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Pyrofax/FG White reverse course on minimum usage fee

Local FG White/Pyrofax customers who were charged a minimum usage fee by the local propane/fuel oil supplier will receive or have received refunds from the company for that fee.

FG White, which was purchased by Pyrofax Energy in June 2009, issued a statement notifying customers that the fees were being refunded/waived for 2010 and 2011 after the Vermont attorney general's Consumer Affairs Program (VCAP) received dozens of complaints about the minimum usage fee.

Jon Whittle, vice president of operations for the Essex, Vermont-based Pyrofax said that the minimum usage fee was a common industry practice in Vermont and throughout the country. He said that customers who did not use one full tank's worth of propane during the year were charged a fee equivalent to $2.50 a gallon for every gallon less than a full tank that they did not consume during the year.

A propane customer with a 1,000-gallon tank would need to have used 800 gallons (propane tanks can only be filled up to 80 percent) to avoid the fee. If that customer used 700 gallons of propane annually, he/she would have been charged a $250 fee ($2.50 times 100 gallons).

Whittle said that he did not feel the minimum usage fee would penalize customers whose energy conservation measure resulted in a failure to use one tank's worth of propane during a calendar year. He said that Pyrofax has a variety of energy conservation programs and equipment and said the minimum usage fee should not be construed as an impediment to conservation.

"That fee was not a penalty for conservation," Whittle said.

He said he did not have an answer to whether the minimum usage fee would be charged after 2011. A press release issued by the company on January 14 stated that the company would be charging the minimum usage fee in 2011 where appropriate.

"We received calls from our customers expressing concern about the fee and a business decision was made to not charge that fee, and if people had paid it, they would be refunded," Whittle said.

Asked about FG White/Pyrofax's local pricing structure, Whittle said his company's open rate varied from town to town and said, "It's a competitive market and we have to return value for that pricing."

FG White/Pyrofax serves approximately 2,900 customers in the Mad River Valley area, according to Whittle.

A call to the Waitsfield Pyrofax office requesting the open per gallon rate (referred to in the industry as the "street price") for a residence where the owner does not own the tank and uses approximately 1,000 gallons a year was quoted as $3.17. That compares to a similar open rate of $2.80 ($2.70 with prompt pay) at Bourne's and $3.28 at Blue Flame and $2.89 at Gillespie's Fuel.

Since Pyrofax purchased FG White in 2009, the Vermont Consumer Assistance Program (VCAP) has received 21 complaints relative to pricing and at least 40 complaints related to the minimum usage fee, according to VCAP program coordinator Jason Duquette-Hoffman.

Duquette-Hoffman explained that when consumers contact his office, a file is started and through his program a letter is filed with the company named in the complaint urging the business owner to seek resolution with the consumer.

"Propane claims may be handled differently because of the state consumer fraud rule, #111. We have a different process if a consumer is alleging a violation of that rule. In some cases, depending on what the consumer is alleging, we may call and try to advocate with the company to resolve any conflicts with the rule," Duquette-Hoffman said.

Rule 111 deals with disconnections, required notices, changes in connection status and charges levied by companies. Pyrofax's minimum usage charge falls under the "charges levied" category of Rule 111, he said.

Propane pricing, he said, is not regulated by the state and companies can charge any price they wish.

"There is no state law that addresses what companies can/may charge. There is a price gouging statute that is only effective if the governor declares that there is a market emergency," he continued.


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