Frequently Asked Propane Pricing Questions
What can I do to make sure my future propane deliveries are priced competitively?
Propane prices are typically not subject to government regulation. Without government regulation, propane suppliers are free to adjust their propane prices to any level at any time. If a propane consumer is using 1,000 gallons of propane per year and is paying 50 cents more per gallon than the propane price offered by most other suppliers in the area, that consumer could be overpaying by $500 or more per year. To avoid overpaying for propane, each propane consumer must proactively research and remain aware of the propane prices offered by competing propane suppliers offering service in their area. Since most propane suppliers choose not to publicly post their current propane prices, researching propane prices requires some detective work on the part of each propane consumer.
Propane consumers should never authorize their propane supplier to make automatic propane deliveries without knowing their exact propane price per gallon before each delivery. Whether the propane supplier publicly posts their current propane prices for customer comparison or agrees to communicate the current propane price per gallon through an e-mail, voice-mail or fax 24 to 48 hours before each delivery, it is absolutely critical that each customer know their propane price per gallon before accepting future propane deliveries. With knowledge of the propane price per gallon before each automatic delivery, propane customers can compare and verify that the price is competitive before receiving each delivery.
What are the important factors that impact my residential propane price?
Several factors impact a consumer's current residential propane price. Two of the very important factors include propane tank ownership (customer-owned tank or leased tank from a supplier) and propane price protection programs (pre-buy propane agreements and price cap agreements).
When a propane consumer owns his/her propane tank, this consumer is free to call any/all propane suppliers in the area that offer "customer-owned propane tank service" to compare their current propane price per gallon and order propane from the supplier of their choice when a delivery is needed. Since this customer is not locked into one suppliers propane service and propane pricing, many customer-owned propane tank consumers pay lower propane prices as they benefit from several suppliers aggressively competing for their business each time a delivery is needed. Propane consumers that own their propane tank have significant control over their future propane pricing.
Conversely, when a propane consumer leases his/her propane tank, this customer is typically locked into the single propane supplier that installed the leased tank and is subject to the propane prices charged by that single supplier for each future delivery. Most propane suppliers will appropriately recommend that customers with their leased propane tanks agree to an "automatic-fill" or "keep-full" delivery program to optimize routing efficiency and minimize the chance of a customer run-out. However, since most propane suppliers choose not to publicly post their propane prices, many customers receiving automatic-fill deliveries on random delivery dates without a propane supplier price protection agreement will be unaware of their propane price per gallon until they receive an invoice from their propane supplier requesting payment for a recent delivery. Without being aware of their propane price per gallon before future deliveries, these propane consumers have very little control over their propane pricing and may or may not be paying competitive propane prices for propane deliveries that occur in the future. Hence, if a propane consumer is leasing a propane tank from a supplier without a price protection agreement, it is absolutely critical that he/she be aware of their exact propane price per gallon before accepting future propane deliveries.
There is absolutely no reason that your propane supplier's propane prices need to be a mystery until you receive an invoice requesting payment for a recent delivery. As noted above, if the propane supplier providing your leased propane tank chooses not to publicly post their current propane price per gallon for customer comparison, contact your supplier and request an e-mail, voice-mail or fax 24 to 48 hours before each future delivery providing advance notification of your propane price per gallon. This will give you the opportunity to compare your supplier's current propane price per gallon to the Federal Government EIA Propane Pricing Data and other local suppliers to ensure that it is competitive before each future delivery.
If your supplier is unable to provide 24 to 48 hour advance price per gallon notification before each delivery, contact your supplier and request that your delivery status be changed from "automatic fill delivery" to "will-call delivery". This simply means that it becomes your responsibility to check your tank gauge and contact your supplier to order a propane fill when the tank level reaches a certain level - typically in the 20% to 30% full range. At the time that you contact your supplier to order your will-call delivery, simply ask your supplier for your propane price per gallon that will apply to your requested delivery. The next step is to complete your price comparison process as noted above. If you have any questions or concerns regarding your propane price per gallon, contact your propane supplier prior to your delivery. If your propane supplier communicates that changing your delivery classification from "automatic delivery" to "will-call delivery" will make you a low priority customer receiving low priority deliveries, it is time to seriously consider changing your service to another propane supplier that will truly appreciate your business and provide excellent customer service regardless of your delivery classification.
While many customers lease a propane tank and others purchase a propane tank, it is important to consider the responsible party for any future tank maintenance and repairs. Suppliers are typically responsible for any tank repairs to their leased tanks, while customers are typically responsible for any repairs made to a propane tank that they own.
If you are leasing a propane tank from your supplier, your supplier is typically responsible for promptly repainting its leased tank, as needed, to help you maintain the appearance and value of your property. A leased propane tank with faded and peeling paint and a mismatched rusty lid should not be acceptable to any homeowner. If your leased propane tank is in need of repainting, contact your supplier's service department to have your tank replaced with a new tank or repainted as soon as possible. Summer is the best season to have your propane tank replaced or repainted as the process can be completed quickly without weather challenges.
When considering several propane suppliers to install a propane tank and provide service, beware of suppliers that only lease propane tanks or suppliers that strongly discourage you from purchasing your own propane tank. A reputable propane supplier will carefully explain the advantages and disadvantages of both purchasing vs. leasing a propane tank and encourage you to make the decision that is best for your situation.
What is a propane price protection agreement?
A propane price protection agreement is any type of propane supplier agreement that either establishes a maximum propane price per gallon for a period of time or establishes a fixed price per gallon for a specific volume of propane through the following heating season. The common propane price protection programs include "propane pre buy" or a "propane price cap".
With a propane pre-buy agreement (sometimes referred to as a "contract price"), a propane customer will purchase the amount of propane that the customer is expected to use during the following heating season in advance (typically mid to late summer before the heating season begins). Since the summer months are non-heating months, propane demand is typically lower and prices may be favorable for propane pre-buy agreements. The propane is purchased at a fixed price per gallon and is typically paid in full at the time of the pre-buy agreement. Some suppliers charge a propane pre-buy participation fee while other suppliers do not charge a pre-buy participation fee. When winter arrives, the propane supplier will then deliver the propane to the customer's tank as needed throughout the heating season until the total propane pre-buy volume has been exhausted. When the propane supply has been exhausted, the price for additional propane will typically change to the current non-pre-buy price offered by their propane supplier. If a surplus of pre-buy propane exists after the heating season, the supplier may refund the balance or credit the propane balance to the following heating season.
With a propane price cap agreement, the supplier will offer a high-side price cap to ensure that the customer's propane price per gallon does not exceed a specified amount during the upcoming heating season. Propane suppliers will typically charge their customers a participation fee for a propane price cap agreement.
Do most propane suppliers offer a new customer offer?
Yes. New customer offers are very common among propane suppliers. New customer offers can provide some initial propane cost savings. However, it is very important to distinguish between a propane supplier's short-term introductory pricing and a propane supplier's standard pricing offered to all customers on a daily basis. The truly relevant information is the everyday propane pricing.
Should I prebuy my propane supply for the upcoming winter?
Many propane consumers elect to prebuy their estimated propane supply for the upcoming winter. Since the demand for propane is typically lower during the non-heating summer months, propane pricing is typically lower, which may create a favorable propane buying opportunity. Propane pre-buy is typically a money saving program for propane consumers. However, many propane consumers that bought a prebuy contract during the summer of 2008 were surprised to discover propane pricing during the winter was lower than many summer prebuy contracts. It is impossible to predict the future of propane pricing with certainly. Therefore, it makes sense to contact your supplier and inquire about their propane pre-buy offer each summer. When considering any propane price protection program, make sure that you are aware of any participation fees that may apply.
Do all propane suppliers charge customers extra fees?
No. Propane companies have operational expenses just like any other business. Some propane companies charge their customers propane delivery fees, safety hazmat fees, administrative fees, prebuy and payment participation fees, invoice fees, fuel surcharge fees, etc. When these fees are included in your bill, they can drastically increase your propane expense with a propane supplier.
If applicable, ask your supplier to explain these fees in detail. It is very important to understand all of these extra propane supplier fees and what triggers the charges. Are the charges per delivery? Are they per invoice? Do they apply under other circumstances? Are these fees passed directly through to the government or does the company retain the money to help offset expenses? Not all suppliers charge extra fees.
Converting the annual total of the fees not paid directly to the government into a propane price per gallon value will provide useful information when comparing your price per gallon with other suppliers. To determine your additional price per gallon attributable to your suppliers extra fees, contact your propane supplier and ask them for the total of the fees that you paid and your total gallons purchased during the past 12 months. Divide the total fees by the total gallons to arrive at the additional propane price per gallon attributable to your suppliers extra fees. For example, if your total fees were $90 for the past 12 months and you purchased 900 gallons during the same period, your estimated additional price per gallon attributable to extra fees is estimated to be 10 cents per gallon. Keep this in mind when comparing the residential propane price per gallon among various suppliers in the future.
What if my propane supplier is not offering propane deliveries at a competitive price?
Propane consumers should never hesitate to contact their propane supplier to question their propane prices. If it becomes obvious that your supplier's propane prices are not competitively priced over a period of time, it may make sense to change your service to another propane supplier. If you decide to change your propane service to another supplier, make sure that you complete any pending service obligations with your current supplier prior to asking your new supplier to install a replacement tank and start your new delivery service.
Whom do I contact for unresolved problems related to propane pricing, service fees or billing issues?
Mistakes happen, problems pop up. Where can you turn for help? Visit the Consumer Action Handbook online and register your consumer complaint directly with consumer contacts at hundreds of companies and trade associations, state and federal government agencies, local and national consumer organizations and many more. Use its sample complaint form as a guide for your own letter or e-mail.
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