E-mail Story
Print Friendly
Send E-mail
Reprint story
Sunday, March 21, 2010
All Fired Up Over Costs
By Michael Hartranft
Copyright © 2010 Albuquerque Journal Journal Staff Writer
The months ahead could bring some new state protections for the estimated 100,000 New Mexicans who rely on propane to heat their homes, fire up their stoves and keep the water hot, but it will fall short when it comes to dealing with wild fluctuations in prices.
Thanks to a bill passed in the 2009 legislative session, a committee is drafting what amounts to the state's first "bill of rights" for propane consumers and plans to submit a formal recommendation to the Public Regulation Commission by the summer.
"It is a critical area and we've had a lot of legislators who are concerned about it," PRC chairman David King said. "Propane is a hot issue."
But the effort, for now at least, will skip consumers' biggest complaint: Propane prices that can vary dramatically from one day to the next, in one area to the next.
"The PRC and the state, as I understand it, don't have any authority over pricing of this," PRC chief of staff Daniel Mayfield told the Journal.
Propane is a market commodity, the price of which is not subject to government regulation.
"The PRC regulates utilities, and the reason they can regulate them is because utilities are granted jurisdiction and are a monopoly within that jurisdiction," said committee member Baron Glassgow, executive director of the New Mexico Propane Gas Association. "The propane industry is not that way. It is very competitive, with lots of competitors competing for customers' business."
Pricing, however, is clearly a sore point for state Sen. Phil Griego, the northern New Mexico lawmaker who sponsored the bill that set the rule-making process in motion. He represents six mostly rural counties largely reliant on propane.
"I would like to see the PRC at least try to take some control to have propane dealers report to them in regard to profit, the amount of money they're making and the price they're selling propane for," said Griego, who introduced Senate Bill 468 signed into law by the governor last year. "If they're buying propane for $1.50 at the rack and then coming back and selling it for $2.81, I don't understand how that works.
"What I'm looking for is to get the propane companies a little more transparent," he said.
"The awful thing is that the people suffering the most are the poorest," said committee member and consumer activist Betty Haagenstad of Ojo Caliente, who worked with Griego and Rep. Jim Trujillo on the House side, to get legislation introduced.
The state's nearly 100,000 households that rely on propane, to be sure, face a host of other issues, Haagenstaad said.
They include:
• Difficulties changing to another dealer if the original dealer owns the customer's tank.
• Lack of regulations requiring dealers to honor winter moratoriums preventing dealers from denying service to low-income customers.
• Getting emergency service if the customer's regular dealer can't make a delivery.
• Having to pay a premium above the regular price for minimum purchases, typically 100 gallons.
• Having to pay extra charges without up-front explanations from the dealers.
"I hate to say that all companies aren't doing it right," Haagenstad said. "There are companies that are doing it right."
She said she's unsure the new rules will correct many of the problems.
Still, "it's a good beginning," she said. "At least the Public Regulation Commission is involved and we are working on the rules."
Senate Bill 468, which will create a new section of the PRC act devoted to propane service, gave the PRC two charges: to adopt rules protecting consumers's rights and to report by the end of 2009 on the progress. The PRC accomplished the latter by adopting staff's progress report in early December.
Comprised of representatives of the PRC staff, the propane industry, Construction Industries staff, and consumers, the committee held a series of workshops to identify consumer protection issues and possible solutions. It plans to continue meeting this spring but has posted a draft rule and document called "Important information for New Mexico Propane Consumers" on the PRC Web site, www.nmprc.state.nm.us.
"We put together a document that says, look, here's the important stuff a propane customer should know and the questions they should ask," said Glassgow. "... Probably 98 percent of what is in the document is what the industry already does."
The proposed rule states that its objective is to ensure propane dealers provide accurate, timely information about their services as well as delivery at the price and charges quoted to customers.
It would require dealers to:
• Offer budget payment plans to residential customers with a method of leveling bills.
• Ensure customer bills contain precise information about due dates, previous balances, total amounts due and where to go with an inquiry or complaint. Similar detail would be required on metered fuel tickets.
• Furnish a layman's summary of the rights and responsibilities of dealers and customers, with information about billing procedures, installment payment plans, low-income energy assistance and procedures for filing complaints with the PRC.
• Provide public access to its current charges for residential service.
• Promptly investigate a complaint and if it can't be resolved, tell the customer how to contact the PRC's consumer relations division.
The companion consumer document provides information about what customers are entitled to know about their propane service and what dealers' obligations are.
Customers, for example, may change dealers for any reason, request the current price for propane and any additional charges related to delivery, or use their own tank and regulator if it is suitable for continued service.
Dealers can charge different prices to different types of customers or for different types of delivery. If a consumer places an order, the dealer must honor the quoted price for the time the dealer specifies.
Griego said he would require propane dealers to appear before the PRC to justify any proposed rate increases.
Public Regulation commissioner Jerome D. Block said that would likely take an act by the Legislature.
"I think we're going in the right direction and maybe some day we'll visit that," Block said.
Ray Engstrom, president of the New Mexico Propane Gas Association, noted the price of propane varies with the price of freight and is so volatile, it would be a financial hardship for many dealers to have to file a rate request for each increase.
"I hear it can run as much as $250,000 for a hearing ... and that would put small dealers out of business and just hurt the consumer," he said.
You also can send comments via our comment form
|
|
