PERC considers new consumer education program, raised assessment rate

May 2, 2013 By    

The Southeastern Convention & International Propane Expo, held last month in Atlanta, came packaged with some of the industry’s biggest news in some time.

Ironically, it happened outside the Georgia World Congress Center, at a nearby hotel connected to the CNN Center – appropriate in this case for the ever-popular phrase “breaking news.”

Almost four years ago, the U.S. Department of Commerce (DOC) restricted the Propane Education & Research Council (PERC) from its multimillion-dollar consumer education campaign, credited for adding 65,000 new residential propane customers and $118 million in industry revenue from 2001-07.

The growth in residential propane prices, compared to residential electricity, natural gas and heating oil prices, exceeded a statutory threshold outlined in the Propane Education and Research Act of 1996 (PERA), the legislation that created PERC. As a result, a consumer-protection clause kicked in, and PERC was limited to efforts pertaining to safety and training and research and development.

However, since the restriction took hold, the U.S. Energy Information Administration (EIA) has stopped collecting the price data – measuring residential, consumer-grade propane prices – used by the DOC in its analysis.

In a February 2013 letter to Rebecca Blank, deputy secretary of commerce, PERC President Roy Willis notes how PERA “also tasks the department with certain responsibilities,” including an analysis of propane prices every six months during the restriction to determine the status of council activities.

The DOC’s last correspondence to PERC regarding the analysis had come in February 2012, putting nearly a full year between communications with the council, Willis notes in the letter. He also requests the DOC make the necessary modifications to the propane price analysis and perform a new analysis in timely fashion.

Willis received a response letter from the DOC, dated March 27, 2013. It acknowledges the discontinuation of EIA’s residential, consumer-grade propane price data and says it is in discussions with EIA regarding alternative data sources. PERC was planning a response letter to the DOC and hoping to rally congressional support and compliance of the law.

The restriction has impaired all of the council’s programs, to some extent, and its ability to plan, Willis writes.

Assessment rate revisited

What does this mean for propane marketers and the industry?

With the situation in flux, PERC has begun discussions about launching a 2014 consumer education campaign and raising the assessment rate on propane marketers from four-tenths of a cent per gallon of odorized propane to five-tenths. PERC is funded through this assessment.

“Our action here today is to begin the conversation in the industry about this possibility,” Willis said at PERC’s meeting in Atlanta.

PERC has at least one legal opinion saying the DOC restriction is no longer valid; the council plans to confirm the legalities of the matter, but it also plans to move forward with other key steps. One is the creation of two budget proposals for 2014 – one with the raised assessment rate and no restriction, the other with the current rate and restricted council activities.

A new consumer education campaign would likely focus on the residential market and receive $10 million to $15 million in annual funding, Willis estimates. In 2008, the year prior to the restriction being handed down, PERC designated $18 million (of its $47.6 million budget) toward consumer education efforts. A five-tenths assessment rate was in place at the time.

As Willis says, the process to launch a new campaign and raise the assessment rate “won’t happen overnight.”

“There are a lot of great opportunities for our industry, but we need to have a specific plan in front of the marketers, so we know how PERC would use the funds assigned to this area,” says PERC member Tom Van Buren of Ferrell North America.

Expect more details to emerge at PERC’s July meeting in New York City, ahead of an Aug. 1 deadline to submit its 2014 budget plan.

About the Author:

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

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