LOS ANGELES (CNS) - The troubled 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 today.

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. DWP officials said only about $245 million of that amount is attributable to the
new billing system.

“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,” according to the audit.

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.”

Los Angeles City Attorney Mike Feuer announced last week that his office had filed a lawsuit against the accounting firm of PricewaterhouseCoopers, which the city hired to implement the DWP system. 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 will defend PwC’s excellent work and this case vigorously.”

Most of the problems with the system have been fixed, Chief Deputy City Attorney Jim Clark said last week, but “the problems are so severe, and the cover-up was so extensive, it’s difficult to say today it’s entirely been fixed.”

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.

Responding to the state audit, DWP General Manager Marcie Edwards again pointed blame at PricewaterhouseCoopers, saying its own audit determined that the contractor “intentionally misrepresented its ability” to implement the system.

“I want to assure our customers that since the rollout of the new customer billing system, we have routinely corrected inaccurate estimated bills by canceling 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.”

She said with the hiring of more than 200 more customer service representatives and meter-readers, telephone wait times have dropped from over 35 minutes to under five minutes. She said the DWP is also offering a late- payment forgiveness program and online payment plan options.

The state audit recommended that the DWP oversight commission create a committee to “oversee and critically evaluate the status of the department’s various information technology projects.” It also recommended that DWP establish standards for the frequency and content of IT status updates and establish a more detailed approval process for technology projects that have “a potentially significant effect on business operations or customer relations.”

Although DWP officials continued to fault PricewaterhouseCoopers for the system’s failings, the head of the union that represents DWP employees laid the blame on the department’s former leadership.

“This project was an epic failure,” said Brian D’Arcy, business manager of the International Brotherhood of Electrical Workers, Local 18.

“Former General Manager Ron Nichols and his management team failed in implementing one of the department’s critical projects and jeopardized almost $1 billion in revenue while creating a hostile work environment for the hard- working employees of DWP.”