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Friday, September 9, 2005



Gas cap
change request
is denied

The revision petition would
have lowered this coming
week's price cap by 2 cents

The Public Utilities Commission has denied a request by a state lawmaker to alter the wholesale gasoline price caps that are scheduled to take effect Monday.

Yesterday's decision marks the second time the commission has denied a request by lawmakers to alter the price cap formula.

Next week's price caps on wholesale gas are 45 cents higher than the current caps, reflecting Hurricane Katrina's impact on Gulf Coast oil production.

A revision sought by Rep. Hermina Morita (D, Hanalei-Kapaa) would have lowered next week's price cap by 2 cents, but the PUC denied the request, saying it does not have the power to make her specific change.

"Definitely these are extraordinary circumstances," Morita said. "I felt that the PUC has more discretion, and he (Chairman Carlito Caliboso) disagreed."

Price caps on wholesale gasoline are published each Wednesday and take effect the following Monday. A baseline price is calculated using an average of spot prices in three mainland markets from the five business days leading up to the Wednesday publishing date.

Because pricing information was unavailable for Monday's Labor Day holiday, the PUC substituted data from Tuesday, Aug. 30.

In a letter to the PUC, Morita said data from Aug. 30 already was used in calculating the cap for this week, and using the data for a second time "distorts current trends in the spot markets and would be an aberration that would adversely affect Hawaii's consumers."

Morita, chairwoman of the House Energy and Environmental Protection Committee, suggested the PUC exclude Labor Day and simply use a four-day average in calculating the cap for next week, rather than substitute last Tuesday.

Morita said yesterday that even using just a four-day average puts consumers at a disadvantage because prices in some markets began to dip Monday, after production facilities in the Gulf of Mexico began coming back online.

In his response, Caliboso said the law requires the commission to use published data for the five business days of the preceding week.

"We do not have the discretion ... to arbitrarily use a four-day average to control the resulting product of the formula and applicable data," Caliboso's letter stated.

Caliboso noted that using a four-day average, the per-gallon base-line price would be reduced to $2.5663 from $2.5883.

Under the law, only gasoline manufacturers, wholesalers or jobbers may petition the PUC to request an adjustment to the formula, although the commission has broad discretionary powers to make changes.

The PUC already has increased the price caps for Kauai, at the request of a jobber who said the slim margins provided by the original cap would force it to stop deliveries to remote locations.

Last month, the commission denied a request by Morita and Senate Consumer Protection Chairman Ron Menor seeking to remove a 6.5 cent "zone price adjustment" added to the cost of wholesale gas sold on Oahu. Lawmakers said the zone price adjustments were intended only for neighbor islands, to compensate marketers for the higher costs of storing and transporting gasoline for remote areas.

Caliboso disagreed, saying the law gives the PUC the authority to determine the appropriate adjustments for each of the eight zones defined by the legislation.

State PUC Gas Cap page
www.hawaii.gov/budget/puc/gaspricecaps/

AAA Fuel Gauge Report:
www.fuelgaugereport.com



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