MARIN CLEAN ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED MARCH 31, 2026 AND 2025
(UNAUDITED)
(Continued)
6 Detailed Analysis (Continued)
Fiscal year 2026 costs also benefitted from lower electricity demand due to unusually cool weather, which contributed to lower California Independent System Operator (CAISO) market and settlement costs. Costs associated with renewable energy, resource adequacy, and contracts used to manage exposure to market price volatility were also lower than in the prior year. These decreases were partially offset by higher costs for certain carbon-free energy resources. Overall, the year over year decrease reflects the timing and pricing of contracted energy deliveries, lower customer demand, and more favorable energy market conditions during fiscal year 2026.
The table below summarizes the year-over-year change in MCE’s main cost of energy categories. 2026 2025 2024
$ change from
2026 to 2025
% change from
2026 to 2025
Energy contracts 522,072,000$ 626,255,000$ 468,797,000$ (104,183,000)$ -17% Resource adequacy 130,444,000 142,264,000 102,607,000 (11,820,000) -8% Total 652,516,000$ 768,519,000$ 571,404,000$ (116,003,000)$ -15% Energy contracts include PCC1 renewable energy agreements, non-renewable energy agreements, carbon free energy agreements, large hydro or asset-controlling supplier deals, and CAISO settlement costs.
Energy costs fluctuate based on retail load, market prices, renewable energy and resource adequacy requirements, contract terms, hydroelectric and renewable generation, CAISO settlements, congestion, and the timing and mix of procurement. The decrease in the cost of electricity was partially offset by increases in contract services, staff compensation, and other operating expenses necessary to support MCE’s operations, regulatory requirements, customer programs, and expanded service area.
Current assets decreased from $512,000,000 at the end of fiscal year 2025 to $479,000,000 at the end of fiscal year 2026. The decrease primarily reflects a shift in the maturity composition of MCE’s investment portfolio, including a $60,000,000 decrease in investments classified as current, partially offset by a $53,000,000 increase in unrestricted cash and cash equivalents. Current assets at the end of fiscal year 2026 were primarily comprised of cash and investments of $354,000,000, accounts receivable of $68,000,000, and accrued revenue of $29,000,000.
Capital assets are reported net of depreciation and amortization. Each year, the change is mostly due to capital asset acquisitions, less depreciation and amortization expenses. Capital assets include leasehold improvements, furniture and equipment, and real estate related to MCE’s office premises.
Capital assets, net of accumulated depreciation and amortization, increased from $600,000 at the end of fiscal 2025 to $6,000,000 at the end of fiscal year 2026. The increase primarily resulted from MCE’s acquisition of land and an office building during fiscal year 2026.
MARIN CLEAN ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED MARCH 31, 2026 AND 2025
(UNAUDITED)
(Continued)
7 Currently Known Facts, Decisions, or Conditions (continued) Other noncurrent assets include investments of $175,000,000 and $166,000,000 at the end of fiscal years 2026 and 2025, respectively. MCE manages its investment portfolio in accordance with its adopted investment policy, with consideration given to safety, liquidity, maturity, diversification, and anticipated cash-flow requirements.
Current liabilities decreased from $192,000,000 at the end of fiscal year 2025 to $92,000,000 at the end of fiscal year 2026. The largest component of current liabilities is the cost of electricity delivered to customers that was not yet paid by MCE at the end of the fiscal year. Accrued cost of electricity was approximately $59,000,000 and $158,000,000 at the end of fiscal years 2026 and 2025, respectively. The fiscal 2025 balance was comparatively high because it included substantial uninvoiced deliveries under a renewable energy contract executed during a period of elevated renewable energy prices. The fiscal 2026 balance included a lower amount of delivered energy for which invoices had not yet been received at year-end. Accordingly, the decrease primarily reflects differences in the amount and cost of delivered, but uninvoiced energy included in the accrual at each fiscal year-end. Accrued cost of electricity may fluctuate from year to year based on the timing and volume of energy deliveries, supplier invoicing and settlement activity, contractual payment terms, and the prices applicable to the products delivered.
Significant Capital Asset and Long-Term Financing Activity MCE does not own assets used for electric generation or distribution. Included in capital assets are office equipment, such as computers, furniture, leasehold improvements and real estate. In July 2025, MCE purchased an office building and land for $5,400,000.
MCE does not have any outstanding financing debt. MCE has a revolving credit agreement with Royal Bank of Canada with a credit line of $60 million that was effective until May 2026 and subsequently amended as described in Currently Known Facts, Decisions, or Conditions.
MCE signs renewable energy agreements, procures electricity and electrical capacity and signs other power purchase agreements to comply with state law and elevated voluntary targets for renewable and greenhouse gas-free products as described in its Integrated Resource Plan. California law established a Renewable Portfolio Standard (RPS) that requires load-serving entities (“LSEs”), such as MCE, to gradually increase the amount of renewable energy they procure for their customers.
MARIN CLEAN ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED MARCH 31, 2026 AND 2025
(UNAUDITED)
(Continued)
8 Currently Known Facts, Decisions, or Conditions (continued) As of March 31, 2026, MCE had executed RPS contracts of ten years or more in duration that are projected to meet MCE’s Senate Bill 350 long-term contracting requirements. Additionally, MCE is planning to continue its long-term RPS procurement as opportunities arise. Expected obligations under power purchase agreements totaled approximately $6.0 billion as of March 31, 2026 and $5.9 billion as of March 31, 2025. Actual future costs under these agreements may vary based on the timing and volume of energy deliveries, contract performance, and curtailment. MCE manages these risks by aligning procurement with forecast customer demand, diversifying its portfolio by technology, project location, contract term, delivery profile, and supplier. MCE also maintains counterparty credit, collateral, liquidity, and energy-risk-management practices.
Effective April 1, 2026, MCE implemented a 14% reduction in customer generation rates. MCE also implemented a temporary bill credit of $0.0062 per kilowatt-hour through December 2026 and approved an additional $10.0 million for the MCE Cares Credit program, which provides bill assistance to qualifying residential and small-business customers. These rate actions were adopted in consideration of declining forecasted energy costs, MCE’s revenue requirements, rate competitiveness, and increases in the Power Charge Indifference Adjustment, or PCIA, charged by PG&E to MCE customers. The rate reduction, temporary bill credit, and expanded customer assistance are expected to reduce fiscal year 2027 operating revenues compared with the amounts that would have been generated under the prior rates schedule. To partially offset this reduction, MCE’s Board approved the recognition of $62.0 million of previously deferred Operating Reserve Fund revenue during fiscal year 2027. Actual operating results may vary based on customer electricity usage, weather, market conditions, and future rate actions.
The PCIA is a state-authorized charge assessed and collected by PG&E from customers receiving generation service from community choice aggregators, including MCE. Changes in the PCIA do not directly affect MCE’s reported revenues or expenses; however, they affect customers’ total electricity bills and may influence MCE’s rate competitiveness, customer participation, and future rate-setting decisions. The 2026 increase in the PCIA was one of the factors considered by MCE when approving the generation-rate reduction, temporary bill credit, and expansion of customer bill assistance. MCE will continue to monitor regulatory proceedings and changes in PG&E charges when evaluating future rates and customer programs.
In May 2026, S&P Global Ratings affirmed MCE’s A issuer credit rating with a stable outlook. The rating assessment cited MCE’s liquidity, diversified renewable energy portfolio, broad customer base, customer retention, and absence of outstanding debt. Fitch Ratings also maintained MCE’s A-issuer default rating following its December 2025 review. MCE’s investment-grade ratings support its ability to negotiate energy supply agreements and access financing and liquidity facilities on favorable terms.
MARIN CLEAN ENERGY
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEARS ENDED MARCH 31, 2026 AND 2025
(UNAUDITED)
(Continued)
9 Currently Known Facts, Decisions, or Conditions (continued) In July 2026, following a 45-day extension, MCE finalized an amendment to its revolving credit agreement with Royal Bank of Canada. The amendment extended the facility through May 2027 and increased the available commitment from $60 million to $80 million. As of the date of this report, MCE had no outstanding borrowings or standby letters of credit under the facility. The facility provides an additional source of liquidity for operating and energy procurement requirements.
MCE continues to evaluate a Remedial Action Scheme, or RAS, in coordination with CAISO and PG&E to reduce curtailment affecting a contracted solar project in California’s Central Valley. If implemented, the software-based solution may improve project deliverability and reduce curtailment-related energy costs. MCE budgeted approximately $10.2 million of capital outlay for the project in fiscal year 2027. The project’s timing, ownership structure, implementation costs, regulatory approvals, and ultimate financial effects remain subject to technical evaluation and negotiations.
BASIC FINANCIAL STATEMENTS
MARIN CLEAN ENERGY
10 The accompanying notes are an integral part of these financial statements
STATEMENTS OF NET POSITION
MARCH 31, 2026 AND 2025
2026 2025
Current assets
Cash and cash equivalents - unrestricted 242,125,512 $ 189,331,563$ Cash equivalents - restricted for grant purposes 16,270,080 22,294,426 Cash equivalents - restricted for security reserve 17,581,784 15,000,000 Accounts receivable, net of allowance 67,953,267 63,716,419 Accrued revenue 29,032,067 32,246,942
Other receivables 18,803,237 22,849,094
Prepaid expenses 1,071,840 2,372,584
Investments 78,048,161 138,291,067
Deposits 8,118,905 26,066,621
Total current assets 479,004,853 512,168,716
Noncurrent assets
Investments 174,622,647 166,170,227
Capital assets, net of depreciation and amortization 6,189,785 555,816 Deposits 197,175 158,622
Total noncurrent assets 181,009,607 166,884,665
Total assets 660,014,460 679,053,381
Current liabilities
Accrued cost of electricity 58,642,896 158,422,801
Accounts payable 4,433,294 3,980,165
Other accrued liabilities 10,160,357 5,353,759
User taxes and energy surcharges due to other governments 1,341,808 1,282,378 Security deposits - energy suppliers 856,800 856,800
Advances from grantors 16,270,080 22,294,426
Total current liabilities 91,705,235 192,190,329
Operating Reserve Fund 150,000,000 70,000,000
Net position
Net investment in capital assets 6,189,785 555,816
Restricted 17,581,784 15,000,000
Unrestricted 394,537,656 401,307,236
Total net position 418,309,225$ 416,863,052$
NET POSITION
ASSETS
LIABILITIES
DEFERRED INFLOWS OF RESOURCES
MARIN CLEAN ENERGY
11 The accompanying notes are an integral part of these financial statements
STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
YEARS ENDED MARCH 31, 2026 AND 2025
2026 2025
OPERATING REVENUES
Electricity sales, net 768,857,882$ 801,542,634 $
Rate stabilization (80,000,000) -
Grant revenue 11,829,585 14,393,254
Other revenue 734,728 288,911
Total operating revenues 701,422,195 816,224,799
OPERATING EXPENSES
Cost of electricity 652,516,462 768,519,084
Contract services 23,707,524 22,184,759
Staff compensation 28,475,316 24,719,274
Other operating expenses 16,417,632 12,336,595
Depreciation and amortization 228,436 632,602
Total operating expenses 721,345,370 828,392,314
Operating loss (19,923,175) (12,167,515)
NONOPERATING REVENUES (EXPENSES)
Investment income 21,369,348 25,354,208
Finance costs - (9,156)
Nonoperating revenues (expenses), net 21,369,348 25,345,052 CHANGE IN NET POSITION 1,446,173 13,177,537
Net position at beginning of year 416,863,052 403,685,515 Net position at end of year 418,309,225$ 416,863,052$
MARIN CLEAN ENERGY
12 The accompanying notes are an integral part of these financial statements
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2026 AND 2025
2026 2025
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 782,441,917$ 811,751,482$
Receipts from grantors 6,228,908 12,584,238
Receipts of security deposits 18,988,991 4,118,400
Receipts from wholesale sales and other operating activities 23,803,994 61,191 Payments to suppliers for electricity and collateral (769,518,931) (705,397,207) Payments for other goods and services (39,785,558) (35,595,730) Payments for deposits and collateral (449,563) (21,226,265) Payments for staff compensation (27,094,705) (22,614,450) Payments of taxes and surcharges to other governments (13,249,249) (12,818,095) Net cash provided (used) by operating activities (18,634,196) 30,863,564
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments of lease liabilities - (545,801)
Payments to acquire capital assets (5,612,405) (324,986) Net cash used by capital and related
financing activities (5,612,405) (870,787)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment income received 23,355,477 16,641,296
Proceeds from sales and maturities of investments 115,447,674 47,017,973 Purchase of investments (65,205,163) (78,375,562)
Net cash provided (used) by investing activities 73,597,988 (14,716,293) NET INCREASE IN CASH AND CASH EQUIVALENTS 49,351,387 15,276,484 Cash and cash equivalents at beginning of year 226,625,989 211,349,505 Cash and cash equivalents at end of year 275,977,376$ 226,625,989$ Reconciliation to the Statement of Net Position
Cash and cash equivalents - unrestricted 242,125,512 $ 189,331,563$ Cash equivalents - restricted for grant purposes 16,270,080 22,294,426 Cash equivalents - restricted for security reserve 17,581,784 15,000,000 Cash and cash equivalents 275,977,376$ 226,625,989$
NONCASH INVESTING ACTIVITIES:
Change in fair value of investments (667,708)$ 8,712,912$ Change in interest receivable (1,318,421)$ 81,606$
MARIN CLEAN ENERGY
13 The accompanying notes are an integral part of these financial statements
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2026 AND 2025
(Continued)
2026 2025
Operating loss (19,923,175)$ (12,167,515)$
Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities
Depreciation and amortization expense 228,436 632,602
(Increase) decrease in:
Accounts receivable, net (4,236,848) (2,268,779)
Accrued revenue 3,214,875 (334,474)
Other receivables 2,727,436 (16,944,778)
Prepaid expenses 1,300,744 (1,400,381)
Deposits 18,539,430 (11,033,423)
Increase (decrease) in:
Accrued cost of electricity (99,779,905) 90,472,512
Accounts payable 453,129 (572,277)
Other accrued liabilities 4,806,598 2,640,346
User taxes and energy surcharges due to other governments 59,430 (5,994) Security deposits - energy suppliers - (126,600)
Operating Reserve Fund contribution 80,000,000 -
Advances from grantors (6,024,346) (18,027,675)
Net cash provided (used) by operating activities (18,634,196)$ 30,863,564$
RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
14 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
Marin Clean Energy (MCE) is a California joint powers authority created on December 19, 2008. As of March 31, 2026, the parties to its Joint Powers Agreement consist of the following local governments:
Contra Costa Marin Napa Solano
Concord Belvedere American Canyon Benicia
Danville Corte Madera Calistoga Fairfield
El Cerrito Fairfax Napa Vallejo
Hercules Larkspur St. Helena Unincorporated area
Lafayette Mill Valley Yountville
Martinez Novato Unincorporated area
Moraga Ross
Oakley San Anselmo
Pinole San Rafael
Pittsburg Sausalito
Pleasant Hill Tiburon
Richmond Unincorporated area
San Pablo
San Ramon
Walnut Creek
Unincorporated area
MCE is separate from and derives no financial support from its members. MCE is governed by a Board of Directors whose membership is composed of elected officials representing one or more of the parties.
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
15 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) REPORTING ENTITY (Continued)
MCE’s mission is to confront the climate crisis by eliminating fossil fuel greenhouse gas emissions, producing renewable energy, and creating an equitable community. MCE provides electricity to retail customers as a Community Choice Aggregation Program (CCA) under the California Public Utilities Code Section 366.2.
Electricity is acquired from commercial suppliers and delivered through existing physical infrastructure and equipment managed by Pacific Gas and Electric Company. MCE administers energy efficiency programs that support the development, coordination, and implementation of energy efficiency projects in and around MCE’s service area. The funding for energy efficiency programs is provided by ratepayers and regulated by the California Public Utilities Commission.
BASIS OF ACCOUNTING
MCE’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements.
MCE’s operations are accounted for as a governmental enterprise fund and are reported using the economic resources measurement focus and the accrual basis of accounting – similar to business enterprises. Accordingly, revenues are recognized when they are earned, and expenses are recognized at the time liabilities are incurred. Enterprise fund-type operating statements present increases (revenues) and decreases (expenses) in total net position.
Reported net position is segregated into three categories – net investment in capital assets, restricted, and unrestricted.
When both restricted and unrestricted resources are available for use, it is MCE’s policy to use restricted resources first, then unrestricted resources as they are needed.
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
16 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
CASH AND CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, MCE defines cash and cash equivalents to include cash on hand, demand deposits, and short-term investments with an original maturity of three months or less. The Statement of Net Position presents restricted cash balances separately. Restricted cash reported on the Statements of Net Position includes funding advanced from grantors and reserves required by MCE’s line of credit agreement.
INVESTMENTS
Investments are stated at fair value based on prices listed on a national exchange for debt securities except for certificates of deposit which are stated at cost. MCE intends to hold its securities to maturity. Investments with a maturity of less than one year are shown as current assets in the Statement of Net Position. Investments with a maturity of one year or more are shown as noncurrent assets in the Statement of Net Position.
MCE’s Investment Policy permits the following types of investments:
Local Agency Investment Fund (LAIF)
United States Treasury obligations
Federal agency securities
Commercial paper
Certificates of deposits
Money market funds
Municipal securities
Corporate bonds
Collateralized mortgage obligations
Supranationals
OTHER RECEIVABLES
At March 31, 2026 and 2025, the balance of other receivables totaled approximately $18,803,000 and $22,849,000, respectively. These amounts primarily consist of receivables related to the resale of excess energy purchased, anticipated refunds from suppliers due to overpayments, and accrued investment income. These receivables are expected to be collected within the next fiscal year and are considered fully collectible.
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
17 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
PREPAID EXPENSES
Payments made to vendors that will benefit periods beyond the end of the current fiscal year are recorded as prepaid expenses.
DEPOSITS
Contracts to purchase energy may require MCE to provide the supplier with advanced payments or security deposits. Deposits are generally held for the term of the contract and are classified as current or noncurrent assets depending on the length of time the deposits will be outstanding.
LEASE ASSETS AND LEASE LIABILITIES
MCE recognizes an asset and liability when it enters into certain leasing arrangements. The cost of the leased asset is amortized over the term of the leases. The lease liability is the present value of payments expected to be paid to the lessor during the lease term. MCE’s leased asset and liability are related to its office lease that expired in March 2025.
CAPITAL ASSETS AND DEPRECIATION
MCE’s policy is to capitalize furniture and equipment costing over $5,000 that are expected to be in service for over one year. Depreciation is computed according to the straight-line method over estimated useful lives of three years for electronic equipment, seven years for furniture, ten years for leasehold improvements, and 30 years for buildings. MCE does not own any electric generation, transmission, or distribution assets.
SECURITY DEPOSITS FROM ENERGY SUPPLIERS
Various energy contracts require the supplier to provide MCE with a security deposit. These deposits are generally held for the term of the contract or until the completion of certain benchmarks. Deposits are classified as current or noncurrent, depending on the length of the time the deposits will be held.
ADVANCES FROM GRANTORS
MCE received grant funding from various grantors. The amount in this category represents funds received by MCE but not yet expended to carry out specific goals. See Note 7 for additional information related to grants administered by MCE.
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
18 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
OPERATING RESERVE FUND
In March 2020, MCE created an Operating Reserve Fund (ORF) to allow MCE to defer revenue in years when financial results are strong for use in future years when financial results may decline. MCE’s ORF Policy allows a deferral of revenues into the ORF when the increase in net position is projected to exceed 5% of total revenues in a fiscal year. The ORF Policy has a targeted maximum balance of 10% of the total revenues in the current fiscal year. In accordance with GASB Statement No. 62, the amount deposited into the fund is shown as a reduction in operating revenues and reported on the statements of net position as a deferred inflow of resources. Although the ORF Policy establishes a targeted maximum balance of 10% of current-year revenues, the Board approved a one-time waiver of the policy in fiscal year 2026 to permit a balance beyond this limit. Transfers to this fund were $80,000,000 and $0 in fiscal years 2026 and 2025, respectively.
NET POSITION
Net position is presented in the following components:
Net Investment in capital assets: This component of net position consists of capital assets, net of accumulated depreciation and amortization, and reduced by outstanding borrowings that are attributable to the acquisition, construction, or improvement of those assets.
Restricted: This component of net position consists of restraints placed on net asset use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.
Unrestricted: This component of net position consists of net position that does not meet the definitions of “net investment in capital assets” or “restricted.”
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
19 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
OPERATING AND NONOPERATING REVENUE
Operating revenues include energy sales to retail and wholesale customers, grant revenue earned from the delivery of program activities, and liquidated damages from suppliers that fail to meet delivery commitments. Operating revenues also include contributions to and distributions from the Operating Reserve Fund.
Investment income and grants that are not earned from the delivery of program activities are considered “nonoperating revenues.”
REVENUE RECOGNITION
MCE recognizes revenue according to the accrual basis. This includes invoices issued to customers during the reporting period and electricity estimated to have been delivered but not yet billed. Management estimates that a portion of the billed amounts will be uncollectible.
Accordingly, an allowance for uncollectible accounts has been recorded. Revenue is presented net of estimated uncollectible amounts.
OPERATING AND NONOPERATING EXPENSES
Operating expenses include the costs of electricity, services, administrative expenses, and amortization and depreciation of capital assets. Nonoperating expenses include expenses relating to financing.
COST OF ELECTRICITY
During the normal course of business MCE purchases electrical power from numerous suppliers. Electricity costs include the cost of electricity and generation capacity arising from bilateral contracts with energy suppliers and for generation credits, load and other charges arising from MCE’s participation in the California Independent System Operator’s (CAISO) centralized market. The cost of electricity and capacity is recognized as “Cost of Electricity” in the Statements of Revenues, Expenses and Changes in Net Position.
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
20 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) COST OF ELECTRICITY (Continued)
To comply with the State of California’s Renewable Portfolio Standards (RPS) and self-imposed benchmarks, MCE acquires RPS eligible renewable energy evidenced by Renewable Energy Certificates (Certificates) recognized by the Western Renewable Energy Generation Information System. MCE obtains Certificates with the intent to retire them and does not sell or build surpluses of Certificates with a profit motive. An expense is recognized at the point that the cost of the Certificate is due and payable to the supplier. MCE purchases capacity commitments from qualifying generators to comply with the California Energy Commission’s Resource Adequacy Program.
MCE purchases capacity commitments from qualifying electricity generators to comply with the California Energy Commission’s Resource Adequacy Program. The goals of the Resource Adequacy Program are to provide sufficient resources to CAISO to ensure the safe and reliable operation of the electricity grid in real-time and to provide appropriate incentives for the siting and construction of new resources needed for reliability in the future.
STAFFING COSTS
MCE pays employees semi-monthly and fully satisfies its obligation for health benefits and contributions to its defined contribution retirement plan. MCE does not provide post-employment healthcare or other fringe benefits and accordingly, no related liability is recorded in these financial statements.
MCE provides compensated absences, including paid time off, which are accrued when earned and recorded as part of accrued liabilities. The liability includes leave that is attributable to services already rendered, accumulates, and is more likely than not to be used or paid. The liability is measured using the employee’s pay rate as of the financial statement date.
INCOME TAXES
MCE is a joint powers authority under the provision of the California Government Code and is not subject to federal or state income or franchise taxes.
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
21 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
RECLASSIFICATIONS
Certain amounts reported in the prior year’s financial statements have been reclassified for comparative purposes to conform to the presentation of the current year financial statements.
These reclassifications did not result in any changes to previously reported net position or change in net position.
2. CASH AND CASH EQUIVALENTS
MCE maintains its cash in both interest-bearing and non-interest-bearing accounts. MCE’s deposits are subject to California Government Code Section 16521 which requires banks to provide 110% collateralization on public funds in excess of the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. Certain short-term investments with original maturities of less than three months are classified as cash and cash equivalents, which are not subject to the collateral requirement or FDIC coverage previously mentioned. Accordingly, the amount of risk is not disclosed. MCE monitors its risk on an ongoing basis.
3. ACCOUNTS RECEIVABLE
The balances of accounts receivable were as follows as of March 31:
2026 2025
Accounts receivable from customers 112,934,268$ 98,746,419$ Allowance for uncollectible accounts (44,981,001) (35,030,000) Net accounts receivable 67,953,267$ 63,716,419$
The majority of accounts receivable are collected within a few months after billing. MCE records and allowance for uncollectible accounts based on historical collection experience, customer aging, and other relevant factors. MCE continues collection efforts on accounts in excess of de minimis balances regardless of the age of the account. Although collection success generally decreases with the age of the receivable, MCE continues to be successful in collecting older accounts.
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
22 4. INVESTMENTS
During the years ended March 31, 2026 and 2025, MCE held investments with original maturities of three months or more. As of March 31, the fair value of investments, except for certificates of deposit which are stated at cost, was as follows:
2026 2025 Level
Current Investments:
U.S. Treasury securities 16,481,262$ 11,423,887$ 1
U.S. agency obligations 5,517,068 1,509,316 2
Asset backed securities - 1,720,609 2
Collateralized mortgage obligations - 743,359 2
Mutual Funds 457(f) plan 1,046,879 - 2
Certificates of deposit 55,002,952 122,893,896 NA
Total current investments 78,048,161$ 138,291,067$
2026 2025 Level
Noncurrent Investments:
U.S. Treasury securities 59,903,669$ 52,915,296$ 1
U.S. agency obligations 6,555,936 13,082,124 2
Asset backed securities 17,685,499 19,432,656 2
Collateralized mortgage obligations 24,256,597 21,333,952 2 Corporate bonds 55,666,130 48,919,999 2
Municipal bonds 1,785,935 1,771,864 2
Supranational 8,768,881 8,714,336 2
Total noncurrent investments 174,622,647$ 166,170,227$
FAIR VALUE MEASUREMENT
GASB Statement No. 72, Fair Value Measurement and Application, sets forth the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets, Level 2 inputs are significant other observable inputs, and Level 3 inputs are significant unobservable inputs.
U.S. Treasury securities are classified as Level 1 inputs because they rely on unadjusted, quoted prices in active markets for identical assets.
Other investments, other than certificates of deposits, are classified as Level 2 inputs as they were valued using institutional bond quotes or valuations based on various market inputs.
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
23 4. INVESTMENTS (Continued)
FAIR VALUE MEASUREMENT (CONTINUED
Certificates of deposits are based on nominal value which is materially consistent with fair value.
In instances where inputs used to measure fair value fall into more than one level in the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. MCE’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.
CREDIT RISK
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Certain investments, such as obligations of the U.S. government or obligations explicitly guaranteed by the U.S. government are not considered to have credit risk. As of March 31, 2026 and 2025, MCE’s investments were rated as follows:
2026 2025
Asset backed securities NR- to AAA NR- to AAA
Corporate bonds BBB+ to AA+ A- to AAA
Municipal bonds AA- AA
Supranational AAA AAA
Certificates of deposit NR NR
Standard & Poor's
MCE’s investment policy addresses this risk. MCE’s investment policy limits investments to those allowed by Section 53601 of the California Government Code that addresses the risk allowable for each investment.
CUSTODIAL CREDIT RISK
Cash and cash equivalents
Custodial credit risk is the risk that in the event of a financial institution failure, MCE’s deposits may not be returned to MCE. MCE’s deposits are subject to California Government Code Section 16521, which requires banks to collateralize public funds in excess of the FDIC limit of $250,000 by 110%.
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
24 4. INVESTMENTS (Continued)
CUSTODIAL CREDIT RISK (CONTINUED)
As of March 31, 2026 and 2025, none of MCE’s bank balances are known to be individually exposed to credit risk.
CUSTODIAL CREDIT RISK – INVESTMENTS
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, MCE would not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. All of MCE’s investments are exposed to custodial credit risk.
MCE’s investment policy addresses this risk. All investments owned by MCE are to be held in safekeeping by a third-party custodian, acting as an agent for MCE under the terms of a custody agreement.
INTEREST RATE RISK
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Duration is a measure of the price sensitivity of a fixed income portfolio to changes in interest rates. Duration is calculated as the weighted average time to receive a bond’s coupon and principal payments. The longer the duration of a portfolio, the greater its price sensitivity to changes in interest rates. MCE manages its exposure to declines in fair values by limiting the weighted average maturity of its investments.
Following is a summary of investment maturities as of March 31, 2026:
Investment Type Fair Value Under 1 Year 1-5 Years
U.S. Treasury securities 76,384,931$ 16,481,262$ 59,903,669$ U.S. agency obligations 12,073,004 5,517,068 6,555,936
Asset backed securities 17,685,499 - 17,685,499
Collateralized mortgage obligations 24,256,597 - 24,256,597 Corporate bonds 55,666,130 - 55,666,130
Municipal bonds 1,785,935 - 1,785,935
Supranational 8,768,881 - 8,768,881
Mutual Funds 457f deposits 1,046,879 1,046,879 -
Certificates of deposit 55,002,952 55,002,952 -
252,670,808$ 78,048,161$ 174,622,647$
Investment Maturities
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
25 4. INVESTMENTS (Continued)
INTEREST RATE RISK (Continued)
Following is a summary of investment maturities as of March 31, 2025:
Investment Type Fair Value Under 1 Year 1-5 Years
U.S. Treasury securities 64,339,183$ 11,423,887$ 52,915,296$ U.S. agency obligations 14,591,440 1,509,316 13,082,124 Asset backed securities 21,153,265 1,720,609 19,432,656 Collateralized mortgage obligations 22,077,311 743,359 21,333,952 Corporate bonds 48,919,999 - 48,919,999
Municipal bonds 1,771,864 - 1,771,864
Supranational 8,714,336 - 8,714,336
Certificates of deposit 122,893,896 122,893,896 -
304,461,294$ 138,291,067$ 166,170,227$
Investment Maturities
CONCENTRATION OF CREDIT RISK
Concentration of credit risk is the risk of loss to the magnitude of MCE’s investment in a single issuer. MCE manages the concentration of credit risk by diversifying its portfolio so that reliance on any one issuer will not place an undue burden on MCE.
As of March 31, 2026 and 2025, MCE’s investment portfolio was concentrated as follows:
Issuer Investment Type 2026 2025
Federal Home Loan Mortgage
Corporation (Freddie Mac)
U.S. agency implicitly
guaranteed 9.6% 7.3%
Percentage of Portfolio
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
26 5. CAPITAL ASSETS
Capital asset activity for the year ended March 31, 2026, was as follows:
Beginning
balance Increases Decreases
Ending
balance
Capital assets not being depreciated:
Land $ - $ 2,025,000 $ - 2,025,000$
Capital assets being depreciated and amortized:
Furniture and equipment 783,928 80,239 (184,982) 679,185 Leasehold improvements 1,089,769 202,221 (1,072,028) 219,962 Software 307,245 180,000 - 487,245
Building - 3,591,751 - 3,591,751
Total capital assets being depreciated and amortized: 2,180,942 4,054,211 (1,257,010) 4,978,143 Less accumulated depreciation and amortization (1,625,126) (228,436) 1,040,204 (813,358) Total capital assets, net of depreciation and amortization 555,816$ 5,850,775$ (216,806)$ 6,189,785$ Capital asset activity for the year ended March 31 2025, was as follows:
Beginning
balance Increases Decreases
Ending
balance
Capital assets being depreciated and amortized:
Furniture and equipment 799,573$ -$ (15,645)$ 783,928$
Leasehold improvements 1,072,028 17,741 - 1,089,769
Software - 307,245 - 307,245
Intangible assets-buildings 2,878,560 - (2,878,560) -
Total capital assets being depreciated and amortized: 4,750,161 324,986 (2,894,205) 2,180,942 Less accumulated depreciation and amortization (3,886,729) (632,602) 2,894,205 (1,625,126) Total capital assets, net of depreciation and amortization 863,432$ (307,616)$ -$ 555,816$
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
27 6. DEBT
LINE OF CREDIT AND LETTERS OF CREDIT
MCE has a $60 million revolving credit agreement with Royal Bank of Canada (RBC) that matures in May 2026. The agreement enhances MCE’s overall liquidity for potential working capital needs, collateral requirements, and enhances MCE’s investment credit rating. The agreement requires MCE to hold $15 million in an operating reserve account. See the subsequent event note for further details.
MCE had no standby Letters of Credit or amounts outstanding under its lines of credit agreement as of March 31, 2026, and 2025. Any unused balance is subject to a 0.33% fee per annum.
7. GRANTS
MCE administers various grants from the California Public Utilities Commission (CPUC), California Energy Commission, and other sources. MCE’s primary source of grant funding is through its CPUC-funded Energy Efficiency (EE) programs. MCE administers several programs under this funding source. Grant revenues are recognized when corresponding eligible expenses are incurred.
The following is a summary of grant revenue for the years ended March 31:
2026 2025
Operating grants:
EE 11,009,121$ 10,160,223$
Other 820,464 4,233,031
11,829,585$ 14,393,254$
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
28 8. DEFINED CONTRIBUTION RETIREMENT PLAN
The Marin Clean Energy Plan (Plan) is a defined contribution retirement plan established by MCE to provide benefits at retirement to its employees. The Plan is administered by Nationwide Retirement Solutions. On March 31, 2026 and 2025, MCE had 108 and 102 plan participants, respectively. MCE is required to contribute 10% of covered payroll to the Plan and contributed approximately $2,035,000 and $1,679,000 during the years ended March 31, 2026 and 2025, respectively. The Plan includes vesting provisions intended to encourage employee retention. Plan provisions and contribution requirements are established and may be amended by the Board of Directors.
9. NONQUALIFIED DEFERRED COMPENSATION PLAN
Marin Clean Energy sponsors a nonqualified deferred compensation plan under Section 457(f) of the Internal Revenue Code for certain eligible employees. The plan is structured as a retention incentive to qualified personnel still employed and is not subject to the contribution limits applicable to qualified plans.
Under the terms of the plan, eligible employees may receive deferred compensation benefits upon meeting specified vesting conditions. The benefits are subject to a substantial risk of forfeiture until the vesting date, at which point the deferred amounts become taxable to the employee.
As of March 31, 2026 and 2025, the total liability recognized in the statement of net position for the 457(f) plan was $1,157,000 and $498,000, respectively.
10. RISK MANAGEMENT
MCE is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; and errors and omissions. During the year, MCE purchased insurance policies from commercial carriers to mitigate risks that include those associated with earthquakes, theft, general liability, errors and omissions, and property damage. There were no significant reductions in coverage compared to the prior year. There were no settled claims that exceeded coverage in any of the last three years.
From time to time, MCE may be a party to various pending claims and legal proceedings.
Although the outcome of such matters cannot be forecasted with certainty, it is the opinion of management and MCE’s legal counsel that the likelihood is remote that any such claims or proceedings will have a material adverse effect on MCE’s financial position or results of operations.
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
29 10. RISK MANAGEMENT (Continued)
MCE maintains risk management policies, procedures and systems that help mitigate credit, liquidity, market, operating, regulatory and other risks that arise from participation in the California energy market. Credit guidelines include a preference for transacting with highly rated counterparties, evaluating counterparties’ financial condition and assigning credit limits as applicable. These credit limits are established based on risk and return considerations under terms customarily available in the industry. In addition, MCE enters into netting arrangements whenever possible and where appropriate obtains collateral and other performance assurances from counterparties. Further information about MCE’s energy risk management policy can be found online at MCE’s website.
11. PURCHASE COMMITMENTS
POWER AND ELECTRIC CAPACITY
In the ordinary course of business, MCE enters into various power purchase agreements to acquire renewable and other energy and electric capacity. The price and volume of purchased power may be fixed or variable. Variable pricing is generally based on the market price of either natural gas or electricity at the date of delivery. Variable volume is generally associated with contracts to purchase energy from as-available resources such as solar, wind and hydro-electric facilities.
MCE enters into power purchase agreements to comply with state law and voluntary targets for renewable and greenhouse gas (GHG) free products and to ensure stable and competitive electric rates for its customers.
The following table details the obligations to purchase existing energy, renewable, and RA contracts as of March 31, 2026:
Year ended March 31,
2027 520,000,000$
2028 460,000,000
2029 380,000,000
2030 370,000,000
2031 370,000,000
2032-51 3,900,000,000
Total 6,000,000,000$
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
30 12. LEASES
PROPERTY LEASE
On March 9, 2015, MCE entered into a ten-year non-cancelable lease for its San Rafael, California office premise. The rental agreement includes an option to renew the lease for five additional years. On December 12, 2017, MCE entered into a 68-month non-cancelable lease for its Concord, California office location. This lease was amended with a new expiration date of December 31, 2024. The leases have expired and there are no future minimum lease payments as of March 31,2025.
STORAGE CONTRACT ARRANGEMENTS
Related to providing electricity to its customers, MCE entered into energy storage agreements.
Through these agreements, MCE obtains the right to control certain aspects of the nature and manner and use of the underlying facilities. The monthly payments made by MCE are variable and based on the performance of the underlying assets including the plant’s available capacity, operating charging efficiency, and the seller’s responsiveness to MCE’s charging and discharge instructions. The variable payments under energy storage agreements are recognized as part of the cost of electricity on the Statement of Revenues, Expenses, and Changes in Net Position. Variable payments for the energy storage agreements totaled approximately $12,986,000 and $4,260,000 in fiscal years 2026 and 2025, respectively.
13. JOINT VENTURE
MCE participates in a joint powers agreement (JPA) through the California Community Choice Financing Authority (CCCFA). CCCFA was formed to assist its members by undertaking the financing or refinancing of energy prepayments through tax-advantaged bonds on behalf of one or more of the members by issuing or incurring bonds and entering into related contracts with its members. Any debt or liability incurred by CCCFA on behalf of a member to prepay for renewable energy is not a debt or liability of that member.
Furthermore, the assets of CCCFA in the form of prepaid energy or reserves held by the respective bond trustees for any prepayment transaction undertaken on behalf of a member do not constitute an asset or reserve of that member.
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
31 13. JOINT VENTURE (Continued)
CCCFA issued the following bonds, excluding original issue premiums, which are to be used to finance energy purchases that will be delivered to MCE. No debt, liability, obligation of CCCFA is a debt, liability, or obligation of MCE.
Deal Date issued Amount Issued
Outstanding as of
March 31, 2026
Outstanding as of
March 31, 2025
2021A November 2021 602,655,000$ 596,830,000$ 598,715,000$ 2023G December 2023 1,038,285,000 1,038,285,000 1,038,285,000 2025B June 2025 1,062,605,000 1,062,605,000 -
2,703,545,000$ 2,697,720,000$ 1,637,000,000$
MCE purchases energy from CCCFA in the same manner as it purchases energy from other suppliers. MCE purchased approximately $99,800,000 and $69,680,000 from CCCFA during the fiscal years ended March 31, 2026 and 2025, respectively. The outstanding commitments to purchase from CCCFA are included in Note 11. This amount represents executed energy contracts assigned to CCCFA as of March 31, 2026. Additional contracts may be assigned while the bond is outstanding.
The financial statements of CCCFA are available online at http://www.cccfa.org/key-documents.html.
14. CONTINGENCY
MCE is involved in pending contract related litigation. The complaint seeks damages of approximately $35 million, including attorney fees. MCE, after consultation with legal counsel, believes it has meritorious and complete defenses to the claims asserted. However, no assurance can be given as to the ultimate outcome of the litigation. Accordingly, no liability has been recorded in the accompanying financial statements.
15. SUBSEQUENT EVENT
In July 2026, MCE extended their revolving credit agreement with Royal Bank of Canada.
The credit line is $80 million until May 2027.
MARIN CLEAN ENERGY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2026 AND 2025
32 16. RECENTLY ADOPTED AND FUTURE ACCOUNTING PRONOUNCEMENTS
MCE implemented GASB Statement No. 102, Certain Risk Disclosures, which requires additional disclosures regarding concentrations and constraints that could impact MCE’s financial position or results of operations. Implementation of this statement did not have a material effect on the financial statements.
GASB Statements No. 103, Financial Reporting Model Improvements and No .104, Disclosure of Certain Capital Assets are effective for fiscal years beginning after June 15, 2025. Management is evaluating the effect of implementation of this statement.
GASB Statements No. 105, Subsequent Events, is effective for fiscal years beginning after June 15, 2026. Management is evaluating the effect of implementation of this statement.