Los Angeles DWP settles electricity rate case; pays schools, other agencies $160 million

Recovery is the largest ever for overcharging utility customers

LOS ANGELES, CALIFORNIA, Oct. 27, 2008 -- The Los Angeles Department of Water and Power (DWP) has decided not to appeal a costly court verdict and will pay Los Angeles County, the Los Angeles Unified School District, the Los Angeles Community College District and certain state agencies a total of $160 million to settle a major rate case.

The settlement is the largest recovery ever made against a utility for overcharging customers.

A state superior court ruled in June 2007 that the DWP had deliberately overcharged Los Angeles County, the school district and other plaintiffs in the case for nearly 10 years and ordered the agency to pay them a total of $223.8 million. After a six-week trial, Superior Court Judge John P. Wade ruled that DWP had inflated its electric bills to governmental customers beginning as early as 1998.

"This settlement will give back to the school district and our other clients some much-needed funds, a San Francisco attorney with Phillips & Cohen LLP, which is representing all the non-State agencies. "We are pleased that the matter was resolved without the need for further litigation."

California state law applicable at the time clearly stated that publicly owned utilities could charge schools and other governmental customers no more than their proportionate share of the capital costs associated with the electric facilities from which they get power. If a government agency used 10 percent of the power produced by a plant, for example, the utility could charge that agency only 10 percent of the capital costs for that plant.

DWP agreed to pay the following amounts to:

  • Los Angeles Unified School District - $67.7 million
  • Los Angeles County - $32.3 million
  • Los Angeles County Metropolitan Transportation Authority - $28.1 million
  • California state agencies - $22.3 million
  • Los Angeles Community College District - $5.58 million
  • University of California at Los Angeles - $3.8 million

The lawsuit originally was brought by Sam Barakat, an energy consultant, under the California False Claims Act, a "whistleblower" law.

The California Attorney General, Los Angeles County, Los Angeles Unified School District, Los Angeles Community College District and the Los Angeles County Metropolitan Transportation Authority (LAMTA) investigated the allegations and joined the lawsuit.

"The case was a model private-public enterprise," said Wayne T. Lamprey, an attorney with Goodin, MacBride, Squeri, Day & Lamprey LLP, co-counsel for the plaintiffs. "My law firm and Phillips & Cohen worked closely with the California Attorney General and our client agencies to achieve this outstanding result."