Power Plant Sues Over Attempt to Tax It

The president of a power plant that overlooks the shoreline in Huntington Beach has asked a judge to toss out nearly all of the ballot language favoring a March measure that would make the plant pay an estimated $2.3-million municipal utility tax.

In fact, the only words that would be left in the ballot pamphlet argument favoring the tax would be: “Vote yes on Measure --.”

Ed Blackford, president of AES Huntington Beach, said the language used by Mayor Pam Julien Houchen and council members Debbie Cook, Ralph H. Bauer, Connie Boardman and Peter M. Green is both false and misleading and amounts to the city trying to impose an “ugly tax” on the corporation.

Blackford’s lawsuit says the city’s argument in a planned voter pamphlet “contains pejorative and libelous attacks on AES and its power plant that undermine the integrity of the electoral process.”

He also asks the judge to remove the measure from the ballot if he agrees that the pamphlet language is unlawful.

Specifically, Blackford objects to the contentions of city leaders that:

* Imposing the tax on AES would help keep down the taxes of other Huntington Beach residents;

* The measure simply makes AES pay the same utility tax paid by all residents and businesses;

* AES is the only business in Huntington Beach that does not pay the utility tax;

* The “plant is ugly, pollutes our air and our ocean”;

* The AES plant has been a blight on Huntington Beach for over 40 years; and

* AES spent nearly $300,000 to defeat a similar measure in the last election, urging voters “don’t be fooled again.”

Blackford’s attorney, Scott Baugh, said the measure “is aimed specifically at punishing AES because the City Council doesn’t like AES.”

During the energy crisis last summer, AES was given fast-track approval by the California Energy Commission to restart two generators that had been idle since 1995.

The city unsuccessfully fought the move, saying the generators would cause excessive pollution and noise.

The city won several concessions from the company, including requirements that air quality be independently monitored and that a noisy, high-emission unit would be used less than originally proposed.

But the city did not succeed in forcing the company to pay $14 million to help offset potential damage to the environment.

The twin generators were scheduled to go into operation in September, but they are still undergoing tests, said Baugh.

If voters approve the measure proposed by a council majority, AES would lose the exemption from the municipal utility tax it now enjoys under city law.

The levy the city wants to apply is a 5% utility tax on the natural gas used by the plant to generate electricity.

The company challenges the fairness of the proposed measure, arguing that it is akin to the city taxing a water utility for providing city residents with water.

If the water company is exempted from paying the tax, the power plant should be also, they say.

The city says AES is a private business, not a regulated utility like the plant’s former owner, Southern California Edison.

Blackford’s lawsuit says that “until Huntington Beach is prepared to enact an ‘ugly tax,’ the aesthetic value of AES’s power plant . . . has nothing whatsoever to do with the propriety of increasing” the taxes it pays.

Councilwoman Debbie Cook said the city’s statement favoring the measure is correct, and any opinions it contains will not be addressed by the court.

“The courts have said unless a statement contains [factual errors] they won’t get involved. I don’t see any arguments of fact that we can’t win.”