By Jennifer Langston
Herald Writer
EVERETT — Kal Leichtman said the Snohomish County PUD’s decision to hire an expensive California management consultant reminded him of the monarchy before the French Revolution.
They lived in gold-plated palaces while their subjects went hungry.
He was among a half-dozen customers Tuesday who questioned the PUD board on why the utility spent more than $620,000 on outside consulting fees when customers were struggling to pay their bills.
The expenses charged over two years by consultant Laurence Akiyoshi to help fix management problems included more than $40,000 for air fare, $34,000 for hotel bills and $20,000 for rental cars.
"I would call that opulent decadence," Leichtman said. "There’s so many worthwhile consultants in this area who could have done the job less expensively."
A review of records by The Herald last week found that Akiyoshi billed the PUD $750,000 over a two-year period. That’s more than any of the utility’s top managers were paid.
The Woodside, Calif., consultant was retained to help hire three top managers, improve customer service, focus the utility’s computer department and analyze results of an employee survey.
The PUD commissioners requested a written report from general manager Paul Elias, who hired longtime business acquaintance Akiyoshi at $400 to $425 an hour.
Commissioner Don Berkey said at the very least there seemed to be a disconnect between customer expectations and the way the utility had been operating. Many of those customers have been cutting corners to pay record high electricity bills, following a 50 percent rate increase last year. The board reduced rates by 5 percent this week, offering some relief.
"I think we have a serious problem here," Berkey said. "Clearly, our customers did not expect to spend a half-million dollars on a consultant … and I think that deserves a full explanation."
Elias defended his decision to hire Akiyoshi at Tuesday’s meeting. He said the consultant was initially brought in to help identify problems and solutions in the utility’s troubled customer service department.
The utility needed a top-notch advisor, he said. Most organization behavior consultants charge between $450 and $625 an hour, and Akiyoshi agreed to reduce his usual fee, Elias said.
The PUD’s customer service department, with nearly 100 employees, is the utility’s third-largest division behind corporate services and employees who service poles and wires.
While customer service employees had good ideas for improving efficiency and saving money, they felt like they weren’t being listened to, Elias said. With Akiyoshi’s help, the utility acted on some of those suggestions. That included doing away with burdensome requirements like asking new customers for references, which should save $300,000 to $500,000 a year.
It also farmed out some work trying to collect on canceled accounts. That freed up more people to answer phones, saving another $240,000 a year, he said.
But Elias took responsibility for expenses charged to the PUD, including stays in a four-star Seattle hotel, expensive car rentals, valet airport parking and copying charges that the utility now says are unreasonable.
The PUD is questioning $45,000 worth of Akiyoshi’s billings after noticing last month they seemed high. It is also conducting an audit to see if it was overcharged in previous invoices that added up to more than $600,000.
Akiyoshi, a consultant with 23 years experience who has worked for companies including Hewlett-Packard, Kodak and Levi Strauss, said in an interview last week that he’s upfront with all his clients about his rates and the expenses he expects to be reimbursed for.
But Elias said he was surprised when employees told him about some charges showing up on the invoices that he wouldn’t consider reasonable.
"They were not expenses I ever agreed to, and I told them to push back," Elias said Tuesday. "But I’m accountable for what had been approved in prior contracts."
The utility also paid Akiyoshi $65,000 twice after failing to notice it had been double-billed for the same work. That money has now been refunded, Elias said. That means the utility has paid $557,000 so far.
"By any stretch of the imagination, that’s still a lot of money for a consultant," he said. "But we needed this kind of help … and Mr. Akiyoshi had the credentials."
Nels Konnerup, a retiree who lives on Camano Island, said the amount of money paid for a single consultant seemed exorbitant. He said he hired plenty of consultants during his career working for the U.S. State Department, and he was perplexed by the charges.
He questioned why, at a minimum, the utility couldn’t have hired someone closer to home who wouldn’t have incurred such high travel expenses.
The PUD spent more than $210,000 just to bring Akiyoshi from his home in California to meet with employees in Everett, according to The Herald’s review of invoices.
"I’ve never seen anything that approached this," Konnerup said. "I just don’t see why anyone … should have to go outside of this state to find a consultant, particularly not at the price this man has charged the PUD."
Ed Taft, who owns a heavy construction company in Arlington, also questioned why the PUD didn’t catch the fact that it had been overbilled $65,000. In his own business, he scrutinizes every bill that comes in and routinely questions expenses that seem high.
"I’m kind of disgruntled with paying someone $400 an hour. I don’t know too many people who are worth that," he told commissioners.
Leichtman, an Everett resident, said he just paid the highest electricity bill in his 76-year life.
"I think Mr. Akiyoshi’s opulence was uncalled for, particularly in light of what we’re paying for our energy bills," he said. "When you compare that with hiring a local consultant, they went totally overboard."
You can call Herald Writer Jennifer Langston at 425-339-3452 or send e-mail to langston@heraldnet.com.
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