AG to take action in alleged price-gouging

BY SHERI McWHIRTER
smcwhirter@record-eagle.com

March 06, 2008 04:00 am

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GRAYLING -- Michigan Attorney General Mike Cox will take action against a group of northern Michigan affiliated propane companies for charging excessively high prices.

Cox issued a notice of intended action on Tuesday, the first step toward suing Inergy Propane of Kansas City, Mo., under the Michigan Consumer Protection Act. The company is accused of price-gouging hundreds of customers, charging upwards of $4.39 per gallon when the average price was $2.45 or less.

"Residential consumers of Inergy-supplied propane gas are having to spend more to heat their homes this winter because of these excessively high prices," Cox said. "If a consumer has a 500-gallon propane tank, and is being charged even $1 over the market price to fill the tank, the consumer is being overcharged by $500. That is unacceptable."

When consumers complained, they were told they could either pay up or have the gas and tank removed for additional fees that weren't included in many customers' contract language.

Cox said the notice included a number of retail facilities across the state, including Blue Flame Gas, Gaylord Gas, Lagasco Propane, McBride Oil & Propane, Northwest Propane, Northwest Energy, Petoskey Propane and Progas Propane.

Forty-Sixth Circuit Trial Court Judge Janet Allen heard testimony in Grayling last week and agreed that Inergy and its affiliates charged at least one dollar per gallon more than competing companies. She issued a temporary restraining order to prevent them from collecting fees or continuing to overcharge customers.

Allen ruled anyone who paid more than $3 per gallon deserves the option to return the gas and get a refund without any fees.

Company executives said their pricing practices are legal and consistent with local and industry standards, as well as historical pricing practices. They believe the judge's ruling improperly dictates the price propane suppliers can charge, ignoring a volatile marketplace and business costs for individual suppliers, said Debbie Hagen, Inergy spokeswoman.