LADWP overcharging settlement means $44 million in refunds

The Reflecting Pool surrounds Los Angeles Department of Water and Power's headquarters in downtown Los Angeles.
The Reflecting Pool surrounds Los Angeles Department of Water and Power's headquarters in downtown Los Angeles.
Kevin Ferguson/KPCC

A class action settlement from the Los Angeles Department of Water means that customers will ultimately be receiving $44 million in refunds for overcharging following a new billing system being put in place in Sept. 2013.

The refunds account for all billing system overcharges, according to the LADWP. The customers whose money will be refunded includes those who didn't notice the errors themselves. The U.S. District court is expected to decide whether to give the settlement a preliminary approval in September, with refunds and credits set to be process by June 30 of next year.

Customers were overcharged for a variety of reasons, according to LADWP, with the main categories including closed accounts, late payment charges, tiered billing calculation errors and estimated bills masking leaks or electricity loss. The amount per affected customer is expected to be less than $10 for most affected customers, according to LADWP.

"We know that the problems associated with our billing system caused problems and headaches for far too many of our customers and we apologize to each and every customer who was affected," LADWP General Manager Marcie Edwards said in a statement.

The settlement also includes an independent audit of all customers' bills and requires LADWP to invest $20 million to overhaul its billing system, according to consumer rights attorney Jack Landskroner in a statement.

"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," Landskroner said in the statement. "The failed computer system hurt families and small businesses throughout Los Angeles."

"It's going to guarantee 100 percent recovery for any customer that was over billed by the department," Landskroner told KPCC. Every LADWP customer in Los Angeles "will have their accounts reviewed and audited to determine if they were affected by the defective billing practices."

Affected customers will then receive a letter notifying them of the amount of money they may have been overbilled. Customers will also have the opportunity to file their own claim independently if people are not notified with a letter, said Landskroner. 

"So if you were overbilled $10 you may receive back $10, but if you were overbilled $1,000 and you paid that bill, you will receive a credit or refund of $1,000," depending on whether you have an open account or a closed account, Landskroner said.  

Landskroner said there have been reports of customers being overbilled in amounts of hundreds and thousands of dollars, while some didn't receive bills for periods of times and were then given lump sum bills.

An independent monitor will verify that DWP meets the settlement requirements, Landskroner said.

A date when customers will begin to receive refunds isn't known.

"I would anticipate that we may see some of the refunds start to occur as soon as 30 days after the final approval is granted by the judge, which may be a couple of months out," said Landskroner. 

Both the city of Los Angeles and LADWP are seeking to recover damages from Pricewaterhouse Coopers due to the accounting error.

"The damages were caused by PWC’s misconduct and failure to properly integrate and convert LADWP’s legacy customer information and billing systems with the new billing system," the LADWP says in an FAQ on its site.

LADWP says that it has issued almost 20 million bills, totaling more than $11 billion, since the new system was put in place.

This story has been updated.