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October 28, 2010

Ferrellgas Agrees to Change Marketing, Pricing Practices in Iowa

(DES MOINES, Iowa)  Attorney General Tom Miller announced an agreement with one of the nation’s largest propane retailers, and Iowa’s largest liquid propane (LP) gas distributor, that will change how the company markets and prices its product in Iowa.  The agreement will greatly enhance clarity and transparency for Iowa customers who rely on LP gas for winter heating.

“This agreement should minimize confusion for Ferrellgas customers across Iowa,” said Miller.  “Consumers will know, up front, what they will be paying for the delivery of the propane that heats their homes.”

Under a formal agreement signed Wednesday, Ferrellgas, based in Overland Park Kansas, agrees to provide current and future customers a clear pricing “summary sheet” with information about the company’s pricing programs, including company surcharges and fees.  Ferrellgas will disclose the price per gallon of propane in an easily understood, simplified format.

For current Iowa customers, Ferrellgas agrees to provide a pricing summary sheet annually, spelling out its various pricing plans and how consumers can determine the prices they will pay for deliveries.  The pricing summary sheet must disclose how prices vary among its different customer plans and be posted on the company's website.

The agreement covers both non-contract LP delivery and contract delivery, including so-called “will call” customers who place incidental propane orders, and “keep full” customers who have standing orders in place for routine LP refills.

For the past several years some Iowa consumers called the Consumer Protection Division, or filed formal complaints, about complicated pricing structures.  These consumers expressed concern and confusion about propane prices they thought were higher than expected when reviewing their Ferrellgas bills.  For example, in some cases Ferrellgas would cite “our market price” to justify a retail propane price that was substantially higher than the industry market price.

“Customers who call Ferrellgas to place an order should get straightforward information on exactly what it will cost per gallon to fill their home heating tanks,” Miller said.  “Because of Iowa consumers who contacted us with concerns we asked the company to more clearly and openly disclose its pricing structure, and the company agreed.”  Miller credited Ferrellgas for its cooperation in working with his office in negotiating these changes. 

The agreement takes full effect January 1, 2011, and expires on December 31, 2013.  Ferrellgas agrees to make a payment of $25,000 to the Attorney General for costs associated with the case.

“While this affects the Iowa’s largest LP distributor and its thousands of customers, I expect that other retailers across the state will adopt the same clear pricing structure being adopted by Ferrellgas.  I intend to approach other propane retailers doing business in Iowa about simplifying pricing,” Miller said.  “Good companies that deliver propane to heat Iowans’ homes should not have a problem delivering their customers easy to understand bills.”

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