Dick Spotswood: MCE should reconsider board’s structure

Last week, the IJ published a four-part investigative series on MCE. Formerly known as Marin Clean Energy, the three-letter acronym was adopted after the public agency expanded into Contra Costa, Napa and Solano counties. The agency is not an energy generator, it’s an “energy provider” whose product is 60% to 100% renewable energy.

Despite its independent business model, MCE uses Pacific Gas and Electric Co. wires to deliver energy and to bill ratepayers. MCE has over 1.5 million customers, 99,000 of whom are in Marin. That represents 82% of our county’s energy customers. I acknowledge that my home isn’t one of them.

The news stories put a spotlight on a public agency in turmoil. Despite a preposterous governing structure, its environmentally positive mission is admirable. Its real-world impact on improving the environment is dubious.

Today we’ll analyze MCE’s governance. Next Wednesday, I’ll examine whether MCE delivers the environmental benefits promised by an agency with a $837 million annual budget.

Like other regional and Marin-only public governments, MCE’s 34-member unpaid board is entirely composed of elected officials. That oddly huge membership guarantees a dysfunctional board that can’t provide effective oversight. One negative result: For MCE management, transparency may be discussed as a core value, but in practice, it doesn’t appear to be the case.

When founded in 2010, it was planned for energy delivery in Marin. It had 12 directors representing each of Marin’s 11 municipalities and county government. When the agency expanded by adding three other counties, that model persisted. Its board consists of 30 council members and four county supervisors.

In most town councils, the mayor assigns council members to liaison assignments including MCE. Some of those assigned are truly interested in energy, a few may have useful professional expertise and some who are politically ambitious use board status to enhance their green credentials.

The status quo is a fiasco. A good government reform would cut the board size from 34 to nine. Four selected from each of the four counties’ council members. One, a county supervisor, would rotate among the counties every four years. Lastly, each county would appoint four public members who possess professional expertise in energy-related fields, the law and/or corporate-scale finance.

A 2014 study commissioned by the Wall Street Journal found that smaller corporate boards are more effective. Among the benefits that apply to public agencies including MCE, “They’re more likely to identify and act on poor performance of the CEO. There’s less chance of a dominant member swaying the group and problems with groupthink.”

Most of the critical analysis of MCE’s management, including its longtime CEO Dawn Weisz, comes from Marin’s MCE directors. Given Marin’s demographics, many of its elected council members have deep experience in the private sector.

A statewide environmentally oriented think tank, The Clean Coalition, found, “Average wholesale energy prices have been falling for multiple years.” While prices are volatile, the overall trend is downward. Simultaneously, MCE’s charges to ratepayers have been upward.

One MCE director who pursued these anomalies is Ross Councilmember Matt Salter, a chartered financial analyst. His reward? Salter was dumped from MCE’s board by his own council based on four anonymous complaints over his deep dive into MCE’s finances.

Keep your eye on three current Marin MCE directors who understand their fiduciary duty is to examine the agency’s operation and finances and then communicate their findings to the public: Larkspur Councilmember Stephanie Andre, an investment banker; Belvedere vice mayor and former investment banker Sally Wilkinson; and Marin’s newest MCE director, Sausalito Councilmember Jill Hoffman, who is an attorney.

Salter stated that “boards are responsible for governance. The management team needs to report to the board. Not the other way around, where management, the CEO, is running the show, running roughshod over the board.”

On Wednesday we’ll review MCE’s “green” claims and propose an independent audit overseen by Marin County’s Civil Grand Jury.

Columnist Dick Spotswood of Mill Valley writes on local issues Sundays and Wednesdays. Email him at spotswood@comcast.net.