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Southern California Utilities Face Lawsuits of Transfer Payments


Santa Clara, CA: Southern California utility companies are coming under legal attack for the practice of transferring funds gathered from customers in their regular utility bills, to the City of Los Angeles, on the grounds that the transfers amount to a tax charged to consumers of power and water, which is essentially consumer fraud and illegal under California state law.

According to the LA Times,two lawsuits have been filed this year that challenge L.A.'s annual transfers. Similar cases involving city-owned utilities are also underway in Shasta County. The argument is that the transfers are back-door tax increases designed to get around required approvals from voter. The utilities raise rates, this argument goes, which generates surplus revenue that is sent to city officials to use for general government purposes, the LA Times reports.

The City of Glendale is also facing lawsuits, after its electrical utility sent $20.6 million to the general government fund in 2014. The International Brotherhood of Electrical Workers Local 18, which represents municipal utility workers in both Glendale and LA, alleges in one pending lawsuit that the annual transfer made by Glendale Water and Power requires approval from two-thirds of city voters.

The two lawsuits filed, in January and April, one of which is a class action, are seeking to overturn the DWP practice of supporting the city general fund. The class action is seeking refunds for ratepayers in an equivalent amount as made to the LA City' budget as of February 2014.

According to attorneys representing a group of ratepayers in Redding, CA, municipal utilities in LA, Anaheim, Riverside and elsewhere are legally barred from making transfers from their electrical utilities under Proposition 26, a statewide initiative passed by voters in 2010. The measure says government agencies cannot charge more for certain services than they cost to provide.



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READER COMMENTS

Posted by
janet Herrera
on
how far back can you go for consumer fraud? the water company the services Quail valley, was charging customers for a sewer fee for many years, it showed on your water bill statement. when all the homes are on septic systems.

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