Power revenues can’t be used to pay for Click network’s commercial expenses, judge says

A Pierce County judge has ruled that it is unlawful for Tacoma Power to use electric-utility revenues to subsidize the Click Cable TV network.

The Friday ruling by Superior Court Judge Susan Serko is a victory for a group suing the city and Tacoma Public Utilities over the subsidies.

According to Serko’s order: “Tacoma Power electric utility revenues and funds may not lawfully be used to pay for Click! Network expenses or capital improvements that are attributable or properly allocable to commercial telecommunications services rather than electric utility service.”

The lawsuit, filed on behalf of former Tacoma mayor Mike Crowley, former TPU director Ted Coates and former TPU attorney Mark Bubenik and others, contends Tacoma Power and its customers have been illegally subsidizing Click by using electric ratepayer revenues to pay for capital, operating and maintenance expenses for the telecommunications network, which provides retail cable TV and wholesale internet service.

There is ongoing disagreement about how much of a benefit Click’s infrastructure provides to Tacoma Power and, as coaxial wire used to run the utility’s smart meters is phased out, for how long. A 2015 TPU analysis recommended Click shoulder 94 percent of the costs associated with its commercial operations and that 6 percent be allocated to power-related expenses. Before that, Click was bearing 76 percent of the cost to maintain and operate the fiber and coaxial cable network.

When the lawsuit was filed last June, the plaintiffs asked that Tacoma Power and its ratepayers be reimbursed for more than $21 million in subsidies they contend the utility has given to Click Cable TV over the last several years. Attorney Dave Jurca recently said that number could increase since the subsidies continued after the lawsuit was filed.

TPU management has maintained that Click has been losing millions of dollars a year. Because it’s a subfund of Tacoma Power, when Click loses money, the losses are made up by power funds.

Chief deputy city attorney Chris Bacha said Monday the city is disappointed by Serko’s decision but needs to assess what it means as the lawsuit moves forward.

“The order doesn’t end the litigation. It’s still ongoing, and so we are looking at what the order means and what our options are,” Bacha said. “But beyond that we can’t really say anything because we still have a trial date set for June. In terms of the breadth and scope and what that means for Click and the city, we’re still looking at that, but we don’t have any conclusions yet.”

Jurca, the plaintiff’s attorney, said Friday what happens next could depend on how the city responds to the ruling.

“Still to be determined are the remedies for the unlawful subsidies since February 2014,” he said in an email.

The Tacoma City Council and the public utility board both recently voted to abandon a plan forward for Click that would have used $6-10 million annually from Tacoma Power to help pay for the network’s expansion into a retail cable, internet and phone service. City attorney Bill Fosbre said at the time the city hoped reversing course on that funding plan would be looked at favorably by the lawsuit’s plaintiffs.

The city is getting ready to solicit ideas on how to fund Click as it moves forward since Tacoma Power funding has been legally challenged and the city’s general fund is stretched thin. Members of the City Council and public utility board said options for Click’s future could include a public-private partnership or a public-public partnership. That request for information is expected to be published in early April.

This story was originally published March 5, 2018 at 4:02 PM with the headline "Power revenues can’t be used to pay for Click network’s commercial expenses, judge says."