Propane Gas Customer Frustrated By Billing System

September 18, 2010
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Mary Carnevalini is part of the 96 percent of Connecticut propane gas customers who are at the mercy of their propane suppliers because they don’t own their own tanks but instead rent them from the dealers.

While propane gas can be a great alternative to heating oil and electricity if natural gas lines are unavailable, Carnevalini and the estimated 200,000 other propane customers in Connecticut have learned or are learning that it’s easier to figure out how a nuclear plant works than whether or how much they are being ripped off. Propane is used as fuel for stoves, water heaters, furnaces and other equipment. Carnevalini uses propane to heat a swimming pool.

Heating oil companies will quote you a price 24/7. Any firm that sells in your area will deliver to you. Comparison shopping is easy. Everyone owns their own tanks and anyone can fill them.

Propane gas is the least transparent energy business in the country. Companies normally don’t list their prices, they frequently won’t give you a quote over the phone, and they all have different prices with different add-on charges, making comparisons impossible.

The biggest weapon propane gas companies have is a set of rules adopted in Connecticut and every state in the union that require the home or business owner to purchase the gas from the company that owns the tank at their home or business. The suppliers convinced the states to adopt the rule by claiming that the liability for filling a tank not owned by the dealer would be too great. So then why aren’t the four percent who own their tanks seeing those tanks explode every day?

And propane gas companies do their best to discourage people from buying their own tanks by falsely claiming that their insurance will increase and that it’s less dangerous to rent than to buy your tank.

Many also refuse to sell the tanks that customers have been renting from them, or charge what a new tank would cost.

Carnevalini, of Winsted, contacted me earlier in the month asking me what she should do about her propane supplier, Arrow Gas, which has offices in Connecticut, Massachusetts and Rhode Island. The company – which in Connecticut operates from Waterbury and Windsor Locks, tacked on an extra annual charge of $100 for her swimming pool propane tank because she did not use the minimum amount that the company requires. She said she complained to Arrow but the company would not bend.

I sent her complaint to state Consumer Protection Commissioner Jerry Farrell Jr., who agrees with my views about the propane business, and he turned it over to James Turner, supervisor of the Food & Standards division, who convinced Arrow to drop the charge, though Turner said he didn’t think they had to because Arrow followed state rules by claiming to have sent Carnevalini its “fee disclosure pamphlet.”

Arrow officials have not returned my phone call requesting comments, and I am not sure the company could have made its fee stick.

First of all Carnevalini never had a written contract with the company and she said she did not receive the fee disclosure pamphlet until this month. While the letter she received stating the firm will waive the fee states as long as she uses one tank of propane gas every year. The pamphlet it sent her does not specify how much gas is the minimum required. You can see the documents at www.ctwatchdog.com <http://www.ctwatchdog.com> .

“It gets more confusing,” she said. If she waits to call the company after using the full tank she gets an extra charge because Arrow has to do extra work when a tank is empty. Normally firms require that 20 percent be kept in tanks as a minimum.

Second, the minimum order is 50 gallons for her 100 gallon tank, and even if she only needs 40, she says Arrow charges her for 50.

Despite all this, Connecticut consumer officials told her that Arrow’s prices were cheaper than other companies charge small users. Arrow only charged her $2.54 a gallon while some other propane gas companies are charging as much as $7 a gallon for small users.

Farrell has instituted rules requiring that propane companies be more up-front about their charges and provide customers with bill-of-rights statements. However, for those who rent their tanks, the propane companies still hold guns to customers’ heads.

My suggestion: Before buying any equipment that requires propane, check the real costs. If possible, buy your own tank and then shop around.

To get an idea on the level of propane costs, and for other tips from Consumer Protection, check out http://www.ct.gov/dcp/cwp/view.asp?a=1621&q=274434

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23 Responses to Propane Gas Customer Frustrated By Billing System

  1. Jim Brangi on September 20, 2010 at 7:12 am

    I learned that in addition to an annual tank rental fee, propane distributors charge a premium over thier cost for folks who rent thier tanks. So a double fee!

    Then if you want to leave a propane dealer, you’ll pay restocking fees for any gas left in your tank (that you’ve already paid an inflated price on).

    I just purchased my tank & regulator and saved almost $1 per gallon!

  2. peter medved on September 20, 2010 at 9:42 am

    I just purchased a 500 gallon above ground tank.
    it was around 1200.00 they are going to fill it for $1.66/gal.
    I live in eastern Conn, used Uncas Gas.. I had Amerigas and rented two smaller tanks, average fill up was at $3.00 a gal..

    Large tank should last one year between fill ups and I will fill in Summer when prices are lowest..

    • moose7585 on September 26, 2010 at 9:32 pm

      A few things you should be aware of:

      1. If all you paid for an above ground 500 gallon tank was $1,200, you either bought a used tank (bad idea) or a DOT tank (worse idea). Better check. If it’s a DOT, it will need re-inspection after 12 years if it is new, 5 years if it is used.

      2. $1.66 was probably a first-fill gimmick and I assure you that your price has risen since. There is a propane supply problem in the northeast and costs with transportation are already in the $1.50-$1.60 range.

      3. Your 500 gallon (water capacity) tank only holds 80% of it’s volume of propane, about 400 gallons. If all you use is 400 or less gallons annually, this may have been an unwise investment as I doubt you’ll ever see that kind of pricing ever again.

      4. Make sure you hang on to your bill of sale as you’ll need it to get deliveries from elsewhere. Also, make sure your tank is in code and the line that was extended to install it was permitted by your town and inspected.

  3. Bill Williams on September 20, 2010 at 3:50 pm

    Of course the company owning the tank requires you to buy only their propane. Why else would they spend $1,200 on supply a tank to you, only to have you buy from someone else? Of course, they are going to charge you to rent the tank if you don’t buy any propane for a year. Why else would they supply a tank with no income. There are many companies that will sell you a tank, and the owner can pay the large upfront cost to get one installed. But over time, is it really worth $1,200 to avoid $100 per year? I don’t think an 8% return on the money plus the added maintenance cost is worth it to most homeowners and therefore they made the right choice to rent, rather than own. On the other hand, if you plan to be in your home for more than 10 years, and you have the extra cash, it may be a good investment. This is not as simple as the article author seems to imply. In the south, over 40% of consumer own their own tank, but they have bigger lots and most are above ground. As with any product, it is always cheaper to put out a lot of money up front to save a lot later on, but very few consumer like to do business this way and therefore the propane company is forced to buy the asset and absorb the capital cost. They can only recap this by passing on the cost, plus the bank interest, to make a profit. Yes changing the law to force them to allow others to fil the tank would lower the cost but would immediately stop them from buying any new tanks to install. Most companies will not invest money without a return on the investment through the asset purchase. Therefore to keep the upfront cost low for the consumer, the option to lease the tank, with protection for the company that owns it is needed to make the transaction work for all.

    • George Gombossy on September 20, 2010 at 4:10 pm

      Bill
      By renting a tank the customer is FORCED by LAW to buy from the company that furnished the tank at WHATEVER price the firm charges. Why should anyone put themselves in a position where the propane company has a gun to your head? The propane business is set up throughout the country to pressure customers to rent instead of buy. I am sure the oil dealers are kicking themselves for not having thought of this scam.
      George

      • Bill Williams on September 22, 2010 at 8:15 am

        The propane company is not “holding a gun” but is one of the most competitive of all energy and utility supplies. Cable, Electricity, and before cell phones, all phone companies were monopolies. The propane industry however, is not a monopoly but is extremely diverse with over 2,500 dealers nationwide, most of which are smaller, mom and pop operations with about 10 employees or less. These hard working small business owners cannot borrow money to buy tanks without a security to the bank to be able to repay the money. If they cannot guarantee that they will fill the tank, they cannot loan or rent it to the customer, especially at the very low rates of less than $100 per year. The economics just don’t work out. However, I agree that for customes who plan to stay more than 10 years in their home, and purchase more than twice the tank capacity per year, buying a tank is a good deal. For customer who do not stay long, or buy much less, I don’t think the capital pay back is worth it unless you just want to own the tank. No it is not a scam, when all parties make informed choices and do what is in their own best interest. Many people cannot afford to buy a tank and when they rent one, they should read and understand the contract and then act accordingly.

      • moose7585 on September 26, 2010 at 9:49 pm

        With tank purchase comes the resposibility of upkeep and most homeowners either don’t know or don’t care. It’s the biggest reason why mobile home parks across the state are requiring that any changes made to existing units or new ones moved in are either LP or electric, not kerosene due to the possibility of leakage from old tanks. Get educated first and know what you’re getting into…

  4. Mike on September 21, 2010 at 1:23 pm

    Back in 1990 when I bought my house, I believed it to be a good idea using propane instead of electricity, so I bought a propane water heater, and a propane clothes-dryer. At first the propane company was my new best friend! Very fair prices, much better than the evil electric company! Boy, was I ever schooled. They don’t wait long to toss out their halo and let their devil-horns pop out! Over the years their prices for propane became like a ride on The Cyclone at Six Flags… up, up, up, then a phone call from me complaining to them and it was down. Soon after though it was up, up once again, so I figured I would teach them a lesson by switching propane companies (boy was I ever callow back then. Who taught who?). The rock band “The Who” have a song called “Won’t get fooled again”, with a lyric that says, “meet the new boss, same as the old boss”. Was THAT ever the truth about propane companies! They’re all the same. After bouncing around from supplier to supplier I finally decided to get off the roller-coasters all together and opt for the merry-go-round instead. So last year when my water heater finally needed replacing, I replaced it with an electric one. And when my dryer finally gives up the ghost, I will buy an electric one of those as well. I’m quite a few years older since first entering this amusement park, and I believe I am a bit wiser too. I realize that the electric companies aren’t my good buddies either, but at least my stomach won’t be so queazy from all the ups, downs and spin arounds. No, the electric companies seem to me to be more like the horses on the merry-go-round. Gently up and down (mostly up) and round and round.

    • moose7585 on September 26, 2010 at 10:13 pm

      Umm, yeah…things have changed immensely in 20 years. Like permitting costs (no one used to pull permits for residential installations back then) and tank rentals (because without a permit, no taxes to the town). It’s probably a waste to even point out that your probably spending twice as much on electricity to heat water…

  5. Jim Brangi on September 27, 2010 at 8:04 am

    I’m not sure which propane company Bill works for, but does his company
    - Provide it’s customers with information on renting vs buying upfront (mine did not)?
    - Do they disclose that tank rental rally has 2 components…there are annual tank rental fees PLUS the mark up on the gas (amount varies on gas purchased) typicalyy $.60 – $100 gal!
    - Do they disclose the “restocking fees” if you replace their tanks that requires you pay an INFLATED price for them returning your paid for gas over what you paid them for it?
    - Do they disclose if you call for delivery today and they quote a price and they can’t deliver until next week… they charge you that delivery date’s “Market Rate” which always seems to be higher!

    I use 500 Gal / yr so in my case 2-3 years will be my payback period. I’ve pre-arranged with several Propane dealers (credit checks & inspections) so that I now will call each for their price and select the best price and lock it in via Credit card

    While the tank ownership option isn’t for everyone it works for me.

    • Bill Williams on September 27, 2010 at 7:34 pm

      Let’s see, from the top:

      1. Yes, the new tank pricing is on the web site. You can easily find pricing for new tanks on-line.
      2. Yes the tank rent is quoted to all new customers. No the rate for customer owned tanks is not always lower. All customers are given the chance to both lock in a rate or play the market, Your choice.
      3. Yes restocking fees are clearly posted at the counter and also sent in yearly terms to all customers. Of course we are going to charge you to pump out gas you bought, since you ordered it and we delivered it. It’s costly to do that and our employees need a pay check.
      4. Yes prices do change at the gasoline pump, and guess what, they change with propane too. Try asking your local shell station to honor last weeks pump price when you fill up today. Not going to happen.

      You made a wise choice in buying a tank and arranging for delivery early with multiple dealers. However, with 500 gallons usage a year, can a person get a decent pay back on a $2000 investment in an underground tank? I don’t think the math works that way. Smalller tanks, with a larger through put each year obviously help the equation and shorten the payback time. Each person needs to run the numbers and see what works for them.

      Finally the 2,5000 independent mom and pop dealers, and the few multi-state regional and national dealers (who make up a minority of gallons sold by the way) work very hard in a competitive environment. Unlike the Cable, Telephone, Natural Gas, City Govermerment, Water Company and all other MONOPOLIES we are FREE ENTERPISE people who operate with no safety net. We win or lose customer every day depending entirely on the price and service we give and are proud to be one of the last of our kind. KEEP THIS COUNTRY OUT OF SOCIALISM! Everyone needs to take responsibility for themselves, as you have, and stop asking for government interference in free enterprise. We need a free market place to create jobs and lower cost. Not more red tape and ridiculous nanny laws. Americans can make choice for themselves and don’t need big sister state or national governments dictating the free market place for propane or any other unregulated and none monopolized retail market!

      • Jimmy Ray on November 24, 2010 at 2:00 pm

        Kudos to you, Bill, for keeping this discussion objective and fact-based. I have natural gas at my house, so I’ll consider myself “fuel neutral” as far as this discussion on propane is concerned, but I am an investor and found this LP discussion quite informative. George, ease up on the Red Bull, crack a cold one and relax a bit. It’s not as bad as you depict, and it’s probably not as good as a propane dealer “insider” commenting here would have you think, so it’s somewhere in the middle. LP fuel pricing, on its own (forget tanks, installation for a moment), varies with market conditions and usage. You’ll pay more if you are ordering for a tiny tank to power up your cute firelog instead of a LP-gobbling pool heater. Simple math and economics, folks. Think about it…a large truck with a licensed CDL driver and/or certified technician is going to drive to your house and fill your tank. And of course, you ain’t the only trip that day. Is that trip worth the same to the LP company if your tank is 28 gallons, and your neighbor’s tank, his next stop, is 1,000 gallons? Hmmm…same mileage, same overhead, same exercise to get to the tank fill valve and pump the fuel, but your neighbor is taking 97% more fuel off the LP company’s hands and paying for it. Has he earned a better price for that fuel? Yaa, methinks so!!

  6. Self porpane dude on November 6, 2011 at 5:50 pm

    Wow!
    Allright, let’s clear the air somewhat

    Moose 7585
    No, it does not cost twice as much to heat water with electricity as propane. It’s a simple BTU calc; 92,000/3400 x KWHR. If the cost of propane goes above this number, it’s more expensive. End of story. Remember also that propane appliances, especially water heaters, are 16-30 % less energy efficient than an electric counterpart in a given price range. ( Not my numbers, these are manufacturers spec’s)
    It isn’t until you get way up in the price of a propane appliance that the efficiencies are comparable.
    In the state of CT if the price of propane, total for all costs, exceeds~ $4.00/gallon, electricity is cheaper.

    Bill
    Comparing Propane to gasoline is nonsense. It has to be compared to electricity, oil and natural gas.
    I can call the oil company today and get the same price for 100 gallons of oil, as 500 gallons of oil. I can order and pay for it over the phone and have it delivered next week. The amount, or time of delivery, has no bearing on the cost. Not so with Propane.
    I know the cost of electricity a year in advance.

  7. Bruce Graham on November 8, 2011 at 9:43 pm

    I am currently fighting with my propane supplier. I am a “small user”. They want to charge $4.54/gal to fill about 300 gallons in a 500 gallon tank. That will last me 3-4 years. They actually called today & said that if I quit using my wood stove that they will charge me a lower price. I suspect that is time to buy my own tank.

  8. Frankie on November 9, 2011 at 10:55 pm

    All I can say is buy your own tank. I’m in NC, and the only reason I’m on this site is because of what happened this afternoon. The propane company finally got around to filling my tank, which was down to 15%. I knew the cost was going to be high, because I had never had to buy this many gallons. The most i had ever paid to fill it up was just under $400. Today’s bill: $825.26. I looked at the cost per gallon, and it was $3.39. I called my sister because she is in the business (unfortunately too far from me to sell to me), and she said their price today was $2.50/gal. I then called a local supplier, who is right down the street from my supplier, and his price is $2.65/gal. Therefore, I was over-charged by some $175 for one fill-up, simply because my supplier knows I can’t buy from anyone else because they own my tank. The reason they own it is because the people I bought my home from leased it, instead of buying it. I have no idea why anyone would build a new home and lease a tank, tying themselves to one supplier. Tonight I’ve been looking through the closing documents for my home.thinking there must be some “exception” showing the propane company owns the tank. I can’t find anything, but I’m sure this happens all the time, so I’m guessing the propane company has proof that they own the tank. The tank is underground, so it isn’t as simple as saying “come and get it,” but what I’m going to do is get a price from them on buying it. The price is supposed to be pro-rated based on its age, and if it is high in comparison to what others in the industry tell me it should be, I’m going to tell them to come dig it up. I’m also not paying the invoice, creidt report be damned. I’m going to offer them what is reasonable and fair, plus another 10 cents a gallon. I’m told it can be pumped out, so if they don’t like my offer, they can come pump out their propane. I’ve never felt so taken advantage of in my life. This is my only source of heat, and the propane company told me I am getting the best price because it is my heat source. The company is HERITAGE PROPANE, and I would advise staying away from them if they are in your area. My sister told me they tried to buy her small company, and they are buying small propane companies as fast as they can. In fact, they bought the company I was buying propane from when I first bought my house, which meant they bought the tanks owned by the previous company. They also have 2 “regulation” charges on my bill, and I’m told by my sister that there aren’t any regulations in NC. The other local company I called confirmed this. The charges are $5.00 each, for a total of $10, and show up as Reg_Com_Chg and Trans_Fuel_Chg. Buyer beware!

  9. michael on November 12, 2011 at 12:25 pm

    i just got a qoute from a supplier for 3.49 pickup which is what gasoline is going for, obama really has to do something about these outragest prices, no need for any oil comapny to charge what we are paying.

  10. SPK on December 18, 2011 at 6:50 am

    We were charged over $6 per gallon during Storm Alfred and negotiated it down to $4. IWe sent copies of the less-than-forthcoming email communications and a copy of the vague contract to the address listed by the State of CT. Filing a complaint with the State of CT was pointless as were were informed that propane companies can charge whatever they want based on usage, don’t have to tell you were underground lines are located, and can charge a consumer price of equipment installed in 1998 of $1,600 for “tank (no size listed) lines (no linear footage identified, and accesssories (no description of what accessories they provide). They did, however, finally provide a price for the annual “rental”. They will not provide the cost to remove their equipment or propane restocking. The formal reply from the Department of Consumer Protection was:
    “Current state law does not prohibit propane companies from charging
    tiered pricing based on tank size and usage. Some propane companies
    have as many as 16 price points based on these factors and current
    retail prices in CT range from $2.50/gal to $7.50/gal. The national
    EOA, New York and Connecticut propane price surveys are based on
    households that use 1,000 gallons or more per year.

    Questions about changing the state laws can be addressed to your local
    state representative and senator.”

    Thank you, State of CT, for nothing.

  11. Tami on January 4, 2012 at 11:14 am

    I have a contract with my propane supplier stating “we MAY charge you a minimum use charge . . . ” Not only am I charged $7.389/gallon but I am also charged a minimum use charge. When I called to have them remove my tank, I was told that they had just filled the tank that day and that I would have to pay a pick up charge and an additional charge because the tank was full.

  12. Cheryl Gajowski on March 11, 2012 at 9:13 pm

    came across this as I was cursing ou my supplier – I’m in Westchester County NY – who has allowed my tank to go empty — and generally has charged from $4 to $6 because I’m a ‘low volume’ user. Note – it doesn’t cost them more to deliver to me, since they come infrequently. I could understand paying a bit more, but double? The company had been local, then- as with many propane outfits was picked up by Inergy, so it isn’t really local management either. As in CT, there is absolutely no regulation of propane pricing in NY, and I have written to legislators ( state) who have the ability to do something, but no will for anything The weirdest thing is that NYS posts propane prices on a website ( along with other fuel prices) but they are always lower than the charges ( are they asking the companies?) My bills are always about double the per unit high volume price. I wanted a gas stove because of the ever more frequent electric outages. However, once my current gas water heater needs replacement, I will probably go to an on demand electric water heater and replace the range as well. ConEd’s KwH price may be the highest in the country, and may well increase once Indian Point shuts down – but electric prices have not risen anywhere near as fast as Propane gas and oil – and as important, they are predictable and posted. To Bill from last Novemebr, should you return, I didn’t know that electric appliances were more efficient than propane – another reason to make that change!

  13. Victor on July 8, 2012 at 9:53 am

    Just stumbled on this site while researching propane. We just bought a home in Fairfield County, CT. No natural gas lines, so our energy sources are electricity and oil now. We are considereing a switch to propane (we have that for a vacation home on the Cape). We will be renovating the kitchen over the next year and want to have a gas stove. Current heat/hot water is oil. Everything else is electricity. Someone told us that if we are thinking of going to propane for kitchen and also heat/hot water, then we should buy a 1000 gal underground tank. While we don’t want to be gouged and ripped off (everyone and I mean EVERYONE seems to have their hand in my pocket), we are probably less price sensitive than most. Service, reliability and aggravation-free are our main criteria. Does it make more sense to buy a small tank just for kitchen and keep the oil going (which is simple, reliable and fine) or switch to a bigger tank, underground, and add heat/hot water to system and get rid of oil (yes, we know a new burner is required but that is a near term requirement under any scenario as the current one is old)? No way would we consider renting a tank. Would appreciate hearing people’s thoughts and experiences.

  14. Sue on August 9, 2012 at 11:34 am

    I have owned 1000 gallon underground tank since 1992 and have been very happy with my prices and service. I’ve had the freedom to shop around and a couple of the companies I deal with will typically compete with pricing and give me the better deal if I used them for the last fill-up to prevent me from going to the other company. I just called today and got prices ranging from $1.76/gallon to $2.40/gallon. I typically fill up 2 times a year for my whole house heating (2700 sq ft) and cooking (which I do a lot of). My friends and family who use oil on average spend a lot more on fuel than I do. If you have the ability to own your own tank, I recommend it.

  15. manuel velez on October 9, 2012 at 6:07 pm

    Question?…If I rent a home, whose responsibility is the tank rental fee? I know I need to pay for the propane but why do I pay the rental fee on the tank if it’s a rental home?

    • George Gombossy on October 9, 2012 at 7:21 pm

      It depends on whatever the lease says that you would sign.

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