Great debate for 2008

There appears to be growing dissention in the ranks regarding the industry’s aggressive pursuit of the untapped indoor cabinet heater market.

Patrick Hyland

Industry leaders for the last four years have been working to amend the NFPA 58 fire code to allow composite cylinders with cabinet heaters. Their hope is to gain access to a virgin propane market that could burn between 11 million and 30 million gallons the first year and 322 million to 523 million gallons after 20 years.

The National Propane Gas Association‘s Executive Committee unplugged the campaign just before the NFPA vote last June, however, and the association remains undecided on its position heading into the next round of code updates this spring.

The strategy debate has caused a true split among propane marketers.

Our industry rarely gets a shot at a new market segment with the potential of this one – even though some portion of sales is likely to be diverted from propane furnaces. Cabinet heater use could introduce propane to first-time customers likely to upgrade appliances down the road.

Still, many marketers are leery about amending their decades-old warning against customers bringing propane cylinders indoors. They also share safety concerns expressed by NFPA and Underwriters Laboratories that customers will try to trade less expensive steel cylinders for safer but costlier composite models once the need for winter heat arrives.

Both NPGA and the Propane Education & Research Council are heavily invested in the project and understandably reluctant to back off. PERC already has invested more than $1.3 million to study the market, develop product listing standards, fire test cylinders and address concerns of fire service organizations. Another $300,000 has been set aside for outreach to consumers and propane industry personnel.

Disclosure of that investment figure at the NPGA board meeting last October seems to have given some marketers the notion that the council has too much of its money to spend. Many marketers expressed shocked at those numbers. At least one state association has since put its concerns in writing to PERC, and I hear several others are considering the same.

Responding to PERC’s solicitation for industry comments on its strategic plan, the Missouri Propane Gas Association board at its November meeting drafted a letter challenging how the council spends industry resources.

“In summary, MPGA’s concern is that we’ve spent a sizable chunk of money for the commercialization of a product that is not likely to be approved. Even if cabinet heaters come on the market, it is uncertain whether they will generate a net increase of profitable gallons without creating substantially more liability for marketers,” the letter says.

The association contends the research investment should have been left to the companies that manufacturer, distribute and sell the appliances and cylinders. It also suggests changes in how PERC project funding is decided.

“We are pleased that the Council is now reviewing its ‘commercialization’ criteria. This new criteria should require, prior to funding, some threshold of industry consensus on the need and some reasonable expectation of benefit. In the case of cabinet heaters, there is no consensus and the benefits are far from clear,” it says.

“Finally, the National Propane Gas Association board of directors has not voted to support proposed changes to national codes which would allow cabinet heater use. A future vote is scheduled and it is far from clear that this will be approved. Should the vote be against cabinet heaters, or should fire officials deny their use, or should the insurance industry increase premium costs for cabinet heater exposure, the industry has committed funds for no useful purpose.”

Win or lose, the great cabinet heater debate is certain to be a primary issue for the propane industry in 2008.