Crummy Computer System Cost L.A.’s DWP over $88 Million in Lost Commercial Billings

Monday, March 09, 2015

The screwed-up rollout of the Los Angeles Department of Power and Water’s (DWP) new computer billing system in September 2013 caused a world of hurt for residential customers, who suffered incorrect bills, delayed bills and threats of disconnection. Lawsuits are pending.

Commercial customers were affected, too, but in a different way. The system was so messed up that $88 million worth of billing information was lost over eight months and those customers skated. The DWP said 10% of its 400,000 commercial users didn’t get billed. 

Now, the city would like Pricewaterhouse Coopers (PwC), the consultant on the project, to pay for the problem.

City Attorney Mark Feuer’s press conference Friday, where he announced the filing of a civil lawsuit in Los Angeles Superior Court, was apparently the first public notice of the loss. Chief Deputy City Attorney Jim Clark told the Los Angeles Times the problem wasn’t totally fixed and the city continued to lose revenue, although it is “difficult to say” how much.

The initial carnage from the system launch was anecdotally reported in horrifying detail. One 69-year-old residential customer, who used automatic withdrawal to pay her bill, had her account overdrawn when the DWP took $3,900 from her bank account, instead of around $325. She called to complain and was put on hold for an hour before being cut off.

Now, the damage is being quantified. DWP spent $70 million on the system’s contract and then another $41 million to make it actually work. Tens of thousands of residential customers were frustrated, inconvenienced and overcharged.     

An independent report commissioned by DWP blamed the utility’s lousy project management, Pricewaterhouse’s inexperience at dealing with projects of this complexity and an unprepared workforce.

The computer system was meant to replace a patchwork of systems cobbled together over decades. That project scope “was far too ambitious,” the report said. Multiple large applications that were said to be “tightly integrated” were not. That didn’t stop them from adding a bunch of “newer, untried technologies.”

Neither the DWP nor Pricewaterhouse provided a project manager with experience implementing a project this complex. “Contract terms were not followed.” Data on customers, accounts, meters, you name it, was transferred to the new system but no one checked to see if it had copied over correctly “despite multiple requests by the project auditors.”   

At some point before the rollout, there was supposed to be a freeze on implementing new computer code so the system could stabilize. That didn’t happen, and they coded right up until the last second, wreaking more havoc in an already chaotic situation.

Testing of the system was “minimal.” Usually, for a project like this, they would test all 21 billing cycles. They only tested one. The report called that a “prime factor in the extensive number of incorrect bills being generated.”

The employees didn’t know how to operate the system because “training never advanced beyond the introductory level” and “knowledge transfer on managing daily operations never took place.”

Pricewaterhouse attorney Daniel J. Thomasch denounced the lawsuit as a “transparent attempt by LADWP to shift blame away from the Department for its self-inflicted billing problems. . . . We will defend PwC's excellent work and this case vigorously.”

–Ken Broder


To Learn More:

Los Angeles Sues PricewaterhouseCoopers over DWP Billing Problems (by Dakota Smith, Los Angeles Daily News)

L.A. Sues Price Waterhouse for Millions (Courthouse News Service)

L.A. Officials Say DWP Lost $88 Million Due to Botched Billings, Sue Firm (by Catherine Saillant, Los Angeles Times)

DWP’s New Billing System in L.A. Is a Mess and Costs Nearly Triple What the Utility Claimed (by Ken Broder, AllGov California)

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