Electronic Billing Snafu Leads to $681 Billion Shortfall in LA

some of the money
Paperless billing has been touted for some time now as a cost-effective, efficient, and accurate form of billing, but it’s also gotten the Los Angeles Department of Water and Power in a bit of a mess — a $681 million mess, in fact.

The Los Angeles Times reports that an audit of the effectiveness of a computerized billing system was released Tuesday, which revealed the startling losses — the LADWP lost over $680 million since the system was implemented in 2013.

Electronic billing should have reduced customer frustration, questions, and phone calls, but the implementation of the system actually increased all of those things.

Some customers and businesses went unbilled for months before receiving outstanding charges and shut off notices. Others received bills that were incorrectly estimated.

“The department minimized or ignored the severity of issues raised regarding the customer service system’s readiness before launching it,” the auditor wrote. “The department is still struggling — more than a year later — to normalize important business practices and to collect unpaid accounts.”

The electronic billing program itself cost the department $70 million to put into place, which should have been earned back through the program — organizations can save an average of over 11 cents per billing statement by going paperless. Additionally, electronic billing saves paper. If 20% of American households switched to paperless billing, it would save 151 million pounds of paper annually.

The Los Angeles Daily News reports that the audit found that the LADWP was largely at fault for the billing snafu due to oversights, ineffective management, and multiple failures to heed warnings.

Customers are suing the LADWP, which is in turn suing the company responsible for rolling out the new and clearly flawed billing program, PricewaterhouseCoopers.

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