City of Arcata v. Pacific Gas & Electric Co.

Sixteen California cities and Sacramento County sued Pacific Gas & Electric Company (PG&E) in California Superior Court, asserting that that PG&E unlawfully diverted tens of millions of dollars that it collects each year from utility users and that are owed to the local governments under their electricity tax ordinances. The amounts allegedly withheld by PG&E are amounts that its users pay with greenhouse gas credits issued under California’s Global Warming Solutions Act of 2006, pursuant to which the Public Utilities Commission developed three financial assistance programs for electric utility customers affected by increased rates due to the cap-and-trade program. The plaintiffs contended that their electricity tax ordinances apply to total charges for electricity consumed by PG&E users, regardless of whether customers pay by cash or by application of a greenhouse gas credit. The plaintiffs alleged that PG&E’s conduct undermined “the goals of California’s greenhouse gas law to reduce use of carbon-intensive power.”