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Findings and Recommendations 14 findings
F1
MCE’s Board as a whole has not played a sufficiently active role in key agency decisions including reviewing policies and future strategy, and setting / evaluating performance metrics for management.
Related Recommendations (1)
R1
By September 30, 2026, MCE’s Board of Directors should review whether its current delegation of authority provides adequate oversight regarding contract approval, setting / evaluating performance metrics for senior management, and overall company strategy.
F2
The Board needs — but in recent years has not received — adequate and independent legal advice. Having ceded approval authority over the hiring of MCE’s General Counsel to the CEO in 2023, the Board has diminished its ability to govern.
Related Recommendations (1)
R2
By December 31, 2026, the Board should amend its Operating Rules and Regulations to reinstate approval authority for hiring of the CEO and General Counsel, to require Board approval for hiring all C-level employees, and to require an open, competitive process for all such hiring.
F3
The Board’s size and composition make it difficult for the Board to govern.
Related Recommendations (1)
R3
By December 31, 2026, the Board should determine whether its current size and composition are impediments to oversight and governance.
F4
Many Board members have — quite understandably — limited expertise regarding a large and complex company such as MCE.
Related Recommendations (1)
R4
By December 31, 2026, the Board should revise its Operating Rules and Regulations to regain responsibility for jointly creating meeting agendas in order to improve meeting efficiency and prioritization of agenda items.
F5
All MCE Board members are local elected officials who face competing demands on their limited time and resources; as a result, meeting attendance has often been poor, and insufficient for optimally effective governance.
Related Recommendations (1)
R5
By December 31, 2026, all of MCE’s Marin jurisdictions (and preferably, all 38 jurisdictions covered by MCE) should implement a process by which its appointed Board member (or, in that person’s absence, the designated alternate member) commits to attending each regular Board meeting.
F6
Energy contracts at the heart of MCE’s business are technical and complex. Board members face a considerable challenge to understand the costs, risks, and policy implications of MCE’s energy contracts — and the relationship between those contracts and the actual “greenness” of the electricity that MCE provides to its customers.
Related Recommendations (1)
R6
By December 31, 2026, all of MCE’s Marin jurisdictions (and preferably, all 38 jurisdictions covered by MCE) should reassess their appointments of chosen Board members to prioritize those with the most extensive financial and energy expertise.
F7
The Board lacks sufficient visibility into the work of its contracted power purchasing agent and technical consultant (Pacific Energy Advisors) — an entity that has substantial influence over MCE’s business operations, and also purchases for (and advises) other CCAs in this market.
Related Recommendations (1)
R7
By March 31, 2027, the MCE Board should evaluate whether changes to Board composition or access to energy expertise would improve oversight and governance, and if necessary, consider amending its Joint Powers Agreement to allow the governing body of each jurisdiction to appoint and designate a Board member (or alternate Board member) who is not a member of its governing body, but who has strong energy industry experience and can commit to serve for multiple years.
F8
The Board has not received from management an adequate and understandable explanation of the almost $200 million year-over-year increase in energy costs in FY 2024–25.
Related Recommendations (1)
R8
By December 31, 2026, the Board should review and assess the value to ratepayers of certain costly contracts that may serve primarily to allow MCE to claim a higher renewable Power Content Label.
F9
Management has at times invoked confidentiality / market competitiveness concerns when providing the Board or individual members with only limited details about energy contracts (even though greater details are publicly reported on the California Energy Commission’s website), thus impairing Board members’ contemporaneous awareness about key aspects of MCE’s business.
Related Recommendations (1)
R9
By December 31, 2026, the MCE Board should hire an impartial, outside auditor to provide a comprehensive review of energy contracts executed in FY 2024–25, including review of cost, capacity, length of contract, fuel source, facility location and approval processes, in order to avoid future similar recurring contract variances and overruns.
F10
Management has been, at some times and in key respects, insufficiently transparent with the Board, as it has (1) provided incomplete responses to Board members’ questions and requests for information; (2) obfuscated or conflated issues and details; (3) failed to inform the Board of important actions in a timely manner or done so after-the-fact; and (4) limited legitimate inquiries and comments from Board members who attempt to question management.
Related Recommendations (1)
R10
By December 31, 2026, the Board should conduct an internal review concerning the apparent April 2023 elevation of then-Associate General Counsel to the position of General Counsel, in order to determine whether that elevation occurred consistently with MCE’s then-operative Operating Rules and Regulations.
F11
The Board has ceded control of its own meetings by relinquishing its responsibility over the creation of meeting agendas. This has contributed to meeting inefficiency and bloated meeting packets.
Related Recommendations (1)
R11
Initially by December 31, 2026 and periodically thereafter, the Board should direct management to issue a Request for Proposal concerning (1) services provided by independent energy consultants, and (2) services of all other consultants when the duration or cost exceeds a de minimis amount (as defined by the Board).
F12
The process for amending the agency’s foundational rules — its Operating Rules and Regulations — has not been consistently and rigorously followed. As a result, the Grand Jury questions whether all relevant materials were made available to Board members and the public (in accordance with the Brown Act) in advance of the Board taking actions.
Related Recommendations (1)
R12
By December 31, 2026, the Board should review its August 17, 2023 amendment of its Operating Rules and Regulations to determine if, in doing so, (1) the Board received adequate and independent legal advice, and (2) whether MCE and the Board complied with the public inspection requirements of the Brown Act, California’s open public meetings law.
F13
Management has repeatedly violated key internal controls, including “Resolution 2020-04” and “authorization chain” documents, requiring consultation about, and approval of, one- to-five year energy contracts.
Related Recommendations (1)
R13
By March 31, 2027, the Board should review its existing policies and internal controls to determine whether they are consistent with and adequate for a company approaching one billion dollars in revenue.
F14
MCE has grown from a small company to its significant size today, yet its foundational documents have not been amended to reflect its increased scale and complexity.
No recommendations for this finding