Ethics complaints related to PUD clean-energy project dismissed

OLYMPIA — A state ethics board has tossed out complaints against several former and current Department of Commerce officials accused of improperly steering a multimillion-dollar grant to a clean-energy project in Snohomish County.

The state Executive Ethics Board dismissed the complaints Jan. 15, determining they were “obviously unfounded or frivolous.”

The complaints were anonymously filed in mid-July. They alleged that state officials had used their public positions to help the Snohomish County Public Utility District get a $7.3 million clean energy grant from the state. The PUD spent the grant money on a no-bid contract with 1Energy Systems. The Seattle-based company employs two former Commerce officials and was started by Dave Kaplan, a former contractor for the department. All three were named in the complaints.

In a statement issued after the ethics board’s ruling earlier this month, 1Energy said “all of this has been more about anti-clean energy politics than any legitimate concern about wrongdoing. We are excited to return our complete focus to the cutting edge work that Washington State is enabling through its Clean Energy Fund program.”

The allegations came out of the PUD’s own ethics investigation last year into its no-bid contracts with 1Energy Systems. After leaving the Commerce Department, Kaplan worked at the PUD before resigning to run 1Energy. 1Energy is the project manager for energy-storage prototypes and is providing software to control enormous batteries connected to the PUD’s electric grid.

An independent investigator found that PUD officials and Kaplan broke the district’s ethics policy by failing to take adequate steps to avoid the appearance of favoritism.

The state ethics board determined that it did not have jurisdiction to consider the complaint filed against Kaplan because he was a contractor and not a state employee.

“We make an initial determination of jurisdiction. If we don’t have jurisdiction, we don’t dig any further,” the board’s Executive Director Kate Reynolds said.

It did investigate seven other complaints, including those about three former officials working for private companies working on projects funded in part by the state Clean Energy Fund. Two — former state Commerce Director Rogers Weed and former Deputy Director Daniel Malarkey — work at 1Energy.

Weed joined the company’s board of advisors in July 2013, five months after leaving Commerce. In April 2014, he became an executive at the company. Malarkey left his state job and went to work for 1Energy in September 2013. In his new position, he helped put together the PUD’s grant application.

Another former state official, Michael Carr, helped launch the state’s Clean Energy Fund while working at the department. He is now an attorney with UniEnergy Technologies, a PUD subcontractor through 1Energy Systems.

Weed and Malarkey responded to the complaints for the ethics board investigation, which also reviewed two years of their emails from when they worked for the state.

In a report submitted to the board, Reynolds said that Malarkey helped draft a “policy memo” on how the Clean Energy Fund could be structured.

“Other than the memo, there is no indication that Mr. Malarkey was involved with legislation” that created the fund, she concluded. “Further, there was no evidence provided that Mr. Malarkey was involved with developing the application process, the evaluation of applicants, or the selection of the recipients” of the funds.

Weed left state service before the Legislature created the fund, according to the investigation.

And, Reynolds wrote, he “did not have a role in the evaluation or selection of the recipients of the funds.”

Carr was not involved in the awarding of grants to the PUD and two other utilities. He did participate in negotiations between Commerce and the three utilities on the contracts accompanying the grants, according to the investigation.

Reynolds concluded that while Carr in his work at UniEnergy Technologies does “on occasion” discuss matters related to the Clean Energy Fund with lawmakers, “it appears he has not had any involvement” with any grants handed out during his time with the state, she concluded.

The board also dismissed complaints against current Commerce Director Brian Bonlender and Assistant Director Tony Usibelli, and two former department officials — Melanie Anderson, a former contracts manager, and Rick Locke, former executive director of the Office of Economic Development and Competitiveness. It determined the four simply performed their jobs relating to the Clean Energy Fund.

While the complaints have been dismissed, the Legislature must further scrutinize a grant-making process which allowed millions of taxpayer dollars to flow to a company dominated by former public officials, a state lawmaker said Tuesday.

“There is still a great perception out in the public that you have executive branch people going from job to job, grant to grant and the money follows them,” said Sen. Doug Ericksen, R-Ferndale, who is chairman of the Senate Energy, Environment and Telecommunications Committee.

“I’m not trying to attack any individuals,” he said. “But I think there is a problem in this process and they took advantage of the way the system is set up and we need to examine if that system needs to be changed.”

The state has already made some changes to how it will award a second round of Clean Energy Fund grants.

In Everett, PUD officials are focused on the work at hand, the district’s General Manager and CEO Craig Collar said.

The district continues “to build on the success of the first phase of our energy storage program” — with 1Energy as lead contractor, he said.

The utility looks “forward to breaking ground on the next phase of the effort this year,” he said. “We remain committed to executing these important energy storage efforts as efficiently and effectively as possible.”

Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole.

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