Industry review

January 1, 2006 By    


Propane bills might not be as high as expected

The U.S. Energy Department’s statistical division – the Energy Information Administration (EIA) – has again revised its prediction about cost increases in the average propane homeowner’s heating bill.

In early December, the EIA said propane users should expect a 15 percent increase in their bills this winter. In October, the agency had forecast a 30 percent increase – about $325 more – in the average winter heating bill. In November, the agency said in its “Short Term Energy Outlook” the increase might only be 21 percent, or $230.

The EIA now says households can expect to pay an average $167 more this winter to heat their homes with propane. The average propane price is projected to be $1.87 a gallon – 14 percent above the 2004 average.


‘Highly successful’ consumer campaign gets big allocation

A nearly $16.13 million investment in the newest leg of an advertising program tops the list of funding requests approved last month by the Propane Education & Research Council (PERC).

For the first time, the 2006 Homeowner Advertising and Outreach will use return-on-investment data collected from previous years to guide the consumer education campaign. In this first year of the five-year strategy, PERC said it plans to increase its work with “marketing channel partners,” such as builders, while continuing its efforts with consumers.

 Propane Suppliers Guide
Propane Suppliers Guide

Kate Caskin, PERC’s senior vice president, said the consumer education campaign is having tremendous impact. Energy and Environmental Analysis Inc. of Arlington, Va., told the council that a 7 percent return on investment would show the program could be considered “highly successful.” So far, the propane industry campaign has generated a 17.5 percent return on investment, the analyst said.

“That’s much higher than most campaigns produce,” Caskin said. “We were very pleased.”

While she feels the campaign has been successful so far, it must continue to address consumers as they confront high heating bills this winter.

“Where we have work to do is on the favorability side of the equation,” she said. “We have a lot of work to do.”

The council voted to spend another $367,000 to reach out to builders, with an additional $160,450 to identify and quantify builder attitudes about propane.

Some $305,000 was allocated to reach builders of manufactured housing, while $690,000 was devoted to communication efforts such as the newsletter, annual report and more.

The council will spend up to $300,000 to measure and evaluate the impact of the residential advertising and outreach, $97,000 to fund the Consumer Education Advisory Committee, $41,000 to monitor the media for propane-related stories and $25,150 to promote the use of the “Exceptional Energy” logo on bobtails and transport trucks.

The spin-off from the consumer education campaign – the Consumer Education Partnership with States Program – was the second-most expensive docket item approved in December. PERC allocated $3.34 million for the program, which helps fund campaign efforts in state and regional markets.

In addition, the consumer education campaign will spend $305,000 for a manufactured housing initiative aimed at improving awareness of propane with manufacturers, retailers, builders and consumers; $690,000 to improve industry and multi-audience communications; $300,000 to analyze the impact on residential advertising and outreach; $97,000 to fund the Consumer Education Advisory Committee; $41,000 to monitor the media for propane-related stories and $25,150 to promote propane vehicles at trade shows.

Meanwhile, PERC will pay $200,000 for its 2006 safe grilling campaign, $77,500 for the safety and training committee expenses and $228,500 to the National Propane Gas Association for its part in safety and training assistance, as provided under the contract that linked the two organizations.

In research and development, the council voted to provide $324,660 for a solar generator system that uses an LP gas engine. The hybrid system, run by a New Mexico-based Native American energy company, uses the propane engine as a back-up fuel to deliver electricity for one- or two-room dwellings.

The council also voted to allocate $125,000 to help develop a market development program to promote propane-powered commercial mowers.


Court rules in favor of propane dealers

The Kentucky Supreme Court ruled 4-2 in November that electric cooperatives can’t legally engage in private enterprises, including the sale of propane.

The court ruled state law only allows cooperatives to distribute and sell electricity or electricity-related services. The decision was praised by the Kentucky Propane Gas Association, which opposed the sale of propane by the cooperatives.


Propane fuels Olympic torch

Cavagna Group‘s High Pressure Division has helped light the most recognizable symbol of the Torino 2006 Olympic Winter Games – the Olympic Torch.

Cavagna supplied 12,000 custom-designed regulators for 12,000 Pininfarina-designed torches. Each torch contains a propane-propylene cylinder with a regulator designed and built by Cavagna.

The official torch run began in December for a two-month trip across Italy in anticipation of the start of the Olympics.


Lower small business threshold

The U.S. Small Business Administration (SBA) will consider a request by the National Propane Gas Association (NPGA) to increase the threshold level used to classify LP-gas propane dealers as small businesses.

The NPGA is seeking to increase the level – based on annual receipts – from $6 million to $10.5 million. An increase would make it equal to the current threshold used for heating oil dealers.

The SBA responded to the request in November stating “…an increase is appropriate for consideration.”

NPGA is lobbying for the change because the DOT hazmat registration fee amount is based upon a company’s classification as a small business.

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