PERC 2018 Budget Approved, Commits to ‘Re-think’ Everything

The Propane Education & Research Council (PERC), meeting in Tampa, Fla. in November, approved a $41.7-million budget for 2018 that will include safety and training programs, the Partnership with States program, ongoing development of propane-fueled products, and an integrated marketing communications program designed to unify all homeowner and business-to-business outreach under a consistent brand.

The assessment rate of $0.005 per gallon of odorized propane, which took effect Oct. 1, is expected to generate revenues of $41 million. The budget includes $30.2 million for program activities. In 2018, the focus of PERC’s homeowner advertising program will move from improving perceptions of propane to promoting adoption of appliances. The media buy will also shift, with most funding going into digital advertising that can be measured for effectiveness. Plans call for the creation of conventional advertising such as print and radio for use by marketers and state councils and foundations.

“The 2018 budget is designed to capitalize on opportunities to spur growth by compelling homeowners and business owners either to switch to propane or add propane equipment to a home or business that already runs on our fuel,” said PERC president and CEO Tucker Perkins. “The budget also provides continued support for our safety, training, and research programs as well as key industry engagement efforts.”

In other business, the council approved a slate of outreach programs aimed at driving adoption of propane equipment in the residential, commercial, autogas, outdoor power equipment, and forklift markets. The panel also approved a 2018 partnership agreement with the National Propane Gas Association (NPGA) and the GPA Midstream Association. The agreement fulfills the council’s statutory obligation to coordinate its activities with industry organizations.

Noted in the lead-up to the PERC meeting: “Our competitor is often the plumber,” Jeff Stewart, president of Blue Star Gas with locations in five states in the Western U.S., observed. “Many retail propane marketers have gotten away from appliance installation, and I think it’s a big mistake. Too often a plumber is contacted by customers regarding a water-heating solution and an electric water heater is slapped in with no consideration of propane.”

NPGA chairman Jerry Brick recently told BPN, “Propane marketers need to be aggressive. We need to become marketers again and sell our products, adapt, and grow our businesses.” And PERC’s newest councilor, Joe Rose, a public member who recently retired after 10 years leading the Propane Gas Association of New England (PGANE), said, “PERC can create marketing materials, but it’s the retail marketer’s job to use the materials and close the sales.”

With the restrictions on consumer education activities imposed in 2010 lifted several years ago, PERC has been hearing comments like those from industry members as it grapples with next steps for targeting funds to most effectively help retail propane marketers add gallons.

To reiterate, PERC raised its assessment back to $0.005 per gallon of odorized propane, a one half of one-tenth of a cent hike, at its July meeting and it took effect Oct. 1. Again, considering assessment revenue, investment income, de-obligations, and a treasury carryover, a $41.7-million budget for 2018 was approved. “But a dollar only buys what 60 cents did in 1998 when PERC started,” Rose said. That reality, in addition to concerns about warm winters slowing assessments, has councilors concerned that PERC needs to build on the success of previous large-scale media branding campaigns with a more targeted marketing effort closer to the point of sale.

Going forward, PERC will be moving away from Blue the Dog and away from softer metrics and moving to more concrete results. A slow, methodical pivot from improving perceptions of propane to promoting adoption of propane appliances will take place. The media buy also will shift, with most of the investment going into highly effective and measurable digital advertising.

The process of improving perception through the PROUDLY PROPANE campaign featuring Blue the Dog was deemed successful, with metrics showing favorability was up 16% among propane non-users, up 17% among users, and 13% among those who would buy propane appliances. Four months later, the data was deemed to have slipped but was stable. In 2016, $9.8 million was spent, with $7 million on media. In 2017, $8.2 million was budgeted, with $5.0 million, year-to-date, spent on media.

Moving into 2018, residential and commercial construction remain a top-level strategic priority, with 1.2 million housing starts expected over the year and 1.35 million expected in 2019. Noted was that these numbers are lower than previous predictions, but this may signal increased remodeling activity. Marketing will have different strategies by region. As Rose explained, “For example, some parts of the country are much more focused on converting fueloil to propane and some areas have much higher electricity rates than others. We have to stress our competitive advantages by region.” An incentive program will be provided for builders, general contractors, architects, engineers, plumbers, and HVAC contractors. In addition, there will continue to be incentives for buying lawn mowers and golf, turf, and utility vehicles. Propane commercial mowers now represent 5% of all mowers with 36-in. to 72-in. decks. Since 2003, 4500 propane-powered commercial mowers have been placed into the market. This represents 4.5 million gallons annually and 31.5 million gallons over the useful life of the equipment.

Along with Rose being new to the council, though he attended many PERC meetings in the past, Perkins is a newcomer to the role of president and CEO, having been second in command for several years under Roy Willis, who led the council during its first 20 years. “It’s a lot different to be seated at the table making the decisions on spending the money,” Rose said. Perkins noted at the meeting he was in his 93rd day as president and CEO. “If there’s anything more you wanted to see accomplished in my first 100 days, I’ve still got seven days to fix that,” he said. Rose commented he felt the council seems very engaged, and he is excited to be involved helping to make a difference.

With a new leader, PERC councilors and Perkins are taking time to evaluate and “re-think” everything. Having promised in July to spend his first 60 to 90 days on a listening tour to hear what retail propane marketers want from PERC, Perkins said he had heard from more than 100 marketers both large and small. “Those who are engaged with PERC find great value,” he said, “but many still don’t even understand what PERC does.” He added that some marketers also said they heard from PERC too much. “I had people say they don’t care about autogas, just commercial, so they don’t want to keep receiving materials on autogas.” But, he commented, he certainly heard the message that marketers expect PERC to continue creating and providing materials and training that helps them sell more propane. “If that means selling more water heaters is part of their working plan, we need to train so they know how to sell water heaters,” he said.

Perkins’ feedback from marketers is consistent with a more formal survey of 1000 retail propane marketers conducted earlier this year that showed satisfaction at 7.7 out of 10 on average. New England and the West Coast had the highest levels of satisfaction. Key information gained showed that marketers wanted to see more information on investment, goals, and results, and they want PERC to solicit more input from them. Also, two-thirds had ordered or downloaded at least one item from the PROUDLY PROPANE Clean American Energy Campaign.

Several stressed the importance of communication. “We need to over-communicate with all of our stakeholders,” said PERC chairman Drew Combs. That includes communication with NPGA, state associations, and the GPA Midstream Association, among others. He mentioned a three-hour meeting with PERC and NPGA officers had taken place earlier in the day, which yielded progress in how the organizations work together to bring results propane marketers want without duplication of effort. Combs said that Perkins and NPGA president and CEO Rick Roldan also had the staffs of the two organizations meet regularly to ensure the organizations are working together effectively and developing an integrated strategic plan.

Beginning with the November meeting, PERC took one more step toward better communications. Meetings, previously accessible only via audio conference, were accessible via video conference. “This will further help more people engage with PERC while saving a few dollars on travel,” said Combs. In addition, PERC councilor Rob Freeman presented details of a new portfolio review process. “Too often, the public hears about the approval of projects but they never get any information on the success or failure of the project,” he observed. Going forward, all funded projects will receive a pre-score and a post-score. There will be reports on all projects with a summary sheet, including conclusions. “This will better ensure discipline, teach lessons learned, enhance transparency, increase the credibility of the council, and measure the value of the investment,” Freeman said.

The council approved several funding requests, among them $300,000 for the Propane Farm Incentive Program; $71,900 for online propane autogas first responder training; $107,446 for propane autogas technician training; $150,000 for cylinder requalification; $30,000 for the 2018Propane Industry Trainer’s Conference; and $440,000 for 2018 industry outreach. CETP NFPA 58 2017 updates, e-learning, and refresher training received $143,017, while 2018 CETP support was awarded $81,465.

Additional funding requests that received approval were $50,000 for the laboratory evaluation of the M-Trigen micro-combined cooling, heating, and power system; $34,576 in a state rebate request for the Maricopa County, Ariz. propane fire pit program; $2,149,800 for 2018 residential and commercial market outreach; $930,000 for 2018 outdoor power and equipment outreach and marketing; $1.3 million for 2018 propane autogas market outreach; $1.1 million for 2018 agricultural market outreach; and $500,000 for the propane mower incentive program.

Additional awards went to the fuel sampling program, $100,000; the Partnership with States program, $1.5 million; propane catalog maintenance and support, $225,872; advisory committee and program support, $490,000; the partnership agreement with PERC, NPGA, and the GPA Midstream Association, $1,319,500; and the 2018 Propane Market Intelligence and Assessment Program, $305,000.

The council reported that, since July, it has approved 97 state rebate requests valued at $2,074,706.76, with 21 programs, including requests for a total of $386,725.70, from PERC’s Partnership with States program. The council will next meet Feb. 14 in Santa Barbara, Calif.

—Pat Thornton