CHS Creates Rebate Program To Grow Propane Gallons

As one of the largest propane wholesalers in North America, CHS (Inver Grove Heights, Minn.) is providing a new resource for propane marketers to adopt propane as an alternative fuel with its CHS Propane-Powered Rebate Program. The program is a first-of-its-kind initiative offering marketers rebates for adopting propane-powered technologies, participating in training, and making investments in autogas infrastructure.
CHS Propane Supplier Now Provides LPG companies a rebate program for gallons purchased
“We heard our customers say it’s hard to justify the cost of a dispenser or pay for other infrastructure if they don’t have any autogas customers,” said Andy Ernst, propane marketing manager at CHS, the country’s largest farmer-owned cooperative. “To help solve the problem and work to keep more American-made gallons here in the United States, CHS decided to invest in getting more marketers involved in autogas.”

Ernst and other CHS leaders saw several areas where they could help spur growth in addition to autogas dispensers. “Marketer conversion kits, school bus or fleet conversions, generators, irrigation engines, and training or grant writing support are all areas where CHS is willing to help with funding of $0.01 for every gallon of wholesale propane purchased,” Ernst said. CHS partnered with retail marketers to form the program, which offers rebates for sales dating back to January 1, 2018. “A lot of our customers have more than a year’s worth of purchases to their credit already.”

Propane-powered technologies
By taking advantage of the rebates, marketers can save thousands on propane-powered investments. The program offers a number of different options. Marketers can receive up to $5000 to convert their car, truck, or crane truck to autogas; two bobtail conversion kits or two new S2G bobtails can be funded at a maximum of $10,000; and as much as $500 can be used toward vehicle graphics. For private use, dispenser rebates allow up to $25,000 for a dispenser, not exceeding 50% of the dispenser cost. As much as $30,000 is allowed for dispensers available to the public, not exceeding 70% of cost. A limit of $25,000 at $2500 per vehicle can go toward school bus or fleet conversions with a max of 10 buses or fleet vehicles. A maximum of $5000, not to exceed 50% of a generator’s purchase price, may be allotted to propane generators and propane irrigation systems.

Training, Grant Writing
In addition to funding infrastructure, the industry is well-positioned to take advantage of grant dollars available due to the Diesel Emissions Reduction Act (DERA) and VW settlement. “These grant funds are available to encourage the use of alternative fuel, including propane, and the CHS Propane-Powered Rebate Program can help marketers capture grant dollars for propane instead of the electric industry,” said Ernst. To this end, marketers can receive a maximum rebate of $1000 toward training or grant writing. “Training and grant writing help marketers not only get funding, but also help with communicating the value of propane as an alternative fuel,” Ernst explained. Jeff Fisher of Fisher Consulting, who has won more than $220 million in DERA funding for various energy-related programs, is available through a partnership with CHS to provide grant-writing services. “I’m glad to partner with CHS to make sure any one of its co-op members or customers can start benefitting from autogas sales,” said Fisher, whose services range from drafting a grant proposal to simply helping edit an existing draft.

CHS also helps marketers take advantage of already existing autogas resources and training. “We partner with companies like ROUSH, Blue Bird, ICOM, and Alliance AutoGas, who already offer training; we just help make it available to our customers,” Ernst said. Along with webinar trainings, CHS offers free marketing materials that customers can utilize when talking with fleets and bus companies.

For Ernst, any step toward autogas adoption is a positive step. “Step one is to get people talking about autogas, and there has been great success in this area with school bus fleets. Through our partnerships, we can work with our wholesale customers to encourage school districts to learn about the cost savings and environmental benefits from switching to propane-powered buses.”

Ernst envisions propane marketers growing their gallons by leveraging the rebate money from CHS with other sources of funding. “Several propane state associations have funding for autogas that can augment funding from CHS to make some investments that require almost no out-of-pocket funding,” said Ernst. “We want to help CHS customers, but feel we are ultimately helping grow the whole industry.”

For more information on the CHS Propane-Powered Rebate Program, marketers can visit CHSPropaneInsights.com

Focus on Efficiency: Make Service Operations a Moneymaker

Service and appliance sales are often considered to be a loss leader or a cost of doing business by propane marketers who are primarily focused on delivering propane. But that doesn’t have to be the case, says Saul Cohen, product specialist at Cargas (Lancaster, Pa.). If the marketer focuses on efficiency and expansion, the service operation can be a profit center.
SE Propane Expo Seminar Overview Cargas Software
Cohen will present a seminar on this topic at the upcoming National Propane Gas Association (NPGA) Expo. At Cargas, as a product specialist, he is a subject matter expert for the propane industry and software. In 2005, Cohen created and presented to Cargas the business plan to start Cargas Energy software solutions for fuel delivery and service companies.

Today, he tells BPN, software solutions like these can help propane marketers increase service efficiency, improve customer satisfaction, and build consumer interest in additional propane appliances.

Among the practices the software can facilitate are the following:

Address the problem the first time
To maximize both the marketer’s efficiency and the customer’s satisfaction, service jobs should be completed on the first visit. Software can make it easier to know in advance what equipment the customer has, capture information about what service needs to be done, and ensure the technician has the parts needed for the job. “This helps you do a better job with the customer, with an improved fix rate and first-time efficiency,” Cohen says.
SE Propane Expo Cargas Energy Seminar 2
Keep a record of the installed equipment Software tools also make it easier for technicians in the field to capture details of the equipment they have installed. They can do the installation, take photos, and those photos are automatically uploaded and attached to the customer’s account for everyone to see in the future. “If you go back and it’s different, you have proof the customer has changed or added something.”

Quote in the field
Software tools make it easier for technicians to handle service contracts or agreements while they are with the customer, so they can more easily sell these and other products and services. “Some consumers are interested in generators, indoor/outdoor propane fireplace/heating, or pool heaters. The propane marketers should provide incentives for their people in the field to educate consumers on the benefits of these and other propane appliances that they may not be aware that you offer so you can [cross-sell/upsell] these items,” Cohen says.

“Another example is to offer a yearly service check, so you can test the generator annually to make sure it works when it’s needed. That provides peace of mind to customers and additional revenue for your company.”

SE Propane Expo 2019 Cargas Energy Seminar OverviewBuild a loyalty program
In some regions, consumers don’t think of propane marketers as a source of appliances. When these consumers want a cooktop or a fire log, they might look to an appliance retailer rather than a propane marketer. “A loyalty program is one way to get customers to think of you that way,” Cohen says. “Some marketers provide loyalty points; as customers buy fuel, they get points that they can cash in to buy appliances and equipment.”

For those looking to expand their service operations, Cohen suggests looking at their existing operations and asking themselves, “Am I making money in service?”

“We are trying to make people think of service as a profit center rather than a cost of doing business,” Cohen says. “Most marketers do service just to get the fuel delivery. But if you are now able to manage it with software — quoting in the field (signature capture), first-time efficiency (eliminate callbacks and not having the right parts), addressing the problem rather than having to go back to the customer a second time—service can be a moneymaker.”

Cohen covered these ideas and others in his seminar, “Driving Revenue With Service Operations: Turn Your Appliance and Install Business Into a Money-Maker.” The seminar was held Saturday, April 13, at the 2019 NPGA Southeastern Convention & International Propane Expo in Atlanta.

Parent Company of Quality Steel Corporation Acquires Assets of LP Cylinder Service, Inc.

April 10, 2019 (Cleveland, MS) — LT Corporation (LT Corp.) of Cleveland, MS, the parent company of Quality Steel Corporation (Quality Steel or QSC), a manufacturer and industry leader in value-added services to its customers, announced the acquisition of substantially all of the assets of LP Cylinder Service, Inc. (LP Cylinder).
Quality Steel  Corp. acquires assets of LT Corporation of Cleveland, Miss. reports BPN the propane industry's leading source for news and information since 1939
LP Cylinder, founded in 1984 and operating with two facilities in Shohola, PA, is recognized as one of the nation’s leaders in the propane tank refurbishing industry. The acquisition gives LT Corp. the opportunity to continue its expansion of product lines and service capabilities to the industry.

Chairman of the Board of LT Corp., Jim Tims, said, “Our companies have grown by setting the industry standards for quality and customer service. We are excited about the many new relationships we will be developing within the propane gas industry.”

Sean Wessel, President & CEO of Quality Steel, stated, “We are looking forward to joining forces with the LP Cylinder family to offer our customers extended product lines and additional services while continuing our focus of being a full-service tank provider. With the addition of LP Cylinder’s two facilities in Pennsylvania, LT Corp. and Quality Steel will be able to expand our presence in the Northeastern United States and parts of Eastern Canada.”

QSC’s VP of Sales and Marketing, Lynn Hardin, added, “This acquisition will expand our product offerings as well as provide an opportunity to improve upon our delivery model. We look forward to maximizing the synergies that exist between our companies to provide the customer with the best experience possible. We know the QSC customer base will welcome the services offered by LP Cylinder.”

Maurice Ryman, President of LP Cylinder, said, “We are thrilled to be joining the Quality Steel family and look forward to leveraging the collective knowledge and resources of our teams as we continue to offer top quality solutions and service to our customers. Our companies share the same values and dedication to our employees and customers, and we are excited to grow this industry leading business together.”

Chris Ryman, VP of Operations, added, “We are all excited about the acquisition and the opportunities it brings to our employees and our customers.” With this purchase, LT Corp continues its mission of being the premier ASME tank manufacturer in the U.S. by offering high quality tanks and tank solutions with exceptional customer service.

About the Companies:
Quality Steel Corp, founded in 1957 in the Mississippi Delta, manufactures pressure vessels for residential, commercial, small industrial and agricultural use. Quality Steel currently has locations in Cleveland, Mississippi; Fremont, Ohio; and West Jordan, Utah. Quality Steel is a subsidiary of LT Corporation. More information on Quality Steel can be found at www.propanetank.com

LP Cylinder Service, Inc., founded in 1984, is the leading refurbisher of propane tanks and cylinders for propane marketers and operates two facilities in Shohola, PA. More information on LP Cylinder can be found at www.lpcylinder.com

Now's The Time For A Financial Physical

By Steven Abbate....


Every year brings new challenges to retail energy marketers. For propane marketers this past year has seen the cost of tanks skyrocket and the pool of qualified CDL drivers shrink with upward pressure on wages. Natural gas competition continues, and heat pumps and geothermal remain a threat to market share. So, what’s a propane marketer to do?
A good place to start is in understanding your financial results. The four basic areas of a financial analysis are revenues, cost of goods sold, operating expenses, and capital expenditures. Because we are in a commodity-based business, we like to look at gross profit (GP) as it is better to analyze trends in GP than revenue.
Tips to improve financials in propane business with these finacial tips for LPG companies

Gross profit
We define GP as what you sold the propane to your customers for minus what the propane cost (with or without transportation). Accountants may define GP differently and many include direct operating expenses such as driver and truck expense.

I think it is important to know the difference between a financial analyst and an accountant. Here is one definition I was given: “An accountant is someone who solves a problem you didn’t know you had in a way you don’t understand. A financial analyst is an expert who will know tomorrow why the things they projected yesterday didn’t happen today.”

All kidding aside, most accountants report on results and financial analysts look at trends. Trend analysis is the first step in better understanding your business. Gallons are a great place to start and normalized gallons is the best first step. Normalization could mean normalizing gallons by taking out extraordinary events like hurricanes, however, for many marketers it involves weather normalization based on degree days.

The table below shows a gallon trend for a propane marketer. This marketer is losing gallons for heating accounts and gaining gallons overall. Understanding where you are growing and shrinking helps determine your plan of action.

Analyze Margins
The next step would be to analyze margins as Gallons X Margin = GP. If margins are decreasing in the example above, then you may be selling more gallons and achieving a lower GP. Even if GP were flat, it typically costs more to deliver more gallons so in that case profits would be down. The old adage of “We are losing money but we are making it up in volume” was never a sustainable plan.
SE Propane Expo 2019 Overview of LPG Business Financial Seminar
The next area of examination is operating expenses. We use a four- or five-year comparative income statement. Several different metrics can be used depending on the expenses. Cents per gallon is good for driver wages, truck fuel, and vehicle maintenance. Percentage of revenue is used for credit card processing fees, bank fees, bad debt, and working capital interest. Benefit expenses such as medical insurance, payroll taxes, 401(k), workman’s comp, etc. should be measured as a percentage of total payroll. Percentage of gross profit can be used for office wages and expenses, insurance, etc. Comparing these metrics over a period of a few years will help guide you to managing expenses.
capital expenditures

The last area to analyze is your capital expenditures. This includes vehicles (new and major repairs), propane tanks, computer systems, tank monitoring systems, and major building expansions/renovations. The good news is that the new tax laws have provided expanded Section 179 deductions (accelerated depreciation). Check with your accountant on specifics, however, the consensus is that you can now write off 100% of the first $1 million in the first year. That is a cash flow savings of $340,000 if you are in a 34% tax bracket. That’s a great incentive to invest in money-saving systems. We always recommend a cost-benefit analysis showing payback before choosing what system to invest in.

Recommendations
With the increased cost of propane tanks and driver wages, analyzing your return on investment for setting a customer tank has never been more important. Our recommendation to clients is to take a hard look at the return on investment and price accordingly. In our presentation at the NPGA Southeastern Convention & International Propane Expo on Saturday, April 13, from 10:30 to 11:45 a.m., in Room 311, we will be sharing our tank investment analysis and expanding on the above items. We hope to see you there!

Steven Abbate is managing director of Cetane Associates, LLC, a provider of hands-on merger and acquisition advisory services for privately held companies. He may be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it..

Autogas Experts Address Common Myths, Present Facts

Many of the barriers to the adoption of propane autogas are based on myths. Some propane marketers remember the inferior vehicle systems of the 1980s and are reluctant to enter the autogas market again. Many members of the public are not even aware that propane can fuel vehicles, so when they think of alternative fuels, they think electricity is the only solution.
Four autogas experts will address these and other myths during a seminar at the National Propane Gas Association (NPGA) Expo in Atlanta. They will also present the facts about today’s autogas dispensing equipment, vehicles, and growth opportunities. The seminar is meant for propane marketers who are looking to learn more about the installation and maintenance of autogas stations; who are skeptics about the dependability of the vehicle systems and fueling infrastructure; and/or who want to sell gallons independently of the weather.
2019 NPGA SE Propane Expo Autogas Seminar Overview on Myth v Facts
Among the myths these experts will address, and the facts they will present, are the following:

The myth: “It’s too difficult to install and maintain autogas refueling equipment.” There is a general misconception that propane stations require substantial time and money to install due to the complexity of the systems, says Jim Bunsey of Superior Energy Systems. In addition, it is sometimes assumed that autogas dispensers require time-consuming training, are difficult to work on and maintain, and require extensive calibration. “These misconceptions sometimes occur due to the fact that other alternative fuel infrastructure, such as CNG and electric, do require substantial financial outlay, site preparations, and equipment,” Bunsey explains.

The fact: Prepackaged and fully tested autogas skids with new technology make autogas dispensers easier to install, operate, and maintain. If station operators are performing routine maintenance, including lubricating dispenser nozzles and the propane pump, they should experience no downtime. If service technicians have been properly trained to handle propane autogas and have experience with gasoline and/or diesel refueling stations, they should have no trouble installing or servicing an autogas dispenser—the systems perform in very similar fashions. As director of operations at Superior Energy Systems, Bunsey has directed thousands of autogas and midstream installations. “At the panel,” he says, “marketers can come hear a step-by-step outline of how simple the installation process and maintenance requirements can be and why new technology is propelling autogas to the top of the alternative fuel ladder.”

The myth: “Public refueling of propane autogas will never happen.” This myth exists because many people have never actually refueled or experienced refueling a propane autogas vehicle, especially with a modern dispenser equipped with a quick-connect nozzle, says David Kennedy of Alliance AutoGas. “They can only relate to cylinder refueling, which does necessitate a propane professional to refuel,” he explains.

The fact: Advancements in autogas refueling have made it easy for end users to refuel a propane-powered vehicle. The industry’s self-regulation is limiting access to its fuel through its own outdated safety regulations. In addition to serving as director of autogas design at Alliance AutoGas, Kennedy is active in PERC’s Research and Technology Development advisory group and NPGA’s Technical Safety and Standards group, and has been an NFPA 58 AutoGas Subject Matter Expert. “During this panel I will point out the advancements in autogas refueling and point out the differences in refilling a propane cylinder compared to an autogas vehicle.”
2019 SE Propane Expo Autogas Seminar on myth v fact Overview
The myth: “Autogas isn’t worth my time, money, or resources.” Some marketers’ only experience with autogas is with the systems that went away in the late ’80s, early ’90s due to technology challenges. “They haven’t given the new technology an honest chance,” says Mark Denton of Blossman Gas. In addition, many people believe that you can’t make money on autogas because it is all “cheap” bid fuel only.

The fact: The new technology is state of the art and cannot be compared with the carbureted systems of the ’80s. This technology is available for both original equipment manufacturers (OEMs) and EPA- and CARB-certified aftermarket systems. Today’s systems are extremely dependable and are saving fleet customers significant money on fuel cost. Denton, who serves as vice president of business development at Blossman Gas, has been in the retail propane business since 1978 and has worked almost exclusively with autogas for the past 10 years. “I drive an F-150 using an EPA-certified bi-fuel system, which has close to 200,000 miles on it, and the only thing I have had done to the propane system is change some fuel filters.”

The myth: “No one outside of the propane industry cares about the adoption of autogas.” Propane-powered vehicles have not yet been marketed to the average consumer, so there is a general lack of knowledge about them, says John Barnett of U-Haul, the largest propane retailer in North America. Compare that to electric vehicles: “Electric vehicles made their way into the mainstream market and have been marketed to consumers in a consistent and effective manner.”

The fact: The autogas industry is growing quickly, but quietly. The public is seeking better transportation solutions and most people understand that there is a need for clean-burning fuel to address the issue of CO2 emissions. U-Haul has a vast infrastructure and is actively marketing autogas to the many fleets with which it does business. Barnett has been dispensing propane since 2006, pushed for propane-powered service vehicles in his fleet when he was U-Haul company president in California, and began upgrading U-Haul’s dispensers with new pumps to fill autogas tanks when he entered his current position: propane programs manager at U-Haul. “Caring about the adoption of anything stems from awareness, accessibility, and appealing to people on a personal level,” he says. “For some, that appeal may involve financial savings, environmental responsibility, making our busy lives a little easier…or all of the above.”

To get the most out of the seminar they will be presenting at the NPGA Expo, the speakers recommend that attendees read up on autogas at the PERC website (propane.com) and bring any questions they might have. They also recommend that attendees consider how far autogas technologies have come since the ’80s—just as phone technology has evolved from payphones to smartphones—and come to the event with an open mind regarding marketing propane autogas.

Bunsey concluded, “We hope to expel the common myths associated with autogas by bringing together all pieces of the autogas puzzle—the marketer, the station equipment provider, the fleet manager, and the autogas vehicle system manufacturer—to explain how autogas can be an excellent addition to a propane marketer’s offerings.”

Their seminar, “Autogas Dispensing Equipment—Myth vs. Fact,” is to be held Sunday, April 14, from 9 a.m. to 10 a.m. at the NPGA Southeastern Convention & International Propane Expo in Atlanta.