Aug. 17--The Los Angeles Department of Water and Power would credit or refund tens of millions of dollars to customers who were overbilled during the botched rollout of a new billing system, under a proposed class action settlement between the utility and aggrieved customers that was announced Monday.
The department says it wrongly billed $44 million in excessive charges after the new system went into effect. Chief Administrative Officer David Wright says the utility has already refunded or credited some of the money, reducing the outstanding sum that is still owed to customers to $36 million.
Under the proposed settlement, customers who were overbilled would get credit for 100% of the excessive charges on their bills. If they have shut down their accounts, they would be refunded the money.
The utility says that the vast majority of the billing credits and refunds would be small -- about $10 or less -- and that the money would be credited to bills or refunded even if a customer didn't know there was a mistake.
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"It's a home run," said Jack Landskroner, an attorney representing one of several customers who sued the utility over the billing errors. "It's not often you get 100% recovery for customers."
DWP General Manager Marcie Edwards welcomed the settlement as well, saying that it "makes good on a commitment I made to our customers when I was appointed to review every account and make whole any customer who was overcharged."
Most of that money would be credited or refunded automatically to customers. In addition, Landskroner said some Angelenos who incurred other expenses because of the billing problems, such as bank charges for overdrafts when excessive bills were automatically drawn from their accounts, would be able to submit claims for reimbursement.
Customers are expected to be notified of the basic terms of the settlement in October. Under the plan, customers would get refunds or credits by the end of next June.
The deal would also restrict when the utility can demand payment for bills that it was slow to send to customers: Under the proposed settlement, residential customers who had not gotten timely bills from the DWP could only be billed for unpaid charges for the previous nine months, instead of the last four years.
Landskroner said the proposed settlement also would require a fresh audit of 1.6 million customer accounts, tap an independent expert to monitor the audit's progress, and require the DWP to spend $20 million to overhaul the billing system. DWP officials said the utility would also be legally required to meet standards for how swiftly it investigates billing problems and answers phone calls from customers.
"These reforms have teeth," Landskroner said. "We are well aware that this department has not had the best credibility in the community. ... If they are not pursuing these reforms, we have the ability to go back to the judge and make sure their feet are held to the fire."
Wright said the DWP had already been expecting to spend $20 million to fix the problems tied to the billing system, including paying for additional customer service representatives to handle phone calls, and has already hired hundreds of added staffers.
And he said the refunds and credits would not be a financial hardship for the DWP, pointing out that the mistaken charges totaled only about 0.3% of their overall billings over the last two years.
The rollout of the new billing system nearly two years ago led to a deluge of complaints, including inflated, erroneous or delayed bills. When customers called the utility for help, they faced lengthy waits exceeding half an hour on average.
The agency was still reeling from those problems when Edwards was tapped by Mayor Eric Garcetti to head the utility last year. DWP officials say the agency has made big strides since the billing fiasco first erupted: Wright said most problems had been fixed roughly a year ago and typical waits for customer service have been whittled down to a few minutes.
The settlement "goes a long way in regaining the trust of our customers," Wright said.
In the meantime, the city is still suing PricewaterhouseCoopers, the vendor hired to help set up the billing system, arguing that it misled DWP executives about its ability to manage such a complex system.
In reaction to the lawsuit, representatives for PricewaterhouseCoopers have said the allegations have no merit and contend the firm is being scapegoated. DWP officials say they hope to eventually recover all costs tied to the billing errors through that lawsuit.
The DWP has faced four different lawsuits from Los Angeles residents over excessive charges stemming from the billing problems. Utility officials said the proposed settlement, which was negotiated with Landskroner and his client, could resolve all of those claims. The court is expected to decide whether to grant preliminary approval to the settlement in September.
In addition to the refunds and credits to customers, the DWP said the court is expected to award up to $13 million in attorneys' fees in connection with the four lawsuits. The final amount would be determined by the court and awarded by the DWP, which says it plans to seek that money from PricewaterhouseCoopers.
MORE ON DWP:
Four L.A. residents file class-action suits over DWP billing errors
DWP billing system errors add $245 million to uncollected debt
