Propane industry news roundup: May 2008

Michigan attorney general, Inergy settle excessive price claims

Inergy Propane and Michigan Attorney General Mike Cox announced March 26 that they have reached an agreement to resolve claims that the propane retailer overcharged some Michigan customers for product this winter.

Consumers who were not on a fixed price plan had complained that they were being charged as much as $4.39 a gallon this past heating season. According to the attorney general’s office, the Michigan Public Service Commission reported that the average residential price per gallon for propane in Michigan from Dec. 3, 2007, to Feb. 19, 2008, ranged from $2.33 to $2.45.

Inergy officials have consistently denied any price gouging.

As part of the agreement, Inergy’s Michigan distributors will give local customers who were not enrolled in fixed-price contracts between Nov. 1, 2007, and Feb. 29, 2008, partial refunds or credits. They also agreed to waive some customary fees for those customers.

In addition, the retailers will offer capped or fixed-price contract options to all of its residential “non- contract” customers from June 2008 through May 2009 for less than $3 per gallon. The sign-up charge will be waived.

The marketers have agreed to take additional action to educate consumers about available payment plans that can help them avoid or minimize the effects of high propane prices. Inergy also has been ordered to compensate the attorney general’s office for legal and investigative fees incurred.

Inergy has a number of retail operations in Michigan that operate under regional brand names, including Gaylord Gas, Petoskey Propane, Blue Flame Gas, DeCock Bottled Gas, Lagasco Propane, McBride Oil & Propane, Northwest Energy, Pearl Gas, ProGas Propane and Quality Propane.

PHMSA extends NPGA’s special permit

The Pipeline and Hazardous Materials Safety Administration approved NPGA’s requested extension of the special permit allowing transportation of consumer tanks.

The permit allows for the transportation of a consumer storage tank from the customer’s site to the nearest bulk plant when the container is charged with propane in an amount greater than 5 percent.

NPGA argued that DOT would increase safety by providing a means to offload storage tanks with more than 5 percent propane at bulk plants.

The permit, which was granted in June 2006, is now effective until March 31, 2010. NPGA urges members to adhere to its requirements.

PERC responds to economy, higher propane prices

PERC is hoping to grow off-season sales through new technology and to more strategically market propane to consumers and builders.

This plan, PERC said, comes in response to the downturn in the U.S. economy and higher propane prices.

“We are all feeling the impact of the economy right now,” said PERC President and CEO Roy Willis. “But we can build upon propane’s inherent strengths to keep the industry strong and growing. Propane is a clean and efficient source of energy, and we have products entering the marketplace that have the potential to significantly increase sales.”

The council approved projects to support the growth of the propane engine fuel market. This includes a marketing development program designed to educate potential customers on the benefits of on- and off-road propane-powered vehicles. Another program will expand the marketing efforts for the new propane-powered Blue Bird Vision school bus. More than 100 have been sold this year, with 300 the goal.

Projects also have been approved to commercialize propane technologies, including the NovelAire desiccant dehumidifier, which improves the air quality in homes and businesses during the most humid months of the year. PERC also will continue its research and demonstration programs for propane steam and heat applications that control weeds and pests on the farm.

PERC continues to support outreach to builders, who are an integral part of the energy decision-making process. The industry will be represented at various trade shows over the next year.

The council approved funding for the following grants during its March meeting in Atlanta:

• $1,506,000 to PERC for 2008 builder trade shows and outreach.
• $937,500 to PERC for the 2008-09 engine fuel marketing program.
• $684,973 to PERC for curriculum alignment for CETP courses, Start-up & Installation and Residential & Small.
• $617,113 to PERC for the validation and commercialization of NovelAire’s desiccant dehumidifier.
• $303,000 to PERC for manufactured housing initiative.
• $286,500 to PERC for 2008 consumer education measurement and evaluation.
• $204,460 to PERC for distributed generation project development and implementation.
• $200,000 to PERC for Engine Fuel Advisory Committee professional services.
• $175,000 to PERC for regional market development representatives.
• $145,200 to University of California at Davis for steam as methyl bromide alternative project in Florida and California.
• $120,000 to PERC for the Blue Bird Propane Vision Demonstration Program.
• $113,100 to PERC for consumer safety education e-learning module program.
• $109,660 to PERC for usepropane.com and buildwithpropane.com web sites.
• $32,000 to Diedrichs & Associates for the electronic ignition control system for propane orchard heaters.
• $30,000 to Connecticut Agricultural Experiment Station for reducing blacklegged tick populations with propane torches in controlling invasive barberry.
• $16,500 to Blue Shepherd for Batchen Stinger reliability and water trials.

The staff also approved 84 rebates from 21 states, totaling $2,693,181. Eight states requested rebates under the Consumer Education Partnership with States Program, totaling $402,072.

AmeriGas adds 3,000 customers through Missouri acquisition

AmeriGas announced that it acquired all of the propane distribution assets of Scott Gas of Eldon, Mo.

AmeriGas gains 3,000 customers through locations in Eldon and Iberia in Central Missouri.

The company also purchased All Star Gas in the rapidly growing Lake of the Ozarks area of Missouri in 2007.

PPL Corp. sells natural gas, propane subsidiaries to UGI

PPL Corp. reached an agreement to sell its natural gas and propane subsidiaries to UGI Utilities Inc. for $268 million in cash plus working capital.

An electric utility, Allentown, Pa.-based PPL said it expects the sale to close before the end of 2008, pursuant to a stock purchase agreement and pending regulatory approval.

PPL Gas Utilities Corp. and Penn Fuel Propane LLC represented only about 1 percent of PPL’s revenues last year. The propane subsidiary buys propane wholesale and resells it to about 33,000 industrial, commercial and residential customers in Pennsylvania, Delaware, Maryland and West Virginia.

UGI Utilities Inc. is a subsidiary of Valley Forge, Pa.-based UGI Corp. It delivers natural gas to 478,000 customers in 28 Pennsylvania counties.

Dover Corp. adds Pump Solutions Group to organization

Dover Corp. announced the establishment of its Pump Solutions Group (PSG).

PSG joins its major legacy brands, Wilden, Blackmer, Griswold and Almatec, to form a pump organization with an array of pump technologies totaling more than $300 million in annualized revenue.

PSG resides within Dover’s Fluid Solution platform. Its mandate is to leverage each company’s brand recognition while taking advantage of synergies within the group’s distribution, manufacturing footprint and supply chains. It also leverages best practices and streamlines back-office support functions.

PSG has facilities in California, Michigan and Georgia, along with a number of international facilities. Dover has over $7 billion in annualized revenues.

Pennsylvania company set to join Dover’s Pump Solutions Group

Dover Corp. announced the acquisition of Neptune Chemical Pump Co. Neptune will become part of Dover’s newly formed Pump Solutions Group within the Fluid Management segment. Terms of the transaction were not released.

Neptune, based in Lansdale, Pa., is a manufacturer of chemical metering pumps, chemical feed systems and peripheral products.

Worthington announces another price increase

Worthington Cylinders announced a price increase on all steel and aluminum propane and fuel gas cylinders ranging in size from 4.25 pounds to 420 pounds.

Prices will increase from 6 to 8 percent with shipments effective May 10. This increase is in addition to the 10 percent increase that was announced earlier this year on all steel portable cylinders.

“We continue to see unprecedented increases in steel and aluminum cost, making it necessary for us to pass on an increase to the market,” said Dusty McClintock, vice president of sales and marketing for Worthington.

Comment period extended for driver training proposal

The Federal Motor Carrier Safety Administration (FMCSA) extended the comment period on its entry-level, driver-training proposal until May 23, after a request from American Trucking Associations (ATA), Transport Topics reported. However, FMCSA denied a request by ATA for a public hearing.

The rule would require new drivers to have a minimum of 120 hours of classroom and behind-the-wheel training by an accredited truck driving school.