Agenda packet — MCE Board of Directors, March 20, 2025

MCE Board of Directors Meeting
Thursday, March 20, 2025
6:30 p.m.
1125 Tamalpais Avenue, San Rafael, CA 94901 (MCE)
2300 Clayton Road, Suite 1150, Concord, CA 94520 (MCE)
955 School Street, Napa, CA 94559, City Hall Committee Room (City of Napa) Public comments may be made in person or remotely via the details below.

Remote Public Meeting Participation
Video Conference: https://zoomto.me/F6Ogt
Phone: Dial (669) 900-9128, Meeting ID: 890 0487 7785, Passcode: 525690 Materials related to this agenda are available for physical inspection at MCE’s offices in San Rafael at 1125 Tamalpais Ave, San Rafael, CA 94901 and in Concord at 2300 Clayton Road Suite 1150, Concord, CA 94520.

DISABLED ACCOMMODATION: If you are a person with a disability who requires an accommodation or an alternative format, please contact MCE at (888) 632-3674 or [email protected] at least 72 hours before the meeting start time to ensure arrangements are made.

Agenda Page 1 of 2

1. Roll Call/Quorum

2. Board Announcements (Discussion)

3. Public Open Time (Discussion)

4. Report from Chief Executive Officer (Discussion)

5. Consent Calendar (Discussion/Action)
C.1. Approval of 2.20.25 Meeting Minutes
Agenda Page 2 of 2
C.2. Approved Contracts for Energy Update
C.3 Addition of Board Members to Committees

6. Proposed Fiscal Year 2025/26 Budget (Discussion/Action) a. Proposed Adjustment to MCE Demand Charges effective April 1, 2025 (Discussion/Action)
b. MCE Investment in Transmission Software Solutions
(Discussion/Action)

7. Legislative Update (Discussion)

8. Board & Staff Matters (Discussion)

9. Adjourn
The Board may discuss and/or take action on any or all of the items listed on the agenda irrespective of how the items are described.

DRAFT

MCE BOARD MEETING MINUTES
Thursday, February 20, 2025
6:30 P.M.

Present: Dion Bailey, City of Hercules
Eli Beckman, Town of Corte Madera
Mark Belotz, Town of Danville
Kari Birdseye, City of Benicia
Monica Brown, County of Solano
Barbara Coler, Town of Fairfax
Cindy Darling, City of Walnut Creek
Gina Dawson, City of Lafayette
Kevin Jacobs, City of Novato
Arlene Kobata, City of Pittsburg
Tarrell Kullaway, Town of San Anselmo
Aaron Meadows, City of Oakley
Devin Murphy, City of Pinole
Laura Nakamura, City of Concord
Beth Painter, City of Napa
Sridhar Verose, City of San Ramon
Max Perrey, City of Mill Valley
Mary Sackett, County of Marin
Mathew Salter, Town of Ross
Manveer Sandhu, City of Fairfield
Shanelle Scales-Preston, County of Contra Costa, Chair
Amanda Szakats, City of Pleasant Hill
Holli Thier, Town of Tiburon
Brianne Zorn, City of Martinez

Absent: Liz Alessio, The County of Napa and Four Napa Cities/Town (American Canyon, Calistoga, St. Helena, and Yountville) Stephanie Andre, City of Larkspur
Melissa Blaustein, City of Sausalito
Maika Llorens Gulati, City of San Rafael
Gabriel Quinto, City of El Cerrito
Elizabeth Pabon-Alvarado, City of San Pablo
Charles Palmares, City of Vallejo
Graham Thiel, Town of Moraga
Sally Wilkinson, City of Belvedere
Cesar Zepeda, City of Richmond
Staff
& Others: Jesica Brooks, Lead Board Clerk and Executive Assistant Stephanie Chen, Associate General Counsel
Alice Havenar-Daughton, Vice President of Customer Programs Sam Irvine, Senior Strategic Initiatives Manager
DRAFT
Vicken Kasarjian, Chief Operating Officer
Shaheen Khan, Vice President of Human Resources, Diversity, and Inclusion
Jonnie Kipyator, Power Analytics Senior Manager
Caroline Lavenue, Legal Counsel
Tanya Lomas, Board Clerk Associate
Alexandra McGee, Vice President of Strategic Initiatives Catalina Murphy, General Counsel
Ashley Muth, Internal Operations Coordinator
Efren Oxlaj, Finance Manager
Justine Parmelee, Vice President of Internal Operations Robin Parmelee, Policy Intern
Zae Perrin, Vice President of Customer Operations
Mike Rodriguez-Vargas, Internal Operations Assistant
Enyonam Senyo-Mensah, Internal Operations Manager
Sabrinna Soldavini, Director of Policy
Maira Strauss, Vice President of Finance
Greg Tillman, Associate Director of Rates
Jamie Tuckey, Chief Customer Officer
Dawn Weisz, Chief Executive Officer

1. Roll Call
Chair Scales-Preston called the regular meeting to order at 6:34 p.m. with quorum established by roll call.

2. Board Announcements (Discussion)
Chair Scales-Preston opened the floor for board announcements, and there were no comments.

3. Public Open Time (Discussion)
Chair Scales-Preston opened the public comment period and there were no comments.

4. Report from Chief Executive Officer (Discussion)
CEO Weisz introduced this item and addressed questions from Board members.

5. Consent Calendar (Discussion/Action)
C.1 Approval of 11.21.24 Meeting Minutes
C.2 Approved Contracts for Energy Update
Chair Scales-Preston opened the public comment period and there were no comments.

DRAFT

6. Board Introductions (Discussion)
CEO Weisz welcomed the Board and extended round table introductions by Board members.

Chair Scales-Preston opened the public comment period and there were no comments.

7. Selection of Chair & Vice Chair (Discussion/Action)
Catalina Murphy, General Counsel, introduced this item and addressed questions from Board members.

Chair Scales-Preston opened the public comment period and there were no comments.

Action 1: Re-elect Director Shanelle Scales-Preston as MCE Board Chair.

Motion carried by unanimous roll call vote with 22 votes for Scales-Preston. (Absent: Alessio, Andre, Birdseye, Blaustein, Llorens Gulati, Quinto, Pabon-Alvarado, Palmares, Thiel, Thier, Wilkinson and Zepeda).

Action 2: Re-elect Director Gabriel Quinto as MCE Vice Chair. Motion carried by unanimous roll call vote with 23 votes for Quinto. (Absent: Alessio, Andre, Blaustein, Llorens Gulati, Quinto, Pabon-Alvarado, Palmares, Thiel, Thier, Wilkinson, and Zepeda).

8. Proposed Resolution No. 2025-01 Accepting Award GFO-23-309 From the California Energy Commission (VPP-FLEX) (Discussion/Action) Alexandra McGee, Vice President of Strategic Initiatives, introduced this item and addressed questions from Board members.

Chair Scales-Preston opened the public comment period and there were no comments.

Action: It was M/S/C (Murphy/Darling) to approve proposed Resolution No. 2025-01 Accepting Award GFO-23-309 from the California Energy Commission. Motion carried by unanimous roll call vote. (Absent: Alessio, Action: It was M/S/C (Darling/Coler) to approve Consent Calendar items C.1 and C.2 pending the request to update the 11.21.24 meeting minutes to reflect Director Bailey as an attendee. Motion carried by unanimous roll call vote (Absent: Alessio, Andre, Blaustein, Llorens Gulati, Quinto, Pabon-Alvarado, Palmares, Thiel, Wilkinson, and Zepeda).

DRAFT
Andre, Blaustein, Llorens Gulati, Quinto, Pabon-Alvarado, Palmares, Thiel, Wilkinson, and Zepeda).

9. MCE 2025 Priorities (Discussion)
CEO Weisz introduced this item and several staff addressed questions from Board members.

Chair Scales-Preston opened the public comment period and there were no comments.

Action: No action required.

10. Fiscal Year 2025/26 Budget Introduction on Power Supply and Staffing (Discussion)
a. Proposed Demand Charges Adjustment Effective April 1, 2025 (Discussion)
Maira Straus, Vice President of Finance, introduced this item and several staff addressed questions from Board members.

Chair Scales-Preston opened the public comment period and comments were made by members of the public, Stephanie Andre and Dan Segedin.

Action: No action required.

11. Board & Staff Matters (Discussion)
There were no comments

12.Adjournment
Chair Scales-Preston adjourned the meeting at 9:36 p.m. to the next scheduled Board Meeting on March 20, 2025.
___________________________________________
Shanelle Scales-Preston, Chair

Attest:

___________________________________________
Dawn Weisz, Secretary
March 20, 2025
TO: MCE Board of Directors
FROM: Adita Farahiyah, Power Resources Analyst
RE: Approved Contracts for Energy Update (Agenda Item #05 C.2) Dear Board Members:

Summary:

This report summarizes contracts for energy procurement entered into by the Chief Executive Officer or her delegate and, if applicable, the Chair of the Technical Committee, since the last report was prepared for the regular Board meeting in February. This summary is provided to your Board for information purposes only and no action is needed.

Review of Procurement Authorities:

In November 2020, your Board adopted Resolution 2020-04 which included the following provisions:

The CEO and Technical Committee Chair, jointly, are hereby authorized, after consultation with the appropriate Committee of the Board of Directors, to approve and execute contracts for Energy Procurement for terms of less than or equal to five years.

The CEO shall timely report to the Board of Directors all such executed contracts.

The CEO is authorized to approve and execute contracts for Energy Procurement for terms of less than or equal to 12 months, which the CEO shall timely report to the Board of Directors.

The CEO is required to report all such contracts and agreements to the MCE Board of Directors on a regular basis.

Item # Month of
Execution
Purpose Average Annual
Contract Amount
Contract
Term
1 February 2025 Purchase of Renewable Energy $9,000,000 1 Year or less Contract Approval Process:

Contract Approval Process: Energy procurement is governed by MCE’s Energy Risk Management Policy as well as Board Resolutions 2020-04 and 2018-08. The Energy Risk Management Policy (Policy) has been developed to help ensure that MCE achieves its mission and adheres to its procurement policies established by the MCE Board of Directors (Board), power supply and related contract commitments, good utility practice, and all applicable laws and regulations. The Board Resolutions direct the CEO to sign energy contracts up to and including 12 months in length.

The evaluation of every new energy contract is based upon how to best fill MCE’s open position. Factors such as volume, notional value, type of product, price, term, collateral threshold and posting, and payment are all considered before execution of the agreement.

After evaluation and prior to finalizing any energy contract for execution, an approval matrix is implemented whereby the draft contract is routed to key support staff and consultants for review, input, and approval. Typically, contracts are routed for commercial, technical, legal, and financial approval, and are then typically routed through the Chief Operating Officer for approval prior to execution. The table below is an example of MCE staff and consultants who may be assigned to review and consider approval prior to the execution of a new energy contract or agreement.

Review Owner Review Category
Vidhi Chawla (MCE, Vice President of Power Resources) Procurement/Commercial John Dalessi (Pacific Energy Advisors) Technical Review Steve Hall (Hall Energy Law) Legal
Nathaniel Malcolm (MCE, Senior Commercial Counsel) Legal/CPUC Compliance Maira Strauss (MCE, Director of Finance) Credit/Financial Vicken Kasarjian (MCE, Chief Operating Officer) Executive Fiscal Impacts:

Expenses and revenue associated with these Contracts and Agreements that are expected to occur during FY 2024/25 are within the FY 2024/25 Operating Fund Budget. Expenses and revenue associated with future years will be incorporated into budget planning as appropriate.

Recommendation:

Information only. No action required.

March 20, 2025
TO: MCE Board of Directors
FROM: Jesica Brooks, Executive Assistant and Lead Board Clerk RE: Addition of Board Members to Committees (Agenda Item #05 C.3) ATTACHMENTS: A. MCE Board Offices and Committee Rosters B. Executive Committee Overview
C. Technical Committee Overview
Dear Board Members:

Summary:

MCE Board Director and Town of Fairfax Councilmember, Barbara Coler, is interested in joining the Executive Committee and the Ad Hoc Contracts Committee. MCE Board Director and City of Larkspur Councilmember, Stephanie Andre, is interested in joining the Technical Committee.

The scope of the MCE Executive Committee is to explore, discuss and provide direction or approval on general issues related to MCE including legislation, regulatory compliance, strategic planning, outreach and marketing, contracts with vendors, human resources, finance and budgeting, debt, rate setting, and agenda setting for the regular MCE Board meetings and annual Board retreat.

The scope of the MCE Technical Committee is to explore, discuss and provide direction or approval on issues related to electricity supply, distributed generation, greenhouse gas emissions, energy efficiency, procurement risk management and other topics of a technical nature.

The scope of Ad Hoc Contracts Committee will be finalized as the committee forms, and members will be asked to review and provide input on several different types of confidential and unredacted contracts, including energy and power agreements. Those agreements can be short term (one- to five-year) transactions, open season offers for supply products, and ad hoc request for offer results for supply products, including hydropower, renewable energy, conventional energy, resource adequacy and shaped delivery products.

Fiscal Impacts: None.

Recommendation:

Approve the additions of:
• Director Barbara Coler to the Executive Committee and the Ad Hoc Contract Committee. • Director Stephanie Andre to the Technical Committee.
2025 MCE Board Offices and Committee Rosters

BOARD OFFICES
Chair: Shanelle Scales-Preston, County of Contra Costa
Vice Chair: Gabe Quinto, City of El Cerrito
Treasurer: Maira Strauss, MCE Vice President of Finance Secretary: Dawn Weisz, MCE Chief Executive Officer

BOARD OFFICES SELECTION PROCESS
The Chair and Vice Chair offices are held for 1 year and there are no limits on the number of terms held by either Chair or Vice Chair. 1 The selection of these offices shall take place on or near December of each year. 2 The office of Treasurer is appointed by the Board via an approved resolution and may be a non-board member. The Treasurer appointment, along with the delegated authority, is held for 1 year and there are no limits on the number of terms held. 3 Deputy Treasurers are appointed directly by the Treasurer each year. Once appointed by the Board, the Secretary shall continue to hold the office each year until the Secretary chooses to resign from the role or the Board decides to remove the individual from the Secretary position. 4 The Secretary does not need to be a member of the Board. All officer appointments/selections by the Board require a majority vote of the full membership of the Board. 5
EXECUTIVE COMMITTEE (Updated 2.3.25)

1. Max Perrey, Chair

2. Eli Beckman
City of Mill Valley
Town of Corte Madera

3. Cindy Darling City of Walnut Creek

4. Maika Llorens Gulati

5. Devin Murphy
City of San Rafael
City of Pinole

6. Laura Nakamura

7. Gabe Quinto
City of Concord
City of El Cerrito

8. Mathew Salter

9. Shanelle Scales-Preston
Town of Ross
County of Contra Costa

10. Sally Wilkinson

11. Barbara Coler, interested
City of Belvedere
Town of Fairfax
5 Article VI, Section 2 of MCE’s Operating Rules and Regulations. At MCE’s current membership of 37 communities with appointed Directors, the vote needed is 19. 4 Article IV, Section 1(c) of MCE’s Operating Rules and Regulations. 3 Article V, Section 1 of MCE’s Operating Rules and Regulations; California Government Code § 53607. 2 Article V, Section 1 of MCE’s Operating Rules and Regulations. 1 Section 4.13.1 of MCE Joint Powers Agreement.

TECHNICAL COMMITTEE (Updated 2.5.25)

1. Devin Murphy, Chair City of Pinole

2. Dion Bailey

3. Gina Dawson
City of Hercules
City of Lafayette

4. Charles Palmares

5. Gabe Quinto

6. Stephanie Andre, interested
City of Vallejo
City of El Cerrito
City of Larkspur
AD HOC CONTRACTS (Updated 3.6.25)

1. Barbara Coler, interested Town of Fairfax
MCE Executive Committee Overview
Scope
The scope of the MCE Executive Committee is to explore, discuss and provide direction or approval on general issues related to MCE including legislation, regulatory compliance, strategic planning, outreach and marketing, contracts with vendors, human resources, finance and budgeting, debt, rate setting, and agenda setting for the regular MCE Board meetings and annual Board retreat.

Authority
Executive Committee is authorized to make decisions regarding:
• Legislative positions outside of the Board-approved legislative plan • Procurement pursuant to Resolution 2018-04 or its successor • Compensation and evaluation of the CEO
• Ad hoc committees
• Honorary awards
The Executive Committee also serves to make recommendations to the Board regarding:
• The annual budget and budget adjustments
• Rate setting
• Entering into debt
• MCE Policies (such as Policy 013: Reserve Policy and Policy 014: Investment Policy) Committee Member Selection Process
MCE strives to assemble an Executive Committee comprised of at least one county representative and one city/town representative from each county in the MCE service area.

Available seats on the Executive Committee are therefore first offered to any interested and applicable Board member whose county is not yet represented by one county and one city/town member. Interested members can be added at a meeting of the Board of Directors when it is included in the agenda.

The Executive Committee selects its own chair for a term of one year. The Executive Chair is limited to two one-year terms.

Current Meeting Schedule
First Monday of each month at 12:00 pm. Two meetings per year will be designated as “in-person” only. For the other meetings of the year, a “Primary Location” will be designated for each meeting, and this will be the location of staff presentations along with a light lunch. The Primary Location will alternate between MCE’s San Rafael and Concord offices every meeting, and the non-primary location will be available, but with minimum support.

MCE Technical Committee Overview
Scope
The scope of the MCE Technical Committee is to explore, discuss and provide direction or approval on issues related to electricity supply, distributed generation, greenhouse gas emissions, energy efficiency, procurement risk management and other topics of a technical nature.

Frequent topics include electricity generation technology and procurement, greenhouse gas accounting and reporting, energy efficiency programs and technology, energy storage technology, net energy metering tariff, local solar rebates, electric vehicle programs and technology, Feed-in Tariff activity and other local development, Light Green, Deep Green and Local Sol power content planning, long term integrated resource planning, regulatory compliance, MCE’s Energy Risk Management Policy (ERMP), procurement risk oversight, and other activity related to the energy sector. The MCE Technical Committee reviews and discusses new technologies and potential application by MCE.

Authority
• Approval of and changes to MCE’s Net Energy Metering Tariff • Approval of and changes to MCE’s Feed in Tariff
• Approval of annual greenhouse gas emissions level and related reporting • Approval of MCE procurement pursuant to Resolution 2018-03 or its successor • Approval of MCE procurement-related certifications and reporting, including the Power Content Label
• Approval of contracts with vendors for technical programs or services, energy efficiency program or services and procurement functions or services • Approval of power purchase agreements
• Approval of adjustments to power supply product offerings • Approval of the Integrated Resource Plan
• Receipt of reports from the Risk Oversight Committee (ROC) on at least a quarterly basis regarding the ROC’s meetings, deliberations, and any other areas of concern • Initiation of and oversight of a review of the implementation of the ERMP as necessary
• Approval of substantive changes to MCE’s Energy Risk Management Policy (ERMP), including periodic review of the ERPM and periodic review of ERPM implementation • Ad hoc committees
Committee Member Selection Process
MCE strives to assemble a Technical Committee comprised of at least one county representative and one city/town representative from each county in the MCE service area.

Available seats on the Technical Committee are therefore first offered to any interested and applicable Board member whose county is not yet represented by one county and one city/town member. Interested members can be added at a meeting of the Board when it is included in the agenda.

Current Meeting Schedule
First Friday of each month at 10:00 am
March 20, 2025
TO: MCE Board of Directors
FROM: Maíra Strauss, Vice President of Finance and Treasurer Efren Oxlaj, Finance Manager
RE: Proposed Fiscal Year 2025/26 Budget (Agenda Item #06) a. Proposed Adjustment to MCE Demand Charges effective April 1, 2025
b. MCE Investment in Transmission Software Solutions
ATTACHMENTS: A. Proposed FY 2025/26 Operating Fund Budget B. Proposed FY 2025/26 Program Development Fund Budget
C. Proposed FY 2025/26 Resiliency VPP Fund Budget
D. Proposed FY 2025/26 Energy Efficiency Program Fund Budget E. Policy 016: Operating Reserve Fund
F: Proposed Fiscal Year 2025/26 Budget Presentation
Dear Board Members:

Summary:

Before the beginning of every fiscal year (FY), running April 1 through March 31, staff presents proposed budgets to the Executive Committee and Board of Directors for consideration. On March 3, 2025, MCE’s Executive Committee voted to recommend Board approval of the Proposed Fiscal Year 2025/26 Budgets, including the MCE Cares Credit allocation, the Operating Reserve Fund trasnfer, and the proposed adjustment to MCE demand charges. On March 7, 2025, MCE’s Technical Committee voted to recommend Board approval of the proposed adjustment to MCE demand charges and the transfer of funds from MCE Reserves of $10.25 million for transmission software solutions.

The attached proposed budgets reflect MCE’s projected revenue, expenditures, and contingencies for FY 2025/26, and are anticipated to allow MCE to continue providing 60-100% renewable energy.

Key highlights from the proposed FY 2025/26 budgets include:
• Projected net energy revenue of $826.7 million, reflecting a 5.6% increase over the prior year’s budget, including
o Higher renewable energy costs (+11.1%) due to supply constraints, transmission limitations, and regulatory changes requiring increased procurement, and o City of Hercules enrollment, adding 10,000 new customers and increasing load by

1.3%, and
o $5 million for MCE Cares Credit, providing targeted cost relief for vulnerable residential and small commercial customers, and
o Transfer of up to $13 million from the Operating Reserve Fund to offset unexpected regulatory costs, and
o A demand charge increase of approximately 4.4% for larger agricultural, commercial, and industrial customers that would apply to less than 1% (<3,000) of MCE’s customers (Agenda Item 6a).
• Personnel investments to support expanded programs, with staffing costs representing just

3.1% of the total budget.
• $10.25 million for transmission software solutions, transferred from MCE Reserves, projected to yield up to $20 million in annual savings once implemented (Agenda Item 6b).

The FY 2025/26 budgets position MCE to maintain financial stability, support customers, and advance clean energy goals, despite market and regulatory uncertainties.

Energy Revenue
The Proposed FY 2025/26 Operating Fund Budget (Operating Budget and included as Attachment A) is based on the most recent five-year average for weather patterns in the MCE service area. The Operating Budget also assumes higher costs for renewable energy reflective of the patterns seen over the course of 2024. Additionally, it includes an unexpected regulatory change that requires additional volumes of renewable and carbon free energy. Lastly, it captures the enrollment of the City of Hercules to MCE’s service area.

Cost Relief Program (MCE Cares Credit): $5 million
MCE offers stable, competitive rates and a variety of discount and assistance programs to support customers. Customers have saved $18.5 million in energy efficiency bill savings and rebates since 2016, and over $100 million with MCE’s lower rates and customer discounts since 2010. MCE hasn’t increased rates since January 1, 2023.

Building on MCE’s tradition of promoting energy affordability and accessibility, the proposed Operating Budget allocates $5 million to continue a targeted cost relief program, MCE Cares Credit, to reduce energy costs for our most vulnerable residential and small commercial customers with monthly bill credits. By targeting customers struggling to pay their bills, including those eligible for the California Alternate Rates for Energy (CARE) and the Family Electric Rate Assistance (FERA) programs, and small businesses impacted by economic shifts, MCE seeks to provide support that aligns with our core values of community care and sustainable energy access. The MCE Cares credit provides:
• $20 monthly bill credits for residential customers enrolled in CARE or FERA • $25 monthly bill credits for small commercial customers enrolled in the A-1 or B-1 electric rates
Revenue – Energy Net: $826.7 million (5.6% increase from FY 2024/25 approved budget; 4.0% increase over projected actuals)
Energy Revenue is projected based on MCE’s customer accounts, incorporating historical usage, weather patterns and applicable rates. Energy revenue is reduced by $5 million, allocated to MCE’s Target Cost Relief Program, which aims to lower costs for our most vulnerable residential and small commercial customers. An additional reduction of $79,500 accounts for the bidirectional EV charging tariff approved by your Board on November 21, 2024.

Revenue includes an up to $13 million transfer from the Operating Reserve Fund to cover the unexpected regulatory change requiring MCE to account for load losses on its power content label. Additionally, staff has incorporated $6.8 million in revenue from the recommended adjustments to demand charges, pending your Board’s approval (see materials for Agenda item 6a for more details).

Staff projects a delinquency rate of 1.5% of sales, equating to approximately $12.5 million in uncollectible balances, which further reduces energy revenue by the same amount. Staff monitors delinquencies monthly and has observed positive trends year to date. Even after accounting for sales growth, the growth of delinquent balances remains negative year over year.

Energy Expenses
Cost of Energy: $765.5 million (11.1% increase from FY 2024/25 approved budget; 4% increase from projected actuals)
The cost of energy is projected to increase by $76.8 million. The main driver for the year over year increase is the high cost of renewable energy. The price of renewable energy, also known as Portfolio Content Category 1 (PCC1) energy, has risen tremendously in the past two years. The increase is driven largely by insufficient supply, which is linked to a broad need for transmission upgrades and adequate interconnection timelines. At the same time, there is an increased demand from other load serving entities. Prices reached a high of $95 per MWh in late 2024. The upcoming fiscal year will capture these high prices contributing about $54 million to the year over year increase. Staff anticipates these costs will decrease in future years as more renewable energy and storage projects come online.

Another driver is a regulatory change. On February 12, 2025, the California Energy Commission passed new regulations that require load serving entities like MCE to account for line losses on their power content label. Under the new rules, MCE will procure 4-6% more renewable and carbon-free energy to account for these naturally occurring losses. If MCE does not procure these additional volumes, on a Total Power Content basis, MCE will show less than targeted renewables/carbon-free percentages i.e., 60% Renewables and 95% GHG-Free for Light Green and 100% Renewables and 100% GHG-Free for Deep Green. Staff estimates that this new regulation will cost the agency about $13 million.

The remaining $9.8 million increase comes from the additional volumes needed to serve the City of Hercules which will begin in April 2025. The City of Hercules represents an increase to MCE’s load of 1.3% and will add about 10,000 new customers to MCE’s service area.

Operating Expenses
Personnel: $29.6 million (9.6% increase from FY 2024/25 approved budget on a before-grant reimbursements basis)
These costs would be offset by $4.1 million in grant funding, reducing the total staffing budget to $25.4 million, an 11.3 % increase from FY 2024/25. MCE currently holds the majority of these grant monies at River City Bank. These funds are not subject to Federal funding freezes. Personnel costs represent approximately 3.1% of MCE’s Operating Budget to support MCE’s capacity, expertise, and competitive positioning. This increase includes cost-of-living adjustments, benefits cost increases, promotions, merit increases, the full-year integration of costs for new full-time employees (FTEs) added this current fiscal year, and the anticipated addition of 13 new FTEs in the upcoming fiscal year.

Key cost drivers include:
● 18% increase in medical, dental, and vision premiums (no change in coverage) ● 12.6% increase in headcount growth (103 to 116 FTEs)
● 8% increase in employer taxes
● 4.8% in merit increases and promotions
● 4.3% increase in ancillary benefits (e.g., life insurance, short-term disability, retirement health savings)
● 15.1% increase in retirement costs (401(a) retirement contributions and 457(f) plan) ● 2% in Cost-of-Living Adjustments (based on U.S. Labor Bureau guidelines) ● 37% decrease in some other benefit costs including vacation cashouts, workers compensation, non-voluntary employee departure costs, etc.

When evaluating new headcount, MCE prioritizes:
● Funding through external grant sources,
● Offsetting costs currently contracted out, and
● Enhancing internal efficiencies.

The agency has seen key growth in specific departments, particularly Customer Programs.

Customer Programs administers multiple grant-funded programs, including CPUC-funded Energy Efficiency (EE) programs which have seen expenditures rise by 250% in the last five years. To support these expanding programs and related operational needs, Customer Programs has increased headcount by 46% over the last five years, including proposed new hires for FY 2025/26. Public Affairs has grown by 36% during the same period to support outreach efforts, community engagement, and marketing for MCE’s growing customer programs and service area.

Furthermore, Technology and Analytics has seen a 100% headcount increase during that period.

Since its creation in 2020, Technology and Analytics (TA) has built MCE's data warehouse and data services platform, implemented MCE's Customer Relationship Management (CRM) system to bring MCE's call center in-house, overseen the move from Calpine to SMUD as MCE's data manager, and now provides data services to nearly every department at MCE. While this has meant a significant increase in the TA department's budget, many of the services TA now provides internally were being served by external vendors, and some of the new data services that have come online in the last five years were not available at all.

Additionally, MCE’s workforce development efforts include a Board-approved internship program, which now provides opportunities for up to 20 interns annually from MCE’s service area. Similarly, MCE provides workforce opportunities with fellowships and temporary coverage for employees on extended protected leaves.

MCE remains committed to attracting and retaining top talent aligned with our mission. Turnover increased from 7.5% in 2023 to 13.5% in 2024, which includes employees who retired or voluntarily left, remaining below the industry average of 15.4%. However, enhancements to employee benefits and a continued focus on solidifying culture have proven effective. MCE was recognized as a "Top Place to Work" two years in a row by the San Francisco Chronicle. Salaries are adjusted annually based on the U.S. Bureau of Labor Statistics Consumer Price Index for the San Francisco Area, and performance-based merit increases of 0-5% are awarded using standardized criteria. Regular salary and market reviews ensure competitiveness, equity, and alignment with industry standards while mitigating unintended bias.

The forecasted personnel costs, projected to make up 3.1% of the total Operating Budget (up from 2.9% in FY 2024/25), represent a strategic investment to enhance MCE’s expertise, employee satisfaction, and operational efficiency.

Data Manager: $5.28 million (2.7% increase)
MCE’s data manager provides a wide range of billing services, including billing management for MCE’s customers, technical support for billing issues, and customer enrollment services. The charges are based on a fixed fee for each customer account. The costs are increasing slightly because of the addition of the City of Hercules to MCE’s service area.

Technical and Scheduling Consultants: $1.40 million (9.8% increase) These consultants schedule energy resources into the California Independent System Operator (CAISO) and assist MCE in managing risk more effectively. They also collaborate with staff to create advanced load management strategies and forecast costs related to market and regulatory changes. Technical services are based on a fixed charge per MWh of electricity usage (load).

Scheduling services are based on contracted amounts. The increase in costs is due to a slight increase in load from adding the City of Hercules and regular inflationary increases.

Service Fees – PG&E: $2.74 million (7% increase)
Service Fees to PG&E consist of a fixed charge per customer account. The fees cover PG&E’s costs associated with data processing and bill coordination. The costs are increasing slightly because of the addition of the City of Hercules to MCE’s service area.

Legal and Policy Services: $1.53 million (8% increase)
This line encompasses external legal and policy services that assist MCE in areas such as contract review for energy suppliers and other vendors, regulatory proceedings, employment matters, and other agency functions. The rise in costs is attributable to additional support required for reviewing energy contracts and efforts with congestion revenue rights.

Communications Services: $2.22 million (10.2% decrease) Communications costs cover a wide range of marketing and community engagement activities including advertising, printing, and mailing customer notices, and community events and sponsorships. This budget reduction reflects the removal of unique costs for the Hercules enrollment outreach and marketing expenses not needed in the upcoming FY, reduced customer mailer costs, and overall adjustments to align more closely with the actual spending observed in the current fiscal year.

Other Professional Services: $4.75 million (50.3% increase) Other services encompass expenses such as accounting, auditing, benefits administration, information technology (IT) and consulting related to ongoing development of MCE’s Customer Relationship Management (CRM) software, and other data driven efficiencies being led by the Technology and Analytics Department. The upcoming year captures a new expense for Federal compliance that will support staff with compliance requirements related to the awarded Federal Earmarks and Grants. Furthermore, costs are increasing due to the additional development of our CRM and data warehouse that will streamline work being done by various departments. Some of the work captured includes one-time data infrastructure expenses like migrating to DataBricks and re-architecting and decommissioning CRM features that are no longer supported by Salesforce.

The energy sector is undergoing significant changes due to availability and cost of renewable energy, climate change, and regulatory changes. Additionally, an aging grid is causing curtailments and reduces the availability of renewable resources, which further drives up costs.

MCE faces competition from both established and new market players who don't always have the same regulatory and community obligations. MCE's main advantage is the trust of its communities and access to customer data. This data, now better utilized thanks to MCE's new CRM and data warehouse, helps MCE stay competitive and serve its communities more effectively.

Investing in data infrastructure, such as MCE's CRM and data warehouse, is crucial. These investments enable MCE to harness the vast amount of data it receives, providing insights that enhance competitiveness and reduce risk. By leveraging this data, MCE can better understand and respond to customer needs, optimize energy usage, and offer more tailored services, ultimately serving its communities more effectively and maintaining its competitive edge.

General and Administrative: $4.97 million (18.8% increase) Costs include diverse items such as software licenses, staff recruitment, office supplies, data, travel, dues and subscriptions, including California Community Choice Association (CalCCA) membership, and other related expenses.

Increased costs reflect expected annual increase in general dues from CalCCA and increased representation in joint proceedings costs. Costs are also increasing due to expected recruitment expenses needed for staff and additional licenses for MCE’s CRM and other platform licenses for use by various departments. Two load forecasting software tools are also included for use by the Power Resources department to allow for more sophisticated resource allocation and optimization of load scheduling.

Occupancy: $0.45 million (55.1% decrease)
Due to the purchase of the San Rafael office building, no rent will be paid in the coming fiscal year for the San Rafael office. Additionally, MCE will be moving its office in Concord to a new suite which will have rental abatement and reduced negotiated rates.

Contingency: $1.5 million (no change)
Contingency is 0.2% of the total Operating Fund Budget, managed and allocated by the Finance Department based upon actual outcomes and needs within the budgets throughout the fiscal year.

Non-Operating Revenues
Grant Income: $3.3 million (35.3% decrease)
MCE receives grants from government and non-profit organizations to support certain activities connected to MCE’s mission. Grant income varies year to year as grants can be “one time” or can be provided to MCE under multiple year agreements. Some grants were completed in the current fiscal year and others are starting or continuing in FY 2025/26. MCE currently has one active Federal Earmark and one Federal Grant from the Department of Energy. The Federal Grant from the Department of Energy “Charged by Public Power” is at a high risk of being frozen or rescinded due to the current Federal Administration. Risk level for other grants is shown in parentheses below.

Also, some grant activities require a ramp-up time that can be hard to predict, and this can cause year-to-year budget variation. The following grants or portions thereof are included in the $3,300,000 grant income line item in the proposed budget:

1. $5,000,000 (2025-2029) for integrating MCE’s existing Customer Programs into the virtual power plant (VPP) across MCE’s service area. Funded by the California Energy Commission. (Medium risk)

2. $3,000,000 (2023-2027) for MCE’s Healthy Homes program in Richmond. Funded by the California Strategic Growth Council Transformative Climate Communities program. (Medium risk)

3. $1,698,000 (2021-2041) for the Disadvantaged Communities Green Tariff (Green Access) program to provide income-qualified, residential customers in disadvantaged communities with 100% renewable energy and a 20% bill discount. The amount is replenished annually.

Funded by the California Public Utilities Commission. (Low risk)

4. $1,500,000 (2022-2025 for EV charging installations in disadvantaged Contra Costa communities in partnership with the Contra Costa Transportation Authority. Funded by the California Energy Commission. (Low risk)

5. $1,000,000 (2024-2026) to support a participatory budgeting process in priority communities to guide the grant investment into EV charging stations and shared mobility options (Charged by Public Power). Funded by the U.S. Department of Energy. (High Risk)

6. $750,000 (2020-2025) for solar paired with storage at nonprofits in Marin. Funded by the Marin Community Foundation. (Low Risk)

7. $500,000 (2024-2025) for solar paired with storage at critical facilities. Funded by federal earmarks. (Low risk)

8. $180,000 (2022-2025) for EV charging installations at multifamily properties in Marin. Funded by the Marin Community Foundation. (Low risk)

9. $99,000 (2022-2026) for the Virtual Power Plant (VPP) pilot in Richmond. Funded by the California Energy Commission. (Low risk)

10. $86,000 (2024-2025) for EV charging installations at multifamily properties. Funded by the California Energy Commission. (Low risk)
In addition to the grants in the proposed budget, MCE has submitted $15,389,000 in new grant applications. If awarded, any of these new grants would be brought to the Board for acceptance and would be added to the grants budget on a forward basis.

Interest Income: $15 million (25% increase)
Interest income is increasing against last year’s budget, but decreasing against the projected actuals for the current fiscal year due to expected rate decreases by the Federal Reserve in the remainder of 2025 and early 2026. Staff is conservatively assuming an average yield of about 3% on all of MCE’s holdings. MCE currently has about ⅓ of its cumulative position in a fixed income portfolio managed by Chandler Asset Management, about ⅓ in liquid money market funds, about ¼ in CDARs issued by River City Bank, and 4% in collateral at the California ISO. Staff continues to manage MCE’s investment resources by adhering to the Board approved Investment Policy.

Capital Expenditures, Interfund Transfers & Other
Capital Outlay: $16 million
Your Board approved the purchase of the San Rafael office building on July 18, 2024 which captures $5.4 million of the recommended capital outlay. An additional $10,000,000 is being recommended to implement upgrades in transmission software that would help alleviate some of the curtailment and congestion of certain power supply projects that could result in savings of up to $20 million per year once implemented (see materials for Agenda item 6b for more details). An additional $250,000 is recommended for compliance contracts costs associated with the upgrades in transmission software. Lastly, $349,000 is proposed to implement building improvements and retrofits at both the San Rafael and Concord Office.

Program Development Fund Budget (Attachment B)
FY 2025/26 Program Development Fund: $2.4 million (71.5% decrease) The Program Development Fund Budget is financed by a transfer from the Operating Budget equal to 50% of the 1¢/kWh premium for Deep Green service ($2,400,000) and additional amounts approved by the Board. For FY 2025/26 the Program Development Fund Budget combines the transfer with existing funding of $260,000 from the Marin Community Foundation and $100,0000 in Community Benefit Funds from NextEra for a total funding amount of $2,752,000. These funds will be used for incentives, technical assistance, community education, and implementation of the following programs:
● Transportation electrification:
o Rebates for newly purchased and leased EVs for income-qualified residents. o Rebates for charging ports installed at workplaces and multifamily properties. o MCE’s EV smart charging app, MCE Sync, which automates home EV charging to use the least expensive and cleanest energy on the grid.
● Building electrification:
o Rebates for electric, grid-enabled Heat Pump Water Heaters. o An Emergency Replacement Water Heater Loaner program to facilitate electrification at the point of existing water heater failure.
● Community Housing Fund:
o Funds building remediation and repair work for homeless shelters and other community housing resources that would otherwise be a barrier to accessing energy efficiency programs.

The Program Development Fund Budget finances programs that require long lead times from project application, approval, permitting, construction, and final completion. In some cases, this process can take many years. Consequently, MCE commits funding for projects on an annual basis, but actual expenditures of these funds are often delayed for a few years or, occasionally, projects can be canceled entirely. If actual expenditures in a given fiscal year are expected to exceed available funding, staff will come back to the Board to recommend additional appropriations from the Operating Budget.

Resiliency VPP Fund Budget (Attachment C)
FY 2025/26 Resiliency Virtual Power Plant (VPP) Fund Budget: $0 (0%, No transfer needed) The Board approved creation of a Resiliency VPP Fund in 2019 in response to power outages which significantly impact the safety, reliability, health, and welfare of our customers, and disproportionately affect vulnerable populations. MCE continues to help strengthen our communities by piloting energy storage paired with solar to retain essential power supply during outages while minimizing the use of carbon-emitting generators and fossil-fuel technologies.

Since the creation of the fund, your Board has approved $9 million and $750,000 of funding from the Marin Community Foundation for a total of $9,750,000 toward battery storage programs in our communities.

The Resiliency VPP Fund Budget, as proposed, adds $1.47 million in grants to the fund. This captures $1.2 million from the $5 million California Energy Commission virtual power plant grant, $200,000 in Federal Earmarks for energy storage projects, and $72,000 in grants from the Marin Community Foundation for storage at critical facilities.

No transfers from the Operating Budget are needed as there is sufficient funding available from previous years to satisfy anticipated expenditures in FY 2025/26.

Energy Efficiency Program Fund Budget (Attachment D)

Energy Efficiency Program Fund: $19.6 million (40.5% decrease) The Energy Efficiency (EE) Program Fund Budget (Attachment D) uses funding awarded by the CPUC to support the following programs: Efficiency Market Programs (Residential and Commercial); Strategic Energy Management for Commercial, Industrial and Multifamily Properties; Agricultural and Industrial Resources (AIR) Program; Small Business Energy Advantage; Multifamily Energy Savings, Home Energy Savings, and Green Workforce Pathways. The funds awarded from the CPUC have decreased from $30,084,000 in FY 2024/25 to $19,561,000 in FY 2025/26.

The EE Program Fund Budget reflects a reduction due to the return of unspent funds to the California Public Utilities Commission (CPUC) allocated for Summer Electric Reliability Programs.

These funds, designated for demand response and energy efficiency initiatives, remained unused due to lower-than-anticipated program participation, mild weather and evolving market conditions.

This EE Program Fund Budget adjustment pertains solely to the return of unspent incentive funds and does not impact MCE’s staffing reimbursements or Operating Budget.

Fiscal Impacts:

Finances in the upcoming fiscal year are subject to a variety of anticipated and unforeseen factors that could have a measurable impact on MCE’s proposed budgets. These include:
1) Market volatility – Energy Hedges, renewable energy and resource adequacy prices may be higher than anticipated due to market volatility, scarcity, availability. 2) Customer Energy Demand – As we continue to experience climate change through extreme weather events, including summer heat waves, severe cold temperatures, and drought, energy demand can outpace our hedged energy supply and negatively impact MCE’s finances. This is particularly true when day-ahead and/or real-time market prices are abnormally high.
3) Regulatory Changes – changes required by regulatory agencies that may result in cost increases for MCE.

The proposed budgets, including the MCE Cares Credit allocation of $5 million, the proposed adjustment of demand charges to be effective April 1, 2025, and transfer of up to $13 million from the Operating Reserve Fund were recommended by the Executive Committee to be approved by your Board on March 3, 2025.

The proposed adjustment to MCE Demand Charges to be effective April 1, 2025 and MCE’s Investment in Transmission Software Solutions in the amount of $10.25 million were recommended by the Technical Committee to be approved by your Board on March 7, 2025.

If the recommendation below is approved by your Board, the projected contribution to the Operating Fund Balance for FY 2025/26 would be approximately $7,300,000. The projections are based on the best available information regarding market prices for any unhedged power supply.

Recommendations:

Approve the proposed Fiscal Year 2025/26 budgets, which include approval for the following subcomponents of the budgets:

1. the proposed adjustment to MCE Demand Charges to be effective April 1, 2025,

2. continuing the MCE Cares Credit with an allocation of $5,000,000,

3. withdrawing up to $13,000,000 from the Operating Reserve Fund to offset unexpected regulatory costs, and

March 20, 2025
TO: MCE Board of Directors
FROM: Maíra Strauss, Vice President of Finance
Greg Tillman, Associate Director of Rates
RE: Proposed Adjustment to MCE Demand Charges effective April 1, 2025 (Agenda Item #06a)
ATTACHMENT: Proposed Demand Charges
Dear Board Members:

Summary:

The MCE Implementation Plan and Statement of Intent (“Implementation Plan”) describes the policies and procedures for setting and modifying electric rates for MCE. MCE rates are typically reviewed on an annual basis as part of MCE’s budget-setting process after PG&E has made its primary annual rate update. The rate review indicates whether rate changes are warranted in consideration of MCE’s cost of service, revenue sufficiency in the fiscal year’s proposed budget, rate competitiveness, rate stability, customer understanding, efficiency and equity among customers.

MCE last increased rates effective January 1, 2023. MCE has not adjusted rates since that time because MCE has maintained revenue sufficiency and competitiveness with PG&E rates. PG&E rates increased on January 1, 2025. As reported to this Committee on February 7, 2025, MCE rates across the board are lower than PG&E generation rates. PG&E’s exit fee, or the Power Cost Indifference Adjustment (PCIA), was also updated resulting in a negative impact on customers that left PG&E service prior to 2018 causing their bills to be slightly higher (about 2% on average). The remaining, newer vintage customers’ energy costs are discounted relative to PG&E costs with the latest vintage seeing up to a 10% savings.

Based on current projections, MCE expects a slight shortfall in its operating income. The expected shortfall is the result of an 11.3% expected increase in energy procurement costs. This expected shortfall would result in an expected, albeit slight, insufficiency in rates to meet the agency’s revenue needs.

Since MCE’s most recent rate change, PG&E has significantly increased the generation demand charges for demand billed to customers. These increases are representative of the higher capacity costs required to provide generation service to electric customers. MCE demand charges have remained level, which results in a misalignment of the rates with the underlying costs and causes price signals to fail to reflect those costs to our demand-billed customers. Effective price signals which reflect the true cost of capacity, especially during the peak periods, encourage customers to reduce their maximum load during the peak periods resulting in lower costs. Following the most recent increase to PG&E rates, the demand charges in MCE rates are approximately 75% of the effective PG&E demand rates, indicating a weakening of the price signals to MCE’s largest customers.

The demand charge encourages businesses to spread their electricity use throughout the day. When businesses spread their electricity use throughout the day, California's supply of electricity is more reliable. The demand charge is calculated using the 15-minute interval in each billing month when a business uses the most electricity. To increase revenue available to mitigate our expected revenue shortfall, create a stronger price signal to reflect the underlying generation capacity costs, and maintain our rate competitiveness for MCE’s residential and small business customers, Staff is proposing to increase MCE’s demand charges for demand-billed rate classes to 95% of the current PG&E demand charges effective April 1, 2025.

On March 7, 2025, MCE’s Technical Committee reviewed the Proposed Adjustment to MCE Demand Charges and voted to recommend approval of the item to MCE’s Board of Directors.

Revenue and Customer Impacts:

The proposed increase in MCE demand charges would generate approximately $6.8 million in revenue, equating to a revenue increase of approximately 0.8%. The proposed demand charge increase would impact less than 1% of MCE customers, or approximately 3,000, and does not affect rate classes, including residential and small business classes, which do not have demand-based charges within their applicable rates.

The proposed changes impact only those customers subscribed to rate classes which have demand-based charges, which are typically the larger agricultural, commercial and industrial customers.

These rate classes are: AG4B, AGC, B19, B20, E19, and E20. Some rate classes with demand rates include no MCE customers; these classes are excluded from the customer impact calculations. The proposed demand charges result in an average increase of approximately 4.4% on the MCE generation portion of the affected customers’ bills and 2.0% of the average overall bill. Even under the proposed rates, MCE rates remain below the PG&E generation rates.

Rate Class Estimated Current
MCE Revenue
Estimated
Increase
Estimated
Proposed MCE
Revenue
Increase %
AG4B/AGC $9,457,971 $388,959 $9,846,930 4.1%
B19 $102,155,011 $4,412,097 $106,567,108 4.3%
B20 $35,421,088 $1,379,987 $36,801,075 3.9%
E19 $2,869,935 $191,809 $3,061,745 6.7%
E20 $4,776,709 $398,271 $5,174,980 8.3%
Total $154,680,714 $6,771,123 $161,451,838 4.4%
Ratesetting Cycle:

MCE typically adjusts its rates on an annual basis, following a process of discussion, review, and public notification. Ratesetting is usually coordinated with the annual budgeting cycle (April 1 – March 31 of the ensuing year) due to the inherent linkages between the MCE budget and MCE rates.

Rates may also be adjusted off cycle, when necessary, to ensure recovery of all MCE costs.

The initial release of MCE’s proposed rates (which occurred on February 14, 2025 for this proposed increase), initiates a thirty one-day public review and comment period. If rate increases are proposed, the affected MCE customers are provided with notice of proposed rate increases with on-bill messages. Following completion of the thirty one-day public review and comment period, final rates may be adopted by the Board. Final rates may differ from the initially proposed rates due to changes in MCE’s budget, consideration of public comments received during the aforementioned review period, changes in PG&E rate forecasts, and/or other factors that may be considered by your Board.

Ratesetting Objectives:

MCE has established various objectives that are considered in designing MCE rates. These ratesetting objectives are as follows:
- Revenue sufficiency: rates must recover all expenses, debt service and other expenditure requirements, and build prudent reserves; i.e., the “revenue requirement”. - Rate competitiveness: rates must allow MCE to successfully compete in the marketplace to retain and attract customers.
- Rate stability: rate changes should be minimized to reduce customer bill impacts. - Customer understanding: rates should be simple, transparent and easily understood by customers.
- Equity among customers: rate differences among customers should be justified by differences in usage characteristics and/or cost of service. - Efficiency: rates should encourage conservation and efficient use of electricity (e.g., off-peak vehicle charging or time-of-use load shifting).

To the extent that the objectives may be in tension with one another, the rate proposal attempts to strike an appropriate balance. For example, a cost-of-service analysis might suggest that a particular rate should be increased, but the increase might be limited in the interest of rate stability and/or rate competitiveness. In accordance with the Implementation Plan, the policy of revenue sufficiency may not be violated; however, the Board may use discretion in how the other ratesetting objectives are reflected in MCE rates.

Ratesetting Process:

The ratesetting process is based on a forecast of MCE electric revenue for the coming fiscal year, determined by examining the forecast load for each rate class. The forecast includes current customers, as well as any communities expected to begin MCE service, organized by forecast monthly billing quantities expected under each rate class. Depending upon the rate class in question, billing quantities can include monthly energy usage (kWh), hourly or aggregated load profiles, peak coincident demand, and peak capacity (kW) demand during specified time-of-use periods. The forecasted billing quantities are multiplied by applicable rates to derive a forecast of revenues at current MCE rates.

The projected revenue at current rates is compared to fiscal year budget items that must be funded through such rates (the “revenue requirement”) to determine whether rate adjustments are warranted for purposes of addressing any projected surplus or deficit.

Rates are designed for the various schedules associated with each customer class in order to recover the revenue requirement allocated to that class. Rates are also evaluated for other key ratesetting considerations, such as cost competitiveness, equity among customers, peak-to-off-peak ratios, and so forth. There are currently 75 rate schedules and over 400 rate components which are adjusted during a rate change cycle.

Fiscal Impacts:

The proposed adjustments to demand charges would increase FY 2025/2026 revenue by $6.8 million, or 0.8% of current revenue.

Recommendation:

The recommendation and approval of this item is included in the Proposed Fiscal Year 2025/26 Budget, Agenda Item #06.

FEBRUARY 14 202
MCE is proposing to adjust demand charges, effective April 1, 2025. Demand charges do not apply to residential customers.

Rate Schedule Rate Component Current Rate
($/kW)
Proposed Rate
($/kW)
AG1B Dmd Summer Maximum $ 3.99 $ 5.45
AG4B Dmd Summer Maximum $ 3.97 $ 4.70
AG4C Dmd Summer Partial Peak $ 4.19 $ 4.97
AG5B Dmd Summer Maximum $ 7.71 $ 9.13
AG5C Dmd Summer Partial Peak $ 8.65 $ 10.25
AGC Dmd Summer Peak $ 17.12 $ 21.38
B19P Dmd Summer Partial Peak $ 2.52 $ 3.16
B19P Dmd Summer Peak $ 17.19 $ 21.57
B19P Dmd Winter Peak $ 1.76 $ 2.21
B19S Dmd Summer Partial Peak $ 2.95 $ 3.73
B19S Dmd Summer Peak $ 20.33 $ 25.66
B19S Dmd Winter Peak $ 2.41 $ 3.04
B19T Dmd Summer Partial Peak $ 3.82 $ 4.84
B19T Dmd Summer Peak $ 15.28 $ 19.34
B19T Dmd Winter Peak $ 1.47 $ 1.86
B20P Dmd Summer Partial Peak $ 2.95 $ 3.70
B20P Dmd Summer Peak $ 21.49 $ 26.88
B20P Dmd Winter Peak $ 2.47 $ 3.10
B20S Dmd Summer Partial Peak $ 2.78 $ 2.98
B20S Dmd Summer Peak $ 19.20 $ 20.57
B20S Dmd Winter Peak $ 2.45 $ 2.62
B20T Dmd Summer Partial Peak $ 5.35 $ 6.81
B20T Dmd Summer Peak $ 22.41 $ 28.59
B20T Dmd Winter Peak $ 2.99 $ 3.82
E19P Dmd Summer Partial Peak $ 11.58 $ 14.62
E19P Dmd Summer Peak $ 11.58 $ 14.62
E19S Dmd Summer Partial Peak $ 13.17 $ 16.44
E19S Dmd Summer Peak $ 13.17 $ 16.44
E19T Dmd Summer Partial Peak $ 12.80 $ 16.85
E19T Dmd Summer Peak $ 12.80 $ 16.85
E20P Dmd Summer Partial Peak $ 13.57 $ 17.07
E20P Dmd Summer Peak $ 13.57 $ 17.07
E20S Dmd Summer Partial Peak $ 12.65 $ 15.62
E20S Dmd Summer Peak $ 12.65 $ 15.62
E20T Dmd Summer Partial Peak $ 16.45 $ 21.11
E20T Dmd Summer Peak $ 16.45 $ 21.11
March 20, 2025
TO: Board of Directors
FROM: Vicken Kasarjian, COO
RE: MCE Investment in Transmission Software Solutions (Agenda Item #06b) Dear Board of Directors:

Summary:

On March 7, 2025, MCE’s Technical Committee voted unanimously to recommend that the Board of Directors authorize staff to execute necessary contracts with PG&E to own and implement a Remedial Action Scheme Project. This project is designed to mitigate curtailments at the Little Bear Solar Project, improving reliability and reducing financial losses for MCE ratepayers.

Background:

Little Bear Solar Project is a 160 MW solar project in Fresno County that came online in December 2020. MCE has a Power Purchase Agreement (PPA) with Longroad Energy to purchase Portfolio Content Category 1 (PCC1) bundled renewable energy and resource adequacy (RA) from this project. Since 2021, the project has experienced significant curtailments in the California Independent System Operator (CAISO) market that has cost MCE customers over $42 Million (fig.1).

Curtailments happen when CAISO reduces the generation output of a power plant typically due to local area congestion issues. In other words, when there is not enough transmission to bring generation from remote areas to load centers, that generation gets curtailed. MCE pays for the curtailed energy even when it doesn’t get delivered to the grid. MCE must also buy additional renewable energy in the market to replace the energy that wasn’t delivered.

Fig.1
Remedial Action Scheme (RAS)
The CAISO Remedial Action Scheme (RAS) guidelines, currently referred to as special protections systems, are part of the CAISO Planning Standards and complement the existing NERC/WECC Reliability Standards to ensure reliable infrastructure development within the CAISO.

Under current CAISO protocols, transmission lines are operated at limits set by the transmission owner (in our case it is PG&E) to prevent overload on the grid and to prevent fires. In addition, the grid where the Little Bear Solar project is located is inadequate to reliably export all the new generation that has been built. For these reasons, Little Bear Solar Project is curtailed often. To mitigate these losses, MCE has been working on a solution for about three years and recently received a proposal from PG&E for ownership and implementation of a RAS. This system employs real-time monitoring and automated software logic that will “trip” (i.e. temporarily shut down) Little Bear units only when transmission lines approach the set transmission line operating limit. This targeted response will replace PG&E’s transmission operating limits provided to the CAISO’s precautionary curtailment approach with a just-in-time, controlled shutdown – allowing Little Bears to operate closer to full capacity until intervention is absolutely required. While power is still curtailed, when necessary, the precision of the RAS minimizes unnecessary curtailments.

Fiscal Impacts:

The RAS project will cost an estimated $10 Million in the first year with an expected ongoing cost of $250,000 per year for compliance contracts. If approved, the expenses associated with the project are expected to begin in FY 2025/26. The expected savings will come from reduced curtailments at Little Bear Solar Project and the expected payback period is 1-2 years once the RAS is operational.

MCE plans to pull money from reserves to pay for this project and therefore, there should be no impact on the upcoming budget for FY 2025/26.

Recommendation:

The recommendation and approval of this item is included in the Proposed Fiscal Year 2025/26 Budget, Agenda Item #06.

Fiscal Year
2024/2025
Approved Budget
Fiscal Year
2024/2025
Projected Budget
Fiscal Year
2025/2026
Proposed Budget
Approved vs
Proposed Budget
Variance
Approved vs
Proposed Budget
Variance

ENERGY REVENUE
Operating Revenues $ 799,829,000 $ 810,484,000 $ 831,238,000 $ 31,409,000 3.9% Transfer from Operating Reserve Fund - - 13,000,000 - 13,000,000 Cost Relief Program (5,000,000) (3,532,573) (5,000,000) - 0.0% Bi-Directional Vehicle Charging Tariff - - (79,500) - 79,500 Uncollectible Accounts (11,967,000) (12,157,000) (12,469,000) 502,000 4.2% REVENUE - ENERGY NET 782,862,000 794,794,427 826,689,500 43,827,500 5.6%

ENERGY EXPENSES
Cost of Energy 688,761,000 735,818,000 765,542,000 76,781,000 11.1% NET ENERGY REVENUE 94,101,000 58,976,000 61,148,000 (32,953,000) (35.0%)

OPERATING EXPENSES
Personnel 22,830,000 20,438,070 25,405,000 2,575,000 11.3% Data Manager 5,136,000 5,143,000 5,276,000 140,000 2.7% Technical and Scheduling Consultants 1,275,000 1,137,000 1,400,000 125,000 9.8% Service Fees - PG&E 2,560,000 2,537,000 2,738,000 178,000 7.0% Legal and Policy Services 1,420,000 957,000 1,534,000 114,000 8.0% Communication Services 2,476,000 2,093,000 2,223,000 (253,000) (10.2%) Other Professional Services 3,163,000 2,833,000 4,754,000 1,591,000 50.3% General and Administrative 4,179,000 3,659,000 4,966,000 787,000 18.8% Occupancy 1,008,000 913,000 453,000 (555,000) (55.1%)
Contingency 1,500,000 - - 1,500,000 0.0%
TOTAL OPERATING EXPENSES 45,547,000 39,710,070 50,249,000 4,702,000 10.3% OPERATING INCOME 48,554,000 19,265,930 10,899,000 (37,655,000) (77.6%)

NONOPERATING REVENUES
Grant Income 5,068,000 1,160,000 3,278,000 (1,790,000) (35.3%) Other Income - - - - 452,000
Interest Income 12,000,000 22,025,000 15,000,000 3,000,000 25.0% 17,068,000 23,637,000 18,278,000 1,210,000 7.1%
225,000 204,000 - 225,000 0.0%
5,068,000 681,000 3,278,000 (1,790,000) (35.3%)
5,293,000 885,000 3,503,000 (1,790,000) (33.8%)
60,329,000 42,017,930 25,674,000 (34,655,000) (57.4%)
424,620,000 403,686,000 445,703,930 21,083,930 5.0%
60,329,000 42,017,930 25,674,000 (34,655,000) (57.4%)
484,949,000 445,703,930 471,377,930 (13,571,070) (2.8%) - - 10,250,000 - 10,250,000
- - 5,400,000 - 5,400,000
- - 349,000 - 349,000
- - - - -
8,400,000 8,400,000 2,392,000 (6,008,000) (71.5%)
8,400,000 8,400,000 18,391,000 9,991,000 118.9%

TOTAL NONOPERATING REVENUES

NONOPERATING EXPENSES
Banking Fees and Financing Costs
Grant Expenses

TOTAL NONOPERATING EXPENSES

CHANGE IN NET POSITION
Budgeted Net Position Beginning of Period
Change in Net Position

BUDGETED NET POSITION END OF PERIOD

CAPITAL EXPENDITURES, INTERFUND TRANSFERS & OTHER
Software Transmission Upgrade
San Rafael Office Building Purchase
Office Improvements and Retrofits
Transfer to Resiliency VPP Fund
Transfer to Program Development Fund

TOTAL CAPITAL EXPENDITURES, INTERFUND TRANSFERS &
OTHER
BUDGETED NET INCREASE IN OPERATING FUND BALANCE 51,929,000 33,617,930 7,283,000 (44,646,000) (86.0%) MCE Operating Fund
Proposed Budget Fiscal Year 2025/26
From April 1, 2025 through March 31, 2026
For comparison purposes, the Proposed FY 2025/26 budget is shown along the current year's Approved Budget. Actuals through December 2024 plus projections through March 31, 2025 are shown in the Fiscal Year 2024/25 Projected Budget column.

A. Proposed FY 2025/26 Operating Fund Budget
FY 2024/25
Approved
Budget
FY 2024/2025
Projected
Budget
FY 2025/26
Proposed
Budget

REVENUE AND OTHER SOURCES
Transfer from Operating Fund and Deep Green Premium $8,400,000 $8,400,000 $2,392,000 Marin Community Foundation Grant 180,000 24,000 260,000 Community Benefits Funds 0 0 100,000
TOTAL REVENUE AND OTHER SOURCES 8,580,000 $8,424,000 $2,752,000

EXPENDITURES AND COMMITTED FUNDS
Transportation Electrification Programs 6,461,000 5,357,000 5,310,000 Committed Funds 2,320,000 - -
Heat Pump Water Heater Incentives 500,000 254,000 540,000 Emergency Water Heater Loaner Program 145,000 4,000 142,000 MCF - EV Charging at Affordable Housing 180,000 24,000 260,000 Community Housing Grants 100,000 139,000 260,000
Electrification Technical Assistance 9,000 - -
Green Healthy Homes Initiative - - -
TOTAL EXPENDITURES AND OTHER USES 9,715,000 5,778,000 6,512,000 Net Increase (Decrease) in Fund Balance 1,135,000 2,646,000 3,760,000 Fund Balance at Beginning of Period* 1,135,000 1,114,000 3,760,000 Fund Balance at End of Period - 3,760,000 -
MCE
Program Development Fund
Proposed Budget Fiscal Year 2025/26
From April 1, 2025 through March 31, 2026
B. Proposed FY 2025/26 Program Development Fund Budget
*Beginning balance for FY 2025/26 budget differs from budget FY 2024/25 ending actual balance due to delays in actual fund spending.

For comparison purposes, the Proposed FY 2025/26 budget is shown along the current year's Approved Budget. Actuals through December 2024 plus projections through March 31, 2025 are shown in the Fiscal Year 2024/25 Projected Budget column.

FY 2024/25
Approved
Budget
FY 24/25
Projected
Budget
FY 2025/26
Proposed
Budget

REVENUE AND OTHER SOURCES
CEC VPP Flex Grant $0 $0 $1,200,000
Federal Earkmark Funding 500,000 - 200,000
Marin Community Foundation Grant 378,000 49,000 72,000
Transfer from Operating Fund - - -
TOTAL REVENUE AND OTHER SOURCES 878,000 49,000 1,472,000

EXPENDITURES AND OTHER USES
CEC VPP Flex Grant Expenses - - 1,200,000
Energy Storage Program 2,747,000 464,000 306,000
CEC VPP Flex Grant Match - - 1,000,000
MCE Sync - - 952,000
PeakFLEX 500,000 47,000 100,000
Federal Earmark - Energy Storage 500,000 - 200,000
MCF - Resiliency at Critical Facilities 378,000 49,000 72,000 Federal Earmark Match Expense 250,000 - 200,000
Home Area Network Device Pilot 150,000 - -
San Rafael Office Resiliency Buildout - - 200,000
Richmond VPP Pilot 74,000 268,000 171,000
TOTAL EXPENDITURES AND OTHER USES 4,599,000 828,000 4,401,000 Net Increase (Decrease) in Fund Balance (3,721,000) (779,000) (2,929,000) Fund Balance at Beginning of Period* 4,361,000 3,865,000 3,086,000 Fund Balance at End of Period 640,000 3,086,000 157,000 MCE
Resiliency VPP Fund
Proposed Budget Fiscal Year 2025/26
From April 1, 2025 through March 31, 2026
C. Proposed FY 2025/26 Resilency VPP Fund Budget
*Beginning balance for FY 2025/26 budget differs from budget FY 2024/25 ending actual balance due to delays in actual fund spending.

D. Proposed FY 2025/26 Energy Efficency Fund Budget
HBN
FY 2024/25
Approved Budget
FY 2024/25
Projected Budget
FY 2025/26
Proposed Budget

REVENUE AND OTHER SOURCES
Public Purpose Energy Efficiency Program 30,084,000$ 9,933,000$ 18,761,000$ Public Purpose Low Income Families and Tenants Pilot Program 2,785,000 1,016,000 800,000 TOTAL REVENUE AND OTHER SOURCES 32,869,000 10,949,000 19,561,000

EXPENDITURE AND OTHER USES
Public Purpose Energy Efficiency Program 30,084,000 9,933,000 18,761,000 Public Purpose Low Income Families and Tenants Pilot Program 2,785,000 1,016,000 800,000 TOTAL EXPENDITURES AND OTHER USES 32,869,000 10,949,000 19,561,000

BALANCE - - -
MCE
Energy Efficiency Fund
Proposed Budget Fiscal Year 2024/25
From April 1, 2025 through March 31, 2026
For comparison purposes, the Proposed FY 2025/26 budget is shown along the current year's Approved Budget. Actuals through December 2024 plus projections through March 31, 2025 are shown in the Fiscal Year 2024/25 Projected Budget column.

POLICY 016: Operating Reserve Fund
Policy Purpose
The Operating Reserve Fund Policy will describe the situations in which staff will propose and the MCE Board of Directors will consider deposits into and withdrawals from the Operating Reserve Fund and establishes an Operating Reserve Fund Targeted Balance.

Policy Statement
The financial strength of MCE is one of the necessary pillars of the Agency if it is to deliver on its mission to address climate change by providing competitively priced renewable and GHG free energy to its customers. MCE will adopt policies and procedures designed to strengthen its financial position to allow the Agency to achieve these environmental goals. The MCE Board of Directors will adopt budgets and establish and adjust rates as necessary each fiscal year to provide sufficient revenues to pay all operating expenses and all other financial obligations of the agency. While MCE strives to meet its Reserve Policy targets, rates will be set to provide an addition to MCE’s Net Position whenever possible. MCE will also take the necessary steps to achieve and maintain strong investment grade credit ratings to minimize interest costs and counterparty collateral posting requirements.

To this end, in November of 2019 the MCE Board of Directors approved Resolution 2019-06 creating an Operating Reserve Fund and later approved the first deferral of revenue into the Operating Reserve Fund effective the end of the 2019-20 Fiscal Year. The Operating Reserve Fund has been established and will be maintained and utilized to strengthen MCE’s financial position and to be a tool to assist in addressing variability in MCE’s annual cashflows and expenses. The Operating Reserve Fund is not to be used to address specific expenses of the Agency, but rather as a tool that supports MCE’s ability to meet its financial obligations each fiscal year.

To the extent there is any conflict with Resolution 2019-06 which authorized the creation of the Operating Reserve Fund and this Policy 016, which provides directives for deposits to and withdrawals from the Operating Reserve Fund, this Policy 016, and any amendments thereto, shall control once approved by the MCE Board of Directors.

Policy Directives
Deposits: Staff will recommend and the Board will consider deferral of revenue into the Operating Reserve Fund in a fiscal year (1) when the projected addition to Net Position is greater than 5% of total operating and non-operating revenues or (2) once the Reserve Policy targets are met, from any excess net revenues after payment of any debt service or other financial obligations due in that fiscal year Operating Reserve Fund Targeted Balance: Deposits can be made into the Operating Reserve Fund as allowed above until the balance equals 10% of the total operating and non-operating Revenues in the then current fiscal year.

Withdrawals: Staff will recommend withdrawals of Revenues from the Operating Reserve Fund in a fiscal year where net revenues are projected to be negative or as necessary to satisfy any legal covenants, contractual obligations or to maintain investment grade credit ratings.

Proposed
Fiscal Year
2025/26
Budget
MCE Board of Directors
March 20, 2025
Summary
2 The proposed budget allows MCE to continue providing customers:
• 60-100% renewable energy
• Stable and competitive rates
o MCE hasn’t increased rates since 2023
• Continue energy affordability and accessibility through discount and assistance programs o $18.5 million in energy efficiency bill savings and rebates since 2016 o $100+ million energy bill savings since 2010
Projecting approximately $25.8 million addition to next year’s Operating Fund, after a transfer of up to $13 million from the Operating Reserve Fund and a proposed adjustment to demand charges.

MCE continues to meet its reserve goals.

Summary
3 On March 3, 2025, MCE’s Executive Committee voted to recommend Board approval of the Proposed Fiscal Year 2025/26 Budgets, including the Operating Reserve Fund , the MCE Cares Credit allocation, and the proposed adjustment to MCE demand charges.

On March 7, 2025, MCE’s Technical Committee voted to recommend Board approval of the proposed adjustment to MCE demand charges and the transfer of funds from MCE Reserves of $10 million for transmission software solutions.

Operating Reserve Fund
4 • In accordance with Policy 16: Operating Reserve Fund, staff recommends withdrawal of up to $13 million to absorb the regulatory change costs imposed on February 12, 2025, by the California Energy Commission • The Fund was designed to enhance MCE’s financial strength, ensuring the agency can continue fulfilling its mission
• Currently funded with $70 million of deferred revenue $319
$374
$441
$489
$244
$404
$469
$495
$0
$100
$200
$300
$400
$500
$600
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26
Reserves in Millions ($)
Reserve Target ($) Projected Actual Reserves ($)
Progress to MCE’s Reserve Goals
5 • MCE’s Reserve goals would be met with the Proposed Budget’s change to net position • Assumes $13 million reduction to the Operating Reserve Fund Audited Actual Results ($)
106% of goal
101% of goal
108% of goal
77% of goal
MCE Cares Credit
6 • Continue $5 million allocation for a cost relief program • Eligible customers:
• Low-income homes enrolled in California Alternate Rates for Energy (CARE) and the Family Electric Rate Assistance (FERA)
• Small and medium size businesses impacted by economic shifts • Bill credits:
• $20/month residential
• $25/month commercial
FY2025/26
Proposed Operating
Fund Budget
Energy Revenue
and Expense
Energy Revenue Breakdown
9 $824
$7
$13
-$12
-$5 -$0.08
$827
$ Millions
$800
$805
$810
$815
$820
$825
$830
$835
$840
$845
$850
Increase Decrease Total
Operating Revenues
Increased Demand Charges
Transfer from Operating
Reserve Fund
Uncollectibles
Cost Relief Program
Bi-Directional Vehicle
Charging Tariff
Net Energy Revenue
Energy Revenue
10 Fiscal Year
2024/2025
Approved
Budget
Fiscal Year
2024/2025
Projected Budget
Fiscal Year
2025/2026
Proposed Budget
Approved vs
Proposed Budget
Variance
Approved vs
Proposed Budget
Variance

ENERGY REVENUE
Operating Revenues 799,829,000$ 810,484,000$ 831,238,000$ 31,409,000$ 3.9% Transfer from Operating Reserve Fund - - 13,000,000 - 13,000,000 Cost Relief Program (5,000,000) (3,532,573) - (5,000,000) 0.0% Bi-Directional Vehicle Charging Tariff - - (79,500) - 79,500 Uncollectible Accounts (11,967,000) (12,157,000) (12,469,000) 502,000 4.2% REVENUE - ENERGY NET 782,862,000 794,794,427 826,689,500 43,827,500 5.6% • Operating Revenue captures sales of electricity to customers. • The increase is due to adding the City of Hercules to our service area. • Revenue is adjusted upwards by increased revenue from higher demand charges and a transfer from the Operating Reserve Fund.
• Revenue is adjusted downwards by an assumed uncollectibles rate of 1.5% and the Bi-Directional Vehicle Charging Tariff previously approved by your Board.

Energy Cost
11 $689 $689
Increased Cost of
Renewables , $54
Power Source Disclosure
Changes , $13
Addition of Hercules , $10
$0
$100
$200
$300
$400
$500
$600
$700
$800
Current Cost of Energy Budget Forecasted Cost of Energy Millions
$766
Energy Contracts,
$517M
Resource Adequacy
Contracts, $146M
Net CAISO Costs,
$85M
Contingency, $14M Other, $4M
Energy Cost Breakdown
12 Renewable/Carbon
Free Energy
Purchases, $251M
Hedge
Contracts*,
$251M
Large Hydro,
$13M
Asset
Controlling
Supplier $2M
Total Cost of Energy: $766M *Designed to hedge the market price risk underlying MCE’s index-priced renewable energy and carbon-free energy contracts.

Energy Revenue and Expense
13 Fiscal Year
2024/2025
Approved
Budget
Fiscal Year
2024/2025
Projected Budget
Fiscal Year
2025/2026
Proposed Budget
Approved vs
Proposed Budget
Variance
Approved vs
Proposed Budget
Variance

ENERGY EXPENSES
Cost of Energy 688,761,000 735,818,000 765,542,000 76,781,000 11.1% NET ENERGY REVENUE 94,101,000 58,976,000 61,148,000 (32,953,000) (35.0%) • The Cost of Energy captures all of MCE’s energy contracts, resource adequacy contracts, net CAISO costs, and Other (i.e. NEM credits) costs incurred to serve our customers Proposed
Operating
Expenses
Staffing Cost Snapshot
15 Previously Presented Updated Proposal
Staffing Cost
Snapshot
Amount
Change from
FY 24/25
Approved
Budget
(Millions)
Total
Proposed
Amount for
FY 25/26
Percent
Change
Revised Amount
Increase from FY
24/25 Approved
Budget (Millions)
Revised
Proposed
Amount for
FY 25/26
(Millions)
Revised
Percent
Change
Total Staffing
Cost $3.4 $30.4 12.7% $2.5 $29.6 9.6%
Salary $2.7 $19.4 16.2% $2.1 $18.8 12.7%
Benefits $0.7 $11 6.9% $0.35 $10.7 3.4%
MCE Salary Breakdown
16 Previously Presented Updated Proposal
Salary Type
Total Projected Cost
of Salary Amount
(Millions)
Total % Change
from Approved FY
2024/25 Budget
Revised Proposed
Total Projected
Cost of Salary
Amount (Millions)
Revised % Change
from Approved FY
2024/25 Budget
Existing Staff Salaries $16.7 0% $16.9 1%
New Salaries (16  13
Additional FTE
Headcount)
$2 107% $1.4 37%
Merit Increases $0.24 14% $0.14 -34%
Promotions (35  33
projected) $0.23 30% $0.2 12%
Cost of Living
Adjustment (COLA) $0.19 14% $0.19 11%*
Total $19.4 16.23% $18.8 12.7%
*COLA effective Jan. 2025 was 2.85% based on the Bureau of Labor Statistics and is budgeted to be 4% for the coming year.

MCE Benefits Breakdown
17 Previously Presented Updated Proposal
Benefit Type
Total Projected Cost
of Benefit Dollar
Amount (Millions)
Total % Change from
Approved FY
2024/25 Budget
Revised Total
Projected Cost of
Benefit Dollar
Amount (Millions)
Revised % Change
from Approved FY
2024/25 Budget
Medical, Dental,
and Vision $2.9 17% $3 18%
Employer Tax $2.1 8% $2 8%
Ancillary Benefits $2 4% $2 4%
Retirement and
457(f) $2.5 2% $2.8 15%
Other (Workers
Comp, Vacation
Cashout)
$1.5 0% $0.94 -37%
Total $11 6.9% $10.7 3.4%
Current Department FTE Headcount with 13
Proposed New Hires
18 2
4 6
8 8
9 10
11 13
17 18
0 0
0 1
1 1
4 3
2 1
0 2 4 6 8 10 12 14 16 18 20
Strategic Initiatives
Finance
Human Resources
Customer Operations
Internal Operations
Power Resources
Technology and Analytics
Legal/Policy
Executive and Leadership Team
Public Affairs
Customer Programs
Current Department Headcount with Proposed New Hires
Current Number of Staff Proposed Additional Staff
Proposed New Positions – Impact
Funded Through External Sources
• 81% of cost for 3 new positions will be externally funded. • CPUC EE Portfolio funding continuous since 2012 with
preliminary approval through 2031. Potential extension to 2035 pending filing next year.
• CEC VPP FLEX grant funding through 2029.
• CPUC Green Access funding through 2041.
• Reduces reliance on external vendors, improving quality, control, and customer support, allowing MCE to serve our customers even better.
• Lowers costs while strengthening long-term institutional knowledge.
• Develops and maintains systems to improve operational efficiency and adaptability.
• Enhances responsiveness to regulatory changes and industry pressures.
• Creates tools and systems to better serve customers and streamline processes.

Offsetting Costs Currently Contracted Out
Enhancing Internal Efficiencies
Externally
Funded
3 Offsetting
Costs
Currently
Contracted
Out
4 Enhancing
Internal
Efficiencies
6 19
Operating Expenses – Personnel
20 Fiscal Year 2024/2025 Approved
Budget Fiscal Year 2024/2025
Projected Budget Fiscal Year
2025/2026 Proposed Budget
Approved vs Proposed Budget
Variance Approved vs Proposed
Budget Variance
• Captures fully loaded personnel costs for all existing and proposed staff.