New Mexico issues new consumer protection rules for propane industry

New Mexico’s Public Regulation Commission has finalized new consumer protection rules aimed specifically at the state’s retail propane industry.

The state has about 90 propane companies operating from 140 retail locations. Other marketers deliver into the state from Colorado, Arizona and Texas to serve the 98,000 households heated by propane.

The unregulated industry had been the subject of public inquiry for more than a year following consumer complaints about billing practices, unfair pricing and minimal fills. From January 2009 through Nov. 29, 2010, the Consumer Relations Division said there were 20 complaints that resulted in saving consumers $2,500. State lawmakers last year authorized the creation of the new rules.

The commission’s final ruling, issued Nov. 23 and effective Dec. 15, is designed to establish a uniform set of standards defining the rights and responsibilities of propane customers and dealers. It also is intended to ensure that dealers provide customers with transparent, accurate and timely information and establishes a process within the commission for the resolution of customer complaints.

The new rule creates standards for customer budget billing as well as tank rental, ownership and removal. It also addresses payment agreements, contents of bills and metered tickets, and public access to charges for propane and related services.

Specifically, propane retailers operating in New Mexico now must:

■ Disclose to customers, in writing, all annual tank rental fees – including fees for tank removal, propane removal, minimum fills and partial fills.

■ Remove its rental tank from the customer’s property within 30 days after receiving a customer’s written notice of change and issue a refund within 30 days for the unused propane and tank rental balances.

■ Make a “reasonable effort” to provide service to residential customers who offer cash payments and enter into a payment agreement with a residential customer with a delinquent or past-due account.

■ Keep for at least 90 days and make available charges for service, including the current price of propane and pricing categories used to establish customer rate variations. Dealers must make this data available in writing to new customers before a service contract is begun, and to existing customers with the next delivery after Dec. 15.

■ Honor the quoted price for a propane order, even if the delivery is made on another date for reasons not caused by the customer.

New Mexico Propane Gas Association Executive Director Baron Glassgow said the additional paperwork required by the new rules for disclosure and notice will have the biggest day-to-day impact on marketers.

“However, in the event a formal complaint is filed, the commission’s procedural rules allow for formal discovery [i.e., depositions, interrogatories, requests for documents, etc.] and a full evidentiary hearing. If the propane company is incorporated, that dealer would be required to be represented by an attorney. In contrast, the complainant could represent themselves. The entire process could easily cost several times $10,000 if the complainant is litigious. This is a huge concern,” Glassgow said.

Still, propane industry representatives are pleased that several originally proposed stipulations did not make the final rule. Those include:

■ Mandated budget payment plans for every propane consumer – regardless of creditworthiness – and mandates on how those plans are administered.

■ Prohibition of discontinued service to residential customer unless there is a delinquency and notice of discontinuance of service.

■ Prohibition of discontinued service for failure of a residential customer to pay for special services or non-payment of the disputed amount of a bill.

■ Mandates on how propane marketers collect past-due balances from their customers.

■ Requirements for deliveries to customers of competing companies that cannot service the account in an undefined “state of emergency.” Penalties or service fees for those deliveries would be prohibited.

■ No discontinuance of service allowed after noon on a Friday, on the day preceding a holiday or on a day preceding a day when the marketer’s office will be closed.

■ Required deliveries for as little as 50 gallons during the busy winter season.

■ No penalties for low or minimal usage for residential customers.