Gulp. Gasp. $3.989 per gallon for propane. Multiply that by 243.4 gallons and be glad the tank wasn’t emptier. My propane dealer (AmeriGas) filled up my tank earlier than I expected and wanted, and did so at more than twice the previous bill’s total. Having that happen during a cash crunch in winter is not a nice way to start the new year. Well, new years are good times for changing bad habits. Time for some personal finance reflections that will probably result in personal finance actions.
It is a good thing that I live in the Salish Sea’s temperate maritime climate. It may be windy and cool, but winters are much more amenable than Midwest blizzards. My house is small, only 864 square feet, which means there’s less to heat. It has a radiant floor system, which is quiet, relatively efficient, and a little slow. I’m frugal, so the thermostat is set to 65F during the day and 61F at night. The non-frugal influences are single pane windows and a fireplace with a damper that’s stuck open. (Ventilation all year round!) The package combines to mean deliveries to my 500 gallon tank about twice a year. Total heating costs (including hot water) for about 12 months ~ $1,280, roughly $100 per month – but it could’ve been much more, and could be much more next time.
Getting the price down to that took effort. They delivered late in the day and left the ticket on my door step. The next business day I called and asked how my bill could more than double in only a few months. They told me it was just the price of propane, that they little control over it, and were willing to lop off $1/gallon. Without that relief, the bill would’ve been over $1,000. Just a few years ago, the bill was more like $200-$400. So much for that budget.
I knew to call because I’d called the last time or two. My house’s efficient heating system was no longer economically efficient. That previous bill that was about half of this bill was also after they dropped the rate as a result of a phone call. Then, they told me it was because a neighborhood plan expired. Pop and pop again. Without my phone calls, the total for those two deliveries would’ve been more like $1,600. They were nice enough to drop the rate each time, but I’m now worried about the next time. Fuel bills that double without notice and without constraints are non-trivial because heat is a vital necessity.
We humans adapt to small changes. Something gets a little worse, and we adapt. It gets a little worse again, and we adapt, again. Continue long enough and eventually something happens that highlights all of those adaptations. Wasn’t this better, before?
The prices are high, but the capricious nature of the pricing is the worrisome part. Then I reflected on the service. Most of the drivers are polite (and doing a job my Dad did with heating oil), but I’ve also had unsettling encounters. One laughed at my energy saving techniques. He said, the more I burn, the richer he gets. Another time I didn’t realize they’d turned my hot water tank to maximum until I was surprised by a far-too-hot shower. Worrisome encounters + worrisome pricing = time to stop worrying and time to start considering options.
A couple of reasons for hesitating. I’m a loyal kind of guy, so I don’t like changing unless it is necessary. I also know that working with a corporate supplier like AmeriGas means that problems with the local office have a chance of being resolved by, as the Customer Service representative said, “bubbling it up.” There were two calls: one before it bubbled up, and one where the bubble stopped.
Call a Help Desk and you know the response. There’s the script, or at least the practiced reply to a familiar set of questions and complaints they receive every day. She walked me through their pricing model and reassured me nothing was wrong. I patiently listened and then returned to what I said earlier. The pricing seems to be capricious. I also had uncomfortable experiences with some of their delivery personnel. The competitors were charging less than half, and their customers didn’t have similar complaints. I rephrased the issue. Would a national corporation want if there was pricing irregularities at the local level? Would a national corporation want to know about potentially unsafe operations? Maybe it was all a fluke. Maybe it all was because of one customer, or one or two employees. Whether I appealed to her defense of the corporation, the thought of a scalding shower, or the fact that the issue generated a very busy Facebook thread – for some reason she bubbled it up.
The bubble call came early. She told me to expect a call back within 72 hours. I got it the next morning. Again, the first part of any such call seems to be navigating the practiced responses and the corporate immune response. But, we both hung in there and politely worked through my issues, concerns, and his possible responses. By the end of the call, I was convinced the company had little or no control over pricing. Evidently, algorithms do more than decide when to deliver; they also decide the prices. Whether there was anything for him to do with personnel was immaterial. The trust is gone.
As I said above, the previous delivery was similarly alarming. I hoped it was a fluke, but evidently not. Back then, I called around and found all of the competitors were charging about 30%-50% less. Time to switch! But not yet. The most promising competitor suggested I wait until the tank was about 70% empty. That would make the transfer of the service much easier. Pumping out the old tank and removing it and replacing it is non-trivial. I figured I had about two or three more months before I checked the competitors again, and time to halt any deliveries if I decided to switch. Instead of AmeriGas’ algorithm scheduling a delivery at 80% empty, it did it at 50% – in winter when propane prices are higher. I’ll probably never know if price predictions influence delivery schedules. Whether they do or don’t, that’s yet another unsettling aspect.
The propane is here. The AmeriGas calls are done. The bill sits unpaid because I haven’t been able to pay myself lately (Gig Economy’s winter slow-down). At least AmeriGas offered scheduled payments, and the bubbled up call resulted in a $50 credit, though that may be against my next bill, not this one. I don’t know.
I set that aside and started calling the competitors. One was bought out by Amerigas. So much for them. The others quoted rates from $1.67 to $1.99 per gallon. Friends suggested other package deals, all of which sound attractive. No one else is charging over $3, and yet AmeriGas almost cracked through the $4 level. Loyalty begins to sound more like a trap than a benefit.
Losing trust is expensive for companies, and industries. I broadened my search.
Why propane? It’s what came with the house, but for this house’s systems, propane may not be the best choice. Propane heats fast, faster than electricity, from what I hear. But, radiant floor heat heats slowly. Why turbocharge heating the water when the heat is going to slowly sink up through the floor? Propane works even if the power goes out; except in the case of radiant floor heat because without the electric pump, the heat doesn’t flow through the house. The house is in an earthquake zone and the neighbors enjoy fireworks. I’d feel safer without a few hundred gallons of flammable liquid in the backyard.
Why not electric? Their prices are regulated, and therefore more predictable. Going all-electric simplifies the systems, frees up space in the backyard, removes worries about leaks, and gets rid of at least two fire hazards. That sounds simple and obvious, and thanks to hydropower, relatively cheap – but. The furnace. I’ve heard informal estimates of $3,000-$20,000 for replacing the furnace. Ouch. Of course, $3,000 was a major hurdle, and still is, but the one-time cost is shrinking in comparison to escalating $1,000 propane bills. Better answers are coming thanks to a call to Puget Sound Energy’s Energy Center. Expect to hear about things like mini-splits, heat pumps, and on-demand hot water.
Ironically, if I decide to switch to another propane customer or to electricity, it might make sense to turn off the portable electric heaters I have by the laptop. The propane is a sunk cost. I can’t sell it back to so I might as well be comfortable. I probably have enough to last until summer.
This blog chronicles the personal finances of one self-professed frugal person. Writers may want me to wait until the story hits a climax, anti-climax, resolution, and conclusion. I’d rather tell the story as it happens. It is messier, but details are clearer. Stay tuned for tradeoffs, choices, and machinations of financing.
As I type this with fingers slightly chilled, I look over at my fireplace. Fireplaces are inefficient. This one has that damper that’s blocked open. But, it is a nice fireplace. It has passive air flow that improves its efficiency – after a few hundred pounds of steel have been heated for hours. Maybe I should just go old school. A cord of wood costs $250. Four cords of wood could fill this house with warmth and ambience. Maybe I could just make this load of propane last a lot longer than their algorithm expects.