Cal.Sup.Ct.;
S225589

The California Supreme Court affirmed in part and reversed in part a judgment and remanded. The court held that the legality of a surcharge added to utility bills and remitted to the local municipality depended on the reasonable relationship between the amount charged and the reasonable value of the property interest for which the municipality sought compensation.

Southern California Edison (SCE) provided electricity to the City of Santa Barbara under franchise agreements that allowed SCE to use city streets and other property. In exchange, SCE paid a franchise fee to the city equal to one percent of SCE's gross annual receipts for electricity sold in the city. SCE and the city later renegotiated their agreement to add an additional one percent to SCE's franchise fee to raise revenues for general governmental purposes. The additional one percent was added as a surcharge to SCE's customers' utility bills. Local utility customer Rolland Jacks filed a class action complaint against the city, alleging that the surcharge violated Proposition 218 by imposing a new or increased tax without first obtaining voter consent.