Notes from Napa

A look at PERC’s reorganization; plus perspective, politics and projects

Against the backdrop of the green vineyards traversing the rolling hills of wine country, a re-engineered Propane Education & Research Council (PERC) met last month in Napa, Calif., further developing its newly structured plan to grow gallons and awareness of propane.

Many new facets of the organization tasked with collecting four-tenths of a cent from every gallon of odorized propane sold and utilizing those marketer funds to improve the industry were highlighted during a one-day meeting out west.

In recent months, PERC has eliminated, created and replaced positions, and redefined roles, as it has realigned to face new challenges posed by energy competition and the economy, consumer behavior and a restriction by the federal government on consumer education efforts.

PERC’s committee structure has changed, too. Instead of five committees focused on different segments of the industry, there is one advisory committee composed of about 80 volunteers who are broken into three working groups (focused on markets, research and technology, and safety and training). The advisory committee works under a detailed project review process, and that pool of products has been reduced from 100 to 50.

The idea behind the process is to have a structured place to start driving industry projects, says PERC Chairman Joe Armentano of Paraco Gas. It’s a process that remains in transition but one that’s raising industry engagement to an all-time high, adds Darren Engle of Blue Star Gas, who helps lead the working group on research and technology development.

Positive outlook
Armentano called the year one of the most challenging on record, mainly because of the warm weather throughout the country but also because of the tremendous amount of consolidation, specifically among the majors.

“There are a lot of bright spots for the industry despite the challenging environment,” says Armentano, citing lower propane prices, higher supply and propane’s stronger link to natural gas than to crude oil.

The fact that AmeriGas and Suburban Propane spent about $5 billion combined for Heritage Propane and Inergy’s retail business, respectively, can be perceived as encouraging.

“Those are large wagers, so to say,” Armentano says. “They made a large commitment to this industry. That should send signals to us marketers that we have a lot to look forward to.”

During a break in the meeting, National Propane Gas Association (NPGA) President and CEO Rick Roldan echoed Armentano’s sentiment, saying the path to our future is never a straight line and that it’s wrong to assume what happened last year will continue.

“We need to square our shoulders and realize the future is going to be different,” he says. “We need to set specific priorities to change our environment and then get them done.”

Talking about jobs
We’ve reported extensively on the PERC restriction since the U.S. Department of Commerce (DOC) handed it down in 2009. A consumer-protection clause kicked in after propane prices rose to high levels compared to other fuels.

The effect on the industry has been severe, Roldan told the council in Napa. Citing ICF International data, Roldan says the industry has lost 10,000 employees, down to 35,000, in the retail sector since 2005.

“In that time, we’ve had a restriction that’s kept us from telling the story about our product,” he says.

Roldan says the data used to calculate prices and initiate the restriction is no longer being published, and therefore DOC must choose a new method. The method used had been flawed, the industry has argued, because it only factored one set of propane prices (residential). NPGA has launched a letter-writing campaign to address the restriction.

“We’re going to the White House, and we’re talking about jobs,” Roldan says.

More from the meeting
The Freightliner propane bobtail remains on track for a March 1, 2013, launch, according to Tucker Perkins, PERC’s chief business development officer. Expect about 300 propane bobtails to hit the road between November 2012 and February 2013, leading up to the full launch. … We have more coverage from the meeting in our August issue, including PERC’s new multimillion-dollar communications program and other projects, and the council’s proposed 2013 budget. Click on the link below.