In March, 2004, UCAN's (The Utility Consumers' Action Network) executive director, Michael Shames, learned that the City of San Diego had been systematically overcharging residential customers (and undercharging large commercial customers) for sewer bills. When confronted, the city confessed then that it had applied the wrong rates, in violation of state law. In June, 2004, the City Council revised sewer rates -- boosting those of commercial users and lowering those of residents to eliminate the overcharges to residents. But the city did not offer to reimburse residential ratepayers for years of overpayment. So Michael Shames requested a refund last year; when he was turned down, he initiated a class action to get the money reimbursed.

After more than two years of litigation, the City and Shamesl have agreed to a settlement that would return about $40 million to overcharged residential customers and would allow for the creation of independent oversight of City water and sewer operations. The latter may be the most valuable part of this settlement, as it gives City utility customers the ability to effectively question future rate increases.