The major shakeup in the high levels of the Imperial Irrigation District Energy Department persisted into the new year with district General Manager Kevin E. Kelley announcing more restructuring.
The latest development came in a memorandum from Kelley to IID employees dated Dec. 30. Kelleyâ€™s office sent the memo to the Desert Review in an e-mail on Jan. 4. It states Vicken Kasarjian is now Energy manager and that Carl Stills, the previous manager, has been moved to head the Portfolio Management Office to work on major and special projects. It also describes other organizational changes.
The moves follow actions in October in which five veteran district employees were placed on paid administrative leave and Kasarjian was hired to co-manage Energy with Stills. Four of the five staff members have been served with termination notices.
While Kelley steadfastly defends the moves, critics allege they amount to mismanagement or lack of leadership that diminishes IIDâ€™s ability to meet customer needs and harms employee morale.
Asked in a Jan. 6 interview how the action will benefit IID customers, Kelley said, â€œThe initial changes and the most recent organizational moves all have a piece. What it comes down to is the independence of IID.â€
Pressed for specifics, Kelley said, â€œKasarjian came in to address what I believe are gaps in the transmission planning function. If you look at some of our recent board agendas, (previously approved) projects are coming back to the board to be cancelled or suspended, huge transmission projects involving millions of dollars.â€
As a public utility, IID is tasked with providing electric power to more than 150,000 customers in Imperial County, the Coachella Valley area of Riverside County and part of San Diego County. That work involves two major areas. One is generating electricity for its customers, or purchasing it from other providers. The second is transmission, specifically the construction and maintenance of electric power lines from local lines to large lines that help move power within the region and to other areas.
The demands on transmission are increasing for several reasons. First is the population growth of Imperial County and the entire western region, which means more electricity must be generated and delivered to customers. Second, older lines need repair and in some cases replacement. Finally, as Imperial County has become a hotbed of renewable energy generationâ€”geothermal, solar and windâ€”over the past decade, the need for transmission lines to move that power, both within the IID service area and to out-of-area power providers, is increasing. IID generates income from having locally generated power moved on its lines to other areas.
New Energy manager at center of debate
Kelley said Kasarjianâ€™s skill and experience will allow IID to better meet its demands. Also in October, the IID Board of Directors approved a three-year agreement with energy consulting firm ZGlobal, Inc., for transmission engineering, planning and related services. Kelley said in the recent interview hiring ZGlobal was done in conjunction with Kasarjianâ€™s hiring to further improve transmission and ZGlobal consultants are the replacements for the five departed Energy staffers.
But Kasarjian to some is a controversial figure because he has previously worked with ZGlobal. Kelley confirmed that Kasarjian had done consulting for ZGlobal in the year prior to being hired by IID.
The Oct. 16 press release that announced his hiring and the five staffers being placed on leave detailed Kasarjianâ€™s experience but did not mention his link to ZGlobal. It also did not mention the contract with ZGlobal.
Kelley praised Kasarjian in the recent interview and also spoke highly of him in the press release and at an Oct. 20 board meeting. The minutes of that meeting state the IID board approved Kasarjianâ€™s and ZGlobalâ€™s hiring during an Oct. 12 closed session meeting. The minutes add that the action was taken but the announcement delayed.
In the October press release Kelley stated Kasarjianâ€™s â€œdepth of experience and standing in the industry sends the right message â€“ both internally and externally â€“ at a time of fundamental change in the electric utility business in California and throughout the West.â€
He called hiring Kasarjian â€œan important step forward in responding to the demands and expectations of an evolving energy landscape,â€ and stated that, â€œBy adding Vicken Kasarjian to its energy management team, the district is better positioned to preserve both its public power business model and historically low rates.â€
The Oct. 20 meeting minutes state Kelley said he had met Kasarjian about four years ago and was â€œrebuffedâ€ in his initial attempts to get him to join IID, but that Kasarjian â€œwas ready to come aboard this timeâ€ and â€œdelightedâ€ to do so.
However, sources who spoke on the condition they not be identified, complained that Kasarjian is still too closely tied to ZGlobal to run IID Energy independently and that his hiring violates district policy by either being a conflict of interest or creating the appearance of such.
â€œYou have a consultant managing the Energy Department. Iâ€™ve never seen that,â€ said one source who has worked closely with the district on energy matters.
Kelley did state Kasarjian is a contract employee who does not have the same protections as regular employees, such as the five against whom action recently was taken.
Organizational changes detailed
Defending ZGlobal in the Jan. 6 interview, Kelley said, â€œIâ€™ve relied on ZGlobal for some years and especially so in this last year when embroiled in this lawsuit with ISO (California Independent Systems Operators, or Cal ISO). I make no apologies for having turned to that firm when this issue came to a head.â€
By â€œthis issue,â€ Kelley was referring to the Energy Department reorganization and related personnel actions, and added that while he concedes using internal personnel to improve the department might have been better, that, in his view, was â€œnot an option.â€
He declined to elaborate further, citing restrictions on what he can say about personnel matters and the situationâ€™s link to the lawsuit.
Kelleyâ€™s apparent frustration with the previous structure shows through in the Dec. 30 memo to employees about the latest reorganization. In it he states the Portfolio Management Office will be â€œrevamped and streamlinedâ€ because â€œit has become clear to me that the current, highly centralized and bureaucratic PMO model must be restructured.â€
The â€œportfolioâ€ term refers to projects, not just in Energy, but in all departments. The previous head of that department, Eddie Lutz, retired, Kelley said.
Kelley explained the changes mean managers of projects will report to the heads of their respective departments instead of reporting directly to the head of the Portfolio Management, which is now Carl Stills, the former Energy manager.
In another change mentioned in the Dec. 30 memo, the Applications & Business Practices Section within Energy will now report to the Information Technology Department, a move Kelley states will allow â€œGISâ€ to be better shared between the Energy and Water departments. GIS commonly refers to geographic information systems, computerized satellite mapping that aids in a variety of tasks, including planning and development.
The new moves follow changes revealed in the Oct. 16 press release, which stated that Kasarjian and Stills were to split energy management duties with Kasarjian being the energy manager in charge of (electricity) transmission and planning and Stills leading energy operations. Prior to that move, Stills had headed Energy as its sole manager. Now Stills heads the much smaller Portfolio Management Office and when the IID board meets it is Kasarjian, not he, that sits on the dais with the board.
Employees given notice of termination
Stills, a long-time and highly regarded IID employee, is not alone in experiencing dramatic change.
The October release stated several employees in the transmission, planning and engineering sections were placed on paid administrative leave, but Kelley declined further comment at the time calling it a personnel matter.
Sources speaking on the condition of anonymity said the five included a deputy energy manager responsible for engineering and operations, a planning and engineering manager, a general superintendent of planning, a supervisor of planning and an assistant manager of energy transmission expansion. All are licensed engineers, sources said.
A sixth employee, an engineer who had been hired by IID within the last year to attend and monitor activity at meetings of out-of-town electric-power organizations, was released from IID employment at a later date, sources said.
Kelly confirmed on Dec. 29 that five staff members had been placed on administrative leave and that four had subsequently been given notices of termination. He declined to name them or provide detailed comment.
One of the employees received a termination notice hand-delivered to his home by another IID staff member on Dec. 28, a source said.
The Desert Review was able to confirm the names of two of the employees, but due to fairness has decided not to name them until they all can be identified.
Of the personnel actions, Kelley said in the Dec. 29 interview, â€œThe action was for cause. Theyâ€™re all long-time employees. Theyâ€™ve got rights and IID has to respect them.â€
Noting the affected employees have access to an appeals process, he added, â€œThis is something that is going to play out over the next few months.â€
Asked if he could specifically explain what precipitated the actions, Kelley said, â€œI donâ€™t think I probably can. Itâ€™s no coincidence that action was taken simultaneous to the announcement of the new Energy (Department) structure.
â€œA lot of this is bound up in our litigation against the Cal ISO (California Independent Systems Operator). Itâ€™s probably a dimension that makes it even tougher since that lawsuit is still, in our view, alive.â€
Kelley confirmed that the five employees placed on leave â€œworked in transmission and planning or were responsible for transmission and planningâ€ at IID.
A source with knowledge of one of the termination notices said it alleges a number of violations of district policies including â€œinsufficient, negligent or careless performance of duties,â€ â€œviolation of state or federal laws or regulations applicable to the districtâ€ and â€œunprofessional conduct.â€
Critics argue the terminations are not beneficial because those staff members have valuable experience and were making steady progress in addressing needed improvements to transmission.
â€œThey just got it going in the right direction. They were behind Carl (Stills),â€ said one long-time observer who spoke on the condition of anonymity.
Sources also said the moves could harm the reliability of IIDâ€™s power, which prevents outages, because Stills as Energy head and the terminated staff members were making great strides in improving reliability.
According to documents obtained by the Desert Review outlining consultant recommendations to IID, and to sources with knowledge of the issue, efforts to improve the Energy Department have been on-going since at least 2013.
External issues play role
The turmoil comes at a time when IID is grappling with several vital issues, including expanding its electric-power generation and transmission capacity, meeting state requirements to get more electricity from renewable sources such as geothermal, solar and wind, and battling Cal ISO, Californiaâ€™s large electric power transmitters, in a lawsuit filed by IID. Kelley referred to the need to meet those challenges in the October press release announcing Kasarjianâ€™s hiring.
The entire issue lapses into the complex and arcane world of generating electric power and transmitting it over power lines. All the vast majority of electric power customers know and care about is whether or not they have power. Outages are usually scattered and brief and that is not by luck.
Electric power utilities, fresh from being required by state law to achieve getting one third of their electricity from renewable sources, now face needing to get their so-called â€œrenewable portfolioâ€ to 50 percent by 2030.
Use of renewable energy resources reduces air pollution, but has traditionally been costlier than power from fossil-fuel plants, which long have made up the bulk of U.S. electric power supplies. Imperial Valley has had numerous renewable energy projects coming online in recent years and more in various stages of development. IID is relying on those sources to meet the state goal.
â€œUnlike any other utility, all of IIDâ€™s renewable energy (resources) are located right here in our service area,â€ Kelley said.
Amid the challenge of controlling electric rates while adding renewable resources to its portfolio, IID is embroiled in the Cal ISO lawsuit.
According to the Cal ISO website, â€œThe ISO manages the flow of electricity across the high-voltage, long-distance power lines that make up 80 percent of Californiaâ€™s and a small part of Nevadaâ€™s power grid. The nonprofit public benefit corporation safeguards the economy and well-being of 30 million customers by keeping the lights on 24/7.â€
Power utilities need to obtain enough electricity to keep the lights on, but not more than they need at any given time. They generate some of the power they use and purchase the rest from other sources, and IID is no different. But that electricity has to be transmitted, which is where an entity such as Cal ISO comes in. Such an organization makes it more efficient for utilities to move around electricity on the â€œgrid,â€ improving reliability and controlling costs.
Though IID is not part of Cal ISO, it still must frequently coordinate with it. This has become more vital because of the renewable energy being generated in IIDâ€™s service area and that power needs to get out to other utilities. IID does not generate renewable power, that is left to the geothermal, solar and wind firms, but utilities such as IID must get involved in building the lines to transmit that power.
This requires an increased number of large transmission lines and IID is deeply involved in such projects.
One of those projects is Path 42. According to an IID press release on the districtâ€™s federal anti-trust lawsuit against Cal ISO, â€œThe dispute between the agencies extends back to 2011, when CAISO approved IIDâ€™s upgrades to the Path 42 project that would send clean, renewable energy from Imperial and Riverside counties to the rest of California. IID subsequently expended nearly $35 million in completing its segment of the project.â€
The release states the suit alleges that in, â€œthe summer of 2014, CAISO used the loss of San Onofre Nuclear Generating Station,â€ a nuclear power plant near Oceanside that was closed, â€œas a pretext for reducing future deliverability from IID into the CAISO system to zero, stranding the districtâ€™s investment in the Path 42 project and leaving it with no practical means of recovering its costs, other than to join the CAISO as a participating transmission owner.â€
Put plainly, IID is stating it invested in constructing power lines to deliver renewable energy generated in Imperial Valley to other areas and that Cal ISO is unlawfully impeding that. It speaks to Kelleyâ€™s comment about the recent changes in its Energy Department being necessary to maintain IIDâ€™s â€œindependence.â€
There is fear that if IID joins Cal ISO, or is in effect forced to join it as the suit alleges, the price its consumers pay for electricity will skyrocket. But critics allege the recent actions of Kelley and the IID Board cause what the press release on the suit states IID is trying to prevent. The lawsuit opened up IID to scrutiny it may not have otherwise received and the big personnel moves attract further attention, they say.
The district suit suffered a blow in November when a federal judge dismissed part of it at the request of Cal ISO attorneys, but the judge provided IID with the chance to re-do its filing, which Kelley stated it will do.