Area propane consumers should prepare now for winter

MARQUETTE – State officials want propane consumers to start preparing now for the winter season ahead to improve their circumstances should another propane shortage arise.

Last winter, more than 30 states, including Michigan, declared propane emergencies after shortages occurred across a wide swath of the Midwest and the east.

Average propane prices in Michigan soared to 75 percent above the previous year.

“When we look back on it, it was just this confluence of circumstances that just hit us all at once,” said John Quackenbush, chairman of the Michigan Public Service Commission.

Those circumstances included late corn crop drying (which uses propane), an earlier than typical heating season and starting that season with a low inventory of propane available.

Trucking, rail and pipelines – the three main transport options for propane – struggled throughout the season.

“The roads were relatively hazardous continuously during the winter,” Quackenbush said. “That didn’t help get propane to where it needed to be. Rail had some challenges too.”

With supply limited, prices rose dramatically. Many propane consumers complained about suppliers limiting deliveries with several allegations of price gouging investigated by the Michigan Attorney General’s Office.

Quackenbush said thinking about winter now can help consumers contend with any potential propane shortage. About 9 percent of Michigan households are heated with propane, with that percentage higher for the Upper Peninsula alone.

“One thing we’re encouraging customers to do is to get early fills and then to lock in a price for their later fills in the winter and to establish a relationship with a propane dealer,” Quackenbush said. “Because I think a lot of the disadvantaged customers last year were the ones that didn’t have the relationship, they didn’t have a locked in price, so they had to pay a spot price when prices spiked significantly.”

Quackenbush said some propane dealers offer a budget plan so propane customers can spread out payments, making costs more affordable.

“That’s a great option for customers,” Quackenbush said.

The state also has heating assistance available. After Oct. 1, low-income customers who think they will need heating assistance can call 2-1-1 to get information on what is available. Quackenbush said there are a range of funding options, financed through federal and state money.

The public service commission has created a new website (www.michigan.gov/propane) providing a useful guide for propane customers. A new consumer tip sheet was also developed for propane customers by the commission.

“It lists questions customers should be asking before they sign a contract, the things they need to be thinking about, but they may not realize,” said Michigan Public Service Commission media and public information specialist Judy Palnau. “Hopefully, it will be useful to folks.”

The tip sheet includes information on fixed versus variable pricing plans, fees and other charges, delivery options, renting or owning propane tanks, switching propane retailers and comparison questions to ask retail marketers.

Meanwhile, state agencies ordered by Gov. Rick Snyder last winter to work together – each doing their part to help alleviate propane shortage problems and concerns – continue to coordinate currently.

So far, there are some indicators which could suggest propane supply problems again this winter.

Quackenbush said a major pipeline serving the Midwest, which provided propane last year, will be reversed and used to move other products this winter and won’t be available.

“We do have pipelines that come across the Upper Peninsula carrying propane, but it’s not just a propane pipeline,” Quackenbush said. “There’s other – crude oil gets carried in the pipe, so it’s a matter of prioritizing the flow. There’s all these transportation challenges. So, our cross-agency group is kind of collaborating on that front.”

Quackenbush said propane prices have dropped since last winter and are currently in the typical range expected for late summer pricing. The commission monitors prices by conducting surveys.

This year’s corn crop could produce record yields this year, which could require more propane for drying. However, a winter season arriving later than last year could require less corn drying.

“Are we heading for another bad winter? Nobody knows,” Palnau said. “We are seeing a few factors that may be setting us up again. I think the biggest factor will be Mother Nature and none of us can regulate that.”

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