Fuel price control? ‘Nuclear option’ a possibility, says McLaughlin
In delivering his budget presentation on Friday Premier Alden McLaughlin said that while implementing fuel price controls was a last resort, the option was still on the table.
McLaughlin said the Utility Regulation and Competition Office (OffReg) has been working towards improving the regulation of the fuel sector.
“Though there has been some delay, a lot of work has been done toward improved regulation of the fuel sector. I have been advised that by and large, the companies within sectors, particularly the main oil companies, are now complying with legislation and providing critical information to OffReg to carry on their work,” said McLaughlin.
However, McLaughlin sternly warned that if this cooperation between firms and the utility regulator did not continue he would be forced, as a last resort, to implement fuel controls.
“I appreciate the cooperation we have had from them to date and government expects that this cooperation will continue to the mutual benefit of the fuel sector and the people of these Islands,” said McLaughlin.
“But Mr. Speaker, let me be clear about something. If this cooperation does not continue to our satisfaction and government is of the view that the only way to properly protect consumers would be to institute price controls, then it should be understood that we will do so. But let me say again, this “nuclear option” would be a last resort,” added McLaughlin.
McLaughlin noted that his administration would not allow the country to fall prey to market failure or unscrupulous business practices.
He noted that fairness has always been a central tenet of his administration, McLaughlin further added that it was his previous administration that had passed and implemented the Utility Regulation and Competition Law last year, which prompted the creation of the regulation office in January 2017.
According to McLaughlin, Utility Regulation and Competition Office (OffReg) has already started to work on ensuring fair pricing and competitiveness at the gas pump.
“Pending the establishment of market rules, there has been general agreement between the fuel wholesalers and Government that prior to increasing prices, there will be discussions and review of the necessity of the increase to satisfy OffReg,” he added.
McLaughlin praised the utility regulator for having in recent times deferred fuel price increases and having them foregone altogether.
“To aid the creation of market rules, OffReg will commence a robust and comprehensive analysis and assessment of the market, including benchmarking what occurs in other jurisdictions,” said McLaughlin.
“This market review is expected to be well under way in the first quarter of 2018 after which initial rules will be established to guide future price increases and changes as well as broader regulation of the fuel sector,” he added.
McLaughlin noted that more work still needs to be done to ensure that information provided about the actual cost of fuel to wholesalers is transparent.
With regard to liquid propane gas, McLaughlin noted that the island is now seeing new entrants to the market and it is anticipated that this will improve competition.
McLauglin added that liquid propane gas will also be regulated by OffReg and once rules covering price increases and other facets of the sector are in place.