Propane pricing unfair, some say
Written by Walt Cook, The Union Democrat February 16, 2010 12:02 pm
Some Tuolumne County residents have discovered it’s “buyer beware” when it comes to propane purchases.
That’s because, unlike electricity and natural gas service, propane isn’t considered a utility in California, meaning suppliers don’t have to justify pricing to the State Public Utilities Commission.
The result can range in prices from $2.50 a gallon to upwards of $5 per gallon. With most home propane tanks ranging from 250 to 500 gallons, that can add up to a lot of money.
Groveland’s Bunny Henningsen found that out earlier this month. While she was away from home, her propane supplier — New Jersey-based Suburban Propane — put 200 gallons in her tank.
She was taken aback when she saw the bill hanging on her door: $1, 030 for 200 gallons. That amounts to $5.14 per gallon. The market rate on the day her tank was filled was $2.99 per gallon.
Henningsen was outraged.
“How many people out there purposely keep their house cold because they can’t afford an extra $2 a gallon? she said. “That’s a horrible thing to do to people in the middle of winter.”
Attempting to modify a pricey home loan and operating a quilt shop in a bad economy, Henningsen had few dollars to spare.
So she called the local Suburban office in Jamestown and complained. As a result, the company lowered her rate to $2.99 per gallon for the fill-up, cutting $432 from the original bill.
Tim Brown, of Sonora, also had a run-in with Suburban. Like Henningsen, on the company’s automatic-fill plan, where a homeowner’s tank is filled without prior notice, he was shocked when he saw his bill. He said he was charged $5 per gallon for 102 gallons after a December fill-up. The market rate for propane at the time in California was $2.89 per gallon.
“I just about flipped out, ” he said. “It’s ridiculous to fill somebody’s tank without notification, stick a bill on their door and expect them to pay up.”
Brown has since canceled his service with Suburban.
“They’re getting their gas back, and I’m not paying a dime, ” he said.
Since most propane tanks are leased by homeowners, canceling service results in the booted propane company picking up its tank, which can cost homeowners up to $100. Some companies, though, have agreements to swap each other’s tanks free of charge.
Various residents in the Sacramento area have levied similar complaints against Suburban, according to published reports.
Suburban gave Henningsen and Brown different reasons for why they were being charged 40 percent more than the going-rate for propane.
Brown said he was told he was paying for “superior service.”
Henningsen, meanwhile, said she was told she was paying a higher rate because she wasn’t using enough propane annually.
“They said it was because I was using less than 400 gallons a year, ” she said.
A call to the local Suburban office in Jamestown this week revealed the company has a tiered pricing system, which, depending on the amount a customer uses annually, can range — as of now — from $2.50 to $5.14 per gallon.
“Nobody else does that, ” said Henningsen, who has been shopping around for a new propane provider.
Indeed, other companies operating in the area claimed they do not used a tiered pricing system. Rates at the other companies — excluding introductory rates — ranged from $2.93 to $3.20 per gallon as of this week.
Suburban spokesman Peter Teshima, based in the company’s New Jersey office, said “a lot goes into pricing.” He declined to comment further on the phone, instead issuing a written statement.
In the statement, Suburban touted its service — including “highly trained” dispatchers who take calls 24 hours a day, and its ability to secure reliable propane supplies from major providers.
Delivery distances, delivery amounts and market rates all come into play when billing customers, according to the statement.
Brown, the owner of a moving and storage company, expressed frustration with politicians for not protecting consumers when it comes to propane prices. He said with various fees and prices going up, the last thing people need is to be hit with an above-market-rate gas bill.
“The regulation factor needs to come in somewhere along the line, ” Brown said.
Henningsen agreed, saying homeowners don’t have the option of suddenly ceasing their use of propane, not when their appliances and central heating systems are powered by the petroleum-based gas.
In that respect, propane is a lot like a utility, she said.
Andrew Kotch of the state Public Utilities Commission described the importance of utility regulation, saying utilities are considered a necessity, so it’s important they aren’t put out of reach for consumers.
“There are not that many around and the competition is less, which could lead to concerns about pricing, ” Kotch said.
Lesley Brown Garland, president and CEO of the California-based Western Propane Gas Association, noted that because there are many propane companies around — several operate in Calaveras and Tuolumne counties alone — propane doesn’t fit the criteria of a utility.
Lawmakers apparently agree, as California has no law regulating propane prices.
Instead, the free market sorts things out, Garland said. If one company is charging too much, other companies are available for consumers to choose from. That’s something Brown and Henningsen have found out.
“This keeps everyone operating as efficiently as possible, ” Garland said.