PF 100 = Power in negotiating with Propane company

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gitmo234

Member
Dec 1, 2010
95
Oxford, PA
Situation:

I have a 2533 square foot home that had a terrible HVAC system layout, propane furnace and was under insulated. Last year I bought a PF-100, threw down R-30 insulation over the existing insulation, and fixed the major hang ups in the HVAC (three inch gaps in pipes, fist sized holes chewed in flex duct, etc).

My propane tank is an underground, 1000 gallon tank. Propane costs $3.44 a gallon as of today, I have 350 gallons left and the only thing running on it now is the water heater, I live with my girlfriend, we both shower once a day for a max of twenty minutes. Oh and a dishwasher run about once a week.

Last year with the house in terrible heating condition (insulation and problems in system) I was burning an entire tank a month. So about $3k in propane. So I burned mostly wood in my insert, but was in a room with 27-30 foot cathedral ceilings. On a good day I got the house up to 62 degrees...hence the pellet furnace.

Today I call the propane company and they are shocked that my last fill up was January 17th last year and I have 350 gallons left. I tell them my living situation, my changes I've made, and my new furnace and that I only run a water heater off it. I then mention I wanted to know my options as far as going to a smaller tank, then removing the tank or me getting a tankless electric water heater (that the tankless electric was not an honest consideration, just to make my point stronger) and I asked what my options were at this juncture for propane and the tank.

She continues with the shocked routine and talks to the manager. Comes back, offers me 200 gallons of propane for $2.99 per gallon today, and no tank rental fees per year, as long as I buy about 200 gallons for water heat. Doing the math, it seems this makes sense (Staying gas) over electric water heat.

It was a good feeling. So much for the $550 a month "budget billing 12 month plan" they wanted last year.
 
Sounds like a good deal to me. The companies in THIS
area will charge you MORE if their LP isn't used for heat.
I guess they consider using it for hot water or cooking as
non-essential luxuries...
 
do you own the tank or does the company?
 
The company does, so they waived the rent fees as part of the agreement.
 
If you own the tank around here, the price is even less
because of those "maintenance" fees. If you have an issue
with your own tank you may be screwed. A buddy of mine
bought one - online - had it delivered & buried & it leaked.
Lost a LOT of LP & $$$, & pretty much got the ole "Caveat
Emptor" from the website he bought it from.
 
It depends on cost of electricity and your current propane water heater. Unless the water heater is highly efficient, or electricity is very expensive, $2.99/gal shouldn't make much of a difference with electric.

For example, if you have a tank heater 85% efficient propane at $2.99/gal, it's about the same as electric tank at 12.5c/KWh. For tankless 95% efficient it's about the same as electric tankless at 11c/KWh (comparing tank to tankless is more challenging).

Sounds like you'll get a one-time $2.99/gal fill-up, and then you'll need to renegotiate next time or pay full price. If you do it I'd make sure to not be locked into anything other than the one-time purchase.
 
fortunateLEE said:
I think you may have some bargaining power since the tank is buried. They're not gonna want to eat the cost of removal since they own it.

I agree.. They will have to spend some man hrs to get it up and out of there...

. I was hit for $21 rental fees for the last 2 yrs (last fill was Nov 2009) and just got my 1st $99 "No usage fee". . I have 40%-45% left (or about 2 yrs) and they are gonna come remove the tank, because I will no longer buy through them.

We only use LP for cooking, so I got two 100 gallon tanks that I can fill at a few different places around the house (shop around for best prices).

Congratulations on the discount. LP is ridiculous here around me in Ohio... Ridiculous! ;-P
 
Back in 2009 I replaced a failing oil fired hot water heater with an electric unit from Marathon Water Heaters. Since the replacement my electric usage is approximately 100kwh more than when I was using the oil fired unit, so at about an average rate of $0.14/kwh, my electric bill has only increased by about $14-$15 per month using electric for the hot water. This is for just my wife and myself, so hot water usage isn't like having teenagers in the house.
The Marathon is guaranteed for life against leaks since its construction is all plastic and as it is well insulated, it ranks very well in efficiency. A good number of electric utilities and co-ops offer these at discount or other incentives because of the efficiency rating. A little pricey up front, but I'm at an age I don't want to replace a water heater at 5-6 year intervals if a tank leaks.
 
fortunateLEE said:
I think you may have some bargaining power since the tank is buried. They're not gonna want to eat the cost of removal since they own it.

there in lies the rub.. it depends on the contract. Our "company owned" underground tanks were included as lien on the property and the cost of removal was the homeowners expense. Granted ours were new, correctly installed with an anode bag and documented with serial number etc on the contracts that they were our property. Most major company have these copies on file and if it was me I'd ask for a copy of the contract . No contract no ownership... Again if it's a 1000 gallon tank I'd be looking at filling in the summer where rates are down, LP is plentiful and call around to all the suppliers in the area and comparison shop
 
That's the downside, its a huge company (heritage propane), they own the tank and the contract states that I am required to pay for excavating fees and to remove the LP at $1 a gallon. My electricity is .089 cents per kwh, locked in for two years, so I may consider that option. The 2.99 per gallon rate is the new customer only rate so the same i got last year.
 
How much is the rental fee? And how many gallons of propane do you use per month for water heating?

Back of the napkin calculation shows you'd spend between $390 and $440 in electric for the $598 you're going to spend on the propane fill-up. With you being responsible for the removal cost you might end up paying more next year, and if you propane co is like mine, low volume is much more expensive (mine is $3.25 for heating and over $5 for cooking volumes) ... or you'd have to order a whole tank fill when it empties.

If you don't use 200 gals per year you'll just build up more propane in the tank over time, which is going to cost you at removal time. Even if you use like 250 gals a year, it'll take quite some time to deplete the extra 350 you have.

If you usage rate is something like 100-150 gals per year you might be best off to ride out 2 yrs on existing propane + tank rental, and save money for the removal and an electric heater.
 
Rental fee is $89 a year. I'm thinking right now I used about 150 gallons for heating the water. I just went off a website cost list basically saying that an electric water heater total life cost is >$5k, while a propane water heater is just over $2k. It sound cheaper to go electric but I may keep this. Right now my girlfriend just moved in, as of today,and we both have agreed to a sort of 5 year plan, and somewhere near the end to 7 years I plan on having little ones possibly, so I'm guessing that with a full house gas may be more cost effective. By then I'll have a tankless water heater too.

Should I need have the tank removed I'll run my gas furance instead of pellets that year for a few weeks and that will suck it down. I'm more worried about the escavating fees. Unless its something I could make a weekend job of...Open the hole around it by hand and just let them pull it out.
 
I plan on hasseling them about another cost reduction next year too.
 
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