The rollout of the Department of Water and Power's billing system, which resulted in some customers receiving wildly inflated bills and others receiving no bills at all, could wind up costing ratepayers more than $200 million, according to a state audit released Tuesday.
The audit also found that as of November, the utility was still trying to collect more than $681 million from customers for past-due bills, largely due to the botched system.
Read: State Auditor's Full Report
"The department originally budgeted $87 million for implementing CIS (customer information system), however, it more than doubled that budget to nearly $181 million over time," according to the report by the California State Auditor. "Nonetheless, immediately after CIS's launch, it became clear that the system was not yet ready and that the department's decision to implement it was questionable at best.
"Consequently, the department's customers began complaining of late utility bills, unwarranted shut-off notices and excessive wait times to speak with customer service representatives."
Auditors found that the department had spent $187 million implementing and stabilizing the CIS system by September 2014, and its inability to collect on past-due accounts "could add in excess of $40 million to CIS's overall price tag."
The LADWP issued a statement in which General Manager Marcie Edwards said the agency agrees with the auditor's recommendations, but finds fault with the basis for making them and cited an independent investigation involving the consulting firm hired to implement the new customer billing system. Los Angeles City Attorney Mike Feuer announced last week that his office had filed a lawsuit against the accounting firm of PricewaterhouseCoopers. Feuer claimed the company misrepresented its level of experience handling such a system, costing the city "millions" of dollars.
Daniel J. Thomasch, an attorney for PwC, called the lawsuit "meritless," contending it was a "transparent attempt by the DWP to shift blame away" from the utility. The DWP "acknowledged in writing last year that PwC fulfilled each one of its contractual obligations and paid PwC in full," Thomasch said.
"We know that a very small percentage of our customers continue to have problems with bills they are receiving," Edwards' statement continued. "Most of these cases involve bills that have been corrected over multiple billing periods, and are clearly labeled as such on the bill.
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The DWP, which has said it was unprepared to deal with the volume of calls prompted by the billing system issues, has since hired more customer service representatives and opened up customer service centers on Saturdays.
