Boyd v. Central Coast Community Energy

California Court of Appeal·Decided October 25, 2023·No. H050140M·Published

Opinion

Filed 10/25/23 (unmodified opn. attached) CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

MICHAEL E. BOYD, H050140 (Santa Clara County Plaintiff and Appellant, Super. Ct. No. 21CV02057)

v. ORDER MODIFYING OPINION AND DENYING REHEARING CENTRAL COAST COMMUNITY ENERGY, [NO CHANGE IN JUDGMENT]

Defendant and Respondent.

THE COURT: It is ordered that the opinion filed herein on October 4, 2023, be modified as follows: 1. On page 11, the second paragraph shall be deleted and replaced with the following: In his opening brief, Boyd contended that the record on appeal does not contain the administrative record lodged in the trial court and therefore 3CE should be deemed to have not met its burden of proof. In fact, as Boyd implicitly recognized in his reply brief, on September 19, 2022, the administrative record was received in this court. Boyd also complains about the size of the administrative record. While, as a pro se litigant, Boyd’s discomfort with the size of the record is understandable, the record’s size provides no reason for doubting that the trial court’s findings are supported by sufficient evidence.

2. On page 13, the second full paragraph shall be deleted and replaced with the following: The trial court also found that the adjusted rates that 3CE adopted in December 2021 due to increased energy costs did not exceed 3CE’s reasonable costs. Although Boyd challenged this rate adjustment, besides his objection to the loan financing the lease to the Santa Cruz County jail discussed above, he makes no argument in his briefs on appeal concerning the reasonable cost of the adjustment’s increase in rates and therefore has forfeited any challenge to the trial court’s ruling concerning the adjustment. (See, e.g., Tiernan v. Trustees of Cal. State Univ. & Colleges (1982) 33 Cal.3d 211, 216, fn. 4 [“Plaintiff has not raised this issue, however, and it may therefore be deemed waived.”].)

There is no change in the judgment. Appellant requests reconsideration of various issues, but he has failed to demonstrate any material error in the opinion. (See, e.g., San Francisco v. Pacific Bank (1891) 89 Cal.23, 25; Alameda County Management Employees Assn. v. Superior Court (2011) 195 Cal.App.4th 325, 338, fn. 10.) Appellant’s petition for rehearing is denied.

2 ____________________________ BROMBERG, J.

WE CONCUR:

____________________________ GREENWOOD, P.J.

_____________________________ BAMATTRE-MANOUKIAN, J.

Boyd v. Central Coast Community Energy H050140 Filed 10/4/23 (unmodified opinion) CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

MICHAEL E. BOYD, H050140 (Santa Cruz County Plaintiff and Appellant, Super. Ct. No. 21CV02057)

v.

CENTRAL COAST COMMUNITY ENERGY,

Defendant and Respondent.

Over the last five decades, California voters have adopted a series of initiatives limiting the authority of state and local governments to impose taxes without voter approval. (See, e.g., Citizens for Fair REU Rates v. City of Redding (2018) 6 Cal.5th 1, 10 (Citizens for Fair REU Rates).) Among other things, voters added Article XIII C of the California Constitution, which requires local and regional governmental entities to secure voter approval for new or increased taxes (Cal. Const., art. XIII C, § 2, subds. (b)-(d)) and defines taxes broadly to include any charges imposed by those entities unless they fall into one of seven enumerated exceptions (id., art. XIII C, § 1, subd. (e).) The second of these exceptions covers charges for services or products that do not exceed reasonable costs. (Id., art. XIII C, § 1, subd. (e)(2).) Appellant Michael Boyd contends that the electricity rates charged by a regional governmental entity, respondent Central Coast Community Energy (3CE), are invalid because they are taxes under Article XIII C that voters have not approved. The trial court rejected this contention on two grounds: (1) 3CE’s rates are not taxes under Article XIII C’s general definition of taxes and (2) 3CE’s rates fall within the second exception to that definition because they do not exceed 3CE’s reasonable costs. We agree in part. We conclude that 3CE’s rates are taxes under Article XIII C’s general definition of taxes, but they fall within the second exception to that definition because 3CE proved that its rates do not exceed its reasonable costs. Accordingly, we affirm the judgment dismissing Boyd’s claims. I. Background A. 3CE 3CE is a joint powers authority formed by the counties of Monterey, Santa Cruz, San Benito, Santa Barbara, and San Luis Obispo as well as certain cities and towns within those counties. 3CE, originally named Monterey Bay Community Power, exercises the authority of these governmental entities to form a “community choice aggregator,” which combines the purchasing power of participating customers in negotiating with privately owned electrical utilities. (Pub. Util. Code, § 366.2, subd. (c)(1); see also id., § 331.1 [defining “community choice aggregator”].) In July 2018, after notifying potential customers of their right to opt out of its services and obtain electricity from a privately owned electrical utility (see id., § 366.2, subd. (c)(15)(A)), 3CE began supplying electricity to residential customers. B. 3CE’s Rates In 2018, following a common practice, 3CE set its initial rates using an “ ‘investor owned utility-minus’ model.” Under this model 3CE based its rates on those charged by PG&E, the privately owned electrical utility serving most of 3CE’s service area. To calculate its rates, 3CE took PG&E’s rates, subtracted surcharges compensating PG&E for customers lost to community choice aggregators (such as 3CE), and applied a 3 percent discount. After operating for several years, 3CE developed a new rate model based on its own costs of service. In June 2021, 3CE adopted this cost-of-service model and set new rates based on it. 2 Shortly afterwards, energy prices increased sharply. Accordingly, in December 2021, again using its cost-of-service model, 3CE adopted an adjustment increasing its rates in light of the rising power supply costs. With this adjustment, 3CE projected $412 million in net revenues and an equal amount in costs. $351 million (about 85 percent) of the projected costs were for long-term electrical generation, spot-market purchases, and other power supply costs. 3CE’s costs also included $28.2 million (7 percent) for enterprise expenses and member services costs, $18.5 million (4.5 percent) for rate stabilization, and $14.7 million (3.5 percent) for energy programs. C. The Proceedings Below In August 2021, Michael Boyd, a residential customer who did not opt out of 3CE’s service, filed a petition for a writ of mandate. Representing himself pro se, Boyd claimed that 3CE’s initial rates adopted in 2018 using the “investor-owned utility-minus” model, the rates adopted in June 2021 using the cost-of-service rate model, and the adjustments that 3CE was then considering (and adopted in December 2021) were taxes under Article XIII C that exceeded 3CE’s reasonable costs of service. Because these alleged taxes had not been approved by voters, Boyd contended that they were invalid and should be set aside. After lodging the administrative record with the trial court and filing a declaration from its chief executive officer, 3CE argued that the petition should be denied on the ground that the rates it charges are not taxes under Article XIII C’s general definition of taxes.

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