DWP clears legal hurdle in fight over faulty bills

The Los Angeles Department of Water and Power has scored a legal victory in its case against a large consulting firm hired to roll out a multimillion-dollar billing system that produced thousands of erroneous bills.

The city sued PricewaterhouseCoopers in March alleging fraudulent inducement and breach of contract. In 2010, the firm received a $60-million contract — later increased by $9.2 million — from the DWP to update the utility’s old billing system.

Last week, Los Angeles County Superior Court Judge Elihu Berle ruled that the city’s claim of fraudulent inducement against the firm could move forward. City officials said that could mean the municipal utility will be able to recover damages exceeding the value of the contract.

A spokeswoman for PwC declined to comment. At the time the case was filed, an attorney for the company called the lawsuit “meritless” and suggested DWP was trying “to shift blame … for its self-inflicted billing problems.”

The project was plagued with problems.

DWP officials were unable to bill 180,000 customers for 17 months. More than 11% of the utility’s meters were unable to function properly as a result of the botched billing system, the city alleged in its lawsuit.

Utility and city officials assert that PwC purposefully misrepresented its track record of implementing similar systems to win the contract. The lawsuit alleges PwC had problems with a project in Cleveland that resulted in 15% of public utility customers not receiving their bills.

Last week’s court decision “will allow us to attempt to recover much of the costs borne by the utility and our customers for the problems experienced with the billing system design and implementation,” said DWP General Manager Marcie Edwards. “We ended up with a nightmare for our customers and our employees as we managed the fallout of the faulty integration and programming of the new system.”