Generators Cause Gate Petroleum Grief

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Generators Cause Gate Petroleum Grief

JACKSONVILLE, Fla. -- During the next few weeks, up to 10 Gate Petroleum gas stations here will be shut down for more than eight hours, in an effort to install thousands of dollars of new electrical equipment to come into compliance with a new Florida law that mandates the installation of generators at gas wholesalers and retailers along highways and evacuation routes in the state, the Financial News & Daily Record reported.

Convenience retailers in the state, including Gate Petroleum, are feeling the burden the law is causing. To install the generators, stations must seek permits; hire a qualified contractor to perform the work; shut down the power through the utility companies and suffer the costs of the installation and a temporarily powered-down station, including waste from perishable refrigerated food and a significant loss in sales revenue, the report stated.

"It's a little more involved with going in and plugging in something," George Nail, vice president of marketing development for Gate, told the paper. "It's tough for everyone, it's tough for Gate. It's capital expenditures that we didn't plan. Rather, the government planned it for us."

While Nail couldn't reveal the specific costs of the installations, he noted they were "considerable" and spread across many stations in Florida.

"Gate intends to be a good provider of services during a catastrophe or without a catastrophe," Nail said. "But there is more to the equation than just the generator."

Others in the industry, such as Jim Smith, president of the Florida Petroleum Marketers and Convenience Store Association, believe that the law is difficult to implement and flawed.

"The small [station owners] are just going to have to close during hurricane season. Some of them are looking at that," Smith told the paper. "We're dealing with the 800-pound gorilla, and that's the government of the state of Florida. They say jump, you say how high on the way up."

The new state law was enacted in response to the devastating 2004 and 2005 hurricane seasons and the reported gasoline shortages that followed, particularly in South Florida after Hurricane Wilma in October 2005, according to the paper. Fuel shortages were attributed to a lack of electrical power, as a result, more than 1,000 fuel outlets were required to install transfer switches for generator hook-up by June 1, 2007, the report stated. The cost of an installation was estimated to total around $2,000, which Smith said is inaccurate.

"Sadly, it's really between $8,000 and $18,000 per facility," he told the paper. "The testimony that was given [to the legislature] was incorrect. They were talking about transfer switches for the average home, not a business."

Convenience stores have three-phase, 600-amp or higher service, which requires a dramatically larger transfer switch, according to Smith. "Which is why my members are just so ecstatic about an unfunded mandate where we bear all the responsibility," he said.

Smith added that the law was illogical and it overlooked the real cause of fuel shortages -- a lack of fuel.

"You don't need a generator for an evacuation. If you need a generator, it's too late to evacuate," Smith said. "Secondly, there's not going to be any gas once a hurricane passes. Each one would've had their inventory depleted during the evacuation. It just doesn’t make a whole lot of sense."

However, to date, 58 percent of stations identified by the law have come into compliance, while 41 percent are working to come into compliance, according to the Florida Department of Agriculture and Consumer Services, which enforces the requirements.

A small number of stations are not coming into compliance, according to the report.

"The problem is that many of the stations are old and antiquated, and the first thing they need is a building permit from the county. Some counties won't give them permits because they aren't sufficiently modern for the new wiring," Department of Agriculture spokesman Terence McElroy told the paper. "At that point, while that station wouldn't be in compliance, it wouldn't make any sense to take enforcement action against them."