Riverside Electric Transfer Lawsuit Ends in $24M Settlement

Riverside electric customers will soon receive credits toward their electric bills as a result of a recent lawsuit settlement.

Electric customers in Riverside might soon receive credits toward their utility bills as part of a $24 million lawsuit settlement. Additionally, as part of the settlement, voters will decide “whether the practice of using surplus electric revenue to pay for unrelated city services should continue.” The credits would be enough to refund customers for the “extra amount they paid in recent years beyond the cost of providing power to cool and light their homes.” Last year, a judge ruled that the charge in question that led to the surplus electric revenue is “an unconstitutional tax that cannot continue without voter approval.”

However, officials with the city argue that the loss of that money would leave a $32 million hole in Riverside’s budget. Currently, the revenue is being used to “help pay for police and fire protection, street repair, park upkeep, services for the homeless, and youth programs.” 

The settlement was announced by Interim City Attorney Kristi Smith on May 18. It was agreed to with the help of a mediator, which made it possible to avoid a “lengthy appeal at significant cost to taxpayers and letting voters weigh in on the matter.” The agreement will protect Riverside taxpayers and honors “the shared commitment of the parties to public transparency and voter approval.”

Mayor Patricia Lock Dawson praised the settlement announcement and said:

“During these difficult times, our residents want to hear that all parts of our community are working together on the dynamic solutions that put Riverside’s businesses and residents first…couldn’t be more thrilled that all parties have come together to prioritize the best interests of our local utility ratepayers and provide much-needed relief to local taxpayers during a time of recovery from the pandemic.”

The lawsuit itself was originally filed against the city by Summer and Vincent Parada back in September 2019 in an effort to challenge a sudden increase in electric rates. During the pandemic, the city ended up delaying a scheduled rate increase. 

As part of the settlement announcement, Phil Pitchford, a spokesman for the city, said the city will “refund ratepayers over five years and pay lawsuit attorney fees, for a total of $24 million.” The plaintiffs will also be paid $10,000. On top of that, the agreement requires the city to put “a measure on the November 2021 ballot seeking voter approval for shifting surplus electric revenue into the general fund as a general tax.” If the vote fails, it will nullify the settlement. 

It’s important to note, however, that if the measure passes, customers wouldn’t necessarily get refund checks. Instead, the “city would issue utility credits to customers over a five-year period.” According to Pitchford, “those credits would be proportional to amounts customers pay for electricity.” He added, “the city hasn’t calculated what the average residential customer would receive.”

Sources:

$24 million settlement reached in Riverside electric transfer lawsuit

A California Electric Transfer Lawsuit Has Reached a $24 Million Settlement