President Reagan said yesterday that consumer protection is a key part of his plan to decontrol all natural gas prices over the next three years as he formally announced he will send the proposal to Congress this week.
"We aren't asking you, the consumer, to take that a promise that gas prices will decline on faith," the president said after noting that the Department of Energy has estimated that the price of gas will decrease at least 10 to 30 cents per thousand cubic feet in the first year after his proposal is enacted.
"To assure consumers are protected, I have insisted on a provision which reverses the present law and provides that until 1986, there will be a moratorium on the automatic pass-through to consumers of increased gas costs by the gas pipelines other than those caused by inflations, which, as you know, is going down," Reagan said on his weekly radio broadcast.
Even before he spoke, opposition to the proposal began to form as members of Congress and consumer groups argued that the plan does not protect consumers sufficiently against sudden price increases that they said will shock homeowners and industrial gas users.
"In the rush to correct problems in the marketplace, it is important that everyone be mindful of what they are doing to consumers," said Paul Young, a spokesman for Washington Gas Light Co. "We would be prefer a more gradual decontrol."
Sen. Howard M. Metzenbaum (D-Ohio) called the president's plan "absolutely off base," predicted its defeat in the Senate and said the proposal would increase unemployment by adding to operating costs for small businesses. "The gas industry itself has estimated that decontrol will cost $60 billion a year," Metzenbaum said.
Rep. W.G. Hefner (D-N.C.) predicted that Reagan's approach to decontrol will mean a 67 percent price increase over the next four years. He added that the plan is "long on decontrol and short on consumer protection and stimulation of the economy. It is good for the producers but not so good for those of us who pay the bills. His proposal will cause gas prices to rise too much, too fast . . . ."
In delivering his party's response to Reagan's broadcast, Hefner said an analysis of the Reagan plan shows that an average family would pay at least $1,000 more during the next four years.
Under the proposal, natural gas producers and the companies that own gas pipelines could immediately negotiate new contracts with gas companies without being under government-imposed price ceilings.
In January, 1985, producers and pipeline owners would be free to break any contracts unilaterally and shop for the cheapest gas available. Until 1986, the price of gas would be capped at the level of the prevailing national average price.
Estimates of how much gas prices would increase for consumers range from 5 percent, according to gas industry analysts, to 60 percent, according to consumer group representatives. Both sides agree that gas prices will increase in the short run.
Gas prices are controlled by a 1978 law placing diminishing price ceilings on wells tapped after April, 1977. The ceilings would be eliminated in 1985. The law was intended to encourage exploration for new wells.
Prices on gas discovered before April, 1977, about half of the nation's supply, are to remain under price controls, according to the 1978 law. The president's plan would free that so-called "old gas" as well as newly discovered gas from any price controls.
"He Reagan wouldn't be making this much of a fuss just to decontrol new gas prices since they are going to be decontrolled anyway in January, 1985," said Michael Podhorzer, associate director of the Citizen Labor Energy Coalition. "The larger oil companies are also gas producers, and they own the old gas. They want to get rid of it without competition from cheaper, newly discovered gas. Decontrol lessens incentive for new exploration to find cheaper gas."