____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting:
Disposition:
Agenda Item No: 3.a
Meeting Date: August 17, 2026
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: City Manager
Prepared by: Angela Robinson Piñon, Assistant
City Manager
City Manager Approval: ______________
TOPIC: RESPONSE TO THE GRAND JURY REPORT ON MCE (MARIN CLEAN ENERGY) SUBJECT: RESOLUTION APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE THE CITY OF SAN RAFAEL’S RESPONSE TO THE MARIN COUNTY CIVIL GRAND JURY REPORT TITLED “MCE, MARIN CLEAN ENERGY: A SERIES OF MISSTEPS HIGHLIGHT NEED FOR GOVERNANCE CHANGES”
RECOMMENDATION:
Staff recommends that the City Council adopt a resolution approving and authorizing the Mayor to execute the City of San Rafael’s response to the Marin County Civil Grand Jury Report entitled “MCE, Marin Clean Energy: A Series of Missteps Highlight Need for Governance Changes.” BACKGROUND:
On June 16, 2026, the Marin County Civil Grand Jury released a report entitled “MCE, Marin Clean Energy: A Series of Missteps Highlight Need for Governance Changes.” The report examines the governance, oversight, and management practices of MCE (Marin Clean Energy), the Community Choice Aggregator (CCA) that provides electricity to most San Rafael households and businesses, as well as those of 37 other member cities, towns, and counties.
The report concludes that MCE’s 34-member Board of Directors has not consistently exercised an active governance role, that the Board ceded significant authority to MCE’s management — including approval authority over the hiring of General Counsel and over many energy procurement contracts — and that MCE management has, at times, been insufficiently transparent with the Board. The Grand Jury found that these governance gaps contributed to MCE entering into energy contracts in late 2024 that increased its annual energy costs by approximately $200 million (more than 25 percent) compared to the prior year, without adequate Board visibility or input in advance.
MCE is governed under a Joint Powers Agreement by its own 34-member Board of Directors, composed of one elected official appointed by each of the 38 member jurisdictions (including the City of San Rafael) plus a Marin County Supervisor. MCE’s Board, not the San Rafael City Council, exercises governing authority over MCE’s policies, budget, management, and energy procurement decisions.
The Grand Jury directed the majority of its 14 findings (F1–F14) and 13 recommendations (R1–R13) to the MCE Board of Directors itself, as the body with legal authority over MCE’s governance. The Grand Jury separately requested that the governing bodies of MCE’s Marin member jurisdictions — including SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
the San Rafael City Council — respond only to Findings F4 and F5, and Recommendations R5 and R6, which concern the expertise and attendance of each jurisdiction’s appointed MCE Board representative.
The City is required to respond to the Grand Jury Report. Penal Code Section 933(c) states in part:
“No later than 90 days after the Grand Jury submits a final report…the governing body of the public agency shall comment to the presiding judge of the superior court on the findings and recommendations pertaining to matters under the control of the governing body.” To comply with this statute, the City’s response to this Grand Jury report must be approved by resolution of the City Council and submitted to the Presiding Judge of the Marin County Superior Court and the Foreperson of the Grand Jury on or before September 16, 2026.
ANALYSIS:
The Grand Jury Report addresses two related sets of governance concerns at MCE: (1) the adequacy of governance, oversight, and internal controls exercised by MCE’s Board of Directors and management, the great majority of which fall under the authority of the MCE Board itself and are not matters within the City Council’s legal authority to remedy; and (2) the expertise, attendance, and engagement of each member jurisdiction’s individually appointed representative to the MCE Board, which is a matter within the City Council’s authority because the City Council appoints San Rafael’s MCE Board representative and alternate.
The City Council does not exercise any governing authority over MCE’s internal policies, its Operating Rules and Regulations, its delegation of authority to its CEO, its hiring practices, its energy procurement decisions, or its Board’s size and composition. Those matters are squarely within the authority of the MCE Board of Directors, which the Grand Jury has separately directed to respond to Findings F1 through F14 and Recommendations R1 through R4 and R7 through R13. The Grand Jury has asked the governing bodies of MCE’s Marin member jurisdictions, including the San Rafael City Council, to respond to Findings F4 and F5 and Recommendations R5 and R6.
The proposed resolution and a draft of the City’s response to the Grand Jury are provided as Attachment 1 to this staff report. Please refer to that attachment for more details on the City’s response.
Approval of the proposed response is consistent with the City Council's Three-Year Strategic Plan, including Objective F.2.5, “Support and explore regional partnerships and intergovernmental collaborations to seek efficiencies in service delivery.” COMMUNITY OUTREACH:
No community outreach is required for the City's response to the Civil Grand Jury report. The City Council's consideration of the response will occur at a publicly noticed meeting in compliance with the Brown Act. Following Council action, the response will be transmitted to the Marin County Superior Court and Marin County Civil Grand Jury and will become a public record.
FISCAL IMPACT:
There is no fiscal impact associated with this required response to the Marin County Civil Grand Jury.
OPTIONS:
The City Council has the following options to consider on this matter:
1. Adopt the resolution approving and authorizing the Mayor to execute the City's response to the Marin County Civil Grand Jury report.
2. Direct staff to revise the proposed response and return at a future meeting.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
3. Provide an alternative direction regarding the City's response.
RECOMMENDED ACTION:
Staff recommends that the City Council adopt a resolution approving and authorizing the Mayor to execute the City of San Rafael’s response to the Marin County Civil Grand Jury Report entitled “MCE, Marin Clean Energy: A Series of Missteps Highlight Need for Governance Changes.” ATTACHMENTS:
1. Resolution, with attached City Response to the Grand Jury Report RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL
APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE THE CITY OF SAN RAFAEL’S RESPONSE TO THE MARIN COUNTY CIVIL GRAND JURY REPORT ENTITLED “MCE, MARIN CLEAN ENERGY: A SERIES OF
MISSTEPS HIGHLIGHT NEED FOR GOVERNANCE CHANGES”
WHEREAS, pursuant to Penal Code section 933(c), a public agency which receives a final grand jury report addressing aspects of the public agency’s operations must, within ninety (90) days, provide a written response to the presiding judge of the Superior Court, with a copy to the foreperson of the grand jury, responding to the report’s findings and recommendations pertaining to matters under the control of the governing body; and WHEREAS, Penal Code section 933(c) requires that the “governing body” of the public agency provide said response and, in order to lawfully comply, the governing body must consider and adopt the response at a noticed public meeting pursuant to the Brown Act; and WHEREAS, Penal Code section 933.05 specifies the required contents of a city’s response to findings and recommendations of a civil grand jury; and WHEREAS, on June 16, 2026, the Marin County Civil Grand Jury released a report entitled “MCE, Marin Clean Energy: A Series of Missteps Highlight Need for Governance Changes,” examining the governance, oversight, and internal controls of MCE (Marin Clean Energy), the Community Choice Aggregator that provides electricity service to the City of San Rafael and 37 other member jurisdictions; and
WHEREAS, the Grand Jury Report directs the City Council of the City of San Rafael to respond to Findings F4 and F5 and Recommendations R5 and R6, which pertain to the financial and energy expertise and meeting attendance of each MCE member jurisdiction’s appointed Board representative; and
WHEREAS, at a regular City Council meeting held on August 17, 2026, the City Council discussed the report’s findings and recommendations pertaining to matters under its control.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of San Rafael hereby:
1. Approves and authorizes the Mayor to execute the City of San Rafael’s response to the Marin County Civil Grand Jury Report entitled “MCE, Marin Clean Energy: A Series of Missteps Highlight Need for Governance Changes,” attached hereto as Attachment 1 and incorporated herein by reference.
2. Directs the City Clerk to transmit the approved response to the Presiding Judge of the Marin County Superior Court, with a copy to the Foreperson of the Marin County Civil Grand Jury.
I, LINDSAY LARA, City Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the City Council of the City of San Rafael held on the 17th day of August 2026, by the following vote, to wit:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
______________________
LINDSAY LARA, City Clerk
Attachment:
1. City Response
RESPONSE TO GRAND JURY REPORT FINDINGS AND
RECOMMENDATIONS
REPORT TITLE: “MCE, MARIN CLEAN ENERGY: A SERIES OF MISSTEPS HIGHLIGHT NEED FOR GOVERNANCE CHANGES”
REPORT DATE: June 16, 2026
RESPONSE BY: San Rafael City Council
The Grand Jury Report directs the governing body of the City of San Rafael to respond to Findings F4 and F5 and Recommendations R5 and R6. The remaining findings (F1–F3 and F6–F14) and recommendations (R1–R4 and R7–R13) are directed by the Grand Jury to the MCE Board of Directors, the body with legal authority over MCE’s governance, policies, and operations, and are not matters under the control of the San Rafael City Council. Pursuant to California Penal Code Section 933.05, the City Council of the City of San Rafael responds below to Findings F4 and F5 and Recommendations R5 and R6, to the extent they relate to matters within the authority of the City Council.
GRAND JURY FINDINGS
• The City agrees with Findings F4 and F5.
GRAND JURY RECOMMENDATIONS
• Recommendation R5 will not be implemented at this time, but will be considered further. • Recommendation R6 will be implemented.
Date: _____________________ Signed: __________________________ Mayor Kate Colin
ATTACHMENT 1
City of San Rafael Response to Grand Jury Report Findings and Recommendations “MCE, MARIN CLEAN ENERGY: A SERIES OF MISSTEPS HIGHLIGHT NEED FOR GOVERNANCE CHANGES” August 17, 2026
City of San Rafael Response to Grand Jury Findings and Recommendations Page 2 of 3
RESPONSE TO GRAND JURY FINDINGS
F4. Many Board members have — quite understandably — limited expertise regarding a large and complex company such as MCE.
Response: Agree
The City agrees that MCE’s 34-member Board of Directors is composed of locally elected officials who, like San Rafael’s own appointed representative, generally are not full-time energy or utility finance professionals, and that the technical complexity of MCE’s energy procurement and contracting activities can present a genuine governance challenge.
At the same time, the City believes that the structure of the MCE Board serves an important public purpose. Under the MCE’s Joint Powers Agreement, member jurisdictions appoint sitting elected officials who bring local accountability, knowledge of their communities, and diverse perspectives to MCE’s governance. Effective oversight therefore benefits from both appropriate technical and professional support and meaningful representation of the diverse communities served by MCE.
The CIty of San Rafael supports continued efforts to ensure Board members have access to the information, training and professional expertise necessary to fulfill their responsibilities.
F5. All MCE Board members are local elected officials who face competing demands on their limited time and resources; as a result, meeting attendance has often been poor, and insufficient for optimally effective governance.
Response: Agree
The CIty recognizes the Grand Jury’s concern in this area, and that regular attendance and active participation are important responsibilities of Board service. The City of San Rafael expects its representative(s) to participate regularly in MCE Board meetings while, at the same time, fulfilling their responsibilities to the CIty Council, the residents they serve, and other public bodies. Despite these competing demands, the City considers consistent participation an important component of effective representations.
RESPONSE TO GRAND JURY RECOMMENDATIONS
R5. By December 31, 2026, all of MCE’s Marin jurisdictions (and preferably, all 38 jurisdictions covered by MCE) should implement a process by which its appointed Board member (or, in that person’s absence, the designated alternate member) commits to attending each regular Board meeting.
This recommendation will not be implemented at this time, but will be considered further.
The City Council considers regular attendance and active participation an important responsibility of its MCE representative(s) and will continue to communicate that expectation in making future appointments.
City of San Rafael Response to Grand Jury Report Findings and Recommendations “MCE, MARIN CLEAN ENERGY: A SERIES OF MISSTEPS HIGHLIGHT NEED FOR GOVERNANCE CHANGES” August 17, 2026
City of San Rafael Response to Grand Jury Findings and Recommendations Page 3 of 3 However, the City Council does not believe it would be appropriate (or practical) to require a binding commitment to attend every regular MCE Board meeting as a formal condition of appointment. Because the appointee is a sitting elected official whose attendance may, on occasion, be unavoidably affected by scheduling conflicts with City Council meetings, other public obligations, illness, or personal circumstances.
The City notes that because Recommendation R5 contemplates a uniform process applicable across all 38 MCE member jurisdictions, this matter is most appropriately and consistently addressed by the MCE Board of Directors itself — for example, in connection with the governance assessment that the MCE Board has commissioned — rather than through 38 separately devised local processes.
The City further notes that under Article III, Section 3 of the Marin Energy Authority Operating Rules and Regulations, a Director may be removed for cause if they have three consecutive unexcused absences from MCE meetings. The City Council will consider adopting a formal attendance expectation for its appointee if and when MCE amends Board-wide attendance norms or expectations applicable to all member jurisdictions.
R6. By December 31, 2026, all of MCE’s Marin jurisdictions (and preferably, all 38 jurisdictions covered by MCE) should reassess their appointments of chosen Board members to prioritize those with the most extensive financial and energy expertise.
This recommendation will be implemented.
The City Council will continue to consider relevant financial and energy expertise as factor in its appointment to the MCE Board, consistent with this recommendation.
The City Council’s existing process for appointing its representative and alternate to the MCE Board, like its process for all other outside-body appointments, considers each prospective appointee’s relevant background and subject-matter familiarity, including any financial, energysector, or utility experience, alongside other factors the Council weighs in making such appointments.
At the same time, MCE’s governance structure intentionally and appropriately places locally elected officials on its Board. Those officials bring democratic accountability and community knowledge to the decision-making process. Effective governance benefits from combining this representation with a strong professional staff, appropriate technical resources, Board education, and access to relevant financial and energy expertise.