Make sure you have set your subscription details by calling Set-AzureSubscription before trying to do operations in a subscription:
$certPath = "cert:\LocalMachine\MY\<your management cert's thumbprint>"
$azure_cert = get-item $certPath
Set-AzureSubscription -SubscriptionName "Your Subcription Name" -SubscriptionId "azure_sub_id" -Certificate $azure_cert -CurrentStorageAccount "azure_storage"
read more here - http://msdn.microsoft.com/en-us/library/windowsazure/jj554332.aspx
EDIT: Package cannot be a local file. Specify the path or URI to a .cspkg blob in a storage within the same subscription/project.