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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