CONSUMER ALERT

N.H. explains law for pre-buy home heating fuel contracts

This is another in a series of public service column.

(The following are a press release and copy of NH House Bill 903FN relating to home heating oil, kerosene and liquid petroleum.)

Press Release
Office of the Governor

CONCORD - Gov. John Lynch today (July 24, 2007) signed a law aimed at ensuring consumers receive the home heating fuel they have paid for in advance, or are repaid for any fuel not delivered,

“With energy costs continuing to rise, it is becoming harder and harder for more and more New Hampshire families to afford to heat their homes. That is why many customers enter pre-buy contracts, hoping to lock in lower oil prices, But as we have seen recently, the fuel companies themselves are also struggling in this volatile energy market. And in several cases, oil companies have not been able to meet the promises they made to customers who entered into pre-buy agreements,” Gov, Lynch said. “That leaves the consumer without their much-needed fuel and without their money.”

House Bill 903 helps ensure the language of a pre-buy home heating fuel contract can be easily understood by the consumer, that dealers will show proof they can acquire the fuel at the agreed upon price, and that the dealer will reimburse the consumer for any undelivered pre-purchased fuel.

“Most of our home heating fuel dealers and distributors are highly reputable and already follow these procedures. But in these times of rising energy costs, we must be sure consumers are protected,,” Gov. Lynch said.

Prebuy Contracts for Heating Fuels

What is a pre-buy contract?

A pre-buy contract is a budget planning tool, not a guaranteed way to save money. It sets a single price for the fuel you will use during the heating season, regardless of price swings.

Should I pre-buy my fuel?

OEP cannot recommend what to do — each householder's situation is different. However, here are some things you might think about when making a decision: a) Do you believe the price of fuel is likely to rise or fall during the heating season? b) Can you afford to pre-buy all the fuel you expect to need? If the price of fuel falls below my pre-buy price, will the dealer lower my price? No. The dealer made a contract with his or her supplier to purchase the fuel at a certain price. Lowering the price to you would cause the dealer to lose money.

Is there any way I can get fuel at a lower price than what I pre-paid?

Perhaps. Some dealers offer a price cap, also known as “downside protection.” The cost for this option is added onto the standard pre-buy price, but you get the fuel at the lower of: a) the standard pre-buy price, or b) the regular price on the day of delivery to you. That means your price could be lower than what you pre-paid, but it will never be higher than the standard pre-buy price. Talk to your dealer about downside protection and what it would cost.

How likely is it that the price will fall during the heating season?

There is no way to predict this.

How can I be sure the dealer will actually deliver the fuel I pre-bought, and at the pre-buy price?

New Hampshire Law requires the dealer to have contracts with suppliers for the fuel, and the ability to pay for fuel sold in pre-buy contracts.

Should I change fuel dealers in order to get a better pre-buy price?

Some people do, some do not. Some householders consider overall dealer reliability and quality of service in addition to price when making such a decision. QEP cannot recommend what is best for you.

I want to manage my fuel costs but can’t afford to pre-buy. What can I do?

Many fuel dealers offer budget payment plans that spread heating costs more evenly over the course of a year. Check with your dealer for details and about other possible payment arrangements.

A final note on preparing for the next heating season:

The first item in planning for the next heating season should be to make your house as thermally efficient as possible and to be certain that your heating system is properly cleaned and tuned up. Proper heating system maintenance could save you up to 20% on heating fuel bills. For more information on lowering your heating bills, go to Winter Energy Costs , (taken from the Office of Energy Planning www.nh.gov/oep)

CHAPTER 376

AN ACT prohibiting delivery of oil to non-compliant underground storage facilities and establishing requirements for guaranteed price plans and prepaid contracts for home heating oil, kerosene, or liquid petroleum gas.

SPONSORS: Rep. C. Christensen, Hills 19.;Sen. Letoumeau, Dist 19

COMMITTEE: Resources, Recreation and Development

AMENDED ANALYSIS

This bill prohibits delivery of oil to non-compliant underground storage facilities, establishes a process for determining compliance, and establishes penalties for violations.

This bill also establishes requirements for guaranteed price plans and prepaid contracts for home heating oil, kerosene, or liquid petroleum gas.


STATE OF NEW HAMPSHIRE

AN ACT prohibiting delivery of oil to non-compliant underground storage facilities and establishing requirements for guaranteed price plans and prepaid contracts for home heating oil, kerosene, or liquid petroleum gas.

Be it Enacted by the Senate and House of Representatives in General Court convened:

376:1 New Paragraph; Red-Tagged Storage Tank or Facility; Definition. Amend RSA 146-C:1 by inserting after paragraph: XIV-a the following new paragraph:

XIV-b. “Red-tagged storage tanks or facility” means one or more oil storage tanks at a facility identified by means of a department-issued identification tag as being non-coiiipliant with department rules issued under RSA 146-C:9, VI for spill prevention, overfill protection, release detection, leak monitoring, or corrosion protection.

376:2 New Sections; Delivery Prohibition. Amend RSA 146-C by inserting after section 13 the following new sections:

l46-C:14 Delivery Prohibition.

I. No person shall deliver or cause the delivery of oil to a non-compliant storage tank or facility which has been red-tagged.

II. No owner or operator of a facility may deposit or allow the deposit of oil into an underground storage tank or facility that has a red tag affixed to the tank or facility’s fill pipe.

III. No person may deposit oil into an underground storage tank or facility that has a red tag affixed to the fill pipe.

IV. No person shall deface, alter, or otherwise tamper with a red tag so that the information contained is not legible.

146-C: 15 Non-Compliant Storage Tanks or Facilities; Red-Tagging Procedure. The department shall apply the following procedure in determining whether to red-tag a storage tank or facility:

I. The department shall perform an on-site inspection to determine whether a storage tank or facility is non-compliant with department rules for spill prevention, overfill protection, release detection, leak monitoring, or corrosion protection.

II. Upon. determining non-compliant status, the department shall provide written notification to the facility owner and facility operator on the nature of the operational deficiencies, the applicable regulatory requirements, options available for correcting the deficiencies, and the deadline for completion of the work.

III, Upon failure of a facility owner or operator to correct such operational deficiencies to the satisfaction of the department by the established deadline, the department shall issue a written notice of “Intent to Red-Tag” to the facility owner and facility operator, and shall provide notification to all oil delivery companies that have requested to receive such notifications. The notice shall include the deadline after which date department personnel will red-tag the non-compliant storage tank or facility. Before affixing a red tag to the fill pipe of an underground storage tank or facility, the agency shall document the level of stored product in the tank or facility.

IV. The department shall publish a current list of all red-tagged storage tanks and facilities in the state, and shall provide notification of list changes to all oil delivery companies that have requested to receive such notification. No person shall be liable for delivery of oil to a non-compliant storage tank or facility that is not included on the department list of red-tagged storage tanks or facilities.

146-C:16 Appeals.

I. A facility owner may request, in writing, that the department rescind the delivery prohibition imposed under RSA 146-C:14. The department shall approve a request to rescind the delivery prohibition, upon determining the following:

(a) The facility owner or operator has corrected the operational deficiencies identified during the inspection conducted under RSA l46-C:15,I;

(b) Fines and penalties assessed by the department against the facility owner or operator, if any, have been paid; and

(c) The department has re-inspected the facility and determined the storage tank or facility is in compliance, or an owner or operator has provided satisfactory documentation that operational deficiencies were corrected. Upon notification by the owner or operator documenting to the satisfaction of the departrpent that the deficiencies were corrected:

(1) The department may provide written notification to the owner or operator to remove the red tag.

(2) The department shall inspect the underground storage tank or facility within 5 business days of notification to determine whether the tank or facility is now in compliance with department rules, regardless of whether it has authorized removal of the red tag by the owner or operator. If, upon inspection, the department determines that the system is not in compliance and the department has not already authorized the removal of the red tag, the department shall immediately remove the red tag.

(3) Upon removal of the red tag, the department shall document the level of stored product in the tank or facility. If the red tag was removed by the owner or operator as authorized by the department, the owner or operator shall document the level of stored product in the tank or facility at the time of red tag removal. The removed red tag shall be sent back to the department with documentation of the level of product in the tank or facility at the time of removal. The red-tagged documentation shall be retmned to the department within 5 days of the removal of the red tag, or sooner if the department requests it.

II. Nothing in this section shall affect any authority of the department or the attorney general to enforce state law relative to oil dischinges or storage tank compliance, or to seek injunctive relief, cost recovery, penalties, and any other sanctions for non-compliance with applicable requirements.

III. Any appeal of department action under this section shall not stay or suspend the department’s action.

376:3 Penalties. Amend RSA l46-C:10, I to read as follows:

I. Any person who owns or operates an underground storage facility without a permit as required by this chapter, who fails to comply with a condition of that permit or of an order issued under RSA l46-C:9-a, or who violates any provision of this chapter or the rules adopted under this chapter relative to underground storage facilities shall be subject to a civil penalty of not more than $10,000 for each violation. Each day of a continuing violation shall count as a separate violation. Such a violation may also be enjoined by the superior court upon application of the attorney general.

376:4 New Subdivision, Petroleum Sales Contracts. Amend RSA 339 by inserting after section 77 the following new subdivision:

Petroleum Sales Contracts

339:78 Definitions. In this subdivision:

I. “Consumer” means a person who purchases home heating oil, kerosene, or liquefied petroleum gas for personal, family, or household purchases.

II. “Heating oil season” means a period of 12 months beginning no earlier than May 1.

339:79 Requirements for Guaranteed Price Plans and Prepaid Contracts for Petroleum.


I. A contract with a consumer that offers a guaranteed price plan, requires prepayment by the consumer, or similar contracts shall be in writing and shall disclose the terms and conditions of the plan. A solicitation for such a guaranteed price plan that could become a contract upon response from a consumer shall also be in writing with the terms and conditions disclosed in plain language.

II. A contract for the retail sale of home heating oil, kerosene, or liquefied petroleum gas to a consumer shall also indicate the (total amount of money to be paid by the consumer, the gallons committed by the fuel dealer to be delivered under the contract, the price per gallon, the payment terms, the duratioh of the contract, the remedies enforceable by the dealer against a non-performing consumer, and that the contract is secured as provided in this section. The information required by this section shall be in plain language and shall be printed in no less than 12-point boldface type of uniform font after the price of service described.

III. A contract that requires prepayment by the consumer or caps the price of heating oil shall comply with paragraphs I and II of this Section. Such contract also:

(a) Shall not require consumers to commit for a term of more than one heating oil season. Such contracts shall be offered no earlier than January 1 of the year in which the heating oil season begins.

(b) Shall require dealers to reimburse consumers at the contract price for any undelivered pre-purchased oil, within 30 days after the contract ends, unless the dealer and consumer agree to different terms,

(c) Shall include a clear explanation of the means by which the dealer will meet the obligations of the contract for the entire contract period, including supplier agreements, futures contrdcts, bonding, or a line of credit.

(d) Shall. not falsely claim coverage. Any dealer who falsely claims coverage or fails to maintain coverage until the completion of the contract shall be guilty of a class A misdemeanor, in addition to other penalties as provided in paragraph VI.

IV. No home heating oil, kerosene, or liquefied petroleum gas dealer shall enter intO a prepaid contract to provide home heating oil, kerosene, or liquefied petroleum gas to a consumer unless that dealer has, within 7 days of the acceptance of the contract, obtained and maintained any one of the following:
that guarantees that the dealer may purchase, at a fixed price, heating oil, kerosene, or liquefied petroleum gas in an amount not less than 75 percent of the maximum number of gallons that the dealer is committed to deliver pursuant to all prepaid contracts entered into by the dealer. The amount of such futures contract may be reduced to reflect any amount of home heating oil, kerosene, or liquefied petroleum gas already delivered to and paid for by the consumer;

(b) A surety bond, made payable to the attorney general, in an amount not less than 50 percent of the total amount of funds paid to the dealer by consumers pursuant to prepaid heating oil, kerosene, or liquefied petroleum gas contracts; or

(c) A letter of credit, made payable to the attorney general, from an FDIC-insured institution in an amount that represents 100 percent of the cost to the dealer of the maximum number of gallons that the dealer is committed to deliver pursuant to all prepaid contracts entered into by the dealer. The cost shall be calculated at the time the contracts are entered into.

V. Paragraph IV of this section shall not apply to budget plans under which consumers pay their yearly heating costs by making equal monthly payments.

VI. Failure to comply with this section shall constitute an unfair or deceptive act or practice in violation of RSA 358-A.

376:5 Effective Date.

I. Sections 1-3 of this act shall take effect July 1, 2007.
II. The remainder of this act shall take effect September 1, 2007.
Approved: July 18, 2007
Effective: I. Sections 1-3 shall take effect July 1, 2007.
II. Remainder shall take effect September 1, 2007.




BE AWARE OF FRAUDULENT ATTEMPTS TO STEAL MONEY FROM YOU

If you have questions or concerns on offers of solicitations, we encourage you to contact the Bureau of Consumer Protection at (603)271-3641, or 1-888-468-4454 or Rye Police Department at (603)964-5522



September 2008



WE WELCOME YOUR FEEDBACK RETURN TO SECTION