The little people won.

The Los Angeles Department of Water and Power this week agreed to a legal settlement that includes $44 million in refunds to 1.6 million customers who were overbilled starting in 2013. In a statement, attorneys for those customers called the deal “historic.”

The utility says it has already begun paying refunds and that $36 million is the amount due. The agreement is an effort to end a class-action lawsuit that alleges the DWP failed to provide refunds for closed accounts, assessed “improperly calculated” late payments and issued bills for estimated charges based on erroneous meter estimates.

The settlement proposal was submitted to a judge yesterday and was expected to be finalized next month. Customers will receive notice of credits or, in the case of closed accounts, refunds, in October, the DWP said. Find out if the utility owes you cash here.

The billing errors started in September 2013 and ended in July 2014, it said.

The utility's general manager, Marcie Edwards, blamed auditing firm PricewaterhouseCoopers for allegedly designing a billing system that produced these results.

“We are continuing our legal action to seek recovery of all costs associated with the proposed settlement as part of ongoing litigation against PricewaterhouseCoopers (PWC), the firm hired to perform the system integration and replacement of LADWP’s customer information and billing system,” she said. “The settlement makes clear specific areas where PWC failed to provide key functionality or made critical errors that resulted in overcharges or the inability to quickly refund customer credit balances.”

An expected $13 million in attorneys fees will be covered by PricewaterhouseCoopers if the DWP is successful in its suit, the utility said.

It might be a victory for the little guy, but it's pocket change to the nation's largest municipal water-and-power utility. The DWP states:

It is important to consider that the LADWP has issued nearly 20 million bills since the billing system conversion occured, totaling over $11 billion in revenue. Of this $11 billion, it is expected that the amount remaining to be refunded/credited to customers is approximately $36 million in total, or about three-tenths of 1 percent of total billings by LADWP over the past two years.

The billing system cost the DWP $181 million, plaintiffs' attorneys said. Under the settlement, the utility promised to spend another $20 million for “a comprehensive overhaul of its billing system,” they said in a statement.

Credit: LADWP's John Ferraro building via Gaston Hinostroza/Flickr

Credit: LADWP's John Ferraro building via Gaston Hinostroza/Flickr

Maybe the saddest news here is that “refunds under the proposed settlement will be quite small, amounting to less than $10 for most customers who were affected,” Edwards said.

Representing the plaintiffs, consumer rights attorney Jack Landskroner of Landskroner Grieco Merriman LLC, claimed victory, however. He said:

Families and small businesses have enough financial stress. We set out to make sure every customer would be made whole. Under this settlement agreement, every single customer who was overcharged will have their money returned. Thankfully, the LADWP took the overbilling problem seriously and understood both the legal and moral obligation to right this injustice and resolve this matter in the best interests of the ratepayers.

The DWP promised to keep things straight from here on out. It says less than one-half of 1 percent of today's bills require adjustment. 

“The problems associated with our billing system caused problems and headaches for far too many of our customers,” Edwards said, “and we apologize to each and every customer who was affected.”

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