Senate passes bill to stop price gouging following severe storms

With memories still fresh of the severe storms that slammed Connecticut during the second half of 2011, the state Senate Wednesday overwhelmingly adopted a bill targeting price gougers who take advantage of weather emergencies.

The measure, which passed 33-3 and now heads to the House of Representatives, empowers the Department of Consumer Protection to level an unfair trade practices charge against any business charging an “unconscionably excessive price” for vital goods or services during a weather emergency as declared by the governor.

Under the Connecticut Unfair Trade Practices Act, courts may impose penalties up to $5,000 for willful violations, and up to $25,000 for businesses that continue abusive practices despite state-imposed restraining orders barring them from doing so.

“Even after this year’s mild winter, residents remember all too well the severe storms of 2011 that knocked out power to thousands of homes, caused roofs to collapse from heavy snow and did structural damage from tropical-storm-strength winds during (Tropical Storm) Irene,” said Sen. Paul Doyle, D-Wethersfield, co-chairman of the General Law Committee.

“This bill protects consumers when they are most vulnerable to predatory price gouging in the aftermath of a storm.”

Legislators have said they received numerous complaints of price gouging from constituents after the two events last year that left most of Connecticut without vital services for one to two weeks at a time.

Tropical Storm Irene, which hit most of the state Aug. 27-28, left more than 670,000 residences and businesses without power. And an Oct. 29 nor’easter, which dumped between 1 and 2 feet of snow on much of northern and central Connecticut as temperatures dropped below freezing, caused more than 800,000 outages.

The bill adopted Wednesday centers on the definition of an “unconscionably excessive” price — a standard that one critic said was too loose.

“I certainly applaud the intention of the legislation,” said Sen. Len Suzio, R-Meriden, who added he fears it would nonetheless lead to penalties being imposed against honest businesses. “I want fair laws, laws that are fair to the business community.”

“How does the court know what the price of anything should be?” added Sen. Robert Kane, R-Watertown. “Why aren’t we dealing with the free market?”

The legislation targets goods and services deemed necessary for consumers’ health, safety or welfare, such as lodging, snow removal, flood abatement and post-storm cleanup. Connecticut already has a statute barring price gouging involving gasoline and other energy resources.

Under the bill, evidence of excessive pricing could include: a gross disparity between the price of the goods or services and their value as measured by the average price 30 days before the severe weather event; or a major difference between the price charged for similar goods or services readily obtainable in the same area of severe weather.

Those charged with price gouging can try to rebut the charge in court by demonstrating that business costs beyond their control led to the disputed retail price.

“I want to have something that is practical, something that is enforceable, something that is unambiguous,” said Suzio, who tried unsuccessfully to amend the measure to set a profit margin trigger.

Suzio’s proposal specifically said price gouging occurs whenever average profits grow over the prior month by an amount equal to at least 5 percent of the sales price of the disputed good or service.

But Senate Majority Leader Martin M. Looney, D-New Haven, responded that this would invite crafty, immoral businesses setting their prices just a tiny fraction shy of the standard Suzio offered. “They might meet the letter of the law, but violate the spirit,” Looney said, “and we’d be back here one year from now.”

Rejecting the argument that “unconscionably excessive price” was too vague a standard, Sen. Edward Meyer, D-Branford, paraphrased the comments of former U.S. Supreme Court Justice Potter Stewart, who had written in a 1964 opinion that the subject of pornography was difficult to define, but easy to recognize.

“We’ll know when a price is ‘unconscionable’ when we see it,” Meyer said.

The Democratic-controlled Senate rejected Suzio’s amendment 21-12 in a vote largely along party lines.