Some Customers Report LADWP Overcharging on Monthly Bill

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There’s a common tendency to assume everything will cost more when living in Los Angeles. Gas is routinely over $4 a gallon, eggs can creep above $10 a dozen and in the case of some residents, monthly electric bills can skyrocket.

While most of these expenses are unavoidable, if you’re a LADWP customer and you have seen your rates jump, there may be an unexpected reason for that. Customers receiving an estimated amount on their monthly bill may be left scratching their heads over why there’s been a sudden jump in cost.

Unfortunately the reason may not satisfy those who are left with tight budgets. The LADWP is fielding complaints related to the recent billing system overhaul that has left many with higher than normal bills. While the LADWP is prepared to correct the errors, the municipal utility is dragging its feet while placing the blame on a third party.

PricewaterhouseCoopers was hired to consult on the new billing system recently put in place at LADWP. It is expected that the migration to this system is to blame for the increase in estimated amounts on customers’ bills across Los Angeles.

“The billing problem has plagued DWP since the system was first implemented. The agency has sent out incorrect bills to customers, sometimes inflated more than 300 percent,” reports NBC Los Angeles. But this doesn’t explain why an auditor’s report released recently claims that DWP officials knew there was issues with the new system before switching to it. An error that some claim may cost LADWP north of $200 million once this is all said and done.

This, however, is in discord with an LADWP commissioned investigation by investigation firm TMG. “Per TMG’s report, the vendor selected to design and implement the system, PwC, lacked the necessary experience to manage a task of such complexity. This gap, combined with the lack of effective project management from the department, resulted in critical missed deadlines and frequent warning signs that were ignored,” LADWP’s internal report reads.

LADWP does admit to a staggering percentage of customers receiving estimated bills in January 2014. Over 20%, by LADWP’s estimate, received the spurious bills. That amount has since dramatically decreased to below the agency’s self-declared goal of 5%. This means that even though everyone may not be receiving accurate bills, steps have been taken to address this issue.

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Estimated Bills

With all this talk about estimated bills, it may be helpful to understand what that means exactly and why one might normally get an estimated bill. Before the billing fiasco of 2014 and now after it’s been addressed, an estimated bill would only be issued when the home’s meter is inaccessible. When the meter is behind a locked gate or somewhere unreachable by a meter reader, or when a dog is present on the homeowner’s property are usually what trigger an estimated bill. Much of this estimated amount comes from historic usage data, and is adjusted for seasonal variance. This means that an estimated bill should reflect an accurate guess on your actual usage.

The crux of the billing fiasco was an increase in customers erroneously receiving estimated bills and those bills were not based on individual customer usage information. This led to a spike in many people’s bills.

Consumer Affairs justifiably got slammed with questions, complaints and pleas for help in the wake of the recent billing errors. Jimmy from Granada Hills expresses fear and outrage at the prospect of being on the hook for a $4,500 billing error:

“They are charging me $4,500 for a billing error that they caused. They said they had been undercharging me for months. How is this my fault? I live in a budget, now they want to blame me for the mistakes they did. I asked if they had a billing plan, they said no. I have to come up with the money or I will lose my electricity. CAN THEY DO THIS???”

Many other residents’ complaining on the Consumer Affairs website share this sentiment: “Can they do this? Is this legal?” “What can we do?” “I’m going to get disconnected and have no idea what to do.”

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Class Action Lawsuit

Early in 2015, LADWP customers filed two separate class-action lawsuits. Both pending lawsuits address the billing errors that affected thousands of Angelinos. “The refunds, in the correct amounts, should simply be paid back and the billing system should be fixed so these types of problems no longer occur,” said Tim Blood, an attorney representing one of the pending cases.

In one year’s time, nearly 1.5 million estimated bills were sent out from LADWP, a figure which the utility company even agrees is far too high. However, one of the two lawsuits alleges that some of the astronomical costs on these bills weren’t marked as estimated, even though, as the suit purports, “estimate” should have been stamped on those bills as well.

LADWP says that the bills they deemed incorrect have already been re-billed. The utility company feels this issue is resolved. With the two pending class-action lawsuits, customers are stating that they feel they’re still not getting the relief they expected after the utility company admitted to the mess up.

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