Fair share payments

November 1, 2004 By    

Some equipment and service providers are crying foul over a new formula to determine how much they must pay to be members of the National Propane Gas Association.

NPGA recently changed its dues structure for the 12 categories of companies that offer goods and services to propane marketers. Among the changes, it revamped the gross sales limits used to qualify companies into categories and amended membership fees.

 Patrick Hyland
Patrick Hyland

Companies with reported sales of less than $100,000 had been paying $570 per year; those with sales between $100,000 and $1 million paid $675 or $795, depending on the type of business. Manufacturer’s representatives paid a flat $227.

According to the 2004 NPGA membership directory, one-third of the 416 U.S. supplier members paid $570. Fourteen percent paid $675, and another 22 percent paid $795. Under the new plan, all suppliers with sales less than $2.5 million must pay $950 in 2005.

The association has gotten complaints from a handful of small service providers who say the new structure is punitive. They say the hike is exorbitant, and are upset that companies earning $100,000 in sales must pay the same as those making $2.5 million. They also are miffed that there was no rate hike for propane marketers, who they claim get the lion’s share of membership benefits.

Some threaten to non-renew their membership over the issue. Others say they will pay the rate hike by shifting donations they now make to the industry’s political action arm, Propane PAC.

NPGA officials say dues will be higher for some members but lower for others in 2005. They admit that smaller companies took the biggest hit in the restructuring, but insist the goal was not to squeeze more out of the little guys.

They say impetus for the changes came from propane producers upset that competitors were not paying the full fare ($14,730/yr.). That concern spread to other supplier categories, where more than a few companies seemed to be under-reporting sales in order to get the cheaper membership rate. NPGA set up a task force last year to study the equity of payments being made by non-marketer members.

“There was a recognition that it was happening, a creeping perception that some people were pulling the cart while others were riding along,” NPGA President Rick Roldan acknowledged. “We found enough examples to warrant a study group, and that’s why the result is more comprehensive and less ad hoc.”

The new structure is more balanced and reduces the financial incentives for companies to under-report their earnings, he says.

NPGA assumes that revenues reported by companies are accurate; it does not verify the data submitted. The newly published membership directory includes each supplier company’s reported sales volumes and corresponding dues paid, which NPGA believes will help police honest reporting.

Not that it makes for good reading for unhappy supplier members who have been paying their fair share all along.

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