Court Enters $12.6 Million Judgment Against the City of Palo Alto For Overcharging Gas Utility Ratepayers Without Voter Approval in Violation of Propositions 218 and 26

In a taxpayer action, a judge of the Santa Clara County Superior Court ruled that the City of Palo Alto violated California Constitution article XIII C (“Propositions 26/218”) by imposing, without voter approval, rates, fees, and charges for gas utility service that are more than the reasonable cost of providing the service.  In particular, the Court found that the City of Palo Alto designed its gas rates to finance transfers of money from its gas utility to its general fund for general government services unrelated to the provision of gas service, and that this practice violates Propositions 26/218, an initiative amendment to the California Constitution, in the absence of voter approval.  The Court has found that the City of Palo Alto owes refunds to all ratepayers for the amounts it collected which exceed the City’s reasonable cost of providing gas service.  On June 25, 2021, the Court entered judgment against the City of Palo Alto.  The City of Palo Alto is expected to seek a new trial and/or appeal the Court’s judgment.  Stay tuned.