There’s a common assumption that everything will cost more when living in Los Angeles. Gas is routinely over $4 a gallon, eggs can creep into the double digits for a dozen, and monthly utility bills can skyrocket for some.
While most of these expenses are unavoidable, if you’re an LADWP customer and you’ve seen your rates jump, there may be an unexpected reason. Customers receiving an estimated amount on their monthly bills may be scratching their heads over why there’s been a sudden jump in their amount due.
What is an estimated amount on a utility bill?
Previous to this current rash of customers receiving estimated bills, estimated amounts only got issued to customers with inaccessible meters. A meter behind a locked gate or somewhere unreachable by a meter reader, or when a dog is present on the homeowner’s property, usually triggers an estimated bill to get delivered to the customer.
These estimated amounts would be derived from historic usage data and might get adjusted for seasonal variance. This means an estimated bill should reflect an accurate guess based on the customer’s actual usage.
The LADWP is now fielding complaints related to the recent billing system overhaul that has left many customers with higher than normal bills due to estimated amounts getting autogenerated. These new estimated bills aren’t based on individual customer usage, leaving some customers to deal with bills many multiple times their actual utility usage.
While the LADWP is prepared to correct these errors, the municipal utility is dragging its feet while placing the blame on a third-party.
PricewaterhouseCoopers was hired to consult on LADWP’s new billing system. It is expected that the migration to this system is to blame for the sudden increase in bills with estimated amounts delivered to customers 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[PDF] released recently claims that DWP officials knew there were 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 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 an unusual jump in customers receiving estimated bills in January 2014. Over 20 percent by LADWP’s estimate, received these spuriously priced bills. The amount has since dramatically decreased to below the agency’s self-declared goal of five percent. This means that even though everyone may not be receiving accurate bills, steps have been taken to curtail the issue.
Consumer Affairs has justifiably gotten slammed with questions, complaints and pleas for help in the wake of this recent deluge of billing errors. Jimmy from Granada Hills expressed fear and outrage on a Consumer Affairs message board 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 on 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???”
Plenty of other residents posting 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.”
Class Action Lawsuit
Early in 2015, LADWP customers filed two separate class-action lawsuits. Both pending lawsuits address the billing errors that are affecting 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 Time 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 even the utility company agrees is far too high. However, one of the lawsuits alleges that some of the astronomical costs on these bills weren’t even 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. But these two pending class-action lawsuits suggest that customers feel they’re still not getting the relief they expected after the utility company admitted to the mess up.
The future remains to be seen if the affected Angelinos will receive any court-ordered help in clearing up this unfortunate mess.