PUC rejects alteration to
gas cap cost formula

The Public Utilities Commission says there is not enough time to review and act on a request by two key lawmakers to modify the maximum price for wholesale gasoline on Oahu before the state's gasoline price cap law takes effect Thursday.

Senate Consumer Protection Chairman Ron Menor and House Energy Chairwoman Hermina Morita asked the PUC this week to change the formula, arguing that the commission mistakenly allowed oil companies and wholesalers to charge an additional 6.5 cents per gallon on the price of gasoline on Oahu.

But PUC Chairman Carlito Caliboso, in a letter to Menor and Morita, said he disagrees.

He added that under the law, only manufacturers, wholesalers and jobbers may file a petition asking the commission to adjust the price cap formula.

Caliboso suggested lawmakers submit additional evidence and data to support their claim before the commission decides whether to further examine their request.

Menor said he was disappointed by the commission's decision, and plans to contact agency officials next week.

"I'm hopeful that they will reconsider their decision," Menor said yesterday. "The decision is adding unnecessarily to the wholesale price of gasoline and is also providing a windfall to the oil companies and wholesalers who already make adequate and reasonable profits under the gas price cap formula."

At issue is the 6.5 cent "zone price adjustment" for Oahu.

The PUC sets a baseline price for wholesale gas based on an average of prices in three mainland markets. Fixed costs to account for shipping, storing and delivering gasoline across the state are then added to that baseline price to arrive at the maximum wholesale price.

Lawmakers say the zone price adjustments were intended only for neighbor islands, to compensate marketers for the higher costs of transporting gasoline to remote areas.

Zone price adjustments differ by island and location. For example, the zone adjustment is 21.3 cents in Hilo and 23.2 cents in Kona.

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