Report 2014-105 Recommendation 1 Responses

Report 2014-105: Los Angeles Department of Water and Power - Consequences Linked to Its Premature Launch of Its Customer Information System May Push Total Costs Beyond $200 Million (Release Date: March 2015)

Recommendation #1 To: Los Angeles Department of Water and Power

To ensure that the Los Angeles Board of Water and Power Commissioners (board) can more effectively exercise oversight for the department's significant information technology projects, the board should establish a standing committee comprised of board members to oversee and critically evaluate the status of the department's various information technology projects. Given the limited tenure of board members and the potential for multiyear and high-cost information technology projects, the board president should consider appointing as many committee members as practicable in order to promote continuity of oversight.

Annual Follow-Up Agency Response From October 2020

As indicated in prior responses to the State Auditor, LADWP was sued in multiple lawsuits from customers alleging damages resulting from the implementation of the customer billing system. Following final approval of the settlement of several of those cases in 2017, LADWP has implemented the settlement, including refunding and crediting customer overpayments and changing LADWP'S information systems and operations to meet billing system and customer service performance metrics established by the settlement. To assure proper oversight, LADWP's board has been regularly briefed, in closed session, on these issues. The first follow-up audit of the billing system, as called for by the settlement, has been completed and submitted to the court, as has a consultant report commissioned by plaintiffs' class counsel on the adequacy of the refunds and credits. The second follow-up audit is scheduled to begin in the next quarter.

LADWP's focus on remediation of the customer billing system has meant that it continues to prioritize other pending major information technology (IT) projects by recognizing the importance of maintaining the day-to-day operations of the enterprise as it implements new systems. In that regard, this year's COVID-19 pandemic did require the reallocation of information technology resources to implement projects to adapt to the large remote workforce resulting from the pandemic.

LADWP staff continues to work with the board to review proposed IT projects, with a focus on assuring ongoing executive management review and board oversight. This has included update briefings on the LADWP's response to the pandemic, as well as the briefing the board received in open session earlier this year on the status of major IT projects. The board continues to provide oversight of these projects given that they are critical to LADWP's operations.

LADWP is pleased to provide this update to the State Auditor.

Estimated Completion Date: Ongoing

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Annual Follow-Up Agency Response From November 2019

As indicated in prior responses to the State Auditor, LADWP was sued in multiple lawsuits from customers alleging damages resulting from the implementation of the customer billing system. Following final approval of the settlement of several of those cases in 2017, LADWP has been implementing the settlement, including refunding and crediting customer overpayments and changing LADWP'S information systems and operations to meet billing system and customer service performance metrics established by the settlement. To assure proper oversight of the litigation and remediation efforts, LADWP's entire board of commissioners has been regularly briefed, in closed session, on these issues. With the settlement now final, LADWP is now in the midst of the several year process - through 2020 - of implementing the settlement agreement. The entire board of commissioners has been provided with regular updates as the implementation proceeds.

LADWP's focus on remediation of the customer billing system has meant that it continues to place other pending major technology systems projects on a slower track though 2019.

A new LADWP general manager was appointed July 2019. He has made an initial reorganization of the information technology services division, and has reconvened an IT executive steering committee and will adopt a holistic approach to technology project budgeting, staffing and prioritization.

LADWP staff continues to work with the entire board of commissioners to review these projects as they move forward, with a particular focus on assuring appropriate and ongoing executive management review and board oversight of these projects. The entire board of commissioners continues to provide oversight of these projects given their critical nature to LADWP's operations.

LADWP is pleased to provide this update to the State Auditor.

Estimated Completion Date: 2020.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Annual Follow-Up Agency Response From October 2018

As indicated in prior responses to the State Auditor, LADWP was sued in multiple lawsuits from customers alleging damages resulting from the implementation of the customer billing system. Following final approval of the settlement of several of those cases in 2017, LADWP has been implementing the settlement, including refunding and crediting customer overpayments and changing LADWP'S information systems and operations to meet billing system and customer service performance metrics established by the settlement. To assure proper oversight of the litigation and remediation efforts, LADWP's entire board of commissioners has been regularly briefed, in closed session, on these issues. With the settlement now final, LADWP is now in the midst of the several year process - through 2020 - of implementing the settlement agreement. The entire board of commissioners has been provided with regular updates as the implementation proceeds.

LADWP's focus on remediation of the customer billing system has meant that it continues to place other pending major technology systems projects on a slower track. LADWP staff continues to work with the entire board of commissioners to review these projects as they move forward, with a particular focus on assuring appropriate and ongoing executive management review and board oversight of these projects. The entire board of commissioners continues to provide oversight of these projects given their critical nature to LADWP's operations.

LADWP is pleased to provide this update to the State Auditor.

Estimated Completion Date: 2020.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

The department states that it is working with the board to review and prioritize major technology systems. Further, the focus of the review includes assuring appropriate and ongoing executive management review and board oversight of the technology systems projects. The current level of board involvement described is a positive step; we anticipate learning of the board creating a standing committee to exercise information technology project oversight.

Annual Follow-Up Agency Response From November 2017

As previously indicated in responses to the State Auditor, LADWP has been involved in multiple lawsuits from customers alleging damages resulting from the implementation of the customer billing system. In July of 2017, the Los Angeles Superior Court issued its order giving final approval to the settlement of several of those cases. The settlement calls for refunds and credits for all customer overpayments and for LADWP to meet a set of billing system and customer service performance metrics. To assure proper oversight of the litigation and remediation efforts, LADWP's entire board of commissioners has been regularly briefed, in closed session, on these issues. With the settlement now final, LADWP has begun the several year process - through 2020 - of implementing the settlement agreement, with regular updates of the board of commissioners planned as the implementation proceeds.

LADWP's focus on remediation of the customer billing system has meant that it continues to place other pending major technology systems projects on a slower track. LADWP staff is working with the entire board of commissioners to review these projects as they begin to move forward, with a particular focus on assuring appropriate and ongoing executive management review and board oversight of these projects. It is expected that the entire board of commissioners will continue to provide oversight of these projects given their critical nature.

LADWP is pleased to provide this update to the State Auditor.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

The department states that it is working with the board to review and prioritize major technology systems. Further, that the focus of the review includes assuring appropriate and ongoing executive management review and board oversight of the technology systems projects. The current level of board involvement described is a positive step; we anticipate learning of the board creating a standing committee to exercise information technology project oversight.

Annual Follow-Up Agency Response From November 2016

Since the State Auditor's report, LADWP has been involved in multiple lawsuits alleging damages resulting from the implementation of the customer billing system. In several cases, a tentative settlement has been reached, and a hearing on the court's preliminary approval of that settlement is now set for 11/18/2016. The settlement calls both for refunds of all customer overpayments, and for LADWP to meet a set of performance metrics for the billing system, and include provision for a project management office, focused on information technology, to provide additional oversight. A copy of the Department's most recent filing with the Court will be provided for context. To assure appropriate oversight, LADWP's entire board of commissioners has been regularly updated and briefed on the status of the litigation, settlement negotiations, and the projects being undertaken by LADWP staff to remediate the billing system. Because litigation is pending, and to protect the attorney-client privilege and LADWP's attorneys' work product, these briefings have occurred in closed session.

Because LADWP has been focused on the remediation of the customer billing system, it has placed other pending major technology system changes on a slower track. In addition, the lengthy search for a Chief Information Technology Officer for LADWP has only now completed with Louis Carr, Jr., taking that role, effective this month.

If the court approves the settlement, LADWP will implement the settlement over the next several years. In addition, as CITO Carr becomes familiar with LADWP's operations, LADWP management will turns its attention, and that of Commissioners, to the need for developing appropriate oversight and management policies for technology system changes, including the appropriate level of Commissioner oversight.

LADWP is pleased to be able to update the State Auditor's office at its request.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

The Board of Water and Power Commissioners at their May 11, 2015 meeting approved a motion to allow the Commission to create the sub-committee comprised of Board members to oversee and evaluate the status of the Department's various technology projects. However, the Board has presently determined to continue their consideration of information technology projects at the board level and not delegate that responsibility to a smaller committee.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

The board has not created a subcommittee, but has the authority to do so. Due to the significant shortcomings in communication and oversight on the Customer Information System Project, we still believe a subcommittee would be in the best interest of the department and its stakeholders.

6-Month Agency Response

As per this recommendation and as was reported in the 60-day response, The Board of Water and Power Commissioners in their May 11, 2015 meeting approved a motion to allow the Commission to create the sub-committee comprised of Board members to oversee and evaluate the status of the Department's various technology projects.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

This recommendation's status is partially implemented because the board has the authority to create a subcommittee but has not yet done so.

60-Day Agency Response

At its meeting on May 19, 2015 and per LADWPs letter to the State of California Auditor, dated 5/11/2015, the Board of Water and Power Commissioners approved a motion to allow the Commission to create the sub-committee if needed.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2014-105

Agency responses received are posted verbatim.