DWP to Repay the Millions It Overbilled

City officials have agreed to pay $44 million to settle a class-action lawsuit accusing the Los Angeles Department of Water and Power of over-billing thousands of its customers for water, electricity and other utility services, attorneys announced today.

It’s the second time in a few days that the city has agreed to repay millions to its residents. Last week Los Angeles agreed to pay up to $92.5 million to taxpayers and attorneys to settle a long-running lawsuit over a city telephone tax under a tentative settlement proposal given preliminary approval Thursday.

LADWP customers will not have to file any claims to receive refunds, which will be paid out automatically. Customers would need to apply to get reimbursed for any additional costs related to dealing with the overbilling problems, authorities said.

“Families and small businesses have enough financial stress,” said attorney Jack Landskroner, who helped negotiate the settlement deal for LADWP customers. “We set out to make sure every customer would be made whole. Under this settlement agreement, every single customer who was overcharged will have their money returned.”

DWP officials said the average rebate for customers would be relatively small, around $10.

LADWP’s $181 million overhaul of its 40-year-old customer billing system -- handled by consultant PricewaterhouseCoopers and rolled out in 2013 -- was marred by numerous inaccurate or missing bills, the attorneys said.

LADWP’s phone lines were swamped with calls complaining of the errors, leading to hold times on the utility’s customer service phone lines that often lasted up to an hour.

The settlement also requires that an independent audit be done on the accounts of the LADWP’s 1.6 million customers. The utility also needs to pay for a $20 million “comprehensive overhaul” of its billing system and put in new rules in place for billing customers.

A third party will monitor whether LADWP fully complies with the settlement terms over the next 18 months.

Landskroner was involved in investigating PricewaterhouseCoopers in 2009 for its handling of the Cleveland Water Department’s billing system overhaul, which also experienced problems.

Los Angeles City Attorney Mike Feuer sued PricewaterhouseCoopers in March, accusing the accounting firm of misrepresenting its ability to implement the new billing system for LADWP. If the city prevails in the lawsuit, it may be able to recover the $44 million in settlement costs, according to attorneys who brought the class-action lawsuit.

PricewaterhouseCoopers’ attorney Daniel J. Thomasch earlier this year called the city’s lawsuit “meritless,” contending it was a “transparent attempt by the DWP to shift blame away” from the utility.

LADWP General Manager Marcie Edwards said the city is “continuing our legal action to seek recovery of all costs associated with the proposed settlement as part of ongoing litigation against Pricewaterhouse Coopers (PWC), the firm hired to perform the system integration and replacement of LADWP’s customer information and billing system.

“The settlement makes clear specific areas where PWC failed to provide key functionality or made critical errors that resulted in overcharges or the inability to quickly refund customer credit balances,” she said.

City News Service