Environmentalists say MCE, formerly known as Marin Clean Energy, is masking a reliance on fossil fuels that produce climate-warming emissions.

Climate activists who have tracked MCE for years say the California Energy Commission’s annual “power content label,” which MCE cites for its carbon-free credentials, excludes hundreds of millions of dollars MCE pays each year for primarily gas-generated power.

“Board members would have no idea that many of these transactions are directly or indirectly with natural gas plants, much less that such transactions include direct financial support for natural gas plants in disadvantaged communities within MCE’s service territory,” Nick Pappas, a San Anselmo energy consultant, said in a recent letter to MCE’s 34-member board.

The Marin Conservation League estimates the core of MCE’s renewable energy mission, its long-term clean supply — from solar, wind, hydro, geothermal and biomass sources — provides less than half of the electricity the public agency procures for 1.8 million consumers. The service area includes Marin, Contra Costa, Napa and Solano counties.

“That’s kind of a harsh picture,” Dan Segedin, the Marin Conservation League’s energy contract expert, told the San Anselmo Climate Action Commission during a presentation in March. “If you just look at the long-term PPAs (power purchase agreements), you’re 36% carbon-free.”

MCE has other energy supply contracts that could raise this figure, he said, but it appears to be below MCE’s public statements and energy plans advertising 60% to 100% renewable power.

“MCE is not masking its procurement activity,” said Jenna Tenney, MCE communications director. “Our financial hedges and RA (resource adequacy) are publicly reported in board and committee meetings and are distinct from the energy supply we deliver to customers.”

MCE emphasizes its clean credentials by citing the California Energy Commission’s “power content label.” MCE’s 2024 label, its latest, reported virtually zero carbon emissions. The agency compares its label of energy sources and emissions to a “nutrition label.”

However, it is not a simple tally. Some energy sources and emissions are reported. Other supplies are not counted. Clean credits can be applied before totals are final.

The label counts all contracted clean energy resources. It does not count “unspecified power” supplied from California’s grid because it is not tied to a specific generating source. However, the label notes such “unspecified power” is “primarily fossil fuel.”

It also counts renewable energy credits and other greenhouse gas-free attributes. These can offset the carbon in other energy supplies before producing the totals. During the past two years, MCE has spent $330 million on these contracts to boost its green credentials, the Marin Conservation League has said, citing MCE data.

The result is a reported annual portfolio that looks cleaner than the underlying electricity MCE relies on, the group has said.

When asked in public what was inaccurate about this characterization — detailed in letters to MCE’s board — top executives did not want to discuss it.

“We are going to be describing our power resources based off of the power content label and those CEC power source disclosure rules,” Jamie Tuckey, MCE’s “chief customer officer,” said at a March orientation for new board members.

“MCE has met its disclosure obligations under this program,” said Michael Ward, a CEC spokesperson. “But … retail suppliers have not been required to directly report energy from hedges.”

Hedges are contracts that allow MCE to lock in the price of the grid power when its clean supply is insufficient to meet customer demand.

In the MCE fiscal year ending March 31, $267 million of its $766 million energy budget was for hedges, staff reports said. In the current fiscal year, the $632 million energy budget allocates $225 million for hedges, staff said.

“This is where MCE is using fossil energy,” Segedin told the San Anselmo commission.

Tenney said it is technically incorrect to describe hedges as energy contracts: “They are not purchases of energy to serve MCE customers.”

MCE’s purchases of state-required resource adequacy contracts support the grid, so they do not show up on the MCE power content label, she said.

The most recent California Public Utilities Commission resource adequacy report, from 2023, said 16% of MCE contracts were from “zero-emitting resources.”

“We recognize that the gap between RA and hedge instruments and the PCL can create confusion, and we are committed to continuing to provide public transparency around our full procurement picture,” Tenney said.

“Such semantic debate is a distraction from the merits … raised here of financial relationships with fossil generators,” Pappas wrote to MCE’s board, seeking an open discussion.

Segedin told the San Anselmo climate commission that the 36% clean energy figure came from data in slides from recent staff presentations to board subcommittees.

MCE’s power content label says it emits 1 pound of carbon dioxide gas per megawatt hour, compared to a “California utility average” of 359 pounds.

Without credits, MCE emissions would be 606 pounds, the slides said. The California Energy Commission’s approximate standard for gas plants is 944 pounds.

“If you stop here, by one estimate, MCE is only 36% carbon-free,” Segedin said.

“If you want to make good claims on the power content label, there’s a gap you’ve got to fill,” he said. That is where credits come in, he said.

“This is trading rights to claim assets or to claim cleanness on the power content label,” Segedin said. “This is what we call reshuffling.”

MCE has repeatedly denied that its short-term contracts amount to little more than buying credit for clean generation already on the grid.

“MCE’s Board has set policy to reduce greenhouse gas emissions through a variety of strategies,” Tenney wrote to the board this winter. “One is to remove renewable volumes from the market and add them to our portfolio, increasing market demand for renewable energy to be built. Purchasing renewable energy from existing, available resources is often more cost-effective and less risky than new-build resources.”

However, officials at other California not-for-profit energy agencies have criticized this carbon-offsetting strategy for years.

Tom Habashi, chief executive officer of Monterey Bay Community Power, called the practice “an accounting exercise with no environmental benefit” in a 2020 letter to his board.

“Appearing to be carbon free is simply not enough,” he said.

George Tyson, a Silicon Valley Clean Energy director, told his board in February it was more important to invest in new generation — “not just doing a shell game.”

At the San Anselmo climate commission meeting, Ford Greene, a former mayor and former chair of the MCE technical committee — which oversees its energy contracts — said the Marin Conservation League analysis was accurate and disappointing.

Greene said that when he was on the MCE board, he “worked really hard to get rid of” renewable energy credits.

“I thought they were B.S.,” he said.

“We’ve been plugging MCE clean energy,” said Sue Saunders, chair of the town commission. “I guess the question for us as a commission is, do we continue recommending?”