Huntington Beach voters to decide on AES vendor tax

Mary Beth P. Adomaitis

HUNTINGTON BEACH -- The city could receive about $1.2 million in

additional tax revenue each year if voters approve Measure Q next week.

However, opponents of the measure say it would double tax residents

who already pay a tariff for electricity because the measure would

require the AES Corp. to pay the same 5% vendor tax for its power plant

along Pacific Coast Highway as other private businesses and residents in

the city.

“Since they’re a private vendor, why should they be different than any

other business in the city,” said Councilman Dave Sullivan, a Measure Q

proponent. “They are subject to the same utility tax that cable

television or any other entity doing public work pays.”

Ed Blackburn, president of AES Huntington Beach, said that when his

company took over the local plant from Southern California Edison in May

1998, it was bought under the existing municipal code, which excluded

utility companies that produce electricity from paying the vendor tax.

“The city’s position is that this is a fairness issue now that we’re a

private enterprise,” he said. “Clearly in the past, Edison was exempted.”

But besides being impartial, Blackburn said residents will be

double-taxed if this measure is approved.

“We have to basically suck up that cost to be competitive in the

market,” he said. “Those costs will ultimately end up on the consumer.

They already pay a 5% tax for electricity, but we will have to pass these

costs on.”

City officials disagree.

“All other businesses pay it, and they [AES] are exempt,” said John

Reekstin, the city’s director of administrative services. “When it was an

Edison plant, we wouldn’t want to tax them. But now, they are a private

system.”

The main issue, he added, is that opponents are claiming that

residents would see a 5% increase on their electric bills, which he said

is not true.

“They are not directly selling to Huntington Beach residents,” he

said. “They bid into the California Independent System Operator, and the

lowest rates are charged. This is no longer a monopoly and no longer a

double taxation.”

The AES plant, operating in the deregulated electrical industry,

supplies power to a statewide electrical grid, not directly to Huntington

Beach residents. Proponents said if there were any additional cost, it

would be spread among the millions of electric customers served by AES

throughout the state, not just city residents.

“My knowledge is that this is for all of Southern California, so they

need to tell the truth and tell how much of their electricity goes to

Huntington Beach,” Sullivan said.

Chris St. Hilaire, a consultant to the No on Q campaign, said

Huntington Beach residents in the long run are at a disadvantage, and

that a quarter to a third of the electricity produced by the AES plant

goes to Surf City residents.

He added that according to the National Taxpayers Union, Americans

already pay $16 billion every year in hidden taxes.

“Measure Q is just one more hidden tax on consumers because it will

result in higher energy rates that don’t show up as a line item on our

tax bill,” Blackburn said.

While proponents of the measure, which includes council members Ralph

Bauer and Pam Julien -- as well as Bob Biddle, president of Huntington

Beach Tomorrow, and Tom Livengood, of the city’s Planning Commission --

agree this may have some affect on residents, it won’t be nearly as great

as Blackburn maintains, he said.

“They supply to a very large area of Southern California,” Sullivan

said. “It probably will be passed along to all users, not just Huntington

Beach residents, but probably for just a few cents a month. What is

Huntington Beach getting for that?”

Proponents added that AES is the largest industrial business in the

city, and as such, the plant has a significant effect on the city’s

services and quality of life while producing power for Southern

California.

Opponents added that this is also the wrong time to be increasing the

costs of energy in California.

“Deregulation has sent the price of electricity soaring in San Diego

-- and Orange County could be next,” Blackburn wrote in the opponents’

statement that accompanies the wording of the measure. “Official state

estimates predict that California will be more than 3,000 megawatts of

electricity short over the next 12 months. We need to reduce the price of

electricity -- not raise it.”

Opponents to the measure include Assemblyman Scott Baugh (R-Huntington

Beach) and the Orange County Taxpayers Assn.

A companion to Measure Q is Measure R, which is an advisory

proposition only.

If approved, the City Council will be allowed to use the proceeds from

the utility tax on the AES plant to improve the city’s infrastructure.

However, because it is only an advisory measure, the council doesn’t

necessarily have to use the money in that manner. The estimated $1.2

million will be put in the city’s general fund, officials said.