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Heating customers fight pricey propane - Customers often don't know price until after fuel is delivered; sending it back often requires another fee
By Liz Lawyer Ithaca Journal, March 1, 2010
Some Finger Lakes residents using propane to heat their homes are paying a $1 more a gallon than the average market price in the region.
The average price for propane among central New York dealers is $2.70, according to a survey taken Feb. 22 by the New York State Energy Research and Development Authority. Propane prices offered by
dealers in Tompkins and surrounding counties ranged from $2.50 to nearly $4 late last week. Propane customers generally don't know the price of
their fuel until they get the account after a delivery.
A survey by the U.S. Energy Information Administration showed that the national average for propane is $2.68.
Virginia Cornwell of Moravia said that about six months ago she noticed her delivery bill for propane from Suburban Propane was higher than
she expected -- more than $200 for 50 gallons -- and looked around at other dealers' prices.
"There was only one out of eight dealers that I contacted that was anywhere near what Suburban Propane was charging me," Cornwell said.
Cornwell eventually switched providers, though Suburban charged $1 per gallon as a restocking fee to have the remaining fuel in her tank pumped back out.
"I didn't realize there was that much difference before 2009. I knew it was high, but I never thought too much about it. I'm 85 years old, I don't always think too clearly," she said, laughing. "That's what happened to me -- it must be happening to others, also. I feel sorry for older people, and maybe even younger people, who just don't stop to think of checking those things, and when the bill comes they just pay it."
Marguerite Sterling, a Trumansburg resident, said she started looking around at prices after a spike in her January propane bill from Ferrellgas made her curious. Not only had other dealers not had the same spike, they generally offered lower prices.
"When I called (Ferrellgas) to see if they would negotiate a better price, they were very firm that they would not do that," Sterling said. "They said I can get off my budget plan, but then that makes me liable for the full amount. I have no choice at this point because I can't afford to pay them off. Maybe over the summer (I'll switch)."
Services offered affect price
A spokesman from Ferrellgas' headquarters in Kansas City, Jim Saladin, said the factors affecting propane prices are complex.
Propane is a product of crude oil and natural gas refining processes, so the price of crude oil will affect the cost to propane users. In winter, when
demand goes up, prices also rise in accordance with the principle of supply and demand. That has been a factor this winter especially, because
temperatures nationwide have been lower than usual and the cold has held on longer, Saladin said. Other factors include the amount used by an individual consumer or how far from the nearest supply station the consumer lives.
Last week, prices quoted by other providers in the region were between 20 cents and a dollar less than Ferrellgas' quoted price for propane.
"It depends on what price you're actually talking about," Saladin said. "We divide prices a lot of different ways. You have to make sure you're comparing apples to apples. It probably makes sense to you that ... a large user is going to have a better price than a smaller user.
Richard Brescia, a lobbyist for the New York Propane Gas Association in Albany, said prices are dynamic and the best way to secure a steady price is to get a season-long contract with a company.
"In general, the reason you don't see propane prices advertised is we don't know what a customer is going to order," he said. "If a customer is a heating customer that's one price; if they use it for heating water or cooking, that's another price."
Peter Teshima, Suburban's marketing department managing director, said factors that influence the price of propane include the purpose for the propane, volume, delivery location and distance travelled, seasonal demand, and additional services offered by the provider.
"I'm concerned we're being portrayed as high above the NYSERDA average," but that comparison is not taking into account different prices for volume, Teshima said. Brescia said the NYSERDA survey compares prices for customers who use about 1,000 gallons a year.
Teshima said, "If you're looking at the NYSERDA average, that's an average ... representative of customers that are using at least 1,100 gallons a year for home heating. Many people will look at that without realizing the volume factor. If you're doing price comparisons between company A and company B, keep in mind that while propane may be a commodity, not all companies that offer propane are the same."
Prices quoted below the market average may be introductory prices that will go up after a short period, Teshima said.
Finding it hard to switch
Customers unhappy with their current providers because of higher-than-average costs said they were unable to switch partway through the heating season because they couldn't afford to get off their budget plan or their tank is inaccessible during the winter.
McCann of Trumansburg said he decided to stay with Ferrellgas until the end of the season because he was offered a reduced price and he didn't want to take the tank out.
"I agreed to take delivery because the tank was down to 10 gallons," McCann said. "I had arranged for Ehrhart to take out the tank, but I heard about an explosion in New Jersey and thought, 'Why risk it?' I will pay m ore to be safe. I said I would take the $3.599."
But when the propane was delivered, the price was higher.
"My bill is now nearly $500," he said. "Out of that $481, I see a significant overcharge of more than $100 ... 25 percent is an overcharge."
A spokesman from Sen. Charles Schumer's office, Max Young, said there is no law or database requiring propane or fuel oil providers to make their price information easily available.
"Having a system where consumers could easily check the price of heating oil from various distributers to make sure they are getting the best deal makes perfect sense, and is worth exploring," Young said.
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