Glendale must pay back residents nearly $57 million for illegal energy rate increase, judge rules

A judge ruled Friday that the city of Glendale must pay back residents almost $57 million for violating state law when it issued an energy rate hike in 2013 as well as return $1.7 million in illegally transferred monies from Glendale Water & Power’s waterworks fund to the city’s coffers.

In a tentative ruling made last year, L.A. Superior Court Judge James Chalfant stated that Glendale had violated its charter when it transferred $85 million from the electric revenue fund to its General Fund during fiscal years 2010-14.

As a result, a 2013 electric rate increase — which included the General Fund transfers as an operating cost — was ruled in violation of Proposition 26 because the transfer was not related to the cost of providing electric service and required a two-third majority approval by voters.

Join the conversation on Facebook >>

“The transfer cannot fairly be described as cost of providing electric service,” Chalfant wrote in the ruling. “Any contrary conclusion would defeat the purpose of Proposition 26 by permitting a city to drain monies from its public utility as an alleged cost and then impose that cost on the utility’s customers without a vote from the electorate.”

The Glendale Coalition for Better Government filed the lawsuit in 2013 and sought the return of all $85 million transferred from the electric works revenue fund, more than $7 million returned to the waterworks revenue fund, as well as a repayment to those who paid into the 2013 electric rate hike.

“We are vindicated that the judge ruled in our favor on all the issues we have raised,” said Roland Kedikian, a coalition board member. “We repeatedly told the council that those transfers are improperly being done ... We continuously said, at the time, when they raised the electric rates, those transfers cannot be included in the [cost of service analysis].”

The proposed judgment on Friday granted relief only for the Proposition 26 violation, asking that Glendale begin the process of issuing $56,949,600 plus interest in credits to active utility payers over the next three years. Chalfant granted only one year’s worth of refunds, $1.7 million, to the waterworks revenue fund.

The judgment also compels the city to adjust its funding and accounting practices in order to maintain compliance with its charter.

The Glendale City Council must first vote on whether or not to file an appeal before residents can expect any electric rate credits.

The city is likely to appeal with direction from the council, according to city spokesman Tom Lorenz.


Jeff Landa,

Twitter: @JeffLanda