propane contract in New Hampshire

[gasgirl]

We just moved into a 1974 Colonial in southern New Hampshire. There is a 500-gallon propane tank underground . It runs the furnace, hot water heater, whole house generator (when needed), and we plan on adding a propane stove to the kitchen.

My wife called me at work last week to tell me that the Eastern Propane delivery driver was there and was told he would be locking the tank for failure to transfer ownership to my name. Apparently when I called them prior to closing on the house, they didn't actually transfer my name to the account. So we got that cleared up, he topped up the tank (even though it was 60% full) and I paid for the whole tank (at $2.49 a gallon). I tell them to put me on "Will Call" status, since I am capable of reading the gauge and I don't want surprise deliveries.

This week I get a contract in the mail from Eastern Propane that they want me to sign. There are all sorts of terms I'm not comfortable with, and I really don't want to sign this piece of paper. Is this how the propane business works in New England? This is all new to me.

It's a 5-year contract, auto-renewing for one-year terms after that.

• If the tank must excavated at any time for removal, repair, recertification, relocation, or replacement, then I am responsible for paying those costs.
• If I want to switch propane suppliers, I must pay $1895.00 to Eastern Propane for the tank.
• There is no mention of routine maintenance, and who is responsible to pay for that.
• There is a minimum usage requirement, where I must use at least 50% of the tank capacity every year, or I will be charged some fee (undisclosed how much this fee would be)

So my problem is, I like the idea of having propane available at the house, but I hate these terms.

• I plan on supplementing a good portion of my space heating requirements with a woodstove.
• I may look into a HPHW heater in the future if the cost savings make sense.
• I like having a diversity of fuel sources since we have all seen fossil fuel prices spike and crash.
• I don't like not being able to shop around to find which supplier has the best price when I need my tank filled.
• I realize New England has some of the highest propane prices in the country, and I bet a lot of that is due to the "captured tank" arrangements, and not just supply/demand.
• I have no idea the condition of this buried tank; whether it is really worth $1895. What is the residual value of this thing, if this contract just passes from one homeowner to the next?

Am I delusional in thinking that I would save money by calling around to the various local propane dealers? Do they mostly keep their prices in lockstep?
Can I save money buy buying and maintaining my own tank?
Has anyone used the Our Town Energy Alliance to save money with the pooled buyer's arrangement?

Hopefully you got everything worked out. Unfortunately propane companies have strict rules to follow (based on the state they are in). Purchasing your own tank does make you responsible for maint. and here in VT a leak check is required each time a customer owned tank is filled because anyone could have filled it and the next person filling it is responsible for it safety wise. To my knowledge they don't HAVE to make you purchase the UG tank, the company you switch to most of the time would be willing to swap a tank in exchange for yours to Eastern Propane. This is not saying they don't make their own rules, as long as it is legal they can do what they want but most of the time propane companies are willing to work with you in order to keep your business. If they are not willing to bend what so ever then they aren't worth keeping as a supplier. good luck with the new home!

 

[gasgirl]

I might even push them for an indefinite price contract, if I buy the tank, based on Selkirk rack price. The price they pay for fuel is no secret. You can track any fuel price here...

(broken link removed to http://www.bgs.state.vt.us/fuel/weekly_rack_pricing.php)

Tell them you want Selkirk plus $1. That's their price, plus $1 per gallon. Right now, Selkirk is .6935 per gallon. Of course, they have additional costs to get it to their plant and deliver it, but, $1 per gallon still leaves them some room to make money, which is why any business exists. You can look up the rack price anytime yourself.

Not all suppliers purchase their gas from Selkirk, there are quite a few places the pricing can come from. The expense to a fuel company to make one delivery is $50+ to cover all of their expenses. It isn't cheap to keep a business afloat.....

 

[twd000]

Follow-up post: after calling around to several suppliers, I found that the propane business is actually quite competitive here. Suppliers are willing to quote prices over the phone, and they commonly "buy out" the tank from another company to get your business. You can repeat this every season if you're willing to put in the phone time. I stayed with Eastern and never signed anything. The tank buyout and "contract" was a bluff. I signed up for the Our Town Energy Alliance, which is a co-op that negotiates bulk rates.