The following Op-Ed Commentary by Consumer Watchdog President, Jamie Court, was published in Los Angeles Daily News on Thursday, November 12, 2015.
The repeating real-life corruption at the Los Angeles Department of Water and Power of recent years often feels as inevitable and unstoppable as the tragic cycle in the 1970s noir detective film 'Chinatown' that made the department famous.
Millions of ratepayer dollars paid to phony foundations run by union leaders who refuse to answer questions about how it was spent. Rampant overbilling of customers threatened with disconnection if they didn’t pay up. Tin-eared customer service agents right out of the Soviet era who tell pensioners their $50,000 water bill was caused by a leaky toilet.
The city fathers promised the cycle would end with a legal settlement dealing with overbilling issues that was supposed to pay ratepayers back “100 percent.” Last week, however, a Los Angeles judge rejected the proposed settlement for a second time.
The question now is whether Mayor Eric Garcetti and City Attorney Mike Feuer will step in to make sure the DWP does the right thing for ratepayers, before a new settlement is filed with the court mid-November.
By not focusing on the details of the settlement, Garcetti and Feuer have failed to deal with the 800-pound guerillas in the DWP building.
First, while some ratepayers will receive refunds, a significant portion has or will receive notices that claim ratepayers owe back bills and have underpaid on their account.
Under the last settlement agreement rejected by the court, ratepayers would have to give up their legal right to dispute back bills without first being told how much DWP says they underpaid. This is unacceptable, as consumers may opt in to a settlement seeking a refund and be forced to pay a debt without retaining the legal right to dispute it.
The mayor should take a bold step and end back billing. All underpayments should be forgiven. It’s wrong that ratepayers would be asked to pay bills that they haven’t been charged for years. Most consumers don’t have thousands of dollars extra to cover bills they should have received in a timely fashion but for DWP’s negligence.
What about the lost dollars? The city is seeking compensation for the billing errors in a separate case from Price Waterhouse Cooper for its failed billing system and will recoup its losses there, if Price Waterhouse Cooper, not DWP, is truly to blame.
The problems at DWP are not limited to a faulty computer system. They stem from an unaccountable, opaque culture and the failure of ratepayers to have a voice at the public monopoly.
The city has a ratepayer advocate, Fred Pickel, but he has been virtually absent as a force for ratepayers during the scandals, supporting the last settlement rejected by Judge Berle.
Pickel was a bad choice for ratepayer advocate from the start. He spent nearly his entire career as an energy consultant adverse to ratepayers’ interest. In fact, he consulted for Enron, co-writing a report espousing the benefits of electricity deregulation and later an anti-consumer analysis of the Western electricity market as it faltered during deregulation.
In 2003, Pickel was an expert witness for Powerex, a power trader during the electricity crisis that ended up paying $750 million to settle allegations of abuse during the energy crisis.
Attorneys for then Attorney General Bill Lockyer, who sought ratepayers’ money back, blasted Pickel: “Through the testimony of … Frederick H. Pickel … the sellers allege that economic forces and market design flaws caused the high prices. In taking this position, they have largely avoided any consideration of the individual behavior of their own clients or of the multitude of other evidence produced in this proceeding …”
Mayor Garcetti needs to replace Pickel with a real ratepayer advocate and fund a fully operational advocate’s office or more scandals will ensue.
Finally, DWP says it has determined the amount of refunds consumers are due, but has not issued any refund checks, only back bills for underpayments. It’s time the refunds start to flow, with or without a signed settlement. That’s what an entity that overcharges its customers, particularly a public agency, is supposed to do — correct bills.
Nor has DWP publicly accounted for how much is owed by customers in underpayments, as opposed to the amount of refunds it will issue. The public and ratepayers deserve this full accounting now, before a settlement is finalized.
In the last lines of the film 'Chinatown', Jack Nicholson’s character Jake Gittes is told. “Forget it Jake. It’s Chinatown.”
The mayor and city attorney’s job is not to forget, but to end the cycle now. They should be saying, “Remember Jake. It’s Los Angeles.”
Jamie Court is president of the nonprofit, nonpartisan group Consumer Watchdog.