L.A. Power & Water Will Refund $44 Million

LOS ANGELES (CN) - Los Angeles Department of Water and Power will pay $44 million to settle claims that it overcharged tens of thousands of customers in the botched rollout of a new billing system.

The water agency overbilled customers by $44 million because of inaccurate estimates of water use, and threatened to cut off their electricity and water if they did not pay the bills.

The largest public utility provider in America, the LADWP serves more than 3.8 million people and employs more than 8,600 workers.

The settlement requires an independent audit of all 1.6 million of its customer accounts. The utility will spend another $20 million to overhaul its billing system, according to the class's Cleveland, Ohio law firm, Landskroner Grieco Merriman.

"Families and small businesses have enough financial stress," said consumer rights attorney Jack Landskroner. "Under this settlement agreement, every single customer who was overcharged will have their money returned.

"Thankfully, the LADWP took the overbilling problem seriously and understood both the legal and moral obligation to right this injustice and resolve this matter in the best interests of the ratepayers."

L.A. Water and Power said it overcharged customers because the new system inaccurately estimated bills. Customers claimed the utility threatened to cut off their electricity and water if they failed to pay the inaccurate bills .

The utility issued a report blaming the billing errors on the project management team, claiming the vendor hired to implement the new system, PricewaterhouseCoopers, "lacked the necessary experience to manage a task of such complexity."

Los Angeles City Attorney Mike Feuer sued PricewaterhouseCoopers in March after the city discovered defective coding in the billing system. The city hopes to recover the costs of the settlement by winning the case.

The utility's general manager Marcie Edwards said the billing system had "caused problems and headaches for far too many of our customers."

"With this agreement, every customer who was affected will receive 100 cents on the dollar," Edwards said. She said credits and refunds will come to about $10 for most customers.

"We are continuing our legal action to seek recovery of all costs associated with the proposed settlement as part of ongoing litigation against Pricewaterhouse Coopers, 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," Edwards said.

The utility's Chief Administrative Officer David Wright says it has refunded or credited $8 million to customers, reducing the amount owed to $36 million.

Court-appointed monitor Paul Bender Consulting, of Arlington, Va. will oversee compliance with the terms of the agreement.

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