Plaintiffs in a civil suit against the V.I. Water and Power Authority gave notice Friday that they will take their case to the Third Circuit Court of Appeals after a V.I. District Court judge ruled in March that their due process claims against WAPA may proceed but dismissed all other counts against the utility and the private contractors that installed its so-called smart meter system.
The dismissed counts alleged violations under the federal False Claims Act, the Virgin Islands Consumer Fraud and Deceptive Business Practices Act, and a product liability claim related to cybersecurity vulnerabilities in the electrical grid. The count that remains alleges WAPA violated the plaintiffs’ 14th Amendment rights when it failed to provide due process before threatening or cutting off electricity services tied to a faulty metering system.
The ruling by U.S. District Judge Juan R. Sánchez narrowed the scope of the lawsuit considerably but left the door open for legal scrutiny of WAPA’s internal procedures and the statutory protections afforded to customers.
At the heart of the case is WAPA’s 2014 contract with Tantalus Systems and Itron Networked Services Inc. to replace its analog meters with a digital Advanced Metering Infrastructure system. The $13 million project was financed in part by a loan from the U.S. Department of Agriculture and was promoted as a cost-saving measure that would eliminate the need for meter readers and allow customers to monitor real-time usage.
However, the plaintiffs alleged that Tantalus and Itron knowingly misrepresented the functionality of the AMI system to secure the USDA loan and that they submitted false invoices for “services not performed and faulty equipment.”
According to the plaintiffs — a mix of individual residents and local businesses, including KH, RV, Gordon Ackley, Gasworks Inc., and Fruit Bowl Inc. — the AMI system never worked as promised. They allege that WAPA continues to estimate bills because the meters cannot reliably report usage, resulting in frequent overbilling.
During a meeting of the V.I. Public Services Commission in August, WAPA CEO and Executive Director Karl Knight said the authority would have to continue relying on estimated billing until the system could be replaced because the existing AMI hadn’t worked properly since hurricanes Irma and Maria in 2017.
One plaintiff in the lawsuit said he relied solely on a generator for an entire billing period, yet still received a high-usage bill. Another was charged thousands of dollars during a time when his family was out of town. Several plaintiffs reported receiving disconnection notices after unsuccessfully disputing charges with WAPA’s customer service. Ackley, one of the named plaintiffs, had his service temporarily shut off for nonpayment of what he claims was an incorrect bill and continues to receive disconnection warnings.
These billing issues are compounded by what the plaintiffs describe as a lack of transparency and recourse. Virgin Islands law allows customers to appeal unresolved disputes to the Public Services Commission, but plaintiffs argue that the process is ineffective and, in practice, unavailable. The complaint points to the experience of plaintiff Johann Clendenin, who served as a commissioner of the PSC and said he was “beset with Virgin Islanders complaining about their bills,” none of which were resolved through the commission.
The plaintiffs further alleged that the PSC “never provided the ratepayers with notice and implemented formalized procedures to resolve customer complaints.” Taken together, the court found the allegations sufficient to support the claim that WAPA violated the plaintiffs’ right to due process under the 14th Amendment by failing to provide meaningful procedures before terminating or threatening to terminate service.
The plaintiffs’ remaining claims, however, did not survive, with the court ruling that the allegations were too vague, lacking the specific details required under the heightened pleading standards for fraud. Sánchez noted that “Plaintiffs conclusorily allege a false claims scheme without details,” and emphasized that they failed to provide “any details on the services that were not performed or the alleged faulty equipment.”
Itron has since filed a motion for an award of attorneys’ fees in the amount of $164,272.
In February, WAPA’s governing board voted to award Itron a four-year, $30 million contract to replace the failed Advanced Metering Infrastructure, or AMI. The short list of vendors considered for the FEMA-funded project included Aclara, Honeywell, Landis+Gyr and Itron. WAPA electrical engineer Belgrave Stedman said during a presentation to the governing board that Itron provided the most complete bid and scored highest based on technological criteria. Itron’s proposal was rated second in cost-effectiveness.
