Riverside Public Utilities customers will be eligible for more than $37 million in refunds, after Superior Court judges found the city has been illegally transferring 11.5% of water revenues to pay for other basic city services.
The decision came earlier this month, when Superior Court Judge Harold W. Hopp ruled in a case brought by Riverside residents in 2019.
The lawsuit alleged the city of Riverside was violating state Proposition 218 by overcharging ratepayers to generate excess water profits for purposes unrelated to providing water. The 1996 law prevents utilities from charging customers more than the actual cost of service.
In May 2023, Judge Craig Riemer ruled the city’s practice violated the law, but didn’t rule on whether the residents who brought the suit had been damaged by Riverside transferring revenues.
The Dec. 3 ruling says customers are eligible for at least $37 million in refunds, and that number could still go up. Judge Hopp will get additional information about funds collected before July 2018 and spent after September 2023 and all parties are expected to meet again next month to discuss the issue.
It’s not clear when water customers would see any refunds.
This is not the first such battle between Riverside residents and the city over utility revenues.
In 2016, a resident sued the city, arguing that if the city-owned utility could give millions each year to the general fund, it was overcharging customers on their bills. A lower court ruled in favor of the city a year later.
And then in 2020, a Superior Court judge ruled that an electricity rate hike being used in part to pay for other city services was an unconstitutional tax. The city ended up paying a $24 million settlement and had to let voters decide about the practice of diverting electrical rate revenues toward other city needs. Voters approved the practice in 2021, with 54.52% of voters saying yes to Measure C.
“Unfortunately, the city keeps doing the same thing it’s being told not to do,” attorney Ryan Kroll, who represents the plaintiffs in the suit, said on Monday. “The City Council voted in 2023 to continue this practice, so it does seem like the City Council hasn’t learned its lesson.”
The city of Riverside declined to comment on Hopp’s ruling, city spokesperson Phil Pitchford wrote in an email, because “litigation is not yet complete.”
More on Riverside utility revenues
- Voters approve Measure A, water fund transfer
- City to get more revenue from utility
- Suit challenges city’s use of electricity payments
- Residents sue to stop Riverside from spending water profits on other city services
- Riverside electric rate increase ruled unconstitutional
- $24 million settlement reached in Riverside electric transfer lawsuit
- $40 million electricity revenue shift to go to Riverside voters in November
- $21.75 million in refunds on way to Riverside electricity customers
