Panel OKs halt of gas caps, with 'safeguard'

The legislative bill allows price caps to be reinstated if prices climb too high

The Legislature's key backer of the state gasoline price-cap law unexpectedly switched gears yesterday, advancing a proposal that would suspend the price controls.

The proposed suspension of the wholesale gas cap is moving in both chambers of the Legislature, but the changes adopted by Senate Consumer Protection Committee Ron Menor also include a "safeguard" that allows the caps to be reinstated if prices climb too high.

PROPOSED 'SAFEGUARD' Senate Consumer Protection Chairman Ron Menor has proposed that the state's price cap on wholesale gasoline be suspended, but only under conditions that would allow the controls to be reinstated if prices climb too high. Here is how it would work: » Although the price caps would be suspended, the Public Utilities Commission would still calculate a hypothetical wholesale price cap each week, in each of the eight zones defined by the law, using a revised formula. » Oil companies would be required to provide information on their wholesale prices. » For each zone, if the wholesale price goes above the hypothetical cap for two consecutive weeks, the maximum wholesale price cap would automatically be reinstated for two straight weeks. After the two weeks, the caps would be suspended again. Source: Senate Consumer Protection Committee

Although Menor (D, Mililani) said he believes the law is working, he offered the proposal as a compromise to House members, who have supported a suspension and repeal of the nation's only state controls on gasoline prices.

"Despite the support I have obtained in getting a pro-consumer piece of legislation through the Senate and over to the House," Menor said, "I recognize that as we head into an election, many of my colleagues, especially in the House, lack the will and the desire to move forward with a measure that takes on the petroleum industry and all its resources."

Key House members said they still needed to examine the details of Menor's proposal before committing to support it, but said they were encouraged with the senator's move away from his previous stance.

"Just that we're actually discussing a suspension of the gas cap is an encouraging movement," said House Energy Chairwoman Hermina Morita (D, Hanalei- Kapaa).

"I think the one thing for sure is we really need a better understanding of this market to make any kind of regulatory oversight occur," she added.

Price controls, designed to make Hawaii prices track closer to mainland trends, began in September after years of debate over whether oil companies were making excessive profits here. Whether they have worked has been debated all year, with each side presenting various analyses to support its argument.

House members previously supported the cap, but have changed their stance, primarily citing their belief that there is a lack of political will on behalf of the Lingle administration to carry out the law as the Legislature intended to bring down the cost of gas.

The House passed a measure suspending the gas cap and in its place adopting strict oversight measures of the oil industry's pricing practices.

Menor criticized the House proposal for not getting enough information out to the public to let consumers decide whether they felt oil companies were pricing fairly.

His amendments would allow for information such as wholesale price changes to be released publicly. Competitive information would remain confidential and be seen only by the Public Utilities Commission.

"This action by the Senate installs true transparency while still allowing the industry to keep sensitive internal affairs sealed by the PUC," Menor said. His committee advanced the proposed changes 5-0.

"It will allow the discussion and debate to continue," said Sen. Will Espero (D, Ewa-Kapolei-Ewa Beach). "By next session, I believe the data and trends will be clear one way or the other. ... I think it's a good compromise."

If approved by the full Senate, House Bill 3115, Senate Draft 1, would go to the Ways and Means Committee and face one final floor vote before going to the House.