Palo Alto Weekly: Supreme Court won't hear Palo Alto power case
Publication Date: Jan 19, 1994

UTILITIES: Supreme Court won't hear Palo Alto power case

City had argued it stood to lose $169 million

The U.S. Supreme Court last week refused to hear a case which Palo Alto had argued in previous lower court cases could cost the city up to $169 million.

The case stretches back almost 10 years and involves a disagreement between Palo Alto and its primary power supplier, the Western Area Power Association, over the city's right to electricity.

Despite the high court's decision not to consider the case, attorneys representing Palo Alto and five other Northern California cities and a Plumas County electric cooperative in the legal dispute said it's unlikely any of them would ever be denied power.

Under a memorandum of understanding the two sides signed in 1985, Palo Alto and the other agencies accepted a set allocation of hydroelectric power with a certain amount built in to accommodate growth.

Of that, 80 percent of the allotment from the Power Association could not be taken away under any circumstances. The remaining 20 percent, however, was not afforded the same protection.

The disagreement arose over what circumstances the Power Association could extract that 20 percent from the local agencies to use elsewhere.

According to the agreement, the initial allocation Palo Alto and the other agencies received appeared high enough that none of them risked ever being left with a power shortage.

At least that's what U.S. Department of Justice attorneys had argued in defending the agreement. They had failed in an early decision, but triumphed on appeal to a federal court. That set up the Supreme Court bid.

The cities, including Redding, Roseville, Biggs and Gridley, and the cooperative sought to remove any risk from the agreement.

According to Ruben Goldberg, the Washington, D.C. attorney representing the cities and the cooperative, Palo Alto had argued it would have to pay up to $169 million to purchase electricity taken by the Power Association.

The amount represented what Palo Alto said it would have pay to buy electricity from PG&E or other sources. Justice attorneys, however, contended the amount was inflated. Redding said it would have to pay $83 million.

Despite the legal conflict, Ed Mrizek of the Palo Alto Utilities Department, said the city and the Power Association are currently working on a new agreement to supply Palo Alto with a secure source of electricity.

--Rufus Jeffris 

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