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Orange County Power Authority’s Costly Price Reduction

Commentary
Orange County Power Authority (OCPA), an energy provider claiming to focus on “green power” as an alternative to Southern California Edison (Edison), recently announced a new rate reduction for its Basic Choice product that is 2 percent lower than Edison pricing, now in effect. The rate reduction is timely considering public distrust and whispers of city departures from OCPA.
However, a closer look at the rate reduction reveals a sizable stealth cost increase that sets up continued price escalations by the agency.
Aside from minimal offered savings, there are three issues that do not reconcile with the announced price reduction.
First, OCPA is “benchmarking” Edison’s price increase to “maintain parity” with the company, then shaving off a few cents and advertising the difference as a “savings” or “lower price,” which amounts to around $1 per month for the average home subscribing to the lowest-price Basic Choice. With $247.9 million of its energy supply contracts already locked in (pdf), each time Edison raises its prices, OCPA’s corresponding benchmark makes millions in additional dollars from a community whose impression is that “choice” results in lower prices….

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