DWP to refund $160 million in overcharges to other agencies
The municipal utility agrees to the settlement more than a year after a judge ruled that it had intentionally overcharged L.A. County, the L.A. Unified School District and other local governments.
By Phil Willon | LA Times Staff Writer
October 27, 2008 /1:34 PM PDT--The Los Angeles Department of Water and Power will refund $160 million that it overcharged other government agencies for more than a decade, authorities said today.
The DWP agreed to the settlement more than a year after a San Bernardino County judge in June 2007 ruled that the nation's largest municipal utility had intentionally overcharged Los Angeles County, the Los Angeles Unified School District and other local governments.
"The Los Angeles Department of Water and Power had been imposing illegal and unjustified overcharges on their government customers for several years," California Atty. Gen. Jerry Brown said in a statement. "The L.A. school district and the other governmental agencies desperately need every available dollar in these hard economic times."
The biggest beneficiary will be the LAUSD, which will receive $25.3 million in the settlement, as well as $28 million in a special account set up for projects to reduce energy consumption. The county will receive $12.4 million, plus $13 million for energy conservation; and the county Metropolitan Transportation Authority will collect $11 million, plus $11 million for energy saving programs.
The other entities receiving refunds include the Los Angeles Community College District, UCLA, Caltrans, the California Highway Patrol, the state Department of Motor Vehicles and several other state agencies.
Under state law, municipal power authorities can bill government agencies for a share of the costs of building power plants and transmission lines, but those charges must be based on the amount of power the customer used from those projects.
The lawsuit asserted that the DWP was charging the plaintiffs as much as 60% more than their legitimate share of capital costs and that the agencies were unaware they were being overcharged until a whistle-blower came forward in 2000.
H. David Nahai, DWP chief executive and general manager, said the agency respected the court's ruling in the case and had since corrected the manner in which government agencies are billed to ensure that the department complies with state law.
"We are pleased to have fashioned an agreement which will enable energy efficiency improvements and overall lowered energy usage for the plaintiffs in this action," Nahai said in a statement. "We can also take comfort in the fact that the involved parties are government entities whose constituents are largely LADWP customers. That the beneficiaries of this settlement serve the residents of the city and County of Los Angeles was a prime factor for LADWP to enter settlement negotiations."
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DWP to pay $160 million to government agencies
LAUSD to get almost $68 million
By Rick Orlov, Staff Writer | Daily News
Article Launched: 10/27/2008 11:25:36 AM PDT
The Los Angeles Department of Water and Power has decided to drop its appeal of a $223 million verdict that said the utility overcharged the Los Angeles Unified School District and other government agencies over the past 10 years.
DWP officials offered no immediate comment to the announcement of the $160 million settlement today by attorney Eric R. Havian.
"This settlement will give back to the school district and our other clients some much-needed funds," Havian said. "We are pleased that this matter was resolved without the need for further litigation."
Under the settlement, the LAUSD will get $67.7 million, Los Angeles County will get $32.3 million, the Metropolitan Transportation Authority will get $28.1 million, various California state agencies will get $22.3 million, the Los Angeles Community College District will get $5.58 million and UCLA will get $3.8 million.
In June, San Bernardino Superior Court Judge John Wade ruled the DWP had overcharged for 10 years beginning in 1996 by billing for more than the cost of producing electricity.
Originally, the utility had indicated it would appeal the ruling.
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DWP to pay LAUSD, others $160M in overcharges
Contra Costa Times | From wire reports
Article Launched: 10/27/2008 02:03:29 PM PDT
The Los Angeles Department of Water and Power will pay a $160 million judgment for overcharging the Los Angeles Unified School District, Metro and other governmental entities, state Attorney General Jerry Brown announced today.
The judgment stemmed from a state lawsuit filed against the DWP eight years ago. San Bernardino County Superior Court Judge John P. Wade issued a tentative decision in June 2007, which found the DWP should pay $223.8 million in damages. That amount was reduced to $160 million.
"The Los Angeles Department of Water and Power has been imposing illegal and unjustified overcharges on their governmental customers for several years. The L.A. school district and other governmental agencies desperately need every available dollar in these hard economic times," Brown said.
DWP General Manager David Nahai said the utility "engaged in good faith settlement discussions that have culminated in a settlement agreement amenable to all parties."
The DWP will make an initial cash payment of $60 million, and $5 million per year for the next three years. Another $67.8 million will be used to implement programs designed to lower energy demand or consumption, and $17.2 million in bill credits will be applied to the plaintiffs' bills for the next 10 years.
The $160 million settlement is the largest ever made against a utility for overcharging customers, according to attorneys for the plaintiffs.
"This settlement will give back to the school district and our other clients some much-needed funds. We are pleased that the matter was resolved without the need for further litigation," said Eric Havian, an attorney who represented the non-state agencies in the case.
Under state law, municipal power authorities can only charge governmental agencies their proportionate share of what it cost to build the electric facility that provides their energy.
The judgment will be split among five local agencies and the state. They are:
-- Los Angeles Unified School District, $67.7 million;
-- Los Angeles County, $32.3 million;
-- Metropolitan Transportation Authority, $28.1 million;
-- Los Angeles Community College District, $5.58 million;
-- UCLA, $3.8 million;
-- California state agencies, $22.3 million.
"We can also take comfort in the fact that the involved parties are government entities whose constituents are largely LADWP customers. That the beneficiaries of this settlement serve the residents of the city and county of Los Angeles was a prime factor for LADWP to enter settlement negotiations," Nahai said.
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