The cities of Shoreline and Lake Forest Park are defendants in a lawsuit contending payments by Seattle City Light totalling $12.7 million to five suburban cities are illegal.
The class-action lawsuit was filed Wednesday, July 27, against City Light and five suburban cities, including Shoreline, Lake Forest Park, Burien, SeaTac and Tukwila.
The plaintiffs, mostly retired city workers, contend that a state law prohibits the suburban cities from charging fees to electric or gas utilities. The suit seeks refunds of the fees paid since 1999 by Seattle City Light to the five cities under franchise agreements.
Lake Forest Park city attorney Mike Ruark said he is still determining the potential impact of the lawsuit and how it may affect the city.
“I am not sure how it would play out; they want money back but I am not sure who would pay it,” Ruark said. “Judgment is up in the air.”
Since there are differing dollar amounts for each city included in the suit, Ruark said all cities will have separate legal counsel.
“The city will defend this vigorously,” Ruark said.
Ruth Bowman, spokesman for Seattle’s city attorney’s office, wouldn’t comment on the lawsuit, but said the payments by the utility, which is owned by Seattle, are legal. She also said that if the franchise agreement is overturned, rate-payers likely will see an increase.
The plaintiffs’ attorney, David Jurca, said they believe state law prohibits a city from charging such fees for electric or gas service.
“We contend the suburban cities should reimburse City Light if the fees are illegal and pay them back,” Jurca said. “We will also be asking that refunds be made to rate-payers.”
According to court documents, Seattle City Light entered into a franchise agreement with Shoreline on Jan. 1, 1999 and with Lake Forest Park on March 1 that same year. The franchise agreements allowed Seattle City Light to use public rights-of-way in the cities for its electric utility business.
The franchise agreements provided that Seattle City Light must pay franchise fees to the suburban city in the amount of 6 percent of the revenue derived from the power portion of Seattle City Light service to customers in that city.
According to court documents, Seattle City Light paid franchise fees to Shoreline for a total of approximately $5,339,183 since 1999 and to Lake Forest Park for about $1,178,561 since 1999.
The franchise fees were unlawful, according to the suit, because it violates a state law that “No city or town may impose a franchise fee or any other fee or charge of whatever nature or description upon the light and power, or gas distribution business…” There are exceptions, however, provided the fee recovers actual administrative expenses incurred by a city.
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