How to select a propane company

Selecting a propane company is something that is best done over a certain amount of time and after a detailed comparison of what different companies have to offer. It would be a pity to be stuck with a propane supplier that you cannot get a hold of (because the customer service never answers the phone), delivers late (because its offices are far), sells propane at an unreasonable price (since the market is not regulated), or cannot match your billing or maintenance needs.

Therefore, it is essential to ask yourself several questions about the way you will use propane, what services your home requires, what and how you would prefer to pay for LP Gas, etc. As you request quotes from different dealers to select a propane company, it is also crucial to know what you will be charged for services other than propane delivery to make an informed decision on a contract that represents a significant financial investment and can greatly affect the comfort of your home for several years.

Recommendation – fixed pricing, automatic delivery, budget plan

The simplest solution in terms of cost and administration, if propane companies offer it in your area, is to pre-buy propane in the summer at a fixed price per gallon (when it is cheapest), have it delivered automatically (so you know you will not run out of gas), and select a budget payment plan to spread payments out over several months (to offset the high cost of filling a propane tank).

Basic questions in selecting a propane company

Propane locations

Where propane companies are located plays a crucial role in the comfort of your propane supply. The following table is indicative of the regions and states the country’s top propane companies service.

Safety first

As you select your propane company, your first consideration should be safety. Very few propane-related accidents happen and most propane companies have a good safety record. However, some companies offer better employee and customer training than others.

Crucially, if you have any doubts about a propane-related safety issue (if you smell gas, for example), you should have a propane company with a 24/7/365 emergency line to call for advice and close enough to ensure that if there is a real threat the company will not take too long to come to your home.

Responsive customer care

Considering that your propane company is likely to supply you with gas for anything between 18 months and five years, you ought to select one with a reputable customer care. Availability and responsiveness are important when needing appliance maintenance, a special delivery or a question related to your billing option. Furthermore, since propane prices fluctuate significantly, it is advisable to check the daily propane price regularly, which implies customer care quality.

Enquiring about propane prices

A further priority when selecting a propane company is enquiring about propane prices. Pricing depends on too many variables (mainly usage, location and climate) to have a golden rule. Yet households spend significant amounts of money every year on LP Gas (the average propane spending per household in the US is $973).

Since the market is not regulated it is in your interest to check different offers by requesting quotes and comparing them: it can save you hundreds of dollars. The simplest strategy in finding the right propane price is to check US Energy Information Agency market price trends and see to it that the offers reflect these trends (even if the prices will inevitably vary, their evolution should not change too much when compared to national, high-end and low-end averages).

What is the cheapest propane company?

It is impossible to establish which propane company is cheaper than the next. Only three companies have national coverage: Amerigas, Suburban Propane and Ferrellgas.

However, Ohio was the state with the closes propane price per gallon ($2.430) to the national average ($2.492 per gallon) at the beginning of March 2013.

And in Ohio at the beginning of March 2013, based on a large home that uses propane as its primary source of energy, Amerigas is the cheapest company, followed by Ferrellgas, followed by Suburban Propane.

The following graph shows national and Ohio residential propane price trends over the 2012-2013 winter/heating season.

How will you use propane?

Companies offer different prices based partly on propane usage. The higher the propane consumption, the more worthwhile it is for propane companies to deliver gas and the lower the price quoted it probably going to be.

When moving into a home where propane is the primary source of energy, ask about total BTU load, for instance, as that will indicate how much energy your propane appliances require. Also, establish what your propane usage factors are: how old the house is, how many people live in it, how often propane will be used and for how long, etc. All these elements are tools in a negotiation when selecting a propane company. The more information you have, the more accurate quotes are likely to be.

What kind of propane tank do you need?

Leasing a propane tank usually implies higher propane prices (there is less competition since you are prohibited from filling a leased propane tank with gas from another company). But it avoids the considerable expense of purchasing a propane tank ($450-3,500 depending on size and whether it is aboveground or underground). Propane tank owners pay far less for each gallon of propane but must bear the cost of buying one (unless it is part of the property).

However, the size of your propane tank makes a significant difference in propane pricing: the more propane is delivered, the better the company offsets associated costs like transport and labor. Although more expensive (especially if bought), a larger propane tank (or, for very important usage, several propane tanks) enables you to benefit from a more interesting price per gallon. If you are requesting a quote that includes a propane tank purchase or lease, you should take size into account.

Similarly, larger propane tanks enable homeowners to better plan propane deliveries. Given that propane prices are affected by supply and demand, propane is significantly more expensive in winter than in summer (since people request more propane for heating). Therefore, a larger propane tank allows you to order propane when it is cheapest, even if you do not intend to use it immediately. When filling a 500-gallon tank (400-gallon delivery since tanks are filled to 80% capacity), a 50c per gallon price difference amounts to $200.

Another propane tank-related issue as you request quotes is whether it should be aboveground or underground. Underground propane tanks do not come in sizes below 500 gallons so if your propane usage is small you do not have much of a choice. However, the decision is an important one if your usage requires at least a 500-gallon tank since underground tanks are less visible but more expensive: most companies do not advertise tank prices but Alpine Gas (Georgia) charges $999 for a new aboveground tank and $1,299 for an underground tank, which gives you a rough idea of the price difference.

Whether you buy or rent a propane tank, the company will install it for you. What you need to find out as you request quotes is whether they charge for tank installation (and, if they do, what the price is). Often, companies install rented tanks for free (though they tend to sell you some of the material, like the gas line). If you purchase a propane tank you are might have to pay the installation labor costs.

Would you rather have propane delivered automatically or order it yourself?

Pay-by-Delivery

All propane companies allow you to order propane whenever you feel you need it (when your tank gauge falls below 30% and before it reaches 20%). Companies refer to this system as Will-Call or Pay-by-Delivery.

This requires advance planning (around seven days but it depends on the company’s delivery schedule and outlet distance from your home) if you do not want to run out of propane. Should you run out of propane, not only will you not be able to fuel your propane appliances but you will need to have a leak test done (it costs around $100 and is compulsory after a gas service interruption). Moreover, if you need propane immediately or after hours, you are likely to be charged a hefty special fee (typically, up to $200).

On the other hand, ordering propane when you need it lets you take advantage of market prices and if you plan propane deliveries strategically by requesting as much propane as possible in summer, when prices are lowest, you can save a significant amount of money. This is more easily done with bigger tanks.

Automatic delivery service

Most companies encourage customers to request an automatic delivery service. This implies that the propane company works out your propane usage (taking into account weather patterns, number of occupants, climate, appliances, etc.) and has propane delivered when they figure that you will need it soon. The advantage of selecting automatic delivery is that you will never run out of propane.

However, being on automatic delivery means that there is a chance you will be overcharged for propane since it is up to the company to decide when you need gas. If you select this option, it is advisable to keep an eye on your tank gauge and on your propane company’s daily market price.

Either way, as you request quotes from various propane dealers you ought to ask whether they charge for propane deliveries. Often, a propane company will charge delivery fees if little propane is ordered or to offset significant labor or transportation costs.

Would you rather pay for propane at a fixed or fluctuating price per gallon?

All propane companies allow you to pay for propane at the company’s daily market price. Once again, prices vary depending on weather conditions, region, climate, usage, proximity to a major supply source, etc. Paying for propane at the market price exposes you to significant price variations (prices can almost double between summer and winter). However, paying for propane at the market price also allows you to plan propane deliveries when the price is lowest (if you have a large enough tank to order a significant amount of propane in summer, for example).

Some propane companies offer fixed pricing options. With this system, customers negotiate a fixed price for propane for an entire year. It is likely to be higher than what the company believes summer pricing will be but slightly lower than the winter pricing forecast. This option’s advantage is that you do not have to worry about price volatility and can order propane when you really need it (or, if on automatic delivery, be sure that the price will stay the same regardless of when your company decides to fill your propane tank).

Another option which many see as a combination of the two is to order and pay for propane in advance. Some propane companies allow customers to determine how much propane they will need for the year, buy it all at once and have it delivered little by little. This is an interesting option only if the price the propane company offers is reasonable, which is why it is important to compare different proposals.

Also, some propane companies offer a meter service. This implies that your propane company will install a meter between your tank and your home propane system to measure how much propane you use. The propane company will then bill you for this propane and not for the propane that has been delivered. This is convenient for secondary homes since you may want to be billed only for limited usage on a regular basis, rather than fill a tank at significant cost.

Do you prefer a single payment or multiple installments as a payment solution?

Regardless of its size, filling a propane tank represents a considerable amount of money (even though on average, propane is actually cheaper than electricity).On average, Americans spend $973 on propane every year.

All propane companies enable you to pay for propane deliveries in one go, mostly soon after delivery but some companies allow customers to settle their bill within 30 days. If this is possible for you, so much the better: it is comforting to know that large chunks of your energy supply are secure and paid for.

However, the relatively large expense of filling a propane tank can be made more palatable if you are given the option of spreading out propane payments over several months, as some companies do. Usually, propane users have the option of paying over nine or 12 months.

What services do you need from your propane company?

Propane companies do not offer the same services at the same costs. Depending on your propane usage (how many appliances you have; whether or not propane is your home’s primary source of energy), it might be interesting to have your propane company install, maintain and inspect your propane system.

An increasing number of companies sell propane appliances and offer the services of qualified service technicians not only to inspect your system as your tank is installed but to maintain your propane system as a whole. Having a single entity service all propane-related elements of your home can be a load of your mind and might be worth considering.

However, the costs of such services vary greatly. Most companies maintain propane tanks that they have leased out for free. But all companies charge to maintain customer-owned equipment; it is in your interest, when requesting quotes from companies and if this is a solution you are envisaging, to enquire as to how much such services cost. This is especially true because service costs greatly depend on local labor rates.

For safety reasons, it is recommended that you have your entire propane inspected once a year. As you select your propane company, it might be worthwhile to ask how much such inspections cost, if anything.

What fees and charges might you incur?

All propane companies offset certain costs by charging customers various fees and charges. Below is a list of the items for which companies are likely to request a fee. As you request and compare quotes, it is in your interest to list which of the following fees might apply to your situation and find out what they amount to (some companies do not list prices). Often, companies will reply that it varies (on local labor costs or on distance travelled, for example) but you could insist on explaining your situation and get a non-binding estimate.