LOS ANGELES (CN) — A Los Angeles County judge Friday preliminarily approved $67.5 million in credits and refunds for utilities customers who were overcharged in the botched rollout of a new billing system three years ago.
Superior Court Judge Elihu Berle granted preliminary approval to a class settlement for customers who said faulty meter readings overcharged them in a system designed and implemented by Pricewaterhouse Coopers (PwC).
The L.A. Department of Water and Power blamed PwC for failing to properly manage the system. The city is seeking legal costs against the vendor.
The Department of Water and Power ignored state and municipal laws by imposing rate hikes on customers based on inaccurate readings, and threatened to cut off their electricity and water if they did not pay the bills, the consumers said in their lawsuit.
“Early on in our billing system rollout, the system did estimate some bills,” the Department of Water and Power conceded on its website. “Estimated bills found not to be accurate were canceled and we re-billed those customers according to the physical meter data.”
Customers who were overcharged will receive a credit under terms of the settlement. People who are no longer customers will get refunds, the department said in a statement Friday.
If a customer disputes the amount of the refund an independent assessor will decide, and if the refund or credit is still in dispute, a judge will make a final call.
Department of Water and Power general manager David Wright said he was “very pleased with Judge Berle’s decision today, because it moves us a step closer to reimbursing every affected customer every penny they were overcharged.”
He added: “We remain committed to holding Pricewaterhouse Coopers accountable and are seeking full reimbursement of all of the overcharges and costs caused by the failed system they designed and delivered to LADWP.”
The settlement is subject to the court’s final approval. Customers can expect to receive notification letters in the spring of 2017 and credits and refunds in the summer, the department said.
Santa Monica nonprofit Consumer Watchdog, however, criticized the settlement, saying it would take nearly a year for customers to get their refunds and credits.
In addition to the $67.5 million, another $42 million will go to computer consultants and an independent monitor, and up to $19 million in attorneys’ fees.
The settlement provides no explanation about how the billing system went wrong or how the department will prevent further billing errors, Consumer Watchdog said.
“The settlement is an outrageous example of lawyers and insiders larding themselves at the public trough,” Consumer Watchdog president Jamie Court said in a statement. “Meantime, ratepayers are at the back of the bus — they don’t get paid back with interest, and they have to wait until late 2017 to see a penny. The public deserves the right to know what went wrong and ratepayers deserve interest on stolen money.”
In a Nov. 17 letter to Mayor Eric Garcetti, the group said that Water and Power showed “systemic callousness” toward its customers.
A resident of Northridge was admitted to an emergency room with high blood pressure after receiving two bills that totaled $30,000, Consumer Watchdog wrote in the letter to Garcetti.
The ratepayers’ attorney Tom Merriman said in an interview Friday that the settlement amount is a “floor.”
“It’s going to continue to grow,” said Merriman, with Landskroner Grieco Merriman. “Customers can also bring claims for damages caused by overbilling, and that’s part of the process.”
Merriman accused the consumer group of “grandstanding,” and said the attorney fee award was a “cap” and that Judge Berle will decide the fees after final approval of the settlement.
“It doesn’t mean everyone’s getting $19 million,” Merriman said. “Judge Berle made it clear again today, he’s deciding attorney fees. There’s a lot of grandstanding going on with Consumer Watchdog over attorney’s fees.”
A news release announcing the settlement included a link to a web page explaining it in more detail. As of Friday afternoon, however, the link led to a “site coming soon” message with no information about the settlement.
Water and Power said customers could call (844) 899-6219 for information.