A state audit released last week details how Los Angeles Department of Water and Power managers ignored and downplayed repeated warnings that a new customer billing system — the lifeline of the utility and how it collects its revenue — was not ready and would not work as promised. Instead, the launch in September 2013 resulted in wildly inflated bills that prompted a flood of phone inquiries that overwhelmed the underprepared customer service center. The missteps turned an $87-million system upgrade into a debacle that is still not resolved and could ultimately cost ratepayers as much as $231 million. The audit, like many in government, focused on chronicling what happened instead of why it happened.
The report from California State Auditor Elaine Howle puts much of the blame on DWP managers for moving forward with a system plagued with defects. The utility, however, blames PricewaterhouseCoopers, the consultant hired to help develop and roll out the system. City Atty. Mike Feuer recently sued the company, saying it fraudulently misrepresented its abilities and failed to deliver on its promises.
But in casting blame, the audit is silent on a more serious and systemic flaw, which is the lack of consistent oversight and accountability by City Hall. This is yet another reminder that the governance of the city’s billion-dollar utility is weakened by overlapping lines of authority, competing political interests and little accountability.
In the summer of 2013, newly elected Mayor Eric Garcetti, who is authorized to appoint the Board of Water and Power Commissioners, which oversees the DWP, and its general manager, replaced four of the five commissioners, leaving little institutional knowledge of the new billing project. (He also appointed a new general manager four months after the flawed launch.) The City Council also has the responsibility to oversee the DWP, yet members signed off on multiple cost increases, including one just weeks before the launch, without pressing managers on why there were so many delays and overruns. At a hearing in May 2013, only one of the five council members showed up. When that lone councilman asked whether the project was going awry, he was assured that everything was fine, and the meeting lasted just 12 minutes. Garcetti made DWP reform a priority on the campaign trail and his first initiative as mayor. Yet he too failed to stop or change the path of the botched rollout.
These layers of oversight are supposed to catch problems and avert bad decisions, but none of the officials responsible prevented the billing system fiasco. Simply put, the mayor, City Council and DWP commissioners were not doing their jobs.
The DWP needs to be run more like a business and less like a government bureaucracy. The utility should be overseen by a board free from the political meddling of City Hall and empowered to make decisions for the good of the ratepayers.
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