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PERC to consider lowering assessment rate
December 4, 2009When the Propane Education & Research Council (PERC) meets on Dec. 9-10 in Houston, PERC President and CEO Roy Willis will ask the council to amend the proposed 2010 budget to reduce both planned expenditures and the assessment rate.
The revised budget would cut PERC’s assessment revenues next year from $45 million to $39 million, based on an assessment rate of four-tenths of a cent per gallon effective April 1, 2010. The reduction of $6 million is almost identical to the amount PERC previously planned to spend on residential advertising. Since August, PERC has been restricted from generic advertising as a result of a Department of Commerce finding.
Willis said the budget and assessment reduction will affect all of the council’s activities, the state rebate program, the partnership programs with the states and with the National Propane Gas Association and Gas Processors Association, and PERC’s operational expenditures.
In addition to the restriction on advertising, the continuing weakness of the economy overall and the housing market in particular greatly influenced his recommendation, Willis said. “The outlook is bleak for any near-term growth in new residential construction and remodeling – a primary source of new propane consumers,” Willis said.
“PERC will continue to support targeted programs in the residential and commercial markets next year to help mitigate the demand declines driven by efficiency gains and consumer conservation, although expenditures will be reduced and will focus on construction professionals,” Willis said.
Funding for PERC activities that are not subject to the Department of Commerce restriction – research and development, training, and safety – will see a modest increase next year, Willis said.
“For the past two years, the council has allocated more of its funds to research and development and less to advertising, and that trend will continue,” he added.
The impact on the state rebate program will be an estimated 15 percent cut in revenues to each of the states and an overall reduction of about $1.1 million. Willis said that he will propose a matching funds program for the states that should more than offset the expected cuts.
“We obviously have work to do to define that new matching funds program, and I look forward to working with my industry colleagues at the state level on that task,” Willis said.
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