DWP Overcharges Customers With “Secret” Formula

Nathan Wells suspected LA DWP was overcharging him, but he had no idea just how much until he started closely tracking his power use.

Wells, a mathematician, says he quickly discovered that the Department of Water and Power was socking him with a bill three times what it should have been. But when he contacted the agency — 11 times — they wouldn't correct his bill or disclose their secret formula for calculating his bill.

"I think the LADWP is worse than the mafia," Wells told the NBC4 I-Team. "It's impossible to deal with them."

After hearing numerous stories like Wells', the NBC4 I-Team investigated and found the utility company appears to be routinely overcharging customers.

DWP does it by "estimating" their water and power use, instead billing them for how much water and electricity they actually use.

"I am absolutely sure DWP is wrong," said Nathan Wells, after noticing the word "estimated" in fine print on page three of his recent bill.

He says he called and emailed DWP to get an explanation of the formula they used to estimate his bill, but no one would explain.

"There is no formula. I think they make it up as they go along," Wells told NBC4. He said he was so frustrated by the lack of explanation from DWP,  he had signs made for both sides of his car, saying "LADWP Steals From the Citizens of LA."

Before a recent board meeting, the I-Team asked DWP chief Marcie Edwards to explain how they estimate bills.

"I'll be right there," said Edwards, but then ducked into a private room and wouldn't talk.

"We've been advised by the city attorney's office not to speak on camera about this," DWP spokesman Joe Ramallo told NBC4.

DWP emailed the I-Team saying estimates "can occur for a variety of reasons." The agency said bills are estimated when crews cannot access the meter or a customer's meter is broken. Those estimates are based on a number of factors, such as water and electricity use during the same period last year, or the billing period prior to the current bill.

But none of those reasons explain why Nathan Wells' bill was 300 percent higher than it should have been.

Consumer attorney Tim Blood said he believes DWP estimates bills using computer software it rolled out in 2013. "The formula for estimating is baked into the software," says Blood, adding that he believes people at DWP "don't even understand the formula."

"Clearly the computer is estimating bills incorrectly and overbilling as a result," Blood told NBC4.

Blood believes DWP's billing system is so flawed, he's suing the city of LA, trying to get refunds for overcharged customers.

Other utilities also estimate customers' bills in situations, but some are more transparent.

Riverside Public Utilities told NBC4 "if an estimate needs to be done, [the company] uses the previous year's consumption to estimate the bill for that month."

After driving around LA for months with that sign on his car — Nathan Wells finally got the DWP's attention.  He says he sent pictures of his car to LA city council staffers, and they forwarded them to DWP.

Wells got a rare email from DWP's chief Marcie Edwards offering "my personal apologies" and promising they would adjust his account. Wells is expecting a refund of $877.

Four red flags that your bill could be inflated:

• Look for the word "estimated" on your bill;
• Look for a surge in "tier levels" on the graph on your bill;
• Look for big increases in months you're using less water and power (winter?) or when you've been on vacation;
• Look to see if your usage from year to year is vastly different.

Ask your utility company explain why your charges are high, and if you think the charges are wrong, insist they investigate.

The LADWP released the following statement to NBC4:

"Estimating a bill is a standard practice used by all utilities when an actual meter read is not available for billing purposes. This can occur for a variety of reasons, the most common is when a meter reader is unable to access a customer’s meter due to a locked gate or the presence of an animal.
LADWP is able to obtain actual meter reads for approximately 95 percent of our customers.

Approximately 5 percent of our customers on any given month receive an estimated bill. Estimated bills are based on:

The daily water and/or electricity use during the same billing period in the previous year. Actual Consumption x Number of days from the same period as last year = Daily Rate of Use (DRU)
DRU x Number of days in the current period = estimated bill

If there is no data available for the previous year, we use the billing period prior to the current bill period.

2. If there is no actual meter read data available for either of the previous scenarios, we estimate based on consumption data for similar sized properties in the customer’s neighborhood.

When an actual meter read is obtained following the estimated meter read, LADWP corrects the estimated bill and credits for any overpayment by the customer or bills for underpayment, allowing customers to pay off any unbilled amount over an extended period of time, if needed.

Any customer who believes his/her billing may not be accurate is encouraged to contact us. We also offer customers online, self-service payment arrangement/plan options and a $10 bill credit for customers who enroll in paperless billing between now and June 30. We also have customer service centers across the city to assist customers with billing questions and concerns."

As for how to get your refund:

If you believe you’ve been overcharged, you can request DWP inspect your meter for accuracy. This comes with a catch, however, as NBC4 reported in December: If DWP determines you have in fact been billed correctly, it will charge you $30 for the inspection.

DWP tells the NBC4 I-Team any customer who has been overcharged on a bill will be taken care of by customer service. Customers who interviewed with NBC4, however, report that DWP customer service will not offer such a refund even when the customer believes he or she has proof of a mistake.

If you believe you've been overcharged, you should specifically ask for a refund application from DWP customer service, which will allow you to explain in detail the reasons you believe you've been overcharged. In many cases, once this refund form is submitted, DWP is able to determine whether a mistake has been made and money needs to be returned.