OCPA Plans 5.5% Rate Increase
News of a potential change in leadership at the Irvine-led OC Power Authority (OCPA) this week comes as OCPA has also disclosed a 5.5% rate increase that will take effect in July 2023 due to requirements in its credit agreement.
Activists warned about the risk of future rate increases due to terms in its credit agreement with MUFG Union Bank during the September 14, 2021 OCPA board meeting, but OCPA board members including Irvine councilmember Mike Carroll denied those terms existed, characterizing activist concerns about the risks as “misinformation.”
OCPA approved the credit facility with MUFG Union Bank for $35M at the September 2021 board meeting with no financial projections or discussion of potential impact on ratepayers. According to OCPA’s most recent budget report, those requirements – called debt service coverage ratios – are the cause of the rate increases.
OCPA Attempts to Hide Ratepayer Impacts
If CEO Brian Probolsky and General Counsel Ryan Baron had had their way, the public never would have seen the credit agreement.
At the June 22, 2021 OCPA board meeting, CEO Brian Probolsky and General Counsel Ryan Baron proposed that the board authorize them to negotiate, set terms and execute a $50 million credit facility without providing any of the loan’s terms or conditions and no information on how the rate covenants would impact ratepayers in the future. The staff report for the item was 2 pages in length.
OCPA was four and a half months late securing necessary credit guarantees and establishing access to a credit line.
The Implementation Plan timeline indicated that these tasks should have been completed by May 2021, but were not completed until September 14, 2021, putting OCPA at a disadvantage for negotiating power rates, especially for Resource Adequacy contracts, which have an annual deadline of October 31.OCPA-Timeline
OCPA has since been fined nearly $2M for Resource Adequacy violations by the CPUC. These decisions impact customer rates.
OCPA had no meaningful discussions of energy market conditions or how its rates might compare to SCE’s based on its crucial early decisions until January 2022, less than a month before sending customer notifications.
From June 29, 2022 OCPA Budget update:
According to the 5-Year Financial Proforma Key Assumptions, “OCPA has continued to follow its Energy Risk Management policy of progressively hedging through time, steadily reducing its open position. Even with that approach, the impact of power prices on the total cost of energy remains significant. Therefore, it led us to the following rate projects:
- Basic Choice: One-time 5.5% increase on July 1, 2023 (FY 2023/24)
- Smart Choice: Remains at 1.225 cents per kWh above Basic Choice
- 100% Renewable Choice: Remains at 1.740 cents per kWh above Basic Choice
- All rates will remain unchanged from FY 2024/25 to FY 2027/28