The Wisconsin Department of Agriculture, Trade and Consumer Protection and Department of Justice announced this week that they have reached a settlement with Lakes Gas Company regarding complaints related to propane prices during the historic runup in winter 2013-14. During the week of February 21, 2014, Wisconsin LP prices surged to as high as $5.10 per gallon according to Inputs Monitor data. That was due to the loss of the Cochin Pipeline and a major supply squeeze in northern states which supported extremely high prices across the Midwest.
According to a press release, "The total settlement of $86,686.20 includes $71,686.20 in restitution to approximately 1,600 of the company's customers and $15,000 in forfeitures, fees and assessments."
Customers who had pre-bought propane for later delivery were billed an additional truck charge during that time. That extra delivery fee is what is being refunded to customers. Lakes Gas makes no admission that it broke Wisconsin law with the extra fees. The propane shortage that year left suppliers scrambling to acquire propane to fill pre-booked contracts and one Wisconsin dealer reported to the Inputs Monitor that they had traveled as far as the Carolinas to find propane supplies. Many states including Wisconsin issued Hours of Service Waivers for propane delivery truck drivers to keep them on the road longer, allowing them to serve more customers in the midst of frigid weather and icy roads.
Transport fees, LP shortages and overtime for drivers all contributed to supporting those higher retail prices. Lakes Gas allegedly passed the extra expense on to customers who had pre-booked their winter supplies in the form of a delivery charge.
"According to the settlement, Lakes Gas will no longer bill Wisconsin residential customers who have pre-buy agreements for delivery fees above and beyond those stated in the pre-buy contracts. An exception may be made if language authorizing these delivery fees is included in a pre-buy contract.
In addition, Lakes Gas will modify its website to clarify that the company does not purchase in advance and store all of the gallons of propane that it sells to pre-buy customers," the press release said.
We do not expect propane prices to spike the way they did during winter 2013-14 this winter -- then again, we did not expect prices that winter to breech the $5.00 per gallon mark. The number one factor in the regional propane shortage was the loss of the Cochin Pipeline and no such infrastructure adjustments have been announced lately.
To guard yourself against having delivery charges added to your bill in a time of crisis despite pre-booking LP, check your contract and see if delivery charges are included or if they can be added to your bill after the fact. Our advice since the crisis of 2013-14 was to fill your entire winter's propane needs before the snow flies. Some have increased propane storage space and filled that storage to the bring to avoid relying on just in time deliveries which are subject to supply fluctuations and foul weather. As a matter of security, if you have not filled your tanks, consider doing that now while supplies are strong, and the roads are clear.