Traverse City Record-Eagle

January 6, 2013

Man in propane billing dispute

Lopez wants to pay for fuel once a year, continues to be billed


CEDAR — Merchant marine Kevin Lopez spends months at a time away from his Cedar home.

So when it comes to paying for propane, he wants to buy the fuel once a year and be done with it.

But Lopez discovered that paying up-front for propane isn't as simple as it might seem in northern Michigan. On two separate occasions with two different propane providers, he paid for propane up-front for the year, only to receive additional charges on his propane bill.

"I told them, 'I want the total bill,' " a frustrated Lopez said. "I want to pay up-front. I'm gone and I only wanted to do this once a year."

Lopez previously worked as a truck driver for Shell propane and was a residential customer of Amerigas for about four years. When he ordered propane, he told the company he wanted to pay for all his propane and not receive any more bills.

Yet every year, he said, he received bills from the company, complete with an annual lock-in fee of $125. The company billed him to set the price of propane, even though he never agreed to the charge and didn't want to lock in his propane price.

Lopez was able to get the fee waved every year, but he questions why he was automatically billed for something he never signed up for.

"They never did stop doing it," Lopez said.

Amerigas President Jerry Sheridan said the lock-in fee is a necessary expense billed only to customers who want to guarantee the price of propane. The charge is necessary because the company faces extensive risk in hedging on the price of propane, which in turn allows customers to lock in the price.

If Lopez did not want to lock in the price, Sheridan said, he may have been confronted with a simple billing error. Bill Katz, an Amerigas vice president, said if customers request participation in a fixed-price program, their renewal is automatic unless they no longer want to participate.

The company works hard to inform customers of new prices for propane and give 30 days to decide if they want to cancel the decision to lock-in their propane price, he said.

"Even if they cancel 30 days after the due date, we honor the cancellation and return any fees paid," Katz said.

Lopez said he recently switched to Hamilton Gas and requested to pay his full bill with no additional charges.

"I told them I wanted to pay up front and be done with it," Lopez said.

Lopez paid $1,456.74 for a batch of propane in October and figured he was covered until it ran out. Weeks later, he received a bill from Hamilton for an additional 50 gallons of fuel beyond what he paid.

The company said the 50 gallons of fuel had to be in the tank when it was filled for safety reasons. Lopez protested.

"I said, 'I'm not paying this,'" Lopez recounted.

Late fees were tacked on and he eventually received a letter warning him his propane service would be shut off. After going back and forth with Hamilton, he said an employee told him they would come out and remove the 50 gallons he was being charged and the fee was waived.

"Then she told me when that tank is empty, you can go get your propane somewhere else," Lopez said.

A Hamilton Gas official called the incident an unfortunate miscommunication between the company and Lopez regarding the 50 gallon-charge, and the company waived the charges. Bob Fenton, regional manager for Hamilton, said the employee's comment to Lopez about getting his propane elsewhere was a reference to Lopez's unwillingness to sign a lease for service, which is necessary for propane billing.

"Through this point of miscommunication, we have to take the responsibility for it," Fenton said. "The responsibility is always on the communicator — not necessarily the listener."

Fenton said the company is diligent in maintaining positive relationships with its customers. Hamilton offers all kinds of payment options, including budget payment plans for struggling customers.

"My goal is to work out every credit issue we can," Fenton said.

The office of Michigan Attorney General Bill Schuette is the recipient of consumer complaints about propane companies. His office did not respond to two separate calls for comment.