Continuation of Fuel Cost Recovery Surcharge; S. P. 28208 [35 Pa.B. 5358] Public Meeting held
September 9, 2005Commissioners Present: Wendell F. Holland, Chairperson; James H. Cawley, Vice Chairperson; Bill Shane; Kim Pizzingrilli; Terrance J. Fitzpatrick
Order By the Commission
The Pennsylvania Public Utility Commission (Commission) by its Fuel Cost Recovery Surcharge Order at Special Permission Number 28208, adopted June 10, 2004, authorized call or demand, paratransit and airport transfer carriers under the jurisdiction of this Commission to adjust rates and fares to offset unanticipated fuel expenditures. All call or demand carriers were authorized to collect a fuel surcharge of thirty cents ($.30) per trip for each paying passenger, and all paratransit and airport transfer carriers were authorized to collect a fuel surcharge of seventy cents ($.70) per trip for each paying passenger in addition to tariff rates. The fuel surcharge was effective on June 14, 2004, and was scheduled to terminate on June 12, 2005.
At its Public Meeting of June 2, 2005 the Commission approved an extension of the temporary fuel surcharge until June 12, 2006. The Commission also required the Bureau of Transportation and Safety to investigate the merits of the fuel surcharge on a quarterly basis.
At the time of approval of the initial fuel surcharge, the average retail cost of regular gasoline was $2 per gallon.1 Throughout the first year of the fuel surcharge the price of gasoline fluctuated as the average price reached a high of $2.22 and a low of $1.84, but the average price of gasoline for that one year period was $2.00. Since $2 per gallon was the price upon which the fuel surcharge had been based, the amounts of the fuel surcharge remained unchanged.
In the three months following the order extending the fuel surcharge, gasoline prices have risen substantially. The continued increase in the price of crude oil as well as high seasonal demands have resulted in greater price increases. Additionally, prices became extremely volatile in the aftermath of Hurricane Katrina. The average cost of regular unleaded gasoline for the week ending September 5, 2005 is $3.29, which is an increase of 64% over the $2.00 used at the beginning of the fuel surcharge.
In consideration of future prospects for retail gasoline prices, the Energy Information Administration of the Department of Energy was consulted. Analysts believe that prices at the pump will eventually decrease. Refineries in the Gulf of Mexico are being repaired and personnel are returning. Authorization has been given to release the nation's petroleum reserves to help alleviate the shortages. The price of crude has also stabilized.
Historically, gasoline prices have frequently fluctuated, but the industry has experienced unprecedented increases. The purpose of the fuel surcharge was to afford call or demand, paratransit, and airport transfer carriers under the jurisdiction of this Commission the opportunity to adjust rates and fares to offset unanticipated fuel expenditures.
Data gathered by the staff of the Bureau of Transportation and Safety in the course of its investigation reveals that the transportation industry's fuel costs are no longer being offset by the fuel surcharge. In its determinations staff utilized the same criteria used in the original order of June 10, 2004: Average trip length of 6.8 miles for call or demand carriers and 13.61 miles for paratransit and airport transfer carriers, average miles per gallon per vehicle provided of 15.04 for call or demand carriers and 13.01 for paratransit and airport transfer carriers, and the Department of Energy's report of retail on-highway gasoline prices for the Central Atlantic Region. The average fuel cost of a trip was calculated by dividing the average trip length (6.8 miles for call or demand and 13.61 paratransit and airport transfer) by the average miles per gallon per vehicle (15.04 for call or demand and 13.01 for paratransit and airport transfer). The results were multiplied by the fuel price.
Cost Per Trip Basis--Call and Demand Date Retail Gas Cost Avg. Fuel Cost/Trip 2002 $1.35 $ .61 2004 $2.00 $ .90 Week Ending 9/5/05 $3.29 $1.49 Cost Per Trip Basis--Paratransit/Airport Transfer Date Retail Gas Cost Avg. Fuel Cost/Trip 2002 $1.35 $1.41 2004 $2.00 $2.09 Week Ending 9/5/05 $3.29 $3.44 At the time of the inception of the fuel surcharge, the changes in average cost per trip were $.29 for call or demand and $.68 for paratransit and airport transfer. These amounts were the basis for the respective fuel surcharges granted to those types of carriers. Throughout the first year of the fuel surcharge there was no significant deviation from the average cost of fuel per trip. In the first three months following the extension of the fuel surcharge, these amounts have increased substantially. In addition, in the week following Hurricane Katrina's onslaught the severe increase in the cost of gasoline has resulted in increases of 144% for the average cost of fuel per trip for both classes of transportation.
In light of this information, we believe it is appropriate to adjust the amounts for the fuel surcharge accordingly. We will permit call or demand carriers to increase the fuel surcharge from $.30 per trip for each paying passenger to $.90 per trip for each paying passenger, and paratransit carriers and airport transfer carriers to increase the fuel surcharge from $.70 per trip for each paying passenger to $2.00 per trip for each paying passenger.
We also recognize that the price of fuel will continue in a state of flux in the future months. Fuel prices could fall as dramatically as they have risen and we have an obligation to ensure fairness to those who are paying for the services of the carriers. In order to make certain that the public is not being charged a greater amount than necessary the temporary fuel surcharge under Special Permission No. 28208 will be evaluated on a monthly basis until further notice.
After due consideration, we have determined that fuel costs have increased substantially. Based upon the evidence available, we are of the opinion that the passenger motor carrier industry continues to have a need for the fuel surcharge, as well as an increase to permit the recovery of unanticipated fuel expenditures; Therefore,
It Is Ordered That:
1. The fuel surcharge established at Special Permission No. 28208 be continued.
2. Call or demand carriers rendering transportation service under the jurisdiction of the PA Public Utility Commission may increase the charge from $.30 per trip for each paying passenger to $.90 per trip for each paying passenger.
3. Paratransit carriers and airport transfer carriers rendering transportation service under the jurisdiction of the PA Public Utility Commission may increase the charge from $.70 per trip for each paying passenger to $2.00 per trip for each paying passenger.
4. The increases be approved to become effective immediately.
5. The approved increases will be reviewed on a monthly basis beginning with the Public Meeting of September 29, 2005.
6. Call or demand motor carriers shall notify the public by placing the attached notice in all vehicles, which shall read: ''The PA Public Utility Commission has authorized a fuel surcharge under Special Permission No. 28208. The surcharge has been increased to $.90 per trip for each paying passenger and is effective on September 9, 2005. The fuel surcharge shall terminate on June 12, 2006.''
7. Paratransit and airport transfer motor carriers shall notify the public by placing the attached notice in all vehicles, which shall read: ''The PA Public Utility Commission has authorized a fuel surcharge under Special Permission No. 28208. The surcharge has been increased to $2.00 per trip for each paying passenger and is effective on September 12, 2005. The fuel surcharge shall terminate on June 12, 2006.''
8. The Secretary of this Commission shall duly certify this order and deposit same with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin.
JAMES J. MCNULTY,
Secretary[Pa.B. Doc. No. 05-1804. Filed for public inspection September 23, 2005, 9:00 a.m.] _______
1 This information was provided by the Energy Information Administration of the Department of Energy.
