DWP owes L.A. customers $67.5 million because of rampant overbilling

The Los Angeles Department of Water and Power owes its customers at least $67.5 million in refunds and credits after the utility overbilled them, an independent monitor has concluded.

The latest estimate represents a significant increase from the proposed $44-million class-action settlement announced in August 2015.

The DWP has been plagued by a faulty computer billing system launched in 2013 that overcharged tens of thousands of customers while failing to bill others at all.

Officials said this week that after a year of working with the independent monitor and revising the settlement agreement, customers can expect to get refunds as early next summer.

Under the terms of the settlement, DWP will refund customers 100% of the amount they are owed, officials said. Customers can also file claims for reimbursement if they disagree with the refund amount.

The $67.5-million estimate is “a floor,” said Tom Merriman, an attorney with Landskroner Grieco Merriman, the law firm representing the ratepayers.

He said his team expects “the total value of the settlement to go up,” in part because ratepayers have the right to make claims for “consequential damages” stemming from the billing debacle, such as if a check bounced or if a customer unnecessarily hired a plumber.

Both the plaintiffs’ attorneys and DWP officials said they hope the court will grant preliminary approval to the revised settlement at a hearing Friday.

If the court OKs the settlement, customers affected by the overbilling will receive letters detailing how much money they are owed within 90 business days, Merriman said.

The $23-million increase brings the total estimated value of the settlement to about $90 million, according to court documents. The agreement requires LADWP to spend about $20 million “to remediate and stabilize” its billing system.

Not everyone is satisfied.

Jamie Court, president of Consumer Watchdog, said ratepayers have been waiting years to get refunds and still don’t have a clear sense of what went wrong with the billing system.

Plaintiffs will ask the court to award attorneys up to $19 million — a $6-million increase from a previous version of the agreement — while the independent monitor can be reimbursed as much as $2.5 million, according to court documents. Those fees would be added to the $90 million already allocated by the settlement.

But Court deems those fees excessive. The lawyers in this case, he said, are “creating a very large … bill to enrich themselves.”

“Any extra money should be given to the ratepayers as interest on the three years of waiting,” he said.

Merriman, the plaintiffs’ attorney, said the judge will decide on the level of fees, and they may not total the maximum allowance.

The flawed customer billing system was designed and implemented by PricewaterhouseCoopers, according to the DWP.

In a statement, the nation’s largest public utility said it has partnered with the city of Los Angeles and continues to “pursue full repayment by PwC of … damages” through separate litigation.

City and utility officials have alleged that the consulting firm misrepresented how it could help launch the DWP’s system. The firm’s initial contract with the city was $60 million; it was later increased by $9.2 million.

Earlier this summer, attorneys for the city accused senior managers at PricewaterhouseCoopers of inflating their time records to earn additional payments and spending that money on liquor and prostitutes in Las Vegas.

Representatives for the firm deny any wrongdoing and have called the original lawsuit “meritless.”

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UPDATES:

7 p.m.: This article was updated with reaction from a consumer watchdog.

This article was originally published at 4:20 p.m.