Disclosing pricing information will aid consumers
Editor's note: Senate Consumer Protection Chairman Ron Menor this week offered more changes in gas price cap legislation in an effort to break a deadlock between House and Senate conferees. House members want the gas cap law repealed. The text of Menor's remarks, delivered Tuesday to the joint House-Senate committee, follows.|
LET ME BEGIN by saying that I believe the original version of this bill I drafted and which was passed by the Senate, along with the conference draft I submitted to the House conferees on Friday, represented a fair, balanced and reasonable compromise in addressing the concerns of the House. The Senate proposals took into account the House's position that our current law should be put on hold and that a system of transparency should be implemented, while keeping a safeguard mechanism in place to protect consumers if oil companies follow their historical pattern and raise prices artificially and unjustifiably high.
I continue to believe that this is the best solution to break the impasse between the House and the Senate.
NEVERTHELESS, I am a realist, and I recognize that the Senate proposals cannot be passed without the concurrence of the House conferees. And the House conferees made very clear (Monday) that the House is firm in its position and will not support the provision in the Senate proposal that would automatically trigger the reinstatement of wholesale price regulation under certain conditions to protect the interests of consumers.
Therefore, in recognition of this reality, I am submitting for your consideration another proposed Senate conference draft, which you can think of as Plan B. I will now spell out the key points of this measure.
To begin with, I am withdrawing the provision that would require the automatic triggering of pricing regulation if wholesale prices exceed the fair pricing indicator for four consecutive weeks.
Instead, I am submitting a new proposal in its place to impose a complete and immediate suspension of our gas pricing law, but give the governor the discretionary authority to reinstate gas pricing regulation under certain circumstances for the protection of consumers.
HERE'S HOW the Senate proposal would work:
» First, the gas pricing regulation would be suspended indefinitely. As a concession to the House, the oil companies will be allowed to set prices as high or as low as they want.
At the same time, the Public Utilities Commission would still be required to calculate and post the Senate's proposed Fair Price Indicator on a weekly basis, showing what the price would have been under the Senate's proposed wholesale pricing regime, which includes adding the Singapore spot price and other changes contained in Senate Bill 2911 recommended by the PUC's consultant.
» Second, I am also proposing that we include the strengthened and improved transparency provisions from the Senate draft in the conference draft, which will require the oil companies and wholesalers to make pricing information public, including the actual wholesale prices that companies are charging, which at this point are not readily available to the public.
By allowing consumers, through the Fair Price Indicator, to compare the actual wholesale prices with what the wholesale price would have been under pricing regulation, we will have established a system of true transparency in which the public will have the means to judge for themselves the fairness and appropriateness of the pricing practices of the oil companies and wholesalers.
» Third, the final key provision is to give the governor the authority to reinstate the gasoline wholesale price ceiling upon publication of a finding that such reinstatement would be beneficial to the economic well-being, health and safety of the people of Hawaii. If the governor exercises this discretion to reinstate gas pricing regulation, it would remain in effect for 30 days, after which time it would be automatically suspended. Thereafter, the governor may reinstate the pricing regulation for 30-day periods if the administration believes it would be beneficial to the people of Hawaii. It should be noted that this provision is consistent with the approach taken under our current law in which the governor has the power to suspend.
This provision represents a major concession to the House position, which calls for the elimination of a mandatory price ceiling, but at the same time addresses the Senate's concern that we have some kind of safeguard mechanism in place if consumers believe they are being gouged and demand protection.
I should add that all of this language has been carefully reviewed and found acceptable by Tim Hamilton, the nationally recognized petroleum industry consultant who has been advising the Senate on the technical aspects of this measure.
TO RECAP, when the House asked for transparency, the Senate provided far more transparency than the House called for in its own bill. When the House asked for suspension, the Senate developed a mechanism to suspend the pricing regulation. The House objected to the automatic trigger as the mechanism to force the oil companies to behave, and the Senate has put forth a mechanism that eliminates the on-off switch but still provides a measure of protection for consumers, which would only be used in a situation in which the public can plainly see the misbehavior by the oil companies and can convince the governor that protection must provided.
AND, FINALLY, the Senate proposal also addresses the concern of the House that we shouldn't continue to implement price regulation until we are able to compile additional data that can be used in a thorough analysis of the pricing practices of the oil companies in the Hawaii market.
For all of these reasons, I believe that in submitting this proposal, the Senate conferees are "going the extra mile" to break our impasse and reach a compromise with the House that is more than fair and reasonable.