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Commission Again Delays Vote on Anti-Consumer Report as Oil-Lobbyist Spouse of Commissioner Quits Her Role
 
Santa Monica, CA -- Consumer Watchdog and Public Citizen have filed a detailed request for public records of the California Energy Commission, seeking communications between its professional staff and a politically appointed member of the commission’s board whose spouse was a state-registered lobbyist for the oil industry. The two groups previously sent a letter charging a conflict of interest by the commissioner, James Boyd, whose spouse, Catherine Reheis-Boyd, is chief operating officer of the Western States Petroleum Association.

The relationship is clear conflict that should prevent Commissioner Boyd from leading a panel deciding the costs and benefits of fixing the unfair sale of “hot gasoline” in California, said the consumer groups.

“Gasoline and diesel fuels are a glaring exception to the usual rules of retail fairness,” said Dugan. “Buying hot fuel is the same as a buying from a butcher with a hidden finger on the scale. The unfairness is doubled when the oil industry has an inside pipeline to a government body that should protect the consumer, not create loopholes for industry.”

On the same day that the consumer groups’ conflict of interest letter was sent, Feb. 9, Reheis-Boyd canceled her lobbyist registration with the state, public records show, Commissioner Boyd, however, did not respond to the conflict of interest letter. The energy commission canceled a vote on the fuel temperature issue soon after the letter was sent.

“The public should know what communications Commissioner Boyd has had with the Energy Commission’s professional staff on the fuel temperature report since he became involved in mid-2008,” said Judy Dugan, research director of Consumer Watchdog. “The report has substantially skewed toward the view of oil industry lobbyists who have been working the issue for months. Many of the companies pushing hardest to stop reform are members of the Western States Petroleum Association, the employer of Commissioner Boyd’s spouse. Her sudden resignation of her formal lobbying role is just evidence of the inherent legal conflict in her job.”
 
The records request said:
“By way of background, on June 5, 2008, at the staff workshop for the AB 868 Fuel Delivery Temperature Study, the staff of the CEC distributed certain materials containing a draft report under AB 868 (“June 2008 Draft”). Subsequently, in November 2008, the California Energy Commission made publicly available a Staff Report entitled Fuel Delivery Temperature Study (“November 2008 Staff Report”). Finally, in January 2009, the Transportation Committee of the CEC (consisting of Commissioners Boyd and Douglas) issued a Committee Report entitled Fuel Delivery Temperature Study (“January 2009 Committee Report).  The November 2008 Staff Report contained materials changes in conclusions and methodology from the conclusions and methodology contained in the June 2008 Draft.  These changes were sought by and favored the oil industry.  Further, the January 2009 Committee Report contained further and materials changes from the November 2008 Staff Report and these changes also favored the oil industry.”

The records request also asked for copies of electronic and other communications between Boyd and any officers or employees of the Western States Petroleum Association during the period of the hot fuel study.

(See the conflict-of-interest letter here.)

(See the freedom of information request to the energy commission here.)

(For more information on Catherine Reheis-Boyd’s employment, see “Reheis-Boyd Employment” below.)
 
A vote on the commission’s disputed “Fuel Delivery Temperature Study” had been rescheduled From Feb. 11 to Feb. 25 in Sacramento, but was again abruptly canceled after the consumer groups submitted their public records act request. The vote is now scheduled for March 11 at Energy Commission headquarters in San Francisco.

The final draft of the year-long cost-benefit study by Energy Commission (CEC) acknowledges that California drivers unwittingly get less energy in their fuel than they believe they’re getting, that on average fuel is sold in the state at a higher temperature than the federal standard, and that such sales are a basic economic unfairness. In November 2008, the CEC estimated the annual loss to consumers in the state at $437 million. Rather than call for implementation of a fair method of sale that would save consumers money, the CEC’s final draft report regurgitates the oil industry’s declaration that retailers will recoup all costs of temperature compensation from consumers. The CEC report does not acknowledge that variable competitive forces are just as likely to return savings to motorists.

The report’s key summary of recommendations (page 116) reduces the value of  fairness and transparency in the sale of gasoline to no more than a “public perception.”  It invites the state Legislature to ban retailers from voluntarily installing gas pumps that compensate for temperature variations in gasoline and diesel fuels, which would be a reversal of current law.

(See the full CEC report here.)

Such pumps, which are widely used in Canada,, deliver gallons of gasoline that are always equal in energy content, no matter what the fuel temperature. The gasoline gallon is measured by mass (weight), rather than just by volume.

“Without temperature compensating pumps, drivers have no way to know the temperature of the fuel they are buying,” said Dugan of Consumer Watchdog. “They have no way to determine whether one gas station’s posted price is actually better than another station’s posted price, since fuel temperature can vary widely between nearby stations. This is economic fact, not a “public perception,” and drivers ought to be furious about the commission’s political bait-and-switch.”

The consumer groups noted that all packaged liquids—milk, kerosene, beer and propane among them—must be sold with temperature compensation. Some vehicles run on compressed natural gas, which is also sold in a manner that compensates for temperature expansion and contraction.

“The report must be reconsidered before submission to the Legislature,” said Dugan. “Any input on its content by Commissioner Boyd should be disregarded. At the very least, the report must reflect variance of  even economists’ opinion on whether and how much consumers would save from temperature compensation of fuel. And it must regard transparency and fairness in economic transactions as a fundamental consumer protection, not a mere “public perception.”

Reheis-Boyd Employment:
The “Report of Lobbyist Employer” of Western States Petroleum Association (“WSPA”) under “Activity Expenses” discloses that Commissioner Boyd reports $27,649.62 as “spouse salary” for the period October 1, 2008 thru December 31, 2008 because his wife (Catherine Reheis-Boyd) is the Executive Vice President and Chief Operating Officer of WPSA.  Similar disclosure forms of WSPA show attributed income to Commissioner Boyd from WSPA for all quarters of 2008.  In addition, we believe that the same “spouse salary” continues to be attributed to Commissioner Boyd for 2009 from WSPA.

The Statement of Economic Interest (Form 700) for Commissioner Boyd dated February 25, 2008 lists “Gross Income Received” from WSPA in the amount of $10,001 - $100,000.  The Form 700 of Commissioner Boyd also shows on Schedule D Income-Gifts from WSPA in the amount of $125 received on October 3, 2007. Both Schedule C and Schedule D of Commissioner Boyd’s Form 700 described the “Business Activity” of WSPA as “Oil Industry”.  

WSPA is the oldest petroleum trade association in the United States and represents oil companies that account for the bulk of petroleum marketing in California.  See www.wspa.org/what-is-wspa.aspx. Indeed, WSPA advocates for petroleum marketers before the legislature and regulators in California.   The installation of automatic temperature compensation equipment at California retail motor fuel pumps is strongly opposed by oil companies and other motor fuel retailers since it would require them to expend millions of dollars and negate millions of dollars in windfall profits each year to the oil industry.  Consumer groups support the use of such equipment because such equipment will provide transparency and save consumers many millions of dollars in motor fuel purchase costs.
 
Key language from draft report:

In its recommendations (page 116 of final study draft), the CEC declares:

“If the only criterion for assessing the merit of mandatory ATC installations for use at California retail stations is a net benefit to consumers, the Transportation Committee (Committee) of the California Energy Commission concludes that [temperature compensation] should not required (sic) since the results of the cost-benefit analysis show a net cost for consumers.”

The report suggests that legislators also consider “the value of public perception of fairness and accuracy” in its decision. (Not actual fairness and accuracy, just the public perception.)

Then the report invites the Legislature to dial current law backward:

“If the Legislature chooses not to mandate the use of [temperature compensation] at retail stations, they should clarify if the current intent of the existing statutes is to permit or prohibit voluntary [temperature compensation] at retail outlets for gasoline and diesel fuel.”
 
Yet in November 2008, the CEC issued a staff report concluding that:

“[p]ermissive voluntary use of automatic temperature compensation (ATC) devises (sic) at California retail stations is already permitted under California Law as it is not specifically prohibited.”  (page 2)

(See this and other documents from the study here.)

Hot Fuel Basics:
In summer and year-round in warmer states, gasoline heats up and expands. Consumers get slightly less fuel when it is measured just by volume because the standard gasoline gallon assumes a  temperature of 60 degrees.

The loss to drivers adds up to billions of dollars a year nationally. California, according to a study accepted by the CEC, has an average gasoline temperature of 71.1 degrees. The average loss in California is a few cents a gallon, depending on the gasoline price, but the loss statewide is hundreds of millions of dollars.

When gasoline sells for $4.00 a gallon (as it did last summer), drivers in hot locations and in summer where gasoline may be 90 degrees lose 8 cents a gallon.

Drivers have no way to know the temperature of the fuel they buy, so they can’t accurately compare value even at gas stations across the street from one another.

At the refinery, at the wholesale level and at delivery to gasoline stations, sales are generally adjusted for fuel temperature variations. The final delivery price or volume is adjusted so the value equals a gallon at the federal standard temperature of 60 degrees F. This adjusted gallon is called a “standard petroleum gallon” and is always equal to the energy content of a 231-cubic-inch gallon at 60 degrees.

It is only consumers buying at the pump who get a gallon measured just by volume, no matter what the temperature.
 
www.ConsumerWatchdog.org
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