In rural areas of the upper Midwest, many consumers depend on propane to heat their homes. The State of Minnesota has sued Ferrellgas, LP, a large national propane energy company, alleging that it deceived Minnesota consumers about the rates and fees charged for propane for heating.
Minnesota Attorney General Lori alleges that the propane energy company failed to disclose specific per-gallon prices to consumers when they called to fill their tanks and represented in its fine-print contracts that it would charge "our current market price," even though Ferrellgas often charged above-market rates and in many cases charged rates substantially above the average market rate on file with the state and federal government.
"For many people living in rural areas, the only available energy source to heat their home is propane. This propane energy company deceptively failed to disclose its prices and fees and then twisted its fine-print contract language to charge above-market rates," Swanson said.
The lawsuit claims that the company's advertisements were designed to create the impression among consumers that the company charges a competitive market price for its propane. When consumers called to fill their propane tanks, Ferrellgas did not inform the consumer of the actual price to be charged. It also represented in a 24-page contract that it would charge "our current market price" for propane gas.
The Minnesota Department of Commerce and the U.S. Department of Energy both conduct surveys of average propane prices charged by the industry. The state's lawsuit includes a chart comparing the actual prices charged by Ferrellgas to Minnesota consumers with the average rates charged by the industry. The lawsuit states that the rates charged by Ferrellgas often exceeded competitive market rates and were at times double the average rates charged by the propane industry as filed with state and federal governments.
The lawsuit also alleges that Ferrellgas charged Minnesota consumers significant fees without adequately disclosing them, including "low usage" fees of up to $199 for consumers who in its judgment did not use enough propane, as well as tank pick-up fees of up to $99.
In 2008 Ferrellgas reported sales of approximately $2.2 billion. In 2007, the Arkansas attorney general filed a similar lawsuit against it for charging fees that were not adequately disclosed.
Ferrellgas has approximately 50,000 customers in Minnesota. Attorney General Swanson noted that with winter approaching, many Minnesotans will soon be filling up their propane tanks for the winter. She cautioned consumers to ask suppliers to document their actual per-gallon price before filling a tank, as well as to disclose any fees.