Hawai'i's cap on wholesale gasoline prices will likely remain state law, but Gov. Linda Lingle and Democrats in the Legislature may take new steps to deter price gouging and force oil companies to turn over internal price and profit information.

The Republican governor, who announced a comprehensive energy package yesterday, again urged state lawmakers to repeal the cap and work to reduce the state's dependence on fossil fuel. Democrats said they do not plan a repeal in the upcoming session but will review several of Lingle's recommendations, including forcing oil companies to make their pricing decisions more transparent.

Hawai'i received national attention in September after it became the only state to adopt a price cap to contain rising gas costs. The cap, which links wholesale gas prices in the Islands to markets on the Mainland, has led to some market volatility at the retail level. But it appears it has done what Democrats intended, which is to make the state's gas prices mirror Mainland markets after years when they said prices remained artificially high.

Lingle said the gas cap has precluded a more meaningful discussion on conservation and alternative energy.

"While the gas cap law was well-intentioned, it has become the de-facto energy policy of the state," Lingle said at a morning news conference at the Capitol. "It has focused attention and government resources away from the state's actual energy problem, which is an overdependence on the use of oil."

In an interview with The Advertiser's editorial board yesterday, state Sen. Ron Menor, D-17th (Mililani, Waipi'o), said the cap had the desired impact on oil companies. He said the cap could be adjusted by lawmakers this session but should not be repealed.

"There's nothing to force them to reduce their prices short of having a price regulation in effect," said Menor, chairman of the Senate Consumer Protection and Housing Committee.

Instead of a price cap, Lingle said, the state should require oil companies to disclose price, product and profit data, with the understanding that some proprietary information would be kept confidential. The state would also gather other market information and then publish an index that consumers could use to judge whether gas prices are fair. The administration suggests such an index would eliminate much of the mystery around pricing and would affect competition within the market more than the cap.

Lingle also said the state should enact a law making it an unfair or deceptive trade practice for companies to price-gouge during a market disruption such as Hurricane Katrina on the Gulf Coast.

Democrats also are interested in making oil company pricing information more transparent, and in preventing price-gouging, but not in connection with repealing the cap.

Lingle also proposed forcing Hawaiian Electric Co. to divert more money from an energy-efficiency surcharge on consumers to support energy efficiency and renewable energy programs. The administration claims HECO uses only about 40 percent of the more than $19 million it collects from the surcharge on such programs. Lingle wants to divert more of the money into an energy efficiency fund that would be overseen either by government or a professional third party.

Chuck Freedman, a HECO spokesman, said the company was not consulted about the proposal and believes the administration misunderstands how the money is spent. He said portions of the surcharge are used to cover fixed costs and offset the lost revenue from consumers who are more energy efficient. If the utility was unable to offset the costs through the surcharge, Freedman said, it would likely have to pass the costs back on to consumers.

Freedman said HECO supports many of Lingle's energy proposals but "this is not one of them."

The governor and Democratic lawmakers seem to agree on tax credits for consumers who use renewable energy and for promoting the use of sugarcane and waste for alternative fuel.

State Sen. J. Kalani English, D-6th (E. Maui, Moloka'i, Lana'i), said he and other lawmakers have met some resistance from the administration in the past over ideas such as making state buildings more energy-efficient, which is now part of the governor's energy package.

"I think that this means that there's great potential for a major energy package emerging from the Legislature this year that's really a bipartisan, very integrated approach," said English, chairman of the Senate Energy, Environment and International Affairs Committee.

Jeff Mikulina, director of the Hawai'i chapter of the Sierra Club, said the Lingle administration has taken the initiative. "I think the ball is firmly in the Legislature's court right now," he said.

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.