A former Tacoma mayor, a former city attorney and a former Tacoma Public Utilities director are among those who filed a legal claim against the city this week, asking that Tacoma Power be reimbursed for what they claim is $21 million in subsidies to Click Cable TV during the past several years.
The claim says Tacoma Power has been “unlawfully subsidizing both the capital expenses and the operational and maintenance expenses of the commercial telecommunications business of the Click! Network ... for many years.”
Click, a subsidiary of Tacoma Power, has been losing millions of dollars a year, according to TPU management. Click general manager Tenzin Gyaltsen has said that the cable system’s costs exceeded revenues by $8.9 million in 2015 and 2016.
The claim appears to stem from Tacoma Public Utilities board’s vote last fall on a funding plan for Click’s expansion into selling retail phone and broadband internet service directly to customers. That funding plan assumes Click won’t operate in the black initially, and directs Tacoma Power to support Click with $6 to $10 million in annual subsidies until it gets on its feet.
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Former assistant city attorney Mark Bubenik, who worked for TPU, sent the utility board a letter the week of that vote saying the subsidy was illegal, and warning about potential future legal action. Claims are often precursors to lawsuits.
Click’s infrastructure does provide some benefit to Tacoma Power, which uses it to communicate with substations and the utility’s smart meters. But there is disagreement about how much Click’s wires aid the electric utility, and how much Tacoma Power should have to fund Click as a result. That debate is part of the reason for a pair of audits the City Council ordered of the Click network last fall, which are underway.
The claim alleges that Tacoma Power is contributing more toward Click than it gets in legitimate benefit, said Seattle-based attorney Dave Jurca, who filed the claim on behalf of Bubenik, former mayor Mike Crowley and former TPU director Ted Coates, among others.
To the extent that some of that network is used to support the electric utility we have no problem with it, but it’s the amount in excess of that that we have a problem with.
Dave Jurca, attorney for complainants
“To the extent that some of that network is used to support the electric utility, we have no problem with it, but it’s the amount in excess of that that we have a problem with,” he said. “We are especially concerned about the plans for future expenditures, because of the announced plan to make the Click network bigger and better — and that’s a good thing, and we all would love to see a bigger and better Click network, but not paid for by the electric utility.”
The claim estimates Tacoma Power has subsidized Click to the tune of at least $21 million over the past three years. Jurca said they’re asking that the subsidies stop immediately, and that Tacoma Power be refunded either from the city’s general fund or from “separate funds of Click itself.”
Interim city manager Elizabeth Pauli and Mayor Marilyn Strickland said they could not answer questions about the claim, because they consider it pending litigation.
Utility spokeswoman Chris Gleason said Click does not have separate funds or its own reserves. Power superintendent Chris Robinson said in a memo last spring that because Click is a subfund of the power enterprise fund, formal financial statements for the network are not produced and it does not have a balance sheet.
Jurca has argued similar cases in the past. He was on the winning side of a 2003 case that was cited in a 2015 legal memo from then-city attorney Pauli to the City Council and the utility board about the funding of Click. In Okeson v. The City of Seattle, the state Supreme Court ruled unanimously that operating street lights was a general government function and not directly related to providing electricity to power customers. The city had unlawfully imposed a tax upon the ratepayers, it found. Jurca represented Rud Okeson, a former Seattle City Light manager who sued Seattle over the street lights.
Also signed onto the notice of claim: Thomas H. Oldfield, an attorney and electric ratepayer, and Industrial Customers of Northwest Utilities, a Portland trade group of large industrial users of electricity in the Pacific Northwest, which includes industrial customers of Tacoma Power.