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California Utility Allegedly Used Safety Funds For Executive Pay. Huge Electric Rate Increase In Massachusetts

Pacific Gas and electric logo The Los Angeles Times reported about an investigation to Pacific Gas & Electric Company:

"Money collected from ratepayers and earmarked for pipeline safety was instead spent on executive pay raises by the state's largest utility, Pacific Gas & Electric Co., in the months before a deadly pipeline explosion in 2010... The new head of the Public Utilities Commission wants to increase financial penalties against Pacific Gas & Electric Co. to a record $1.6 billion for negligence related to the 2010 pipeline explosion that killed eight people and leveled a neighborhood in the Bay Area suburb of San Bruno."

Fines? Jail time seems appropriate instead. People died, and:

"Records released a few days after the explosion showed that PG&E received approval in 2007 to spend $5 million of ratepayer money to replace a high-risk section of the 30-inch pipeline north of the San Bruno blast site. The work on the 1950s-era pipe was never performed. And in 2010, the utility asked for another $5 million to do the same job, according to PG&E documents submitted to the PUC."

Each state's Public Utility Commission (PUC) oversees and the utilities (e.g., water, electricity, gas), including how much they can raise prices to ratepayers. Consumers and businesses are ratepayers. The California PUC's mission:

"The California Public Utilities Commission serves the public interest by protecting consumers and ensuring the provision of safe, reliable utility service and infrastructure at reasonable rates, with a commitment to environmental enhancement and a healthy California economy.  We regulate utility services, stimulate innovation, and promote competitive markets, where possible, in the communications, energy, transportation, and water industries"

Seems like the public interest wasn't served very well, if at all. When scheduled (and paid for) maintenance and safety work isn't performed, one has to question whether the state PUC is doing its oversight job effectively.

This news story deserves monitoring. It makes one wonder where else this type of executive wrongdoing happens. Meanwhile, a Massachusetts state legislator is investigating huge electricity rate increases in Boston:

"... the Bureau of Labor Statistics said electricity prices in Boston were 63 percent higher than the national average in February — well up from last year, when local prices were 29 percent higher. Utilities have blamed insufficient pipeline capacity to supply the region, coupled with high winter demand."

63 percent is a huge rate increase. Huge. Did you pay go up 63 percent? Mine didn't, and I doubt that yours did either. Did your electricity consumption go up 63 percent? Mine didn't, and I doubt that yours did either. The "public good" is a balance between the needs of ratepayers and the utility providers. Things seem lopsided.

Besides the negative impact upon the Boston and metro-area economy, the huge electric rate increase is especially difficult for retirees on fixed incomes. State politicians, the Boston Mayor's office, and the Massachusetts PUC need to explain how they let this huge increase happen.

What are your opinions of the above events in California? Massachusetts residents: what do you think about the recent rate increases in your electric bills?


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