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Utica Energy/ Renew sued for $12 million by Oil Companies..

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Dan,  BIG NEWS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


Here is a link published today. ;D





Judge dismisses minimum markup lawsuit against Utica Energies



Case continues against Renew E-85


By Jeff Bollier

of The Northwestern



Winnebago County Circuit Court Judge Barbara Key has dismissed Utica Energy LLC from a lawsuit filed by 42 Green Bay area convenience store operators accusing the company and Renew E-85 LLC ethanol stations of unfair gas pricing.



After a hearing Friday, Key determined there was "no disputed fact" that would require the Oshkosh ethanol producer to remain a part of the lawsuit which seeks a total of $12 million in penalties for violations of the state's Unfair Sales Act, also referred to as the minimum markup law, at Renew E-85s Lineville Road fuel station in Green Bay.



According to case filings, the convenience store operators sought to prove Utica Energy "operated and managed Renew E85 LLC as its 'alter ego,' controlled pricing at its fuel stations and that Renew had no identity separate and apart from Utica," but Key ruled against the plaintiffs. The companies, in state incorporation documents, list the same business address, 4991 State Highway 91, and Paul Olsen as the agent for both businesses.



Gov. Jim Doyle has previously directed state agencies not to seek penalties against ethanol producers for Unfair Sales Act violations. Under the law, fuel stations are required to mark up the price of fuel sold to consumers in order to ensure fair competition. In the civil suit, the convenience store operators have argued their profits and operations have been harmed by Renew's decision to sell 10 percent, 20 percent and 85 percent ethanol fuel at their costs regardless of whether it is above or below posted fuel prices at Green Bay and Milwaukee motor vehicle fuel distribution centers.



Phil Younger, of Renew, said Key's decision is positive, but does not resolve the overall lawsuit.



"We're pleased about that first step and we will have to see where it goes," Younger said.



Jeff Bollier: (920) 426-6688 or jbollier@thenorthwestern.com.





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Hi Dan,


Yes it's great news  ;D and I am confident that Renew and Outlaw will prevail.  But, I think this goes beyond the minimum mark up law.


For the other readers,  he is my opinion for the reasons why.


Established gas stations are forced to get their fuels at a Motor Vehicle distribution center (i.e. Green Bay or Milwaukee termanals in my case) who controls the price that the fuel is sold for.  Along came the need in SE Wisconsin to use Reformulated Gas (E10).  The only place to get that fuel was still the established distribution center.  During the process of starting ethanol production and blending,  the Federal Government began a tax credit for those who blend gas using ethanol.  The oil companies took the credit,  but didn't pass the credit on the end consumer.


Then along comes the invention of blender pumps.  Then this small ethanol plant (Utica) decided to sell their product directly to the consumer, bypassing the established distribution network and the price controls established by them.  So, by using the blender pumps in a stand alone pump station (no convience store attached),  the consumer became the blender of the E10, E20 or E85.  This small ethanol plant then passes the federal tax credit on to the consumer.  


As a point of reference,  my Renew station in Sheboygan Falls was selling E10 at 2.85 last night (E85 at 2.12),  while the other stations in town where at 2.88 or 2.89.  To me, the price difference is the Federal Tax Credit at 10% of 51 cents (E10 is 10% ethanol) that Renew passes to the consumer.


I am at my Renew station at least 3 times each week because I have 2 vehicles that uses E85 and I drive to Milwaukee everyday for work.





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In the Milwaukee World blog today it was announced that Federal Judge William Callahan Jr. ruled in favor of Flying J- dismissing a case against them by Lotus Business Group for violation of Wisconsin "Unfair Sales Act" (minimum markup). To summarize - the judge stated that the State of Wi did not actively supervise calculations of minimum markup based on the average terminal price- a proxy for wholesale costs based on an industry index. The court noted that since 1998 inflation is running 27% and motor fuel is up over 200%. (yet the state kept 9.18% markup constant-- my words). He ruled the law unenforceable and says the law is in violation of the Commerce Clause of the US Constitution.


This is what we have been saying all along- yet no mention is even made of ethanol in the case. Remember in Wisconsin ethanol has historically been marked up at the terminal by no less than 30 cents, making the "unfair sales act" even more unfair to consumers and competitors to traditional oil products.


The station which sued Flying J appears to be at least 50-60 miles from the nearest Flying J. You should be able to go to www.milwaukeeworld.com to view todays story by Michael Horne.

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