© Jeff Chiu / Associated Press The current head of finance at the Department of Public Works was alerted in January 2019 to trash collector Recology's improper rate increase, according to emails between senior management in the department and the company. (AP Photo/Jeff Chiu)
The current head of finance at the Department of Public Works was alerted in January 2019 to trash collector Recology's improper rate increase, according to emails between senior management in the department and the company.
It's not yet clear, and no city agency involved will say, what the finance head did with the information and whether she took any action to flag it as improper.
The City Attorney's Office announced a nearly $100 million settlement with Recology last week for overcharging customers. The company failed to account for revenue received from ratepayers during the application for its rate increase in 2017. The court documents say that the company hiked rates 14% instead of the 7% the company should have received. Recology identified the error and discussed it with Public Works in December 2018, but no action was taken by either body to publicly disclose or correct the error and instead the company continued collecting improper rates for two years, the City Attorney said.
The emails obtained by The Chronicle, first reported by NBC Bay Area, included two messages sent in January 2019 between then-Recology Vice President John Porter and Ann Carey, at the time a retired Public Works employee brought back to assist in the rate process.
In the first email, Carey asks Porter to point out which line items from the 2017 rate increase application they discussed in a December 2018 meeting so that she could "follow your logic." Porter responds with a hand-annotated attachment of the accounting, pointing out the errors.
Julia Dawson, the current Public Works' deputy director for finance and administration, is copied on both emails. Nick Roberts, former Group Controller at Recology, is copied on the second email.
The City Attorney has not accused Dawson or Carey of any wrongdoing. Public Works and the City Attorney did not respond to questions about whether either woman took action after being alerted to the improper rate increase.
"Our investigation into why the error was not corrected promptly is ongoing, and further comment could potentially compromise our ongoing investigation," City Attorney spokesman John Coté said.
Public Works spokeswoman Rachel Gordon said Dawson was not available to be interviewed for the story.
"We are actively conducting an internal investigation, still collecting information, and have no further comment at this time," Gordon said.
Roberts, who no longer works for Recology, referred questions to the company when reached in a message. Porter, who also no longer works for Recology, could not be reached. Carey did not respond to phone messages.
Based on the emails, Supervisor Aaron Peskin accused Julia Dawson of malfeasance during last week's Board meeting - and doubled down on his comments in later remarks. Peskin said he hadn't confronted Dawson directly about allegations.
"We should all be befuddled that nobody in the Department of Public Works understood these things. I believe higher ups actually knew or should have known these things," Peskin said.
In the same meeting, Peskin also implicated the head of the Department of the Environment, but provided little documented evidence for the second accusation other than comments in Recology's press release two weeks ago, which said its staff alerted the Department of the Environment in December 2018 about the improper rate charge.
Recology didn't provide more information upon request about who in the department was alerted.
"Nothing matters more to us than our relationships with our customers, and we know that even beyond the settlement we reached with the City Attorney, we have a lot of work to do to regain their trust," the company said in a statement. "We fell short of our community's expectations."
Department of the Environment spokesman Charles Sheehan said "we do not understand where this is coming from and what Recology is basing their statement on."
Sheehan said the department head was alerted to the overcharge in February 2021 and reached out to Public Works and the City Administrator's Office, which told the head of the environment department that the City Attorney was the lead agency already investigating the issue.
Supervisor Connie Chan said Monday she agreed with Peskin that the scandal should be investigated further. .
"It's our job to question and to restore public trust," Chan said. "For Supervisor Peskin to be questioning city department heads about their actions, I do understand the intent. Whether that's the forum to speak about or give out specific names, I defer back to Supervisor Peskin and what are his goals when he makes those comments. But I do understand we're raising questions around public integrity. It's a very serious problem."
Peskin on Monday stood by his accusations amid a pending city investigation.
"I in no way have impeded the investigation," Peskin said. "I think it is going to bring about an honest, transparent discussion."
Mallory Moench is a San Francisco Chronicle staff writer. Email: mallory.moench@sfchronicle.com Twitter:@mallorymoench