue - Electricity 301,750 100.0% 285,887 100.0% (15,864) -5.3% Investment and Miscellaneous Income 1 0.0% 8 0.0% 7 529.0% Total Net Revenue and Other Sources 301,752 100.0% 285,895 100.0% (15,857) -5.3%
EXPENDITURES AND OTHER USES
CURRENT EXPENDITURES
Cost of Energy 285,342 94.6% 234,366 82.0% (50,976) -17.9% Data Manager 1,839 0.6% 1,403 0.5% (436) -23.7%
Utilities Service Fees 532 0.2% 690 0.2% 158 29.7%
Staffing Costs 4,046 1.3% 3,070 1.1% (976) -24.1%
Contract Services 1,302 0.4% 1,287 0.5% (15) -1.1%
Legal Services 580 0.2% 790 0.3% 210 36.1%
Marketing and Customer Enrollment 1,597 0.5% 1,241 0.4% (356) -22.3% Other G&A 844 0.3% 800 0.3% (44) -5.2%
Energy Programs 500 0.2% 500 0.2% 0 0.0%
296,582 98.3% 244,146 85.4% (52,435) -17.7%
OTHER USES
Capital Outlay 110 0.0% 10 0.0% (100) -90.9%
Total Other Uses 110 0.0% 10 0.0% (100) -90.9%
DEBT SERVICE
Interest costs - nonoperating 329 0.1% 753 0.3% 424 128.8% Finance costs - Principal 0 0 0 0.0%
Total Expenditures and Other Uses 297,021 98.4% 244,909 85.7% (52,112) -17.5% Net Income (Surplus/Deficit) 4,731 1.6% 40,986 14.3% 36,255 766.3% OCPA FY 2022-23 Mid-Year Budget
Questions?
ITEMS 9.3 – APPROVE FISCAL YEAR 2022-2023 MID YEAR OPERATING BUDGET Recommended Action
Approve Fiscal Year 2022-2023 Mid-Year
Operating Budget.
ENERGY MARKETS UPDATE
March 15, 2023
AGENDA ITEMS 9.4
PROCUREMENT UPDATE:
LONG-TERM RPS PROCUREMENT &
FEED-IN TARIFF DEVELOPMENT
Orange County Power Authority
March 15, 2023
Key Resource Planning Considerations
64 Near- and longer-term goals:
• Fulfill OCPA’s near- and long-term RPS needs (voluntary and statutory)
• Promote budgetary certainty and rate stability
• Increase use of locally situated clean energy sources • Support local economic development
• Reduce GHG emissions
Advance achievement of goals, subject to:
• Rate impacts to OCPA customers
• Financial/budgetary impacts to OCPA
• Achievement of compliance mandates
• Operational feasibility and reliability of supply
• Resource diversity and mitigation of market risks
Market Prices (CAISO Energy)
65 $-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$/MWh
Southern California Energy Prices (SP 15)
Feb-22 Jun-22 Aug-22 Dec-22 Feb-23
• Prices have fallen from peak
levels in December 2022, yet
remain quite high
• Winter months are impacted
by high prices for western US
natural gas
• 12-month peak forward
prices are up 63% vs. 1 year
ago and 148% vs. 2 years ago
Market Prices (Resource Adequacy)
66 $-
$10
$20
$30
$40
$50
$60
Jan Feb Mar Apr May Jun Jul Aug* Sep* Oct Nov Dec
$/kW-month
System RA Capacity Prices ($/kW-month)
2021 2023
*Aug & Sep 2023 volumes are not being offered, and capacity prices are much higher than the costs assessed for non-compliance
RA prices in the summer months have more
than doubled over the last two years
Increased demand due to higher state-mandated planning reserve margins Supply constraints due to lower Net
Qualifying Capacity (“NQC”) values for
intermittent resources, natural gas plant
retirements, new-build project delays
and stricter import capacity requirements
Longer dated contracts starting in 2025 are
in the $8 to $9 per KW-mo. range,
reflecting expectations of increased
supply
Battery storage recently offered in the $14-
$17/kW-month range
Market Prices (Renewable Energy)
67 PCC1 prices have traded around $15-
20/MWh over the past few years
PCC1 prices rose to nearly $40/MWh in
early 2023
PCC1 currently offered at $48-50/MWh
(limited volumes)
Short positions amongst large buyers and
project delays seem to be the primary
causes of upward price pressure
PCC2 prices have nearly doubled since the
beginning of 2023 – PCC2 pricing trends
tend to mirror those of PCC1 products
(currently offered at ≈$30/MWh)
Long-Term RPS Contracting Requirements
Renewables Portfolio Standard (“RPS”) requirements
necessitate the purchase of renewable energy under long-term (“LT”) contracts (10 years or longer) In CY 2021 and beyond (Compliance Periods 4, 5 and 6), LT contracting requirement equate to 65% of statutory RPS
procurement obligations
Compliance is measured across multi-year Compliance
Periods
68 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
RPS Procurement Quantity Requirement
(% of Sales) 36% 39% 41% 44% 47% 49% 52% 55% 57% 60%
Long-Term Contracting Requirement (% of
PQR) 65% 65% 65% 65% 65% 65% 65% 65% 65% 65%
Effective Long-Term RPS Procurement
Mandate (% of Sales) 23% 25% 27% 29% 30% 32% 34% 36% 37% 39% Effective Long-Term RPS Procurement
Mandate (% of Sales during Compliance
Period) Compliance Period 4 26% Compliance Period 5 32% Compliance Period 6 37% RPS Compliance: Numeric Example for CP 4
69 Compliance Period 4 2021 2022 2023 2024 Total
Retail Sales (MWh) 100,000 110,000 120,000 130,000 460,000 Gross RPS % 35.8% 38.5% 41.3% 44.0% 40.2%
Gross RPS (MWh) 35,800 42,350 49,560 57,200 184,910
PCC1 @ 75% (MWh) 26,850 31,763 37,170 42,900 138,683
PCC2 @ 15% (MWh) 5,370 6,353 7,434 8,580 27,737
PCC3 @ 10% (MWh) 3,580 4,235 4,956 5,720 18,491
Gross LT % 65.0% 65.0% 65.0% 65.0% 65.0%
Gross LT (MWh) 23,270 27,528 32,214 37,180 120,192
To demonstrate RPS compliance, the
noted/circled total volumes (MWh, for CP 4)
must be procured and retired.
Long-Term Contracting: Status Update
•On a projected basis, OCPA is very close to meeting its statutory long-term RPS mandate in Compliance Period 4 (CP4) •Two long-term RPS contracts (with SCE and Shell Energy North America) have already been executed with initial deliveries scheduled to occur in 2023
•Depending on eventual retail energy sales in CP4, another LT RPS contract may be needed to achieve compliance
•OCPA is currently negotiating a third LT RPS contract and hopes to complete this process within the next 1-2 months
70 Long-Term RPS Procurement Strategy
Begin addressing LT RPS open positions in Compliance
Period 5 (2025-2027) and beyond through upcoming RFP
Recent long-term RPS project proposals have generally
reflected initial deliveries that commence no sooner than 2026
Recent Supplemental Mid-Term Reliability Procurement
order will also be a focus of this upcoming RFP
71 Supplemental Mid-Term Reliability
CPUC Decision 23-02-040 was issued February 28, 2023
Obligates California load-serving entities, including CCAs, to procure 4,000 MW (aggregate) in addition to the 11,500 MW previously ordered in D.21-06-035
4,000 MW requirement is phased across CY 2026-2027 and allocated based on load share
OCPA has been directed to procure 38 MW in
2026, 38 MW in 2027 – 76 MW total
By comparison, SCE was directed to procure
1,367 MW (684 MW in 2026 and 2027,
respectively) for its bundled customers
Prior incremental capacity procurement
mandates were not applicable to OCPA based on
the timing of its launch
72 Potential LT RPS RFP Schedule
•Release RFP: Late March 2023
•Response Deadline: Late April 2023
•Proposal Evaluation: May 2023
•Short-List Selection: Late-May 2023
•Contract Negotiation(s): May-mid-July 2023
•OCPA Board Approval & Execution of Final Contract(s): July/August 2023 73 Current Renewable Energy Market
Fewer responses relative to prior solicitations: ongoing incremental procurement orders, supply chain challenges, increased voluntary RPS targets, etc. have reduced the
pipeline of available projects
Seller’s market:
Seller credit expectations have generally increased,
particularly for non-investment grade buyers
Unconventional contract terms excusing performance
for trade measure events, supply chain disruptions,
etc. are now being requested by sellers
Some sellers have walked away from “exclusive”
negotiating processes to pursue higher-priced
opportunities
Increased competition amongst buyers
74 Response Evaluation
Price/Value
Project Location
Size
Portfolio Fit/Delivery Profile
Technology Type
Initial Date of Deliveries/Commercial Operation Date
Delivery Term
Seller’s Experience
Development Progress
Resource Adequacy/Incremental Capacity Benefits
Other Considerations
75 Feed-In Tariff: Overview
76 Feed-In Tariff for local, small-scale RE projects
• Provides opportunity for local RE developers to transact with OCPA • Creates opportunity for smaller-scale projects
• Strikes balance between goal of RE advancement, rate impacts to OCPA customers, operations and budgetary impacts
• Standard offer eliminates need for negotiation and minimizes administrative costs
• Successfully administered by both IOUs and several CCAs • Ongoing wholesale supply opportunity, subject to participatory cap • Complementary to other wholesale RE supply options
Request for Proposals for RE projects
• Periodically administered, formal solicitation process(es) • Longer-range planning activity to secure RE supply in consideration of OCPA needs and statutory mandates
• Each proposal will be evaluated across a broad scope of criteria • Evaluative preference for local projects
Feed-In Tariff: Key Considerations & Requirements
77 • Often introduced as pilot program
• Initial parameters represent starting point, subject to change – FIT will evolve over time • Allows sponsor to gauge participant interest
• Allows sponsor to develop experience with FIT Program on a manageable scale • Allows flexibility related to pricing, program expansion and other parameters • Standard offer: non-modifiable contract
• Total Program Size (limit): 2-5 MW
• Individual Project Size (limit): ≤ 1 MW
• Contract Term: 10, 15 or 20 years
• Location: w/in OCPA Member Communities
• Eligible Technologies/Fuel Sources: all RPS-eligible
technologies w/CEC certification required
• Pricing Level(s) & Structure(s): may vary by technology type and/or delivery profile; should reflect value of energy, plus adjustments for local development costs and/or project size Feed-In Tariff: Other Requirements
78 • Establishing FIT eligibility typically requires completion of application, indicating:
• Project details (size, generating technology, location, etc.) • Permitting status and requisite environmental reviews • Demonstration of site control
• Interconnection status
• Financing plan and qualifications of project sponsor
• Presentation of key documents:
• Signed application
• Evidence of site control
• Financial statements of project sponsor
• CEC application for RPS certification
• Interconnection agreement
• Signed FIT PPA
Feed-In Tariff: Other Requirements (continued)
79 • Participation may be limited to commercial operation dates occurring within specified time periods
• FIT projects can establish queue position and reserve price with documented completion of certain activities/milestones
• Local stakeholders can be engaged to provide input when developing program elements
• Local labor requirements can be incorporated, if desired Feed-In Tariff: Next Steps
80 • Determine interest in further evaluating prospective FIT program parameters
• Evaluate key requirements
• Overall participatory cap for initial program (MW)
• Initial pricing parameters
• Budgetary impact analysis
• Timing of program implementation
• FIT Application preparation
• Power Purchase Agreement preparation
• Other concerns/considerations
• OCPA is expected to benefit from available documentation prepared and utilized by other CCAs
• Staff to return with initial FIT requirements proposal at future Board Meeting
Questions & Discussion
81 ITEMS 9.4 – ENERGY MARKETS UPDATE
Recommended Action
Receive and file.
APPOINTMENT OF TWO AT-LARGE MEMBERS
TO THE COMMUNITY ADVISORY COMMITTEE
March 15, 2023
AGENDA ITEMS 9.5
ITEMS 9.5 – CONSIAPPOINTMENT OF TWO AT-LARGE MEMBERS
TO THE COMMUNITY ADVISORY COMMITTEE
Recommended Action
Discuss and consider recommendation on
appointment of two at-large members to the
Community Advisory Committee (CAC).