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DRAFT IMPROVEMENT PLAN
The Orange County Power Authority (OCPA) Board of Directors takes audits seriously and sees them as a resource as we strive for continued improvement. As a new Community Choice Energy provider with a critically important mission of climate action, a focus on continuous improvement will allow OCPA to reach its goal of providing our customers with energy choice. The Board is committed to working with staff on this Improvement Plan that includes consideration of the recommendations contained in the following reports.
ORANGE COUNTY GRAND JURY REPORT…………………………………………..………..ISSUED JUNE 24, 2022 The Orange County Grand Jury began its investigation into OCPA in response to significant public discussion and criticism regarding OCPA’s formation and activities.
LOCAL POWER LLC……………………………………………………………………………..…….ISSUED DECEMBER 9, 2022 At the request of the Orange County Board of Supervisors, Local Power LLC conducted an analysis of OCPA to determine whether its staff, operational structure, policies, and procedures are proficient at mitigating risks to customers who join the OCPA in search of finding a reliable source of renewable energy. The report does not include recommendations but refers to best practices some CCAs use.
ORANGE COUNTY AUDIT…………………………………………………………..…….ISSUED ON DECEMBER 14, 2022 At the request of the Orange County Board of Supervisors, the Orange County Auditor reviewed business practices including contracting, disbursements, human resources, payroll, invoicing, and analyzed financial data and costs incurred by OCPA on behalf of Orange County.
The auditor reviewed and evaluated OCPA’s policies, procedures, and controls over these key business processes, obtained information related to costs attributable to the County if they were to withdraw from the OCPA, and analyzed financial data.
CALIFORNIA STATE AUDITOR..…………………………………………………………….ISSUED FEBRUARY 28, 2023 As directed by the Joint Legislative Audit Committee of the California Legislature, the State Auditor evaluated OCPA’s finances, projections, and other business operations including compliance with various statutory requirements.
Conclusions reached in the reports include the following areas:
TRANSPARENCY
OCPA is fully transparent with its finances by posting budgets, treasurer reports, and audited financial statements on its website.
OCPA follows state law when it keeps certain details of power purchase agreements confidential, such as the price of power, but could demonstrate a commitment to transparency by doing more to safely share information about its power purchase agreements with the governing bodies of its member communities.
OCPA generally complied with Public Records Act requirements. Auditors concluded that the OCPA met the requirement to, within 10 days, notify the person making the request of its determination about whether the request sought disclosable records. Concern was raised about some requests remaining open for six months or more.
OCPA could strengthen its ability to demonstrate compliance with open meetings law by tracking information showing when meeting agendas are made publicly available. [Type here]
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OCPA could build trust with its current and potential customers by updating its website to provide additional useful information about its operations and how it has provided savings to customers and other relevant benefits to member communities.
GOVERNANCE
OCPA has not implemented bylaws and has underutilized its Community Advisory Committee.
OCPA could strengthen its risk management practices, by expanding its risk oversight committee to include a subset of Board members and establish a schedule for the committee to report its activities to the full Board.
BUDGETING AND FORECASTING
Due to data limitations that were beyond its control, the OCPA used outdated 2019 customer usage data from Southern California Edison to prepare budgets for fiscal years 2021-22 and 2022-23. The California State Auditor’s Office endorses OCPA’s current plan to use information it has collected on customer power usage and opt-out rates when making projections of revenues, expenditures, and its need to procure power.
Decisions made by member communities to adopt default rate tiers with a greater proportion of renewable energy caused OCPA’s cost of energy to be higher than originally projected. In addition, member communities deciding to change their default rate with little warning to OCPA could negatively affect budget projections.
Concerns were raised about the participation rates for commercial and residential customers being lower than projected and the impact of high opt-out rates. The California State Auditor suggests that a low participation rate could hinder OCPA’s ability to operate efficiently but acknowledges that due to its size as one of the largest CCAs in the state it will likely be able to absorb a significant opt-out rate.
STAFFING
OCPA relies on external contractors for industry expertise and should continue to recruit and hire in-house expertise.
CONTRACTING PRACTICES
OCPA did not always maintain documentation to support its decision to use formal or informal solicitations, that proposals were reviewed and evaluated, and final vendor selection. In addition, when using sole source contracts, the OCPA did not always document its rationale for such use.
Some contracts did not include adequate cost or pricing details or not-to-exceed amounts.
OCPA staff circumvented key elements of its contracting policies, particularly when amending contracts.
OCPA staff did not evaluate contractor performance prior to amending existing contracts or proposing new contracts with the same vendor.
OCPA staff did not promptly report new contracts between $50,000 and $125,000 to the Board as required.
Amendments to its procurement policy to clarify delegated authority would strengthen OCPA’s procurement process.
PAYROLL……………………………………………………………………………………………………………………… (Two minor issues) OCPA’s employee pay matched supporting documentation and the master payroll file reconciled to the Payroll Disbursement report.
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Two minor exceptions were identified by the Orange County Auditor regarding the timing of a merit increase and verification of a Board member’s attendance at a meeting prior to payment for such attendance.
INVOICING…………………………………………………………………………………………………………..……………………… (No issues) OCPA’s rates agreed to customer invoices for all customers reviewed.
To address concerns raised in the various reports and to further improve operations, OCPA staff developed the attached Improvement Plan and look forward to working with our Board of Directors as we pursue our mission of providing cleaner, renewable choices at competitive rates, and invest in innovative programs that benefit residents, businesses, the environment, and the economy of our communities.
PLANNED IMPROVEMENTS
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 them to the Board
at its February 15, 2023.
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
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
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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, an
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
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
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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
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
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
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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
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
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
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
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OCPA of its
decision to change
its default rate
before the change
occurs.
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
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
submission 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
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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
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
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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
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
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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
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
CONTRACTING
PRACTICES
Board Approval
Ensure the Board
approves all contracts
of more than $125,000
before execution.
(California State
Auditor’s Office)
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
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
ONGOING
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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
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
for all contracts to ensure
proper segregation of duties
being documented.
Respective
Departments
March 2023
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
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
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