PERC approves assessment rate increase, mulls funding decisions

July 21, 2016 By    
LPG0516_consumer-ed_blue-590x320

Photo courtesy of the Propane Education & Research Council

Looking to fund its new consumer education campaign at an effective level without significantly compromising current commercialization and state programs, the Propane Education & Research Council (PERC) approved an assessment rate increase on odorized propane gallon sales at its July meeting in Napa, Calif.

The assessment rate of four-tenths of a cent per gallon, which had been in place for the past six years following a federal government restriction on PERC consumer outreach activities, will rise to four-and-a-half-tenths on Nov. 1. The decision came as PERC approved a proposed 2017 budget of $41.4 million, now open for industry and public comment.

PERC says the assessment increase will generate about $3 million in additional revenue in 2017. The increase will help fund the continuation of the new consumer education campaign, focusing on the residential market and featuring Blue the dog (shown above); commercialization projects designed to grow propane gallons across markets; and the council’s Partnership with States program.

“We wiped the slate clean,” says Rob Chalmers, PERC treasurer, of Meritum Energy Holdings. “We said, ‘What is it we need to do and how do we fund it?’”

The council had approved $10 million this year for the new consumer campaign and, under the 2017 budget, will fund it at $8.2 million in the second year. The new total represents about 33 percent of PERC’s $25.3 million operating programs budget in 2017.

“We took into consideration what [PERC branding agency partner] The Richards Group said we needed for an effective campaign,” Chalmers says.

With a raised assessment, the council will assess a full cycle of the consumer campaign while it protects some of its project work and decides future funding needs, Chalmers adds. He says the council will “see a little pause” in some of its research and development initiatives in the new budget, and council leaders have noted reductions in other areas, as well.

“[The $8.2 million in 2017 for the consumer campaign] is less than we spent this year in a six-month time frame, and next year’s a 12-month time frame,” PERC President and CEO Roy Willis says. “If we have additional resources, we should look at deploying [them] to this consumer campaign and particularly to television and other channels where we have an opportunity to reach the greatest number of homeowner customers.”

In Napa, the council discussed the consumer campaign rollout and its multimedia blitz across the nation this summer to improve public perceptions of propane and showcase its many uses in and around the home. Deciding how to fund the program as it fits with other PERC initiatives, however, has been a key part of the process.

“We have to prove the value of this campaign,” says Dennis Vegas, PERC’s chief marketing officer. “We are being diligent, and we will make adjustments as we have to.”

As consumer campaign development took place early this year, Willis signaled budgetary challenges ahead for the council, saying PERC would have to consider program cuts. The future of Partnership with States, which historically has provided $1.8 million annually to fund programs that target external audiences, appeared in doubt.

But after receiving feedback from a number of states, PERC left Partnership with States intact in 2017, albeit at $1.5 million – $300,000 less than its original amount. The council provides a dollar-for-dollar match to states that choose to participate in Partnership with States programs.

“I’m sure they are breathing a sigh of relief that Partnership with States was saved,” says Pat Hyland, director of industry programs at PERC. “Most states were formally supportive of an assessment increase to five-tenths. Some states were very specifically opposed to raising it from four-tenths. There were formal letters from associations to the council stating their positions. At the end, we settled on a happy medium.”

In an effort to bring state propane associations closer to the council and strengthen retailers’ involvement in industry programs, PERC has formed an Industry Outreach Committee. The committee will review how state rebates are used and also discuss a parameter in which states would have to spend any excess rebate funds before participating in Partnership with States.

The council also announced the formation of a new strategic plan task force at the July meeting. The task force is being asked to provide feedback on PERC’s strategic focus needs and objectives.

“A lot of this is evolving,” says Tom Van Buren, PERC chairman, of Ferrell North America. “The new Industry Outreach Committee leading into November [and the next council meeting] will get feedback from states on what they believe are some solutions for the criteria with Partnership with States and to optimize what we’re doing with consumer awareness.

“We don’t have all of the answers right now,” he adds. “That’s the plan we have in place to make the best decisions as we move forward.”

Brian Richesson

About the Author:

Brian Richesson is the editor in chief of LP Gas Magazine. Contact him at brichesson@northcoastmedia.net or 216-706-3748.

Comments are currently closed.