July 01--In the wake of the botched rollout of a new billing system at the Los Angeles Department of Water and Power that sent inaccurate bills to many customers, a new report by a watchdog agency says the city must make a host of changes to speed up utility hiring and outsourcing work to prevent similar problems in the future.
The report said a root cause of the billing debacle and its messy aftermath was the sluggish way the agency hires and contracts workers, a problem that city ratepayer advocate Fred Pickel attributes to both municipal rules and union agreements.
As it stands, "the current hiring and contracting processes are too lengthy, but the DWP Board cannot sufficiently change or mitigate these processes," Pickel and his deputy director, Camden Collins, wrote.
Resolving hiring, contracting and other problems has been difficult partly because of rapid turnover in management at the utility, which has skewed the balance of power between management and labor, the report says.
Over the past two years, as the DWP grappled with the bungled rollout and a massive backlog of erroneous bills, it was unable to put enough workers in place to quickly fix the problem and respond to customer complaints, the report found.
Despite extensive efforts to hire and train people faster, customer wait times weren't under control until nearly a year after the billing system was launched, the report said.
The utility needed nearly six months to put in place newly trained, emergency customer service workers -- and a year to make permanent hires. Bringing in new billing department staffers took a year and a half.
To prevent such problems in the future, the agency should pursue changes that will allow it to hire or contract out for workers within 30 days in "dire and urgent circumstances," and hire new staff within six months under "normal circumstances," the report said.
As it stands, the utility can become bogged down in disputes between labor and management when it needs to outsource work quickly to solve a problem, the report found.
Labor leaders have "veto power on a lot of strategic outsourcing," Pickel added in an interview, and have held up such contracts as long as a year.
Pickel also said the DWP needs a backup call center to handle surges in complaints and requests for service. And he recommended changes in how technological projects such as the billing system rollout are managed at the utility.
Change at the agency takes longer than the typical head of the DWP stays around, the report said, making many managers "effectively a 'lame duck' from their first day."
The report suggested altering the relationship between management and labor by requiring high-level managers to have at least seven years of experience operating a utility. City leaders could also use longer contracts -- five years -- in order to stem the turnover in upper management, the report said.
Without change, "the imbalance between labor and management" could "materially impede the DWP from moving out of the last century," according to the report.
If the DWP cannot achieve such changes, the report said, the mayor and the City Council should consider more sweeping reforms, including a completely new system for hiring and alternative ways for governing the utility.
It did not, however, suggest what those alternatives might be. Councilman Felipe Fuentes, who oversees a council committee on energy, said he believed that the DWP needed a fundamental change in the way it was governed.
"I think the problems at the utility are bigger than how we hire .... This utility is managed, in part, by a board, that is appointed by a mayor, that occasionally has to check in with the City Council," Fuentes said.
"It's difficult to govern in that type of environment," he concluded.
Marcie Edwards, who took over as general manager of the utility last year, thanked Pickel for his report and said she and the Board of Water and Power would review the recommendations this month.
"Some are already underway, while others will take further consideration," Edwards said in a statement released Wednesday.
Edwards said the DWP had taken steps to create a stronger program management office, as recommended in the report, and had recently appointed a chief administrative officer who would help strengthen control over customer service and other utility functions.
Brian D'Arcy, the head of the International Brotherhood of Electrical Workers Local 18, which represents DWP employees, could not be immediately reached for comment.
In response to questions from city lawmakers, Pickel found that the money spent on outside contractors and utility staff to roll out the new billing system was reasonable. However, he said the amount of revenue lost because of the billing errors "will not be known for some time."
The report did not draw conclusions about how vendors hired by the city to develop the new billing system had performed, though it did say the city had gotten "misinformation" about system readiness from an outside company before the launch.
City Atty. Mike Feuer announced this year that Los Angeles was suing PricewaterhouseCoopers, the vendor hired to help set up the system, alleging that it misled DWP executives about its ability to manage a complicated utility billing system.
At the time, an attorney for the company called the lawsuit "meritless" and an attempt "to shift blame."
