Seattle City Light customers due refunds

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Seattle electricity customers should receive refunds totaling about $25 million because of an illegal tax imposed by the city of Seattle, a King County Superior Court judge ruled yesterday.

The average residential customer would get between $30 and $60 from such a refund, according to estimates by city officials and plaintiffs in the case. Businesses and institutions would probably get more, but estimates weren't available yesterday.

The ruling by Judge Sharon Armstrong results from a decision in November by the state Supreme Court. In that decision, the Supreme Court found the city created an unconstitutional "revenue-raising ploy" when it started charging Seattle City Light ratepayers for streetlights. The court said providing public lighting was a government function that should have been paid for by general tax revenues, not tacked on to electric bills.

In their unanimous decision, justices said the remedy in the case should be decided by King County Superior Court.

The city started charging Seattle ratepayers for streetlights on Dec. 24, 1999, and continued to do so until the Supreme Court's ruling on Nov. 13. Because the city didn't cut any other taxes when it shifted the cost of streetlights to City Light, the move freed up $6 million a year for other government programs.

Armstrong's ruling was a mixed bag for the parties involved. Her decision on the amount of the unlawful tax favored the city, which argued the figure should be $24 million. Plaintiffs, who were led by former City Light employee Rud Okeson, contended ratepayers were owed $41.5 million.

But Armstrong ruled against the city on the matter of how to remedy the problem. City lawyers said the money should go to City Light, where it would help the municipal utility's financial health and forestall future rate increases. Plaintiffs said the money should be returned to the pockets of City Light customers. Although Seattle City Light has customers in suburbs such as Shoreline and Tukwila, Armstrong's ruling applies only to ratepayers in Seattle.

City lawyers said it would be a costly and logistical nightmare to track down all the City Light customers who had been illegally charged for the cost of streetlights for four years.

Plaintiffs disagreed. "Most customers are relatively stable, and for those customers it shouldn't be a problem determining where they are," said Okeson.

Armstrong did not decide how and when to refund the money. She left that and several other matters for a jury to decide in the second phase of the case.

In their lawsuit, plaintiffs also argued that city officials used City Light as a "cash cow" and charged it for a variety of expenses that were illegitimate. Armstrong said the mayor's office should not have charged City Light for almost $600,000 in expenses incurred since late 1999. City lawyers said the charges were warranted because the mayor's staff devoted a lot of time to overseeing City Light. Armstrong disagreed, saying the work was of a "general administrative nature."

She also said most of the $2.8 million that City Light spent on art was impermissible. In addition, she said the city's "One Percent for Art" ordinance, which mandates that 1 percent of capital-projects costs go to public art, was invalid because it benefited the general public and not City Light ratepayers.

Bob Young: 206-464-2174 or