Report 2022-120 All Recommendation Responses

Report 2022-120: Orange County Power Authority: Increased Board Oversight Is Needed to Improve Its Operations (Release Date: February 2023)

Recommendation #1 To: Orange County Power Authority

To ensure that OCPA acts in its customers' best interests when contracting for services, by September 2023 OCPA's board should strengthen its procurement processes by directing staff to follow its policy that prohibits splitting purchases into multiple purchases if doing so results in contracts for amounts that are less than the relevant procurement limits for the amount of the combined purchase.

60-Day Agency Response

Staff has developed an OCPA RFP Evaluation Template to document process of soliciting, reviewing, and evaluating proposals, as well as the results of proposal evaluations and vendor selection. The purpose of this template is to reinforce the agency's procurement processes in accordance with its policy, which prohibits the splitting of purchases.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

On June 21, 2023, OCPA's board approved a revised version of OCPA's procurement policy. In doing so, it reaffirmed the policy's prohibition against staff's splitting purchases in order avoid competitive procurement requirements.

Recommendation #2 To: Orange County Power Authority

To ensure that OCPA acts in its customers' best interests when contracting for services, by September 2023 OCPA's board should strengthen its procurement processes by reminding staff to follow its policy that all new contracts of more than $50,000 should be reported at the next regular board meeting and that all contracts of more than $125,000 should be approved by the board before their execution.

60-Day Agency Response

Since October 2022, all contracts between $50,000 and $125,000 have been reported to the Board. All active contracts exceeding $125,000 have received Board approval. Going forward, staff will continue to seek Board's approval before executing any contracts above $125,000.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

On June 21, 2023, OCPA's board approved a revised version of OCPA's procurement policy. In doing so, it reaffirmed the requirement to report contracts with values above $50,000 to the board at the next regular board meeting. At the same time, the board revised its existing policy to require that all contracts valued at more than $100,000 receive board approval.

Recommendation #3 To: Orange County Power Authority

To ensure that OCPA acts in its customers' best interests when contracting for services, by September 2023 OCPA's board should strengthen its procurement processes by requiring staff to maintain documentation of the evaluations that they perform of responses to competitive bidding processes, regardless of the dollar amount of the proposal or contract.

60-Day Agency Response

Staff has created an OCPA RFP Evaluation Template to document the process of soliciting, reviewing, and evaluating proposals, as well as the results of proposal evaluations and vendor selection. The purpose of this template is to strengthen the agency's procurement processes with respect to competitive bidding by requiring staff to maintain documentation of the evaluations.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

OCPA's most recent version of its procurement policy, approved June 21, 2023, reiterates the requirements for evaluating contractor proposals that we identified during our audit. OCPA also provided us with a proposal evaluation template that describes procedures for individual staff and a selection committee to follow when reviewing and scoring contractor proposals. Further, OCPA provided us with a recent example of the template being used to select a contractor that was subsequently recommended to OCPA's board. To the extent OCPA follows the evaluation requirements in its policy and the procedures it provided to us, it will be better positioned to demonstrate whether it has acted in its customers' best interests when contracting for external services.

Recommendation #4 To: Orange County Power Authority

To ensure that OCPA acts in its customers' best interests when contracting for services, by September 2023 OCPA's board should strengthen its procurement processes by instructing staff to 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.

60-Day Agency Response

Staff has developed an OCPA Contractor Performance Evaluation Form for use with new contracts or contract amendments. This Form will facilitate periodic evaluations of the contractor's performance and will be included in the staff report for the board's review when staff requests approval of new contracts or contract amendments exceeding $125,000.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

On June 21, 2023, OCPA's board revised OCPA's procurement policy to require that staff perform evaluations of contractors' performance and include those evaluations in reports for the board's review when requesting approval of new contracts or contract amendments with those contractors in excess of $100,000. OCPA also provided us a template it plans to use when conducting contractor evaluations.

As we discuss under Recommendation #2, the board revised OCPA policy to require board approval of all contracts over $100,000. Further, as we discuss under Recommendation #5, OCPA's board clarified in its procurement policy that all dollar thresholds in the policy apply to contract amendments. Therefore, if OCPA follows that provision and the prohibition in policy against splitting purchases, this new evaluation requirement will address the issues we identified in the audit report about the board's receiving incomplete information about the performance of large contracts when approving renewals of or amendments to those contracts.

Recommendation #5 To: Orange County Power Authority

To ensure that OCPA acts in its customers' best interests when contracting for services, by September 2023 OCPA's board should strengthen its procurement processes by amending its procurement policy and contract delegation policy to clarify whether the thresholds in these policies apply to contract amendments.

6-Month Agency Response

Section 5 (c) vi was added to Policy #1.

Section 1 (d) was added to Policy #2.

Both policies were approved at the 6-21-2023 Board meeting. (See Item 9.3 in the meeting agenda and meeting minutes Item #3 in Section #9 entitled "Consent Calendar")

California State Auditor's Assessment of 6-Month Status: Fully Implemented

OCPA's most recent version of its procurement policy, approved June 21, 2023, specifies that the dollar thresholds in the policy apply to contract amendments.

60-Day Agency Response

OCPA has developed an Improvement Plan to address each recommendation. In accordance with the Improvement Plan, this recommendation will be completed as of June 2023.

California State Auditor's Assessment of 60-Day Status: Pending

OCPA has not yet submitted evidence demonstrating it has implemented this recommendation.

Recommendation #6 To: Orange County Power Authority

To ensure that OCPA does not spend or incur fees for which it does not have proper board approval, by May 2023 OCPA's 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.

60-Day Agency Response

Provided Quarterly Contract Progress Report to the Board specifying the dollar value of each service contract, the amount paid to each to date, and the amount owed to the contractor for work performed but not yet paid.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

On June 21, 2023, OCPA's board revised OCPA's procurement policy to require staff to report, on a quarterly basis, the elements specified in our recommendation for each service contract. OCPA provided copies of the reports it made to the board for the first two quarters of 2023. This implements our recommendation, so long as OCPA continues to engage in this process.

Recommendation #7 To: Orange County Power Authority

To enhance transparency and build trust with its member communities and the public, by May 2023 OCPA's board should direct staff to report no less than quarterly on the number of public records requests received, closed, and pending; the average time OCPA took to respond to those requests; and the reasons for withholding or not providing requested documentation, if applicable.

6-Month Agency Response

Quarterly PRA report was presented to the Board at its 5-17-2023 meeting (See item 9.5).

At the meeting there was discussion about the quarterly reporting of this information. Below is a video clip where this item is discussed.

https://vimeo.com/828061343/e9b3049d61?share=copy

The conversation regarding the Quarterly PRA report begins at 26:52.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

The report OCPA provided to its board for the period of January 1, 2023 through May 12, 2023 includes the relevant information specified in our recommendation. The document indicates that it will be updated and provided to the board quarterly. Thus we assess this recommendation as fully implemented. In addition, at the May 17, 2023 board meeting during which the report was discussed, OCPA staff stated their intent to pursue software that would assist the organization in processing and reporting on public records requests.

60-Day Agency Response

OCPA has developed an Improvement Plan to address each recommendation. In accordance with the Improvement Plan, this recommendation will be completed as of June 2023.

California State Auditor's Assessment of 60-Day Status: Pending

OCPA has not yet submitted evidence demonstrating it has implemented this recommendation.

Recommendation #8 To: Orange County Power Authority

To demonstrate a commitment to transparency and increase the relevant information it shares with its member communities, OCPA's board should develop a policy outlining the means by and circumstances under which OCPA can share key terms of its power purchase agreements with officials from those member communities without compromising the confidentiality of those terms.

6-Month Agency Response

Policy #22 was presented to the Board at its 4-19-2023 meeting. (See agenda item 9.4 and meeting minutes item #4 in Section #9 entitled "Consent Calendar" for Board approval).

California State Auditor's Assessment of 6-Month Status: Fully Implemented

On Aril 19, 2023, OCPA's board approved a policy entitled "Member Access to Confidential Information." The policy outlines a process by which member communities may request and receive access to certain confidential information, including unredacted power purchase agreements.

60-Day Agency Response

OCPA has developed an Improvement Plan to address each recommendation. In accordance with the Improvement Plan, this recommendation will be completed as of May 2023.

California State Auditor's Assessment of 60-Day Status: Pending

OCPA has not yet submitted evidence demonstrating it has implemented this recommendation.

Recommendation #9 To: Orange County Power Authority

To allow OCPA sufficient time to buy or sell the energy necessary to accommodate changes in a member community's participation, OCPA's board should establish a policy specifying a process for member communities to follow when changing their default rate that includes 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.

6-Month Agency Response

Policy #23 was presented to the Board at its 5-17-2023 meeting. Agenda item 9.4. See Item #1 in the Process Section of the policy for the specific language. See meeting minutes item #4, in section #9 entitled "Consent Calendar" for Board approval.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

OCPA adopted a policy on May 17, 2023, that specifies a member community must provide written notice of a change to its default rate by January 1 for changes to be implemented in October, unless the member agency and OCPA mutually agree on a different schedule.

60-Day Agency Response

OCPA has developed an Improvement Plan to address each recommendation. In accordance with the Improvement Plan, this recommendation will be completed as of June 2023.

California State Auditor's Assessment of 60-Day Status: Pending

OCPA has not yet submitted evidence demonstrating it has implemented this recommendation.

Recommendation #10 To: Orange County Power Authority

To allow OCPA sufficient time to buy or sell the energy necessary to accommodate changes in a member community's participation, OCPA's board should establish a policy specifying a process for member communities to follow when changing their default rate that includes the maximum number of times a member community may change its default rate in a given period.

6-Month Agency Response

Policy #23 was presented to the Board at its 5-17-2023 meeting. Agenda item 9.4. See Item #6 in the Process Section of the policy for the specific language.

See meeting minutes item #4, in section #9 entitled "Consent Calendar" for Board approval.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

OCPA's policy now states that member communities may not changes their default rate more frequently than one time every two years.

60-Day Agency Response

OCPA has developed an Improvement Plan to address each recommendation. In accordance with the Improvement Plan, this recommendation will be completed as of June 2023.

California State Auditor's Assessment of 60-Day Status: Pending

OCPA has not yet submitted evidence demonstrating it has implemented this recommendation.

Recommendation #11 To: Orange County Power Authority

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 its normal course of business, OCPA's board should amend its risk management policy to alter the membership of the risk oversight committee to include a limited subset of OCPA board members that does not violate open meeting act requirements.

6-Month Agency Response

During 3-15-2023 Board meeting this recommendation was discussed by the Board and concerns regarding the Brown act were raised.

At the 4-19-2023 Board meeting item 9.3 was presented to the Board. The item discusses quarterly meetings and the responsibilities of the Risk Oversight Committee.

Although the Board decided not to add board members to the committee it agreed with staff and legal counsel's recommendation to invite both Board Chair and VC to future meetings as observers.

Orange County Power Authority Board Regular Meeting March 15, 2023 (vimeo.com). The conversation regarding the ROC begins at 1:15.37.

California State Auditor's Assessment of 6-Month Status: Resolved

In April 2023, the CEO reported to the OCPA board that, as an alternative to our recommendation, beginning in April 2023 he initiated a practice of inviting the chair and vice chair of the OCPA board to observe risk oversight committee meetings. According to OCPA, its legal counsel determined that including a limited subset of OCPA board members on the risk oversight committee would make its meetings subject to open meeting act requirements. Based on its legal counsel's determination we consider this recommendation to be resolved.

60-Day Agency Response

OCPA has developed an Improvement Plan to address each recommendation. In accordance with the Improvement Plan, this recommendation will be completed as of May 2023.

California State Auditor's Assessment of 60-Day Status: Pending

OCPA has not yet submitted evidence demonstrating it has implemented this recommendation.

Recommendation #12 To: Orange County Power Authority

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 its normal course of business, OCPA's board should establish a schedule for the risk oversight committee to provide periodic reports on its activities to the full board.

6-Month Agency Response

At the 4-19-2023 Board meeting item 9.3 was presented to the Board. The item discusses quarterly meetings and the responsibilities of the Risk Oversight Committee.

The ROC met on April 3, 2023. An update of the meeting was provide to the Board in its April Board meeting. https://acrobat.adobe.com/id/urn:aaid:sc:VA6C2:d9852426-f2d8-4407-b327-fed723495695

The ROC met again on July 20th with the Chair and Vice Chair in attendance. We will report on this ROC meeting during the September Board meeting (the Board is on summer recess for August).

California State Auditor's Assessment of 6-Month Status: Fully Implemented

OCPA's policy requires its risk oversight committee to, at least quarterly, both meet and report to the board about its meetings, deliberations, and any areas of concern. OCPA provided evidence that on a quarterly basis since April 2023 staff have reported on the committee's meetings to the board. In addition, OCPA indicates that the board chair and vice chair have been invited to observe the risk oversight committee meetings. As such, although the board has not developed an additional schedule for risk oversight committee meetings, if the risk oversight committee does not meet there are now multiple means by which this fact should become apparent to the board. Therefore, we deem this recommendation to be fully implemented.

60-Day Agency Response

OCPA has developed an Improvement Plan to address each recommendation. In accordance with the Improvement Plan, this recommendation will be completed as of May 2023.

California State Auditor's Assessment of 60-Day Status: Pending

OCPA has not yet submitted evidence demonstrating it has implemented this recommendation.

Recommendation #13 To: Orange County Power Authority

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 its normal course of business, OCPA's board should direct the risk oversight committee to fulfill the functions defined in OCPA's risk management policy.

6-Month Agency Response

At the 4-19-2023 Board meeting item 9.3 was presented to the Board. The item discusses quarterly meetings and the responsibilities of the Risk Oversight Committee.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

OCPA provided evidence that since April 2023 staff have reported to the board on a quarterly basis about the risk oversight committee's activities. In addition, OCPA indicates that the board chair and vice chair have been invited to each risk oversight committee meeting. These represent multiple means by which the board can monitor whether the risk oversight committee is performing its assigned functions. Therefore, we deem the recommendation to be fully implemented.

60-Day Agency Response

OCPA has developed an Improvement Plan to address each recommendation. In accordance with the Improvement Plan, this recommendation will be completed as of May 2023.

California State Auditor's Assessment of 60-Day Status: Pending

OCPA has not yet submitted evidence demonstrating it has implemented this recommendation.

Recommendation #14 To: Orange County Power Authority

To allow OCPA to more conclusively demonstrate that it is appropriately responding to public records requests, it should improve its tracking and handling of these requests by developing and following written procedures governing how it processes them.

6-Month Agency Response

The Administrative Policy #1, which was approved by the Interim CEO on July 19, 2023, as outlined in Staff Report Item 11. This internal administrative policy details OCPA's established procedures for tracking and addressing PRAs. Consequently, no additional discussions regarding this item were held with the Board.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

OCPA's Interim CEO provided a set of administrative procedures for handling public records requests. The document identifies OCPA staff responsible for handling such requests, and sets forth sequential responsibilities for accepting, processing, and responding to the requests, as well as retaining the responsive records for two years' time. The procedures also specify the types of records OCPA believes are exempt from disclosure.

60-Day Agency Response

OCPA has developed an Improvement Plan to address each recommendation. In accordance with the Improvement Plan, this recommendation will be completed as of December 2023.

California State Auditor's Assessment of 60-Day Status: Pending

OCPA has not yet submitted evidence demonstrating it has implemented this recommendation.

Recommendation #15 To: Orange County Power Authority

To demonstrate to stakeholders its compliance with the state law requiring open meetings, by May 2023 OCPA should begin tracking information showing when meeting agendas are made publicly available.

60-Day Agency Response

OCPA has updated its server software which now generates a log each time a document is posted to the website.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

OCPA provided evidence that it has made changes to its website to implement the recommendation.

Recommendation #16 To: Orange County Power Authority

To improve customer retention, OCPA should take steps to build trust with current and potential customers by communicating more clearly with them. For example, it should update its website as soon as feasible 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.

6-Month Agency Response

To address this recommendation and to communicate more effectively and clearly with the public and OCPA customers, OCPA has expanded the scope of work with its main communications consultant, Reveille, Inc. (see new contract below).

Reveille is in the process of a major refresh of the OCPA website (see link below to the last board of directors meeting when an update was given. Also, the OCPA team is giving regular updates to the board on its efforts (see Marketing and Communications Update below). Additionally, OCPA formed a Marketing and Communications Committee, which meets on a quarterly basis.

https://www.figma.com/proto/VSmCmFY4sKgkWLAVRxPpsS/Orange-County-Power-Authority-Design-2023?page-id=3090%3A28359&type=design&node-id=3115-29337&viewport=-21881%2C1072%2C0.25&t=dlnpsgxKFC5MRCzP-1&scaling=min-zoom&starting-point-node-id=3115%3A41603

Orange County Power Authority Board Regular Meeting July 19, 2023 (vimeo.com). The conversation regarding the website refresh begins at 37:12.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

OCPA has taken steps to enhance communication with current and potential customers, such as forming a marketing and communications committee and updating its website. The website provides additional information about OCPA's operations and some data on customers' savings. We consider this recommendation to be fully implemented because the steps OCPA has taken represent a clear improvement from its past practices. However, it is still difficult to find on OCPA's website certain information that other CCAs highlight in easy to find locations on their websites, such as descriptions of specifically how it promotes local renewable energy projects or programs, quantifying its accomplishments, and providing data on customers' participation rates. As OCPA produces or collects more information relevant to these important topics, it should look for ways to communicate them publicly.

60-Day Agency Response

OCPA has developed an Improvement Plan to address each recommendation. In accordance with the Improvement Plan, this recommendation will be completed as of July 2023. More specifically, OCPA formed an internal working group to focus on upgrading the OCPA website to deliver more information on who we are, what we do, the benefits of community choice energy, programs that are available to our customers, and our customers' clean energy choices. We are working with our web designer and creative team on this update. We are planning for a June unveiling before the Board of Directors and to be live with the upgrade by July.

California State Auditor's Assessment of 60-Day Status: Pending

OCPA has not yet submitted evidence demonstrating it has implemented this recommendation.

Recommendation #17 To: Orange County Power Authority

To improve the accuracy of its budget projections, 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, its expenditures, and its need to procure power.

60-Day Agency Response

OCPA has developed an Improvement Plan to address each recommendation. In accordance with the Improvement Plan, this recommendation will be completed as of June 2023.

California State Auditor's Assessment of 60-Day Status: Pending

OCPA has not yet submitted evidence demonstrating it has implemented this recommendation.

Recommendation #18 To: Orange County Power Authority

To provide sufficient oversight of its contractors and better protect public funds, OCPA should immediately devote additional effort to hiring a power resources director with the necessary expertise to update its projections of power needs, to better evaluate power purchase agreements, and to effectively oversee the work performed by its relevant contractors.

6-Month Agency Response

See item 10.6 in the agenda for the 7-19-2023 Board meeting, in this item OCPA staff present to the Board a recommendation to increase the salary range for the Director of Power Purchases as recommended by CPS the consultant OCPA hired to assist with the recruitment.

The brochure for the position that has been posted widely (e.g., LinkedIn, Twitter, Facebook, Governmentjobs.com) is attached. We have paid to boost the reach on all social media platforms as well.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

OCPA described to us actions beyond those listed in its response. For example, in June 2023 OCPA entered into a contract with a consulting firm to help OCPA identify and recruit candidates for the power resources director position. OCPA also stated that it is interviewing candidates for the position--a process it expects to conclude around the middle of November 2023. These facts support OCPA's assertion that it has devoted additional effort to hiring a power resources director.

60-Day Agency Response

OCPA has developed an Improvement Plan to address each recommendation. In accordance with the Improvement Plan, this recommendation will be completed as of June 2023.

California State Auditor's Assessment of 60-Day Status: Pending

OCPA has not yet submitted evidence demonstrating it has implemented this recommendation.

All Recommendations in 2022-120

Agency responses received are posted verbatim.