Published: Saturday January 16, 2016 at 8:10 p.m.

Santa Rosa agreed to a settlement with PG&E on Tuesday over hundreds of customers who weren’t billed properly for local utility taxes.

The City Council accepted a one-time payment from the utility of $145,480 to resolve the matter, which arose after new billing software more accurately identified which customers were located inside city limits. The company is supposed to bill all customers who live in Santa Rosa a tax equal to 5 percent of their bill and turn it over to the city every month. Last year Santa Rosa collected $8.9 million in utility users tax from electric, gas, cable television and non-cellular telephone customers. But when the utility rolled out a more geographically precise billing system, it realized that hundreds of customers, residential and business – that were located inside city limits weren’t being charged the tax but should have been, while hundreds of homes and businesses located outside city limits were also being charged but shouldn’t have been.

The net result was that the city received $68,000 less last year than it should have, the utility estimated. It’s unclear how long the utility had been underpaying the city. The tax has been in place since 1970. The utility said it last year refunded a total of $56,635 to 491 customers who were overcharged.

PG&E representative Joe Horak told the council the errors occurred in some cases when customers called to start utility service and said they were located in the city when they actually weren’t.

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