LEGISLATURE 2006 SESSION
Gas prices have climbed steadily since this photo was taken April 18 in Honolulu, fueling intense debate about the effectiveness -- or ineffectiveness -- of the state's gas-cap law.
Gas cap: Deal reached to halt controversial law
Legislators resolve a cap-calculation conflict just before a midnight deadline
The state's unique gasoline price-cap law is being suspended indefinitely with the power to reinstate the controls being turned over to the governor under an 11th-hour compromise reached last night by House and Senate lawmakers.
Any kind of suspension had appeared unlikely after House members broke off negotiations with their Senate counterparts yesterday afternoon.
But leadership from both chambers met late into the evening to try and force a compromise. The final measure passed by a 9-0 vote just five minutes ahead of the midnight deadline to have work completed on all bills.
"I'm very pleased," said Senate Consumer Protection Chairman Ron Menor, the chief author and main backer of the bill. "It's been a long and difficult road but in the end I think House and Senate conferees realized that we needed to pass out a measure that ultimately benefited consumers and I think we got that sort of a bill."
The agreement was reached after two of the original House negotiators, Reps. Hermina Morita and Kirk Caldwell -- the chamber's strongest supporters of a repeal -- were discharged from the conference committee late last night and did not take part in the vote.
The remaining House conferees agreed to the proposal offered by Menor earlier this week.
"This is not a perfect bill, but it's an improvement over what we have now," said Rep. Joe Souki (D, Waihee-Wailuku). "We understand the need to move on."
Under the proposal, suspension of the price caps would begin immediately. The governor would be able to reinstate the caps if it is determined that high gas prices are having a detrimental effect on the public.
The measure also requires the Public Utilities Commission to continue calculating hypothetical price caps under a revised formula.
Negotiations previously bogged down over the formula to be used for calculating the hypothetical price caps, which would serve as a basis of comparison for consumers.
House members argued that the formula in Menor's proposal had not been adequately studied and would be artificially low, resulting in actual prices being consistently higher.
The House wanted to have the Public Utilities Commission collect and study pricing information that oil companies would have to provide under new reporting requirements, and then determine an appropriate formula for any caps.
With gas prices expected to be an election year issue, cap opponents could be embarrassed if gas prices remained high while hypothetical caps showed consumers could be saving.
Menor stood by the formula, which he said was based on recommendations by both the consulting firm hired by the PUC to implement the gas-cap law and a mainland petroleum industry analyst.
Under that formula, which adds Singapore to three mainland markets whose spot wholesale gas prices are used for setting the weekly caps, current price ceilings would be about 23 cents lower than actual caps.
Morita, citing a letter from the PUC's consultant, earlier had argued that Menor incorrectly and selectively applied the consultant's recommendations in setting his formula.
"We're in a regulatory arena," said Morita (D, Hanalei-Kapaa). "The philosophy of regulation is that it's fair to all parties and in the public's interest.
"Putting misinformation into law, strictly to give consumers false hope of lower prices, doesn't benefit anybody."
Menor argued that the Senate passed the proposed formula over to the House in March and that if there were any concerns about it, they should have been raised earlier.
He further argued that lawmakers already have the pricing information they need as a result of the state's antitrust lawsuit against oil companies that was settled in 2002. Information from that lawsuit that showed oil companies' profits in Hawaii compared with the mainland led to the passage of the gas-cap law.