L.A. officials say DWP lost $88 million due to botched billings, sue firm

L.A. City Atty. Mike Feuer sues DWP contractor, alleging it breached contract in rollout of new billing system

The Los Angeles Department of Water and Power wrote off up to $88 million in commercial billings because it couldn’t figure out what it was owed during a botched rollout of a new computer system, city lawyers said Friday.

That revelation came as City Atty. Mike Feuer announced that a lawsuit had been filed in Los Angeles County Superior Court against Pricewaterhouse Coopers, the consultant hired to help the DWP plan and roll out a system that integrated functions, including operations, service calls and -- most disastrously -- billings.

After the system was activated in September 2013, DWP customers flooded the utility with complaints about delayed or incorrectly estimated bills and late notices. The telephone call volumes were so high that some customers had to wait on hold for up to 40 minutes. The backlog got so bad that the DWP added a voice message advising customers to try again during off-hours.

A 57-page complaint alleges that Pricewaterhouse Coopers breached its contract and fraudulently misrepresented how it could help the city implement the new system.

An outside counsel for Pricewaterhouse Coopers responded Friday that the case is "meritless."

Daniel J. Thomasch, of Gibson, Dunn & Crutcher, called the lawsuit an attempt by the DWP "to shift blame ... for its self-inflicted billing problems." He said the DWP "acknowledged in writing last year that [Pricewaterhouse Coopers] fulfilled each one of its contractual obligations" and it paid the firm in full.

Thomasch said the consultant would defend its "excellent work and this case vigorously."

Feuer, at a news conference, said the city spent $70 million on a system that didn’t work, and then spent another $41 million to smooth out problems. The DWP was not able to bill 40,000 of its 400,000 commercial customers for up to eight months, Feuer said, resulting in losses of $11 million a month.

Though most of the problems have been fixed, Chief Deputy City Atty. Jim Clark said, the utility likely is still losing revenue as a result of the changeover, though how much is "difficult to say.''

DWP General Manager Marcie Edwards released a statement Friday acknowledging the lawsuit's filing and assuring the public that the utility will continue to fix problem billings.

In recent months, several utility customers have filed a class-action lawsuit against the utility, claiming overcharges due to the billing problems.

The utility has hired more than 200 new customer service representatives and meter readers to address incorrect billings based on estimated meter readings, Edwards said. It has also reduced average call wait times from 35 minutes to five minutes, she said.

"We have made tremendous progress and appreciate the action by the city attorney today,'' she said.

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