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FAQs on Propane Pricing. . .

Do all propane suppliers charge the same price?

No. Since propane prices are not regulated by the government, each propane company is responsible for setting their own propane pricing. Propane price ranges can vary significantly by geography, season and supplier. Propane prices can also vary if the propane tank is leased from the supplier or owned by the customer. If a homeowner is using 1,000 gallons per year and is paying 50 cents more per gallon than the price offered by most other local suppliers, that homeowner could be over-paying by $500 or more per year.

Should propane customers make an effort to stay informed of their pricing?

Yes! Consider the following scenarios: A consumer would not walk into an appliance store and order a refrigerator without having a clear understanding of the price and the opportunity to compare pricing at other stores. A propane company manager would not walk into a tire store and tell the clerk to install tires on a truck without having a clear understanding of the tire pricing and the opportunity to compare pricing at other stores. The same applies to homeowners purchasing propane. Each propane consumer should make a consistent effort to stay informed of their supplierís propane pricing. The Co-opís current propane pricing can always be found on our website.

To help communicate current pricing, a few propane companies choose to openly post their propane prices on their website. These companies are interested in openly sharing their pricing with both existing and potential customers. This helps existing customers compare their suppliers pricing while new customers can clearly evaluate a potential suppliers regular everyday pricing.

Some propane suppliers claim that their pricing changes so frequently that it does not make sense to post their prices on their website. Gasoline station owners face the same challenge of fluctuating prices, yet they continue to physically post their prices out on large illuminated signs, rain or snow, for the public to view. Keeping gasoline pricing current on those signs involves significantly more commitment and effort than periodically logging on a computer to adjust website propane pricing. Would you drive into a gasoline station and fill your automobile tank without knowing the price before filling?

In some cases, propane suppliers clearly state that they do not want their prices made public because of competitive reasons. Perhaps this can be translated to mean that they do not want their prices made public because they are not competitive. Spending several hundred to several thousand dollars per year on propane to heat a home is a serious matter. If you suspect that your supplier is playing a game that involves hiding pricing information, it may be a good time to contact other propane suppliers in your area.

Are new customer offers by propane suppliers a good idea?

Yes. These offers are very common among propane suppliers. New customer offers can provide some initial cost savings. However, when viewing a supplierís propane pricing, it is very important to distinguish between a supplierís short-term introductory pricing and a suppliers everyday standard pricing offered to all customers. A typical new customer offer can include a short-term introductory rate designed to attract customers. To make an apples-to-apples comparison of propane suppliers pricing, make sure you fully understand the price difference between new customer offers and your suppliers regular pricing. The truly relevant information is the suppliers regular everyday pricing.

How will leasing vs. buying a propane tank impact my price?

Homeowners that use propane for home heating have the option of leasing a propane tank or purchasing a propane tank. If a customer leases a propane tank, that customer must purchase their propane from the supplier providing the leased tank. With a leased tank, the propane pricing schedule is controlled by the propane supplier that provides the leased tank. Many suppliers choose to only lease tanks to customers, rather than offer their customers the opportunity to purchase a tank. Locking into a suppliers service, by leasing a tank, without the ability to openly view current prices, can be the same as writing a blank check to your supplier. Leasing a tank from a supplier that posts their pricing on their website makes sense as customers can openly view and compare their suppliers pricing at all times.

If a customer purchases a propane tank, that customer has the option of calling any propane supplier in the area that services customer-owned tanks and order a fill at the best price. Since suppliers are generally aware that a customer that owns their tank can call any supplier for a delivery, the propane price quotes are generally lower.

While many customers lease tanks and others purchase tanks, it is important to consider the responsible party for any future tank repairs. Suppliers are typically responsible for any tank repairs to their leased tanks, while customers are typically responsible for any repairs made to a tank that they own. Ask your supplier for details.

Should my tank be filled automatically on a route by my supplier?

Yes. Many propane suppliers use an automated delivery system to make efficient deliveries to customers within their service area. The automated system involves monitoring outside temperatures, then making deliveries to customers based on each customerís propane appliances and typical consumption patterns. In addition to delivery efficiencies, propane customers are less likely to run out of propane during the winter heating season if their propane supplier is responsible for keeping their tank full. Many propane suppliers even offer a small discount for customers that are on their automatic fill program.

How can I be sure that my supplier's propane price is competitive?

It is important to conduct your own research on a regular basis to ensure that your propane price is competitive.

1. Make sure all your suppliersí delivery tickets and invoices show your propane price per gallon. If these documents fail to show the price per gallon, contact your supplier and request that your price per gallon is included on future delivery tickets and invoices.

2. Call your supplier and inquire about your price per gallon on a regular basis. When contacting your supplier by telephone regarding price inquiries, notice if the company representative asks if you are a current customer or a prospective new customer. This type of seemingly irrelevant question may be cause for concern as the supplier may offer multiple pricing schedules. Ask for both new customer and existing customer prices for comparison purposes.

3. When viewing the EIA national or state propane price information, it is important to pay close attention to the directional trend of propane prices, rather than the exact national average price per gallon. If the national pricing average is going up or down during the past few weeks, compare the direction of your suppliers pricing for the same time period. The directional pricing movement will not be identical; however, the pricing should follow the same general direction.

4. Ask your friends and neighbors about their propane pricing. When comparing pricing, make sure you consider if both tanks are leased or purchased and if the annual volume is similar. If all factors are comparable, then the pricing should be similar.

Should I pre-buy my propane supply for the upcoming winter?

Many propane consumers elect to pre-buy their estimated propane supply for the upcoming winter. Since the demand for propane is typically lower during the non-heating summer months, propane pricing is typically lower, which may create a favorable propane buying opportunity. Pre-buy is typically a money saving program for propane consumers. However, many propane consumers that bought a pre-buy contract during the summer of 2008 were surprised to discover propane pricing during the winter was lower than many summer pre-buy contracts. It is impossible to predict the future of propane pricing with certainly. Therefore, it makes sense to contact your supplier and inquire about their pre-buy offer each summer. The Co-op's pricing is based on the wholesale price of propane. As the wholesale price fluctuates, the Co-op members cost also fluctuates proportionately.

Should I consider a price cap program?

Many propane suppliers offer a price cap program to help consumers control their winter heating bills. Since these programs vary significantly by supplier, it makes sense to evaluate price cap programs and consider any supplier price cap participation fees that may apply. Fees cost money too!

Do all propane suppliers charge customers extra fees?

No. Propane companies have operational expenses just like any other business. Some propane companies charge their customers propane delivery fees, safety hazmat fees, administrative fees, pre-buy and payment participation fees, invoice fees, fuel surcharge fees, etc. When these fees are included in your bill, they can drastically increase your propane expense with a propane supplier. The Co-op only charges a $4.00 Hazmat fee.

If applicable, ask your supplier to explain these fees in detail. It is very important to understand all of these extra propane supplier fees and what triggers the charges. Are the charges per delivery? Are they per invoice? Do they apply if the cost of diesel fuel to operate their trucks exceeds a certain amount? Are these fees passed directly through to the government or does the company retain the fees to offset expenses? Not all suppliers charge these fees. If a fee is not passed through directly to the government, it makes sense to contact your supplier and challenge these fees.

At the end of the day, all suppliers are aggressively competing for your business. The supplier that offers the best service at the most competitive price is the supplier that you should select. Iím confident that at the end of this process, youíll choose Hudson Co-op.

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