Schuette investigates AmeriGas in possible propane price gouging

MARQUETTE – Michigan Attorney General Bill Schuette has filed a petition in Marquette County Circuit Court seeking testimony and documents from AmeriGas in his ongoing investigation into possible propane price gouging and other potential violations of the Michigan Consumer Protection Act.

“Let this send a clear message to energy suppliers that we will continue this review until we get homeowners the answers they deserve,” Schuette said in a news release. “My job is to protect Michigan consumers-it’s this simple: If we find that state law has been broken, we will take legal action.”

Schuette’s office has received more than 400 complaints from consumers across the state made against propane suppliers this winter.

In March, Schuette filed similar petitions in Saginaw County Circuit Court, requesting information from Ferrellgas, after receiving 65 consumer complaints. Schuette’s investigation and review of information supplied by Ferrellgas continues. The company has denied any wrongdoing.

Schuette’s petition filed recently in Marquette County Circuit Court requested issuance of an investigative subpoena to AmeriGas, which has a local office in Negaunee Township and does business at more than 50 locations in Michigan.

Schuette’s office has received 44 consumer complaints alleging misconduct by AmeriGas or Holton’s LP and Rural Gas & Appliance, which are other AmeriGas entities in Michigan.

A request for comment from AmeriGas was not answered before press time today.

Like in the Ferrellgas petition, Schuette stated he has probable cause to believe AmeriGas has violated the Consumer Protection Act by charging prices grossly in excess of what has been charged by other propane retailers; telling customers the product will be supplied at one price, but charging another and leading customers to believe they had locked in a set rate when propane prices were low, but then failing to deliver on that pricing.

According to Schuette, evidence gathered to date suggests that while the statewide average retail price for propane went as high as $3.76 in early February, some AmeriGas customers were allegedly charged nearly $7 per gallon.

According to the petition, a Skandia woman said she was billed $5.45 per gallon for a propane delivery received Jan. 27. The statewide average propane cost that day was $3.61.

Because of the high price quoted, the woman ordered a delivery of only 100 gallons. AmeriGas “refused to deliver less than 200 gallons,” according to the woman’s complaint. Another Marquette County woman reported a similar situation.

“AmeriGas was magnifying the impact of its excessively high prices on consumers by requiring them to buy large quantities at the peril of losing the ability to heat their homes during one of the coldest periods in Michigan history,” Schuette said in the petition.

Schuette said AmeriGas justified its pricing to customers referencing a late-January surge in wholesale market pricing. The petition said the spike in prices peaked Jan. 24 at a high of $4.32 a gallon, but then fell quickly to $2.49 by Feb. 1 and further, to $1.74 by Feb. 5.

Schuette said complaints indicate AmeriGas did not adjust its prices downward.

A Marquette woman was charged $5.75 per gallon Feb. 5. With taxes and fees, the order cost $2,203.80. The woman said the cost far-exceeded what the family had budgeted for propane.

In downstate Levering, a man had his tank filled the same day by AmeriGas for $4.82 per gallon, nearly $1 less per gallon than the Marquette woman paid, but still well in excess of the statewide average, the petition stated.

Additional customers complained of extra fees charged and being charged double the price for a leak test. Schuette said some customers complained AmeriGas was charging customers high prices before the propane shortage became the subject of media attention in January.

In one downstate incident, a couple had propane tanks filled Jan. 24 at their home and pole barn. The couple was charged $4.32 per gallon to fill the barn tank, a cost $1.05 per gallon more than they were charged to fill the house tank on the same day, during the same visit.

Schuette said when the woman called to inquire, an AmeriGas telephone representative could not provide a coherent explanation for the circumstances.

Schuette said the customer then filed a complaint with his office. Under normal practice, the complaint was then sent to AmeriGas for a response Feb. 20. Schuette said the company has never answered.

Schuette said the Skandia woman’s complaint, and several others, illustrate the alleged failure of AmeriGas to honor telephone quotes on propane pricing.

Schuette said the Skandia woman called AmeriGas in Negaunee Jan. 27 and was quoted a price of $5.35 a gallon. The propane delivery was made two hours later. The woman was charged $5.45 per gallon, according to the petition.

“These complaints and responses create probable cause to believe AmeriGas is not consistently honoring telephone quotes given to its customers,” the petition states.

Schuette is requesting recordings of the telephone calls with the complaining customers, as well as random samples of calls and other documentation.

Schuette said the complaints and responses described in the petition were just a sampling of those received by his office. Without discovery, the attorney general said he has no way of knowing how many similar cases there may be in Michigan.

“Investigation into the pricing and order processing practices of AmeriGas is needed to determine to what extent, if any, the Michigan Consumer Protection Act has been violated,” Schuette wrote. “The facts to this point present probable cause to believe there are such violations, but the investigative process will also give AmeriGas an opportunity to explain itself.”

Schuette wants to depose customer service representatives, on-site office managers and corporate representatives of AmeriGas’ choosing to “ensure that a complete and fair understanding of AmeriGas’ pricing and consumer relations practices are obtained.”

Consumers with additional evidence suggesting a retailer engaged in behavior violating the Consumer Protection Act may contact the Attorney General’s Consumer Protection Division at 1-877-765-8388 or file an online complaint at www.michigan.gov/ag.

John Pepin can be reached at 906-228-2500, ext. 206.