NPGA Adds COVID-19 To Propane Industry Priorities

Natoinal Propane Gas Associaiton (NPGA) Leaders add COVID-19 coronavirus pandemic planning to 2020 priorities reports BPN leading industry trade publication 061520At the beginning of 2020, BPN spoke with the National Propane Gas Association’s (NPGA) Jeff Petrash, vice president and general counsel, and deputy counsel regulatory affairs, Sarah Reboli, about the coming decade. Midwest propane supply issues had consumed their time in late 2019. “Electrification will be a big issue for a number of years ahead for NPGA,” Petrash told BPN in January. Other issues discussed included a plan to go back to FERC in June to address how index pricing is set for liquids shipped on pipelines; natural gas expansion issues brewing in Utah and Iowa; and new requirements from the Federal Motor Carrier Safety Administration (FMCSA). With the spread of COVID-19, addressing the pandemic and its many challenges while still focusing on all other pressing issues became NPGA’s new plan for 2020, with all NPGA staff members hands on deck, but from remote locations as all are teleworking due to Washington, D.C.’s stay-at-home order.

In mid-May Petrash and Reboli were joined by fellow NPGA staffers Sarah McLallen, vice president of communications and member services, and Lesley Garland, vice president of state affairs, in a discussion with BPN about new issues that arose since our discussion at the beginning of the year. “I returned from a trip in mid-March, went straight home, and have not been back to the office since,” Petrash said. “The COVID-19 pandemic has all staff members working from home since March 15. Between the virus and all our existing issues, we’ve been busy the past couple of months!”

“We’ve been engaging with NPGA’s Propane Supply and Logistics Committee,” Petrash said. “With lower oil and gas prices, rig counts were down before the COVID-19 virus further slowed demand. Use of diesel fuel is down 20%, motor gas is down 30%, and jet fuel is down 60%. While we can’t move the levers of the commercial marketplace, we can keep the industry informed about what is happening and what their options are.”

With the infrastructure for exporting propane more developed than ever, there is more export capacity from the Gulf Coast as well as Marcus Hook in the Northeast. “Looking back at supply data over the past six years, when propane demand peaks in the U.S., exports drop,” Reboli said.

Reboli noted that laws and appropriations related to COVID-19 have been passing in Congress faster than agencies can handle them. “All details related to small business, tax credits, and paycheck programs must be provided to the industry,” she said. For Garland, there has been a surge of information to monitor with specific state requirements and recovery proposals. Some key questions have included whether employers can take employee temperatures; how companies can obtain face masks; and sharing with staff how best to handle existing requirements and COVID-19 requirements. Both Garland and Reboli acknowledged industry members are in uncharted territory following sometimes rapidly changing requirements while still taking care of customers.

An NPGA survey of industry members has aided the staff in focusing on members’ needs and their various situations and concerns. Respondents, by sector, were intrastate marketers (38%), interstate marketers (25%), distributors (20%), service providers (9%), and manufacturers (6%). Some highlights of the survey include:
  • 77% of survey respondents indicated the level of business operations in April 2020 was the same (31%) or slightly reduced (46%) from April 2019 operations; 10% saw increased activity and 13% reported severely reduced activity.
  • 95% of respondents reported employment levels in April 2020 were similar or only slightly lower than a month earlier on March 1. None reported significantly lower employment levels.
  • 85% reported that projects, deliveries (gallons), and purchase orders had not been delayed at all (38%) or that less than 25% had been delayed (47%).
  • 61% of respondents reported that they had no cancellations of existing projects and gallons delivered, while 36% reported they had some (less than 25%) cancellations.
  • 43% of the respondents applied for federal aid through the Paycheck Protection Program.
COVID-19 will not always dominate our conversation. Garland and the state affairs team continue to watch state governments, some of which are holding committee meetings and votes virtually. “There are nearly 200 bills regarding decarbonization and electrification right now,” Garland explained. “There have been attempts to ban natural gas installations in local construction in some states, including Massachusetts, where some suburbs of Boston have passed city ordinances. In other states, such as Arizona and Tennessee, we have passed bills that prohibit local governments banning natural gas or propane.” 

Key Data Helps Propane Marketer Make Improvements, Achieve Goals

What key numbers should retail propane marketers be reviewing? What is the importance of tracking key numbers in running a retail propane business? As discussed in the January issue of BPN, for each marketer, the key numbers will be different depending on the goals and objectives of the business.Propane business owners Key Numbers to know reports BPN june 2020
 
Recently BPN followed up with Chris Caywood, president of Caywood Propane Gas Inc. (Albion, Coldwater, and Hudson, Mich.), who has updated his list of key numbers he tracks based on the continued refining of goals and objectives for his business. “If it is an important area of the business, we want to measure our progress. We measure and evaluate strategic and business data,” Caywood said. “All of it helps us identify and prioritize opportunities for improvement and make faster decisions to achieve our goals.”

Return on capital is a strategic measure for Caywood as well as most businesses. “I can invest in my own business, someone else’s business, or private or public markets,” he said. “In the long run, the stock market will provide a 10% return and it’s both highly liquid and diversified. My own business is neither highly liquid nor diversified, so we need to be compensated for that with a risk premium- which we measure as return on capital.” He calculates return on capital as return on invested capital (ROIC) minus weighted average of cost of capital (WACC).
Here are Key Numbers propane business owners should know when selling a propane business reports BPN magazine june 2020

Comparing ROIC to WACC reveals whether invested capital is yielding an appropriate risk premium. The rule of thumb is that a company creates value if its ROIC exceeds WACC by 2%. Caywood (along with everybody else in the industry) also looks at EBITDA, which stands for earnings before interest, taxes, depreciation, and amortization. Operating cash flow and the company owned-tank base are also key factors.

Business-level metrics include market share. “We calculate our residential share by county as a percentage of the total number of homes using propane as a heat source using Census Bureau data,” Caywood explained. “Degree-day adjusted growth takes into account gallons today versus gallons in a previous period without the noise that can be introduced by weather fluctuations.”

“New customer growth is simple. How many customers do we have now versus in a previous period,” Caywood said. “Retention is based on the percentage of customers that stay with us from period to period.”

In the area of operations, Caywood tracks key numbers that many retail propane marketers track. “Like most, we want to know the gallons we pump per hour, per mile driven, and per stop. We like to know our auto-fill run-outs. It also is very important from a customer service standpoint to take care of a delivery in less than 10 days.”

“Service data is very important to us because we want to improve customer retention,” Caywood added. “So on-time arrival rates for service calls and call-back rates are important metrics.” In the office, telephone call performance is measured using traditional call center metrics like average call volume, answer rates, speed to answer, hold rates, average hold time, abandoned calls, and first call resolution.

“In addition, we use discounts to encourage our customers to interact with us digitally so we can measure our progress using metrics like percentage of customers with email addresses, the percentage of customers who receive e-statements and e-invoices, the percentage of will-call customers who place online or smartphone orders, and percentage of auto-fill customers who use a digital auto-pay feature.”

“Safety also is a very important area that can often be neglected,” Caywood said. “We track any safety violations or reportable events. We document safety meetings and attendance, and we measure and reward employees with safety certificates and continuing training.” — Pat Thornton

Propane With A Village Touch

From September to April, the best time to catch Steve Frey, owner of Frey’s Propane in Stapleton, Neb., is from 8 a.m. to 9 a.m., Monday through Saturday. If you miss him, he’s either filling up his 3000-gal. propane delivery truck at his 18,000-gal. bulk plant or making a delivery. Unless it’s the noon hour, which means he and Cindy, his wife, business partner, and only other employee, will be religiously taking an hour break for lunch. Sunday is his day off.
Frey's Propane and General Store in Nebraska Has The Village Touch reports BPN the propane industry's leading source for news since 1939. june 2020
As the number of family-owned propane marketers dwindles, Frey’s Propane continues to serve the small village in mid-Nebraska and surrounding areas in the same way it has since 1979.

“I have very loyal customers. I haven’t really had to change how I do business; for the most part it’s the same,” said Steve Frey. “I found out if you treat people decent, give them a good service, be honest, they stick with you.”

There are 305 residents in Stapleton, which is coincidentally about the number customers Frey’s Propane serves—actually almost 350 customers within a 50-mile radius. They include businesses, the school, residents, and farmers, many of whom, like the Freys, are natives of Stapleton.

“We know every single one of our customers, unless they are new to town,” said Cindy Frey. “And they freak out when they learn we don’t take credit cards; it’s check or cash. I bill once a month. We’ve had credit cards before, and you get a lot of fees and all these hidden costs. I run on their good word.

“We just give them a good deal and they accept it,” she added. “Some people get behind, but they figure it out. They don’t get any more propane if they don’t.”

The Freys, who have been married 41 years, also run Frey’s General Store; a bed-and-breakfast “minus the breakfast” that is attached to the store; and a storage unit. They have a few part-time employees for the store and their youngest daughter, Shawna, who has special needs, often rides with Steve in his truck and assists in delivering bills. “She is Stapleton’s best hugger,” Cindy said.

Lifelong community leaders, Cindy currently sits on the Stapleton Cooperative Market & Deli and Chamber of Commerce boards; Steve was a volunteer firefighter for more than 20 years; and both have been involved in the school and their church. The propane business, however, is what keeps them going.

Last year, the company sold more than 400,000 gallons of propane; it will probably do about the same this year, Steve predicts. In addition to delivering propane, he spends time keeping up with insurance, HAZMAT, and Department of Transportation requirements. However, his biggest challenge, he said, is keeping the truck running.

“I keep with the industry. I do what I need to do,” he said. With no other employees, “doing what he needs to do” means dragging a hose 20 times a day. He had knee replacement 10 years ago, so he no longer digs trenches and has allowed some of the “younger boys” with another business to do some of the outside setup work.

Although there is competition in the area from other propane companies, including a co-op, Steve said he doesn’t have to do much marketing; it’s all word of mouth other than the company listing on the Stapleton Chamber of Commerce web page.

The billing is his wife’s job. With the help of QuickBooks, bills are mailed out once a month. Winter contracts became a “bookkeeper’s nightmare,” he said, so they have been eliminated.

During the summer months, the couple has more free time even though their store remains open from 7 a.m. to 6 p.m. six days a week. For “relaxation,” they have a giant
garden with primarily asparagus, corn, and tomatoes. Right now, he also has 250 chickens.

“A lot of people say, ‘How can you two work together and go home together?’ I just tell them we can’t think of anything else. It’s always been that way,” Steve said. — Karen Massman VanAsDale

Virtual Propane Conference Maximizes Learning Opportunities

(June 9, 2020) — What do you do when a virus pandemic cancels your premier industry event of the year? As an industry, we faced that challenge with the cancellation of the annual NPGA (National Propane Gas Association) Expo scheduled for April 6-8 in Nashville. Chris Brablc, senior director of marketing for Tank Utility (Boston), didn’t have to think too long for a solution. He reached out to Brian Weit, manager of marketing at Cargas Energy (Lancaster, Pa.), among others, to see if there was interest in helping to put together a virtual conference. “As it turned out, others were thinking the same thing,” Brablc said. “We were moving in that direction,” Weit told BPN. “Chris was just a few days ahead of us.”

Brablc and Weit discussed with BPN how they and others pulled together to put on a virtual conference in less than three weeks. This ingenuity culminated in the Energize 2020 program that included a virtual trade expo complete with ways to set up live discussions with vendors. In addition, the full-day program ended with a virtual happy hour with all participants visible on the computer screen and able to have a group discussion.
Energize 2020 Propane Webinar provides learning opportunities in wake of COVID-19 shut down reports BPN LPG industry leading source of info june 2020“It was important to us to make this happen during what would have been the NPGA Expo in Nashville,” Brablc said. “The NPGA Expo is the pmier event of the year where customers and technology companies can talk about the latest innovations that benefit the industry. While we knew we couldn’t fully replicate the event, we wanted to bring marketers a small part of the educational sessions virtually.”

“We also decided to raise funds to support NPGA as part of the virtual conference,” Brablc explained. “We’re excited that NPGA was supportive of us and that other companies as well as retail marketers came together to help put on the webinars. Energize doesn’t happen without them.” Additional company sponsors included Cetane Associates (Kent, Conn.), P3 Propane Safety (Portsmouth, N.H.), and Qualpay (San Mateo, Calif.). A week after the virtual conference, more than $11,000 had already been raised to benefit NPGA from attendees and sponsors.

“It was amazing how fast this all came together,” said Adam Shantzer, CFO at Gastec Enterprises (Ivyland, Pa.). “Looking at my phone records, Chris called me March 23 to see if I would be interested in presenting. We had another discussion about details March 27, which led to a test run on April 1. On April 8, I was one of many presenting to hundreds of people.” Shantzer said it was great to still be able to connect with so many people he’d usually see at the NPGA Expo. “It is always good to have these discussions, which I feel lead to ‘sparks of insanity’ that cause people to think of things in different ways and refine those thoughts into something useful.”

“The NPGA Expo is certainly the gold standard of propane events,” said Jim Townsend, CEO of Townsend Energy (Danvers, Mass.), who also presented during Energize 2020. “All key contacts and new products can be found at this event every year. With the cancellation, it was great that the virtual conference came together so fast. The sponsors and presenters did an excellent job.” Townsend said he feels the experiences of 2020 may change forever how information is shared. “I think conferences will still be held, but more people will have had new experiences with learning and gaining information via technology. People will understand more how they best want to receive information and learning. I suspect more will be in a better position to gravitate toward the learning methods that work best for them.”

“We had over 600 register to participate with over half attending for at least part of the day,” Brablc said. “The feedback has been overwhelmingly positive from attendees. We had registrations from 48 states in the U.S. and we had at least one from five additional countries.”

BPN shares details of the Energize 2020 Virtual Conference in its June 2020 issue and in upcoming issues. Other experts originally slated to speak at the NPGA Expo in Nashville have also been presented virtually recently or will be doing so in the upcoming weeks. BPN will provide details of some of these presentations as well in upcoming issues.

Session recordings are available at no cost from Energize at energize.tankutility.com. — Pat Thornton

New Cooperative Aims To Help Independents Across The Country

Several years ago, Kris Magnusson ran into Ed, a family friend, who had started a flooring company more than 30 years earlier called Ed’s Flooring. Magnusson noticed it was now named Ed’s Flooring America.
New Propane Cooperative named IDEAL helps indpendent lpg marketers with supply security andpricing reports BPN the leading industry trade pub since 1939 june 2020

Ed explained that he had become a member-owner of Flooring America, a purchasing cooperative. He added that he now had access to more products and marketing, his purchases were aggregated with other independently owned flooring companies, and they had better buying power collectively.

Magnusson, having grown up as the fourth generation of her family’s energy business in southern New Hampshire, had witnessed consolidation within the industry firsthand. Two years after this chance meeting, she co-founded a member-owned cooperative of local energy distributors. Launched in October 2019, it is named IDEAL Energy Cooperative, with “IDEAL” standing for Independents Delivering Energy Aligned Locally.

Today, IDEAL has a member footprint throughout New England, New York, and Pennsylvania. All of the cooperative’s members are privately held, and independently owned and operated. IDEAL is now inviting new members, suppliers, and vendors from across the country.

AGGREGATE, COMMUNICATE
IDEAL Energy Cooperative is 100% owned by its members. Each member has a vote and a voice in the direction of their cooperative. “As time goes on, it’s up to the membership to decide how to define this cooperative,” said Magnusson. “It’s up to IDEAL’s member-owners.”
New Propane Cooperative named IDEAL helps indpendent lpg retailers with supply security and pricing reports bpn 06-20

Last year alone, IDEAL’s members purchased more than 179 million gallons in total of distillate and propane, purchased $79 million in business services, and had a business revenue of more than $506 million. Now, as members of IDEAL, they can aggregate their purchasing volume, thereby negotiating better buying power with their supplier and vendor partners. They also aggregate marketing resources and share best practices.

Because of benefits like these, purchasing cooperatives have flourished in many industries. Examples include Flooring America, ACE Hardware, True Value Hardware, Land O’Lakes, Agri-Mart (Cabot Cheese), Carpet 1, and Furniture First.

Membership in IDEAL is open to privately held, independently owned and operated energy distributors. An energy distributor includes any retail establishment that provides retail fuel delivery and/or services. Propane, fueloil, diesel fuel, and gasoline are the fuels currently represented by IDEAL’s membership. Membership is open across the nation for energy retailers and supplier and vendor partners.

“Our members put competition aside when it comes to best practices and the bigger issues,” said Chris Brennan, general manager and co-founder of IDEAL. “For example, we recently led a discussion about applying for the federal government’s Paycheck Protection Program as well as what members are doing in response to COVID-19.”

As for suppliers and vendors, any that have customers in the propane and energy space are welcome to become partners.

PRIMARY BENEFITS
In the seven months since the founding of the purchasing cooperative, the members of IDEAL have worked together to create three primary benefits.

“It’s important that IDEAL is member-owned,” said Ryan Jackson, chief operating officer of D.F. Richard, a family-owned energy distributor in Dover, N.H. He serves as board chair of IDEAL. “It provides more value than just purchasing; it increases communication and cooperation in all areas of business by leveraging benchmarking.”

One primary benefit is the better buying power with supplier and vendor partners. IDEAL partners already include suppliers and vendors of fuel, business services, propane equipment, health insurance, 401Ks, business insurance, credit card processing, tanks, accounting, and bookkeeping. Members are not required to purchase from only designated suppliers and vendors; they can still choose their own vendors.
New Propane cooperative named IDEAL helps indpendpent lpg retailers with supply reports bpn 06-20

Another primary benefit is to aggregate marketing resources to promote a national brand called Fuel-Local. By using this in co-branding, members can provide a common voice while continuing their existing local marketing efforts. Similar to what “Eat Local” and “Farm Local” have done for other industries, Fuel-Local is intended to help members communicate to their customers the benefits of using local, independent providers. Jackson said D.F. Richard plans to use Fuel-Local alongside its own brand, adding, “It’s important to get that message out.”

The third primary benefit is a member community in which they share best practices and training. Here, activities include weekly webinars hosted by partner vendors and virtual roundtables that bring together member-owners. In a recent virtual forum, members discussed how to get back to work in the “new normal.” They have also scheduled an annual meeting at the end of September where they hope to come together in person.

“Like all small businesses in every industry, it is getting harder and harder to compete with the highly capitalized multinational corporations,” Magnusson said. “Now, with even more burdens and costs created by the pandemic, pooling resources is critical.”

“Ironically,” she added, “I think one of the positives of the COVID-19 pandemic is that consumers are being forced to re-prioritize what is important for their families and households. IDEAL members are essential service providers. What a perfect time to have a strong, common IDEAL voice to reinforce to customers that their energy providers have always had their best interests at heart, including safety, value, care for their families, and environment.” — Steve Relyea

For more information about IDEAL, visit IDEALenergycooperative.com, or email Kris Magnusson at This email address is being protected from spambots. You need JavaScript enabled to view it. or Ryan Jackson at This email address is being protected from spambots. You need JavaScript enabled to view it..