Los Angeles customers overcharged by the Department of Water and Power's flawed new billing system would be ill-served by a $44 million settlement on their behalf, a consumer advocacy group said Monday.
Consumer Watchdog President Jamie Court called on Mayor Eric Garcetti and the City Attorney's office to re-negotiate the DWP's proposed settlement of a class action lawsuit.
A Los Angeles County Superior Court judge is expected to rule on a preliminary settlement agreement Tuesday. The lawsuit over DWP's overcharges is part of the continuing fallout of the agency's deeply flawed billing system installed in September 2013 by accounting giant PriceWaterhouse Coopers.
The proposed settlement repays every dime ratepayers were overbilled, said attorney Jack Landskroner. His Cleveland-based firm negotiated the settlement with DWP and stands to earn a lion's share of some $13 million in legal fees charged on top of the $44 million for ratepayers.
At a news conference Monday in Santa Monica, Court said the settlement is as flawed as the billing system it was meant to correct.
He said it wrongly accepts DWP's decisions about how much customers were overbilled, and says DWP has not been transparent about how customer refunds would be calculated. However, consumers would have to agree to the refunds before they knew how much they would be, he said.
Another problem with the settlement are the catch-up bills -- those potentially huge bills that consumers got after months of being undercharged while the billing system was still messed up and DWP was estimating consumers's bills. At one point, some 21 percent of all DWP bills were estimated rather than based on actual meter readings, an agency report said. The issue has been a thorny one to untangle, and DWP has been working to improve its customer service and regain consumer trust.
Court said DWP should erase any back bills from customers' accounts and instead charge PriceWaterhouse Coopers, which created failed billing system. Los Angeles has a separate lawsuit against that firm.
Consumer Watchdog's Court said the settlement also voids important consumer rights, like having claims heard by a neutral third party. It was also giving customers only three months to file overbilling claims.
The settlement calls for customers to receive a credit on their bills for 100 percent of any overcharges. An independent monitor is supposed to oversee the calculations and refunds. Consumer Watchdog attacked the monitor as too closely tied to large power agencies, putting it potentially in a conflict of interest if the monitor sided against DWP and for consumers.
Consumer Watchdog objects to the $13 million payment the settlement would confer on the attorneys representing the ratepayer class. The group accuses the DWP of shopping around for an attorney who would represent ratepayers in the class action lawsuit by accepting a weak settlement and a high payday.
Six different law firms filed four class action lawsuits against DWP over its wrong bills. The cases were combined, and in late June the DWP announced it had entered mediation with one of the plaintiff's lawyers. That was Cleveland attorney Jack Landskroner of Landskroner Grieco Merriman LLC. That firm had sued over a similar PriceWaterhouse Coopers billing system installed in Cleveland, and that expertise led it to represent clients in Los Angeles.
The mediation, before a retired federal judge, did not include several other attorneys, and those are now protesting the settlement terms, attorney Tom Merriman said. The settlement included an estimate of $44 million for ratepayers, and legal fees capped at $13 million to divide among the various lawyers.
Merriman and the DWP separately described Consumer Watchdog's attack on their settlement as serving the lawyers who disagree with the terms of the settlement.
" Someone has to put their arms around it trying to get the case settled, and then when it happens, they all come out of the woodwork and throw stones trying to undermine it," Merriman said.
Superior Court Judge Elihu M. Berle reviews the settlement for preliminary approval on Tuesday.
An LADWP statement Monday called Consumer Watchdog's allegations legally and factually wrong: "These inflammatory allegations do nothing more than repeat baseless claims already made by a small group of plaintiff's attorneys who wish to disrupt the Court from approving the settlement."
Merriman said a benefit to the consumers is that the settlement limits DWP back bills to just nine months of previously unbilled charges, while state law permits the DWP to go back as far as four years.
" At some point you will have the opportunity as an individual, if you want to opt out of the settlement you can," Merriman said. A neutral decision-maker, called a special master, would also be available to settle disputes over bills and refunds, he said.
DWP's Office of Ratepayer Advocate, as a city entity, does not have a position on the settlement apart from the City Attorney's office, said its director, Fred Pickel.
However, his office asked that people who have already entered repayment agreements to receive an additional year to repay their bills. This would affect a customer who was, for example, underbilled for several months and then received a big catch-up bill once DWP figured out the correct amount.