City Attorney Announces Lawsuit Stemming From Alleged Mismanagement of LADWP Billing

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Los Angeles City Attorney Mike Feuer described a civil lawsuit against PricewaterhouseCoopers during a news conference on Friday, March 6, 2015. (Credit: KTLA)

A professional services firm fraudulently misrepresented its ability to implement a new billing system for the Los Angeles Department of Water and Power in order to secure a $70 million municipal contract and subsequently failed to deliver, according to a civil lawsuit filed Friday by the city attorney’s office.

As a result of PricewaterhouseCoopers’ lack of skills and experience to perform the work stipulated in the contract, the LADWP’s system was unable to properly tally service bills for tens of thousands of customers, City Attorney Mike Feuer said at morning news conference.

“Most of DWP’s billing system problems have been resolved. What is unresolved is the fact that the city of Los Angeles is out tens of millions — perhaps hundreds of millions of dollars,” Feuer said. “Today we’re here to get it back.”

Calling the lawsuit “meritless,” an attorney for PricewaterhouseCoopers said the legal action was an attempt to shift blame away from the utility for its “self-inflicted billing problems.”

“LADWP acknowledged in writing last year that (PricewaterhouseCoopers) fulfilled each one of its contractual obligations and paid (PricewaterhouseCoopers) in full,” outside counsel Daniel J. Thomasch said. “We will defend PwC’s excellent work and this case vigorously.”

The alleged malfeasance began after the L.A. utility issued a request in 2009  for proposals in an effort to modernize its customer care and billing system, which was nearly 40 years old.

According to the city attorney’s complaint, PricewaterhouseCoopers “overstated its knowledge, expertise and skills necessary to convert” the existing system and launch a new software platform.

The London-based company allegedly misled the LADWP by claiming to have a “100 percent success rate” in implementing the software and falsely touted the success of similar work performed for the Cleveland Water Department, the lawsuit states.

“In fact, Pricewaterhouse’s failure at Cleveland Water caused the company to incur severe financial losses as a result of improper billing to customers,” according to a news release from Feuer’s office.

As a result of the PricewaterhouseCooper’s alleged misconduct, 11.25 percent of LADWP’s meters were unable to function properly and the utility could not bill about 180,000 of its customers — many for a period of more than 17 months, the complaint alleges.

DWP General Manager Marcie Edwards issued a statement thanking Feuer for the lawsuit.

“I want to assure our customers that since the rollout, we have routinely corrected incorrectly estimated bills found not to be accurate by cancelling and rebilling those customers according to actual meter data,” Edwards said. “Still, the problems we experienced were significant, and we understand the anger and frustration experienced by those who were affected.”‘

Customers who are among the “very small percentage” that continue to have billing problems were urged to contact the utility at tellmedwp.com.

KTLA’s Melissa Pamer contributed to this article.