A staff report by the California Energy Commission (CEC) has concluded that that implementation of automatic temperature compensation (ATC) in California would increase overall costs to consumers, according to information from the National Association of Convenience Stores (NACS).
Consumers would end up paying for the installation of equipment and the related expenses associated with a regulatory change that required the temperature compensation. Any adjustment to the volume of fuel dispensed to consumers due to changes in fuel temperature would result in an equal change in consumer prices, NACS said.
If California fuel temperatures do average above 70 degrees F as the CEC’s evaluation found, ATC would necessitate a larger gallon that would be met with an equally greater retail price. Consequently, the net effect would be a transfer of equipment and regulatory costs directly to the consumer, NACS said.
In addition, the association points out that additional costs incurred at the pump would be recaptured in the pump, not spread throughout the sales of items inside the convenience store as the report suggested.
The CEC staff report’s assertion that fuel retailers would have to recapture lost revenues associated with the change in fuel volume was an incorrect assessment of the market. There would be no lost revenues associated with the sale of larger gallons because the price would automatically and almost immediately shift with the size of the fuel--in other words, there would be no free motor fuel dispensed by any retailer.
The CEC will accept written comments on the issue until January 5, 2009. NACS will submit its final economic analysis in the near future. Shortly after, the National Conference on Weights and Measures will meet for its annual interim meeting January 11, 2009, in Daytona Beach FL where NACS and its allies hope to present the findings of the analysis. The CEC will then meet again February 11, 2009, in a business meeting to review and possibly approve the final staff report in preparation to submit to the legislature.