N.Y. State Senator Introduces Bill to Require Generators at Gas Stations

Haslam, Eichberger voice argument against such requirements

NANUET, N.Y. -- New York State Senator David Carlucci (D) has introduced legislation that will require gas stations in the state of New York to have electric generators on site, ensuring that they are able to weather a storm in the event a power outage occurs.

But on separate news shows, Pilot Fly J chairman Jimmy Haslam and NACS vice president John Eichberger voiced reasons against requiring stations to purchase generators.

"New York State must have a backup plan in place when power is lost so that gas station operators, the lifeblood of our energy delivery system, have the capacity to service the millions of commuters on a daily basis," said Carlucci. "We need to face the reality that these '100-year storms' are now occurring on a regular basis. This legislation will provide a safeguard to our energy supply and will allow us to double-down our efforts to ensure that when disaster strikes, we can rebound to recovery."

The proposed legislation, which is modeled off of similar laws enacted in other states such as Florida in 2007, would require:

  • Each terminal facility and wholesaler which sells motor fuel to be capable of operating its loading racks using an electric generator for a minimum of 72 hours. They would be required to have the generator source power available no later than 24 hours after a major disaster.
  • Each newly constructed or substantially renovated motor fuel retail outlet given a certificate of occupancy issued on or after July 1, 2013, that must be capable of operating all fuel pumps, dispensing equipment, life safety systems and payment acceptance equipment using an alternative generated power source.
  • Each motor fuel retail outlet, which is located within one half mile to an interstate highway or state/federally designated evacuation route, must be capable of operating all fuel pumps, dispensing equipment, life safety systems and payment acceptance equipment using an alternative generated power source.
  • Each motor fuel retail outlet must also have a transfer switch installed by a professional electrical contractor and keep a copy of the documentation of the installation at its site or corporate headquarters. They must also keep a written statement stating that they have done testing and have ensured that the equipment is working.

The legislation would apply to any self-service station, full-service station or combination of the two regardless of whether the outlet is located on the grounds of or owned by another business that does not engage in the business of selling motor fuel.

It would not apply a car dealer, a person who operates a fleet of motor vehicles or a retail outlet that has an agreement with a public hospital where the hospital agrees to provide the retail outlet with the alternative power source.

Also, the legislation offers added financial incentives to station operators who are not necessarily required to purchase generators. The legislation calls for an added tax credit of 50% of the expense to purchase and install a generator, not to exceed $2,500.

Meanwhile, Haslam talked with Liz Claman from Fox Business Network's "Countdown to the Closing Bell" about the company's efforts to prepare for Hurricane Sandy. Knoxville, Tenn.-based Pilot Flying J ensured that the company's stores in the Northeast could get back up and running quickly with an ample fuel supply for those affected by the storm.

Claman asked if the company would install generators at its locations.

"We probably will not," Haslam answered. "It's a substantial cost to put these generators in on the front end.

He added, "I know there has been a lot in the news about why don't convenience stores and truckstops have these generators all the time? Think about it--we might have this happen once a year at five of our locations. This was an extraordinary storm ... and what we do when a storm comes up is we track [it] very closely; we saw that there was a chance of a storm coming [ashore] somewhere between Washington and Boston, and as it began to zero in on the New York area, we positioned seven or eight generators in places like West Virginia, central Pennsylvania and western Massachusetts, and once the storm hits, they usually declare a state of emergency ... and as soon as things are clear, we'll bring electricians in that we work with around the country who know how to do this; they'll hook the generators up, and we'll be back in business."

(Watch the embedded video to see the full interview, or click here.)

Adding a generator could cost service stations up to $40,000 to run a pump, John Eichberger told CNBC's "Fast Money Halftime Report."

"It's expensive," Eichberger said. "That's a big investment when you don't know how often you need it. You might not need it again for another 15 to 20 years, so we need to be very cautious about how we go about mandating things."

Click here to watch the full interview (Eichberger segment begins at the approximately six-minute mark).