NASHVILLE – The Tennessee Fuel and Convenience Store Association (TFCA) touted recent victories in the legal and legislative arenas on hard-fought industry issues.
Oil marketers won a regulatory victory that will ensure fair competition in the Compressed Natural Gas (CNG) market, when the Tennessee Regulatory Authority turned down Piedmont Natural Gas Company’s request for permission to set the price had requested to raise heating rates to pay for installation of CNG fuel facilities.
TFCA launched a full campaign to challenge Piedmont’s request. In addition to hiring attorneys and expert witnesses, TFCA benefited from years of engagement with the Tennessee General Assembly on the issue of cross-subsidization. “It was important that we prevented a regulated monopoly from gaining an unfair pricing advantage over our retail members,” said TFCA Executive Director Emily LeRoy. “If Piedmont had been allowed to use ratepayer dollars to cross-subsidize a business that competes in the open market, then a precedent would have been set for utilities across the state.”
The state of Tennessee is required by law to convert 25% of its fleet to “alternative fuel” vehicles. As a result, the niche market for fleet fueling with CNG has the potential to grow significantly. “If regulated utilities want to expand into the retail fuel business, they should accept risk and operate like any other competitor,” said TFCA President Bobby Page, who is vice president and COO of Highland Corporation/Fast Stop Markets.
On another issue, TFCA also partnered with health-care advocacy groups to win an increase in the minimum cigarette mark-up, leading the Tennessee General Assembly to vote last month to increase the minimum mark-up for cigarettes from 8% to 15% over the next 24 months.
The increase in the minimum mark-up for cigarettes was a critical issue for the state’s convenience retailers: “Tennessee has historically supported a cigarette minimum markup law to prohibit retailers from using cigarettes as a loss leader and to discourage consumption of cigarettes, especially by children,” said LeRoy. “C-stores and health-care organizations shared a common interest on this legislation and worked together to increase the minimum markup.”
LeRoy said that an important part of the campaign was explaining to legislators that tobacco companies require local retailers to sell tobacco products at or near the state minimum. With two out-of-state tobacco companies controlling 85% of market share for cigarettes in Tennessee, the result was that a monopolistic industry was setting cigarette prices at the expense of local retailers. Convenience store owners were active in the campaign, as they talked to lawmakers in their districts about how the legislation would support locally owned businesses.
“We know that our members must be actively involved with the state legislature. Every session brings new challenges to our industry and we need to constantly be prepared to address them,” said LeRoy of these recent victories.