HomeMy WebLinkAbout3/21/2001 - STAFF REPORTS (23) 9 !/nj
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DATE: March 21, 2001
TO: City Council
FROM: Director of Finance&Treasurer
RE: WAIVER OF 5% UTILITY USERS TAX ON INTERRUPTIBLE ELECTRIC
POWER PENALTIES
RECOMMENDATION:
It is recommended that the City Council approve a resolution endorsing the action of
the Tax Administrator(City Manager or his designee) to waive the City-imposed 5%
Utility Users Tax (UUT) on penalties incurred by Palm Springs businesses for
violations of their interruptible power agreements with Southern California Edison
(SCE)for the past year.
SUMMARY:
This action would endorse the Tax Administrator's proposed action to waive the Utility
Users Tax which was or to be charged to Palm Springs businesses on the interruptible
power penalties.
BACKGROUND:
Many Palm Springs businesses have agreements with SCE which allow, in exchange
for lower rates (the 1-6 rates), their power to be turned off during periods of high
demand. There are significant penalties for not complying with the shut down order.
In the recent and on-going energy crisis,the number and length of the shut downs far
exceeded anyone's expectations. Businesses with interruptible power agreements
were forced to choose between complying with the shut down notices and losing
sales, or keeping the power on and paying penalties for doing so. The California
Public Utilities Commission (CPUC) recently suspended the penalty provisions. SCE
had already charged some penalties and had added the City's UUT to those
penalties.
Under the UUT ordinance,the Tax Administrator has the authority to"adopt rules and
regulations not inconsistent with the provisions of this chapter for enforcing the
payment, collection and remittance of the taxes." (See section 3.32.180). The UUT
Ordinance is silent about whether or not the UUT should apply to interruptible power
penalties. Therefore, any action to waive the UUT on the penalties is within the
authority of the Tax Administrator. The action before Council would endorse the Tax
Administrator's position.
Staff has been trying to contact SCE to determine how many businesses are affected,
how much such a waiver might cost, and what would be the best method of
accomplishing it. Working with SCE, the Tax Administrator will establish a process to
credit the UUT directly to the business that paid it. In any event, the Tax Administrator
and SCE would determine the most efficient method for processing such credits, and
inform the businesses affected.
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The attached resolution endorses the action of the Tax Administrator.
Thomas M. Kana
Director of Finance &Treasurer
APPROVED:
City Manager
Attachments:
1. Resolution
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RESOLUTION NO. 20009
OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS,
CALIFORNIA, ENDORSING THE TAX ADMINISTRATOR'S
ACTION TO WAIVE THE UTILITY USERS TAX ASSESSED
BY SOUTHERN CALIFORNIA EDISON ON PALM SPRINGS'
1-6 CUSTOMERS INTERRUPTIBLE POWER PENALTIES
FOR THE LAST YEAR
WHEREAS, the State of California in general and the City of Palm Springs in particular have
been experiencing escalating energy costs and diminished energy availability; and
WHEREAS, one of the methods used by Southern California Edison (SCE) to manage the
demand for electricity is to require businesses with Interruptible Power Agreements being
charged at the 1-6 rate, to shut down upon notice from SCE; and
WHEREAS, the failure of such businesses to shut down their demand for electricity results in
the assessment of substantial penalties to those businesses; and
WHEREAS, SCE has added the City's 5% Utility Users Tax(UUT) to the interruptible power
penalties; and
WHEREAS, the California Public Utility Commission on January 26, 2001 suspended the
penalty provisions of the 1-6 Interruptible Power Program; and
WHEREAS, the UUT ordinance does not specifically require the collection of the tax on
interruptible power penalties; and
WHEREAS, the Tax Administrator has the authority under the UUT ordinance to adopt rules
and regulations not inconsistent with the ordinance; and
WHEREAS,waiver of the UUT on interruptible power penalties would ameliorate a small part
of the impact of higher energy costs on a number of Palm Springs businesses; and
WHEREAS,the Tax Administrator proposes to waive and/or refund the aforementioned UUT.
NOW THEREFORE BE IT RESOLVED by the City Council of the City of Palm Springs,
endorsing the Tax Administrators proposed action to waive Utility Users taxes assessed by
Southern California Edison on 1-6 customers' interruptible power penalties for the last year.
ADOPTED this 21st day of March , 2001.
AYES: Members Hodges, Oden, Reller-Spurgin and Mayor Bleindienst
NOES: Member Jones
ABSENT: None
ATTEST: CITY OF PALM SPRINGS, CALIFORNIA
By
City Clerk City Manager
REVIEWED&APPROVED AS TO FORM