The California Court of Appeal, Second Appellate District, recently ruled that Southern California Edison (SCE) incorrectly calculated taxes it was responsible for collecting from residents of Torrance, but left collection of the missing money up to the city.
In calculating the local electricity tax owed by Torrance residents, SCE first subtracted an annual credit related to the state’s greenhouse gases emissions policy, according to court documents. The appellate court partially overturned a lower court decision, ruling that SCE should have calculated the tax based on what customers owed without considering the credit, but left in place the determination that Torrance needed to collect the missing taxes from consumers, rather than directly from SCE.
“We agree with Torrance that the electricity tax ordinance cannot reasonably be construed in the manner proposed by Edison and adopted by the court,” the appellate court decision states. “We agree with Edison, however, that Torrance cannot recover unpaid taxes from Edison and must instead amend its complaint to include electricity consumers as defendants. Accordingly, we reverse and remand for further proceedings.”
David Song, and SCE public information officer, told the Southern California Record that he could not comment on the company’s legal strategy.
"Southern California Edison (SCE) is a pass-through entity as it relates to utility user taxes collected on behalf of local franchising authorities in its service area,” Song said by email. “The company is committed to protecting its customers from unnecessary costs that detract from the state’s goal to reduce harmful carbon emissions and a transition to a clean energy future."
Song said that the intent of the credit provided is to encourage residents to take actions that combat climate change, and that the company seeks to uphold the spirit of the program.
"The California Climate Credit was created by the state of California to protect residents from energy cost increases and to provide additional opportunities to take advantage of energy and money-saving upgrades that help fight climate change,” he said by email. “SCE will continue to ensure that climate credits are distributed to customers in a fair and equitable manner."
As a means of rectifying the underpaid taxes, the appellate court granted Torrance the opportunity to amend its complaint to include its residents as defendants in the complaint.