NEW YORK (Reuters) -California's energy regulator on Friday recommended new rules to encourage more private investment in fuel imports and a pause on refiner profit limits, hoping to stop gasoline prices from skyrocketing in the state as it braces for the closure of two of its major refineries.

The recommendations by the California Energy Commission came in response to a letter by Governor Gavin Newsom to suggest changes to the state's energy transition efforts by July 1. Phillips 66 and Valero Energy have announced plans to close two plants that make up about 20% of refining capacity in one of the world's biggest fuel markets.

The CEC is exploring ways to keep existing refineries operational, while raising capacity at third-party import terminals to bring in and distribute more gasoline and jet fuel, CEC Vice Chair Siva Gunda said.

Gunda said gasoline prices in the state could rise 15 to 30 cents per gallon in the short-term as refineries close, but the state hopes that these recommendations will negate that.

Retail gasoline prices averaged $4.61 per gallon in California as of Friday, the highest in the country, according to AAA data. The national average was $3.21.

As part of those efforts, the CEC recommended a pause on a program that capped the maximum profit refiners can earn on gasoline sales in the state. It said additional analytical work is needed to ensure it works as intended to protect consumers.

It said the pause should be for a "reasonable length of time" but did not specify how long that would be.

The CEC also asked Newsom to take steps to stabilize crude oil production in the state. California's crude oil output has dropped steadily from a peak of over 1 million barrels per day in the mid-1980s, to less than 300,000 bpd last year, according to U.S. government data going back to 1981.

The recommendations drew a sharp rebuke from consumer and environmental advocacy groups, which called them a bailout for refiners in a letter addressed to Newsom, California Senate Majority Leader Mike McGuire and Assembly Speaker Robert Rivas.

The groups called on the state to reject the proposals, and instead propose rules for price gouging penalties and implement proposals requiring minimum inventory levels for refiners.

The CEC declined to comment on the letter, which was published by Consumer Watchdog and signed by 51 advocacy groups.