Propane Prices: Checking your Contract Price
As spring weather approaches, many propane consumers will be relieved that they can take a break from worrying about frequent propane deliveries, propane service and propane prices connected with winter heating. As a result, the discussion of propane prices will become less frequent until the mid to late summer when many propane suppliers will begin promoting propane payment plans for the following summer.
Each year, many propane consumers choose to participate in a propane price plan including a propane pre-buy or a propane price cap plan. These propane price plans are designed to save consumers money on their propane bill each year. However, it is important to remember that these plans typically do not guarantee propane expense savings. Furthermore, when participating in these types of plans, consumers should remember that it is impossible to determine if they made a money-saving decision to engage in one of these propane price programs until they follow up and compare propane prices.
When it the best time to compare your propane price plan pricing? The best time to compare propane price plan programs is during the winter heating season - when most of your propane supply is consumed.
How does one determine if they made the right choice and protected themselves from high propane prices when they signed up for their propane price plan duing the past summer? If it a very simple process that typically takes a few minutes:
Look at your records to make sure that you are aware of your contract propane price for a pre-buy plan or the actual propane price per gallon paid since October 1st (or the date that your propane price plan started) for your propane price cap program. Note that your propane price may be less than the propane price cap - since the price cap is typically designed to limit the amount that your supplier charges you during the winter heating months - and your propane price may be less than the cap price at the present time.
Factor in the additional charges that your supplier may have charged you to participate in the propane price program. Divide the participation fee, if applicable, by the total average annual gallons that you purchase for the entire year to determine the participation fee estimate per gallon (for example, $100 participation fee, divided by average 1,000 gallons consumption each year = equals 10 cents per gallon estimate of the participation fee applied to each propane gallon consumed).
Call each supplier in your area, including your current supplier, to find out the current propane price per gallon for non-propane payment plan deliveries. Make sure that you obtain propane prices consistent with your tank ownership situation - if you lease your propane tank- compare with the quoted price for 'customer leased propane tanks'.
The next step is to compare your propane price per gallon in the payment plan (adding the payment plan participation fee per gallon estimate) with the propane price per gallon currently charged by all local suppliers without the impact of a propane price plan. Note that is is a good idea to perform this type of evaluation three to four times per winter since propane prices tend to change.
The information above will give you a good indication if your decision to participate in a propane supplier price plan was a money-saving decision. This propane price evaluaton will not change your current propane pricing with your propane supplier. However, it will give you good information to be aware of as you consider participating in a supplier propane pre-buy or propane price cap program in future years.
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