* -- Results: City contests

* -- South Bay election results

The AES power plant Tuesday won its battle over a Redondo Beach ballot measure that would have forced the company to pay taxes on the gas it uses to generate electricity.

Measure UU, which would have brought an estimated $1 million to $2 million annually to city coffers, fizzled at the polls Tuesday.

With absentee ballots and all 20 precincts counted, the measure had collected only 46.6 percent of the vote. A majority vote was needed for passage.

"We're optimistic," AES Southland President Eric Pendergraft said after the absentee votes had been counted. "For the yes vote to prevail, they're going to have a lot of ground to make up."

Mayor Mike Gin said Tuesday night he was disappointed by the early returns but appreciated the fact that residents took the time to vote on the issue. Residents, he said, may be sending a message to the city to further tighten its belt.

Although the Redondo Beach City Council approved the controversial ballot question with just a few months to go before the election, plant owner AES led a well-funded campaign to defeat it.

Expenses exceeded $186,000, campaign finance records show, with money spent on mailers, advertisements, polling research and political consulting services.

Company representatives challenged the measure in court earlier this fall and have indicated a "yes" vote would prolong their legal fight. They have characterized Measure UU as both a "double hit" to residents and an attack on the plant fronting Harbor Drive.

AES makes electricity under a contract with J.P. Morgan, which sells it to Southern California Edison to distribute to its customers. Opponents say a tax on AES would ultimately force Edison to request a rate hike from the California Public Utilities Commission - meaning it would eventually trickle down to residents.

But city officials contend it's only fair that AES pays the 4.75 percent utility-users' tax on natural gas - and not just on services such as electricity and water usage.

Measure UU would have changed the tax ordinance to eliminate an exemption for companies "conducting the business of a utility."

Officials say the code was meant to exclude Southern California Edison - the former plant owner - from paying the tax on natural gas. But they argue the exemption shouldn't extend to AES because the company does not supply power directly to the public as Edison does.

In August, the City Council voted unanimously to put the measure on the ballot while declaring a fiscal emergency in town. That gave the city momentum to put the issue to a vote this year, rather than wait until the March 2011 municipal races.

Before deciding to put the measure on the ballot, Redondo Beach followed a different strategy for collecting the sizable gas tax.

In 2004, a former council tried unsuccessfully to bill the AES plant for tens of millions of dollars in taxes dating back to when AES took over for Edison in the late 1990s - a move that triggered a series of costly lawsuits.

The cases were finally settled in July 2008.

kristin.agostoni@dailybreeze.com

Originally published by By Kristin S. Agostoni Staff Writer.

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