Irvine Utility Expansion to Be Studied

After a raucous eight-hour meeting that ended just before 2 a.m. Wednesday, the Irvine City Council agreed to continue studying an expansion of the city-owned electrical utility -- a proposal embroiled in recent weeks in allegations of corruption and unethical conduct.

Councilman Chris Mears has accused Mayor Larry Agran of promoting the utility proposal through an Anaheim company with undisclosed financial ties to longtime Agran political advisor Ed Dornan.

If Irvine expands its municipal utility -- now serving a single city customer served by generator power -- to serve newly developing areas, it would be the first city in Orange County to do so since power blackouts swept the state in 2000-01.

The merits of an expansion, however, have been overshadowed by ethical questions involving Dornan and Agran. Both have denied any wrongdoing.

Mears, elected in 2000, announced he wouldn’t run for reelection in November because of his concerns. Agran, who has served his limit as mayor, is running for a council seat.

Mears and council members Christina Shea and Mike Ward questioned Dornan’s role in setting up several meetings between city officials and representatives of ENCO Utility Services to discuss whether ENCO should manage the utility.

ENCO officials didn’t attend Tuesday’s meeting.

Dornan, who had been unavailable to answer questions, appeared before the council at nearly 12:30 a.m. Wednesday. In a statement, he denied he would make $1 million if the city’s business went to ENCO -- a boast that Mears said Dornan made to him and Agran in February.

Dornan also denied that he had a direct financial relationship with ENCO -- a comment disputed minutes later by City Manager Allison Hart, who said Dornan told her after a recent trip to an ENCO-managed utility in Phoenix that “he had a financial interest in the ENCO organization.”

Shea and Ward asked City Atty. Joel Kuperberg to suggest an independent attorney to investigate the allegations involving ENCO.

Shea -- who opposes the expansion -- said she also wanted to know why a purported lobbyist for ENCO took her to lunch with promises of a Sacramento job. Shea said former state Sen. Frank Hill did not tell her that he was working for ENCO. Ward said Hill, who was convicted of felony political corruption charges in 1994 and served jail time, worked for ENCO. Hill was not at Tuesday’s meeting and has not commented on the allegations.

Even before the political firestorm, the idea of the expansion languished for months after an ENCO analysis showed that it wouldn’t be profitable for either Irvine or ENCO in the small area contemplated by the city, which is served by Southern California Edison.

ENCO recommended expanding the study area to include 13,000 homes planned for the city’s northern edge, as well as the redevelopment of the former El Toro Marine base.

Agran said his only interest in the proposal was money for the city. An earlier study suggested that the city could earn $109 million through 2025 by reselling electricity to new residents.

“Whether it’s ENCO or anyone else, I don’t care -- I’d like to see the analysis move forward,” Agran said early Wednesday.

Mears finally moved to allow a final $65,000 study of a larger area to determine the risks and potential profit from the city buying electricity for new residents. He said later that opposing further study would have been “a purely political vote.”

After the brownouts and rolling blackouts in 2000 and 2001, dozens of cities, including Irvine, created public utilities in a bid to have more control over their energy supplies and as a possible source of revenue.

The backers of the concept noted that cities such as Los Angeles, Glendale and Anaheim that own electric utilities were able to maintain lower rates during the crisis.

But critics pointed out that those cities generate their own power. The Irvine utility would buy power from the state grid, which saw prices skyrocket in 2000 and 2001 as energy supplies dwindled.