Wednesday, September 22, 2010

City of Los Angeles v. Tesoro Refining & Mktg. Co. (Cal. Ct. App. - Sept. 22, 2010)

Tesoro owns that big refinery that's near Carson. You've seen it. Huge.

Apparently, the refinery straddles the border between Los Angeles and Carson. Which I'm sure is a minor jurisdictional hassle at times.

But I didn't realize it'd be a big hassle. You see, the refinery gets most of its electricity from the DWP (in L.A.), but some of it from Edison (in Carson). But presumably because Edison is charging cheaper rates, the refinery decides that it wants to power the plant with electricity from Edison. Makes sense, right?

Sure it does. So L.A. sues. Claiming that Tesoro has no right to use electricity within the borders of L.A. that it bought elsewhere.

The trial court agrees. It enters an injunction precluding Edison and Tesoro from providing and buying (respectively) electricity from anyone except the DWP for use on the L.A. portion of the refinery.

That just seems silly to me. Both because it just seems wrong as a matter of law and because I don't see why L.A. actually cares. Except for money reasons, of course. If Tesoro wants to buy electricity from someone else, and wants to transmit it over its own electricity lines on its own dime on its own property, why stop 'em?

Again, except for the whole: "Because we can."

But you can't. The Court of Appeal reverses. A city surely has a right to stop a new utility from using public streets and other public facilities without a permit. But that "exclusive franchise" to supply electricity doesn't extend to situations like Tesoro's.