Ferrellgas lawsuit over propane delivery prices settled in Minnesota

A two-year public rift between Ferrellgas L.P. and the Minnesota attorney general’s office over prices charged for propane deliveries has been resolved.

A Minnesota District Court judge last month approved an out-of-court settlement of lawsuits between Minnesota Attorney General Lori Swanson and Kansas-based Ferrellgas.

In October 2009 the state filed a lawsuit alleging that the nation’s second-largest propane marketer inflated prices and did not properly disclose customer fees. Ferrellgas countersued, insisting it hadn’t violated laws and that Swanson exceeded her authority.

The settlement requires Ferrellgas to pay $450,000 to the state, which will create a settlement fund from which to refund customers for any no-use and low-use fees they were charged after May 1, 2007. Of that, $200,000 goes to the attorney general’s office to pay for investigative costs and $250,000 goes into the settlement fund. Any funds left after distribution in an “equitable manner” will go into the state’s general fund.

The company also agrees to change several business practices in the state. It must stop using the term “market price” in its advertising and communications to customers and provide each customer annually a rate and fee sheet with a telephone number to call and discuss those charges. Each delivery invoice ticket must include the price-per-gallon of product delivered. Ferrellgas no longer will charge customers a no-use or low-use fee unless the customer has a leased company tank and has not purchased propane for at least 18 months.

Ferrellgas, one of the state’s largest propane retailers with about 50,000 customers, dropped its lawsuit against Swanson as part of the agreement.

“Ferrellgas is extremely pleased with the settlement. We feel that while we have long been a propane industry leader with regard to consumer disclosures, this process has been an opportunity to reexamine our practices and make improvements where necessary. We look forward to continuing to provide excellent service to our thousands of customers in the state of Minnesota,” the company said in a statement.

The resolution also opens the door for the multi-state marketer to rejoin the Minnesota Propane Gas Association (MPGA), which is the only local propane association to which the company does not belong. MPGA in early 2010 denied the company’s request for reinstatement because of the public scrutiny the lawsuit caused propane marketers throughout the state.