AG Propane Investigation Update: Schuette Secures $100k Relief for Ferrellgas Customers, Goes to Court to Fight for AmeriGas Customers

Contact: Joy Yearout 517-373-8060

September 22, 2014

Lansing -  Attorney General Bill Schuette today announced key developments in his ongoing investigation into hundreds of consumer complaints related to propane pricing and delivery during the 2013-2014 winter season.   Under an assurance agreement secured with Ferrellgas, more than 600 propane customers will receive a share of relief totaling more than $100,000.


In addition, today Schuette has filed a separate and independent class-action lawsuit in Berrien County Circuit Court against another propane retailer, AmeriGas, to pursue monetary and injunctive relief on behalf of that company's Michigan customers.

 
“Michigan’s Consumer Protection Act offers important safeguards for Michigan families, and companies doing business here have a duty to follow the law,” said Schuette.

 

Ferrellgas Agreement

Through the agreement made public today, Ferrellgas agreed to resolve the Attorney General’s investigation, which focused on pricing in late January and early February when rising propane costs received widespread media attention. Examples of pricing issues and their resolution follow:

  • Will Call Propane Orders – Some Ferrellgas Michigan residential customers who placed will call for propane just before the spike in propane prices did not get their purchase price locked in by a customer service representative, contrary to Ferrellgas’ policy at the time. After delivery, some of these customers received a bill for an amount greater than what they should have been charged. 

Resolution: The 280 affected customers will receive account credits for the difference between the price that should have been secured for the customer at the time of the order and the final invoice price, plus fifty percent. If the person is no longer a Ferrellgas customer, they will receive a credit to any remaining balance on their account and receive a check in the mail from Ferrellgas for any remaining amount.

Affected Consumers:Affected customers placed telephone and Internet will-call orders with Ferrellgas between January 12, 2014 and January 22, 2014 but did not receive deliveries until January 23, 2014 or later.

  • High Propane Prices – To resolve complaints related to high prices and the hardships faced by many propane customers this past winter, Ferrellgas has agreed to give credits to 275 customers billed above specified per-gallon price points in early 2014. Schuette notes these objective price points are based on data compiled by the Michigan Public Service Commission as part of its weekly survey of residential propane prices throughout the State.

Resolution: Affected consumers will receive billing credits equal to the amountabove specified per-gallon price points, plus fifty percent. If the person is no longer a Ferrellgas customer, they will receive a credit to any remaining balance on their account and receive a check in the mail from Ferrellgas for any remaining amount.

Affected Consumers:Affected residential propane customers received a delivery at prices above the specified per-gallon price points from January 24, 2014 through February 20, 2014.

“I’m pleased that we reached an agreement with Ferrellgas on behalf of Michigan consumers before the upcoming heating season,” said Schuette. “Under this agreement, hundreds of Ferrellgas customers who were harmed by pricing errors and the highest propane prices will receive a share of $100,000 in billing credits by October 15th.”

Additionally, 69 Ferrellgas customers with varied complaints will also each receive $100 bill credits (52 of which did not receive any relief under other provisions of the agreement). All Ferrellgas customers receiving relief under the agreement will be notified in writing by the Department of Attorney General. Under the terms of the agreement, all credits and refunds must be delivered to consumers by October 15, 2014.  

Schuette’s Corporate Oversight Division will monitor Ferrellgas’ execution of the agreement to ensure every citizen entitled to relief receives it.

AmeriGas Class-Action Lawsuit Alleges Price-Gouging, Consumer Protection Act Violations

Schuette also announced a development in his investigation of the propane retailer AmeriGas. Today Schuette filed a class-action lawsuit against AmeriGas, alleging violations of multiple provisions of the Michigan Consumer Protection Act. According to the complaint filed in Berrien County Circuit Court, AmeriGas ignored systemic problems that resulted in many Michigan customers being treated unfairly, including a statewide practice of charging grossly excessive prices last winter.

The complaint includes the following alleged violations:

  • Price Gouging: The complaint alleges that AmeriGas charged some of its customers grossly excessive prices in two distinct ways. First, it charged residential customers prices that grossly exceeded the prices being charged both by other propane retailers. Second, AmeriGas charged certain customers grossly excessive prices compared to other similarly situated AmeriGas customers.
  • Denial of Pricing Established in Advance Contracts: AmeriGas allegedly denied many customers the benefit of guaranteed per-gallon prices that they had locked in for the winter.
  • Failure to honor prices quoted for telephone orders: The complaint alleges that consumers’ bills did not reflect the prices that they were quoted when they placed an order by telephone.

The complaint also includes allegations that customers in Berrien County were disproportionally affected by excessive prices. Information obtained by the Attorney General under subpoena as part of the recent investigation revealed that there were twenty-five AmeriGas customers who were charged per-gallon prices higher than $6.00 per gallon in January and February. Of these twenty-five, sixteen reside in Berrien County and received deliveries from the AmeriGas location in South Bend, Indiana, where AmeriGas says it takes a different approach to pricing. Despite this circumstance, Schuette alleges even prices below $6.00 per gallon in late January were unlawful, citing various examples, including a Marquette customer billed at $5.75 per gallon.

“We are taking the fight to Court to get relief for AmeriGas customers,” said Schuette. “I am confident that the action we are taking today will send the message to every propane retailer throughout our State that we will not hesitate to do whatever it takes to protect propane consumers in the winter ahead.”

AmeriGas is the largest provider of residential propane both in Michigan and in the United States. According to the complaint, AmeriGas told the Attorney General during the investigation that it has more than 200,000 residential customers in Michigan.

Background on Schuette’s Propane Price Gouging Investigation

Schuette’s investigation of the propane industry began after receiving multiple complaints from Michigan consumers across the state.  In March he issued subpoenas for Ferrellgas, Inc. regarding allegations of excessive pricing and misrepresenting the price that consumers would have to pay for propane. 

Schuette’s second round of subpoenas came in May 2014 against AmeriGas for allegations of price gouging. To date, Schuette has received more than 500 complaints against propane retailers involving incidents last winter. 

If consumers have additional evidence suggesting that any retailer engaged in behavior that violates the Consumer Protection Act, they are encouraged to contact the Attorney General's Consumer Protection Division at 1-877-765-8388 or file an online complaint at www.michigan.gov/ag.

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[Attachments: Ferrellgas Assurance of Voluntary Compliance, AmeriGas Complaint]