Editor’s Note: This column was written in response to and covers challenges related to New York’s Assembly Bill 01451. Have thoughts and commentary on the bill or this article? Email email@example.com.
Upstate New York can get brutally cold in the winter, which is why so many residents rely on the dependable heat that propane provides. When home tank levels start to get low — especially when freezing temperatures are in the short-term forecast — propane companies know they’ll be on the receiving end of a raft of requests for fills.
During one of those severe cold snaps in 2017, one propane company was unable to keep up with deliveries and fulfill requests. People ran out of the propane that heats their homes right when the subzero temperatures hit.
Cold and upset customers then contacted their legislators and the media, leading to multiple news stories. Within a month, legislation was introduced with the objective to prevent this situation from ever happening again. Assembly Bill 01451 by Angelo Santabarbara would allow customers to suspend the lease arrangements they have with their propane suppliers if they felt they were in danger of running out of propane.
With legislation, the devil is always in the details, and that was certainly the case with A01451. This was not surprising to most of us in the propane industry, as we were never asked for our thoughts or provided a chance to contribute our expertise. In short, this was a bill to change how propane was delivered in the state of New York — without any input from the propane industry. Naturally, there were problems. This article explores several of the big ones.
1. ‘Emergency’ Was Left Largely Undefined
The heart of the bill was that customers who found themselves low on fuel would be allowed to contact another propane delivery company to fill their tank in an emergency. So, what qualifies as an emergency? Leaving this largely undefined and up to the consumer is problematic because that answer could vary widely from one customer to the next. Some customers call in a panic when fill levels drop below 50%. While most customers are on automatic delivery, there are some who try and squeeze all they can from one tank, hoping to delay the bill for the next fill.
The legislation also gave a propane company only 24 hours to address a customer request for a fill. Under normal circumstances, this might not be a huge issue, but again, when the forecast calls for multiple days of very cold weather, it can take longer than 24 hours to get
2. The Legislation Amounted to a Taking of Property
This point was a bit more inside baseball than the first, but it is an important one. Propane tanks represent an investment on the part of a propane company, and they count on the revenue generated from selling propane to customers to offset those costs.
In 2017, the inability to fulfill customer requests stemmed largely from one company. It’s not hard to imagine what happens next: a company has trouble filling orders for customers, those customers all go to other suppliers for fills and the company has an even bigger problem on its hands — no revenue to support the maintenance and replacement of its owned tanks.
Although this would have been a strong legal argument for us, it wasn’t the ideal message on which to rest our opposition to a bill; few legislators were going to care about equipment and margins when they had constituents unable to get propane for heat in the dead of winter.
3. Safety & Liability Issues Were Top Concerns
One point that did resonate with legislators was the safety angle. Overall, the propane industry has a great track record on safety. Accidents are rare. But when they do happen, it’s almost always during a fuel transfer situation, such as a customer fill. Now, add in the potential for unfamiliarity with tank styles when one company is filling tanks that belong to another company, and you have increased the likelihood for accidents considerably. Further, add in the liability concerns. If something does happen during a fill, which company is responsible for absorbing the liability?
Given the problems with this bill and an unwillingness on the part of the legislator who introduced it to talk to the industry, the picture was grim. Although an industry-supported alternative was introduced in the New York Senate by Senator James Tedisco (S7395D) that addressed industry concerns with the bill, the first, more problematic bill sailed through the legislative process and was only halted at the eleventh hour due to some remarkable lobbying efforts on the part of our industry’s talented legislative affairs team.
However, this bill reemerges every few years, particularly when there are cold snaps. We have been successful in getting some modifications to the bill that are crucial. Rick Cummings, New York state director for the National Propane Gas Association, and Dick Brescia, New York Propane Gas Association lobbyist, have worked tirelessly trying to get to an agreement that will help consumers without causing major problems for propane providers.
Tightening what defines an emergency, allowing for a longer response period than 24 hours and codifying a requirement that any propane company that fills a tank it does not own must have, at minimum, $1 million in liability insurance and will assume all liability — these are all important improvements to these proposals.
What the Future Holds
This might feel like an issue that is confined to New York, New England or maybe just the northern regions of the country. However, any state with propane customers can experience shortages, and shortages can be caused by a variety of issues. Changes in global demand, legislation banning the installation of propane in new construction as part of a push to renewables, or even severe weather can all affect supply and delivery. And, as the New York case shows, it only takes one such incident to get the legislative ball rolling.
On June 2, the final day of New York’s legislative session, the New York Senate passed the version of the Propane Emergency Delivery Act that had advanced from the assembly. Having passed both chambers, it now heads to Governor Kathy Hochul’s desk for her signature or veto. At press time, there remain problematic elements in the bill, which we will be working to address.