KING5: State lawmakers investigating Snohomish County clean energy contracts

Jun 16, 2015

EVERETT, Wash. — A series of contracts awarded by the Snohomish County Public Utilities District through a state clean energy grant program are under investigation by state lawmakers, some of whom are concerned about potential conflicts of interest between public and private entities.

Central to questions being raised, mostly by Senate Republicans, are dealings between the state Department of Commerce, Snohomish County PUD and a software company called 1Energy.

1Energy was started in 2011 by David Kaplan, a former Commerce Department consultant and PUD employee who won a no-bid contract for his new company not long after leaving the utility. He was also involved in the crafting of the state clean energy grant program.

Two other head executives with 1Energy had high-profile positions with the Department of Commerce before leaving for the private sector, and were involved in crafting the state’s clean energy grant framework.

“You have these employees who are going from the Department of Commerce to Snohomish County PUD to be CEO of a company with money following them every step of the way,” said State Sen. Doug Ericksen (R-Ferndale), chair of the Energy, Environment and Telecommunications committee.

1Energy has received more than $8 million in grant funding to develop software for an effort led by Snohomish County PUD to create batteries for storing clean energy.

Questions into 1Energy began in April with a whistleblower complaint by Anthony Curtis, a PUD employee. His concerns were the source of an investigation called for by PUD commissioners. That investigation finished in early June. And though it found most of the contracting was proper and legal, it determined the first investment of public dollars “gives rise to the appearance of a conflict of interest.”

While employed by the PUD, the investigation determined Kaplan was given permission by former utility CEO Steve Klein to “continue consulting for outside clients” and it was known he “intended to identify an entrepreneurial opportunity in the course of his work.”

By the summer of 2011, the investigation states, Kaplan was “directly involved” in discussions with Klein and other PUD leaders about “a possible project following his departure.” 1Energy, it states, “was activated” by the initial contract with Snohomish County PUD.

In a statement to KING 5, Kaplan reiterated comments by the investigator that he “took specific steps to dispel any inference of favoritism.” Also stated by the investigator, and not included in Kaplan’s statement, is his efforts “fell short,” according to the report.

Kaplan did not respond to a follow-up email for comment.

Snohomish County PUD Interim CEO and former general counsel Anne Spengler highlighted the investigation’s determination the contracting process was legal.

“This is just the appearance of a conflict of interest,” said Spengler. “I wouldn’t characterize it as big. I would characterize it as an after-the-fact look at things we should have done differently.”

That includes, according to the report, having an independent review of the bidding process to ensure no conflict of interest.

“It’s a lesson learned for the PUD,” she continued, “One that we do take seriously because we are a public entity. But again, I think in the grand scheme of things, it is what it is.”

Sen. Ericksen said he intends to address this issue in the upcoming special session.