Propane Gas - Understand Pricing Options and How to Lower Your Heating Costs
The Attorney General provides Consumer Alerts to inform the public of unfair, misleading, or deceptive business practices, and to provide information and guidance on other issues of concern. Consumer Alerts are not legal advice, legal authority, or a binding legal opinion from the Department of Attorney General.
understand pricing options AND HOW TO LOWER YOUR HEATING COSTS
While the prices many consumers are paying for propane gas continue to rise, there are some simple steps you can take to lower your fuel costs.
Discuss payment plan options with your retail propane suppliers
Most retail propane suppliers offer payment plans that can help protect you against rising propane prices and seasonally higher bills. Consumers can often save $1 to $2 per gallon over the course of a heating season by utilizing these plans. There may be a sign-up fee, so make sure you understand all the fees and costs before entering into any of these payment plans. Below is a sample of some of the common payment plans. Contact your supplier to determine the terms and conditions of its plans.
Budget plans spread your projected annual propane cost over many months, lowering the costs of seasonally higher bills. Typically your supplier will estimate your annual usage based on the size of your home, the number of people in your household, other heating sources, and the normal temperature you maintain in your home. The total cost for the anticipated propane use is generally calculated based on a fixed price per gallon. The total cost is spread evenly among payments over a year that typically ends as the heating season ends in spring. Normally, payments are adjusted in mid-winter. If you paid for more fuel than you used, your remaining payments will lower. If you used more than you paid for, your remaining payments could be higher.
These plans provide the opportunity to pre-purchase the propane you will need during the heating season at a fixed price, allowing you to know your expense ahead of time and avoid market spikes. Your retailer will continue to fill your tank until you have depleted your pre-purchased propane.
Price-Cap and Fixed-Price Plans
These programs often require an initial sign-up payment, after which you are charged a guaranteed per gallon price for the propane used during the heating season. Under a price-cap plan, your price will not exceed your established price-cap price per gallon but can go down if the current market price drops.
FOR MORE INFORMATION ABOUT PROPANE PRICING
Further information regarding propane pricing, including survey results charting the average weekly price of residential heating oil and propane in Michigan during the winter heating season, is available on the Michigan Public Service Commission website; http://www.dleg.state.mi.us/mpsc/reports/shopp/.
In addition to the savings provided by payment plans, you can cut your heating costs by taking steps to make your home more efficient. Some tips for saving on heating costs include:
Protect against drafts by caulking and weather-stripping around windows, doors, and other openings such as ducts, fans, and vents.
Inspect and tune-up your heating system regularly for efficiency. Contact your local retail propane supplier to inquire about a home heating system inspection. A properly working heating system is more efficient and will save you money.
Set your thermostat as low as is comfortable in the winter and as high as is comfortable in the summer.
Clean or replace filters on furnaces regularly according to the manufacturer's instructions.
During the heating season, keep the draperies and shades on your south-facing windows open during the day to allow the sunlight to enter your home and closed at night to reduce the chill you may feel from cold windows.
Reduce your heating and cooling needs by up to 10% by investing in proper insulation and sealing air leaks.
Lower the thermostat on your hot water heater to 120° F.
Consumers may contact the Attorney General's Consumer Protection Division at:
P.O. Box 30213
Lansing, MI 48909
Toll free: 877-765-8388
www.michigan.gov/ag (online complaint form)