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Bulk LPG - Cheapest suppliers / supply route?
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Did they ask how much you use? I think I remember you saying that you are not spoiled for choice where you are just 3 big ones? Negotiate negotiate always worth it? of course as I say overestimating is what i would do?So I received a reply from Shell last Friday (very prompt :j) and got the following quote;
43.5ppl for the first 6 months,
£15/qtr tank rental,
2 year agreement, with a price increase cap of 3ppl in any 6 month period (which by my understanding means that the price cannot rise above 52.5ppl at the end of the contract).
I'll be going back to Calor to ask them to match this deal, or they can say goodbye to my custom....0 -
I forgot someone who used to work for Flo Gas was telling his bosses years ago (before the OFT looked into LPG) that they would lose bussiness if they kept up there behaviour. He said he was always getting hard times from people who were with flogas when he found who he worked for?0
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Did they ask how much you use? I think I remember you saying that you are not spoiled for choice where you are just 3 big ones? Negotiate negotiate always worth it? of course as I say overestimating is what i would do?
Shell asked how much I used on their online enquiry form. I didn't lie, but I did err on the side of caution
. And I view this as an opening bid - I will see what else they can offer as an inducement to go over to Shell.
As for Flogas (as you recall, my only other option :eek:) I'm not sure I even want to consider them after reading some of the horror stories on here!0 -
It seems there is some confusion (or at least "lack of clarity") in respect of LPG prices and their freedom to move (or otherwise). I think this is largely down to the complexity of the contracts, and the fact that contracts can be so very different from supplier to supplier, so I thought it might be useful to put together a brief summary.
There are basically only three types of agreement you are likely to see as a domestic user:- a fixed-price agreement;
- a "capped" price agreement and
- a "variable" price agreement.
Fixed Price AgreementIn a fixed price agreement, the supplier undertakes to supply LPG at an absolute fixed price per litre. This is most common when the initial price is fixed for a period of six months from signature of contract. This may be enshrined in black and white in the "Terms and Conditions" for all customers, or may be a customer-specific agreement made with the supply company as a condition of contract signature and detailed in writing on the contract document that you actually sign. Shell, for example, in their 2010 contract state (clause 6.4) that
so if you are a Shell customer, you know that your price is fixed for the first six months. Once any agreed "fixed price" term ends, the agreement will then become either a variable price agreement or a capped price agreement, dependent on the small print. If you have a fixed price agreement, or you are in a fixed price period of your contract, then your supplier must honour that price (subject to any rights reserved by the supplier to impose surcharges or other "exceptional" price increases as detailed at the end of this post)."The current Gas price (as shown on the front page) will be fixed for the first 6 months of this Agreement..."Capped Price AgreementThis, I think, is where the most confusion arises. In the past, some contracts specified an additional period following any initial fixed term during which any price rise was absolutely capped at a specified limit. In the case of Calor, for example, they used to include a statement to the effect that they couldn't increase the price by more than 2.5ppl in any six month period in the 12 months following the expiry of any Special Entry Price, (ie, if you had a "Special Entry Price" fixed for the first year of your contract, price rises were then capped capped in year TWO). Again, any such cap is binding on the supplier and they must not increase the price by more than the specified amount. Sadly, however, it seems that this kind of capped price contract died when the Competition Commission Order came into force on 13th April 2009 (and probably long before). I am certainly not aware of any current contracts that include such a great clause.Variable Price Agreement
This is everything else.
Leaving Extra Gas aside for the time being as they openly operate on a business model whereby the price they charge is supposed to be dictated more or less directly by what they are paying on any given date, the companies that I would describe as the more "reputable" will offer an escape clause in their contract. It is important to note that this is not a price cap, merely a clause that gives the customer the opportunity (should they wish to go through all the hassle of finding a new supplier), to terminate their contract in the event that prices are increased by more than a pre-determined amount. Companies that offer such "protection" include Shell and Calor, but be warned, these "escape clauses" can be quite different, so take care to note not just the headline ppl amount, but also the time period over which any such rise must occur.
In respect of invoking such "escape clauses", LittleVermin recently posted (http://forums.moneysavingexpert.com/showpost.php?p=42463348&postcount=878):
In the case of Shell, they are explicit in their contract that there will be no uplift charge if you are terminating the contract by invoking the right to terminate conferred by the contract in the event of a price rise in excess of the predetermined limit. I cannot speak for Calor or any other supplier in respect of this."I'm told - though I cannot verify this - that uplift charges of £500 for a surface tank and £1000 for an underground tank have recently been made."
The less "reputable" companies do not offer even this limited level of protection. For example, Flogas baldly state:
And if you read that carefully, you will note that it does not say reasonable - so according to the letter of the contract, they can put forward just about any rational argument they wish (however reasonable or unreasonable) as reasoned justification."Where the cost of supplying LPG increases due to an increase in the cost to us, we retain the right to pass on such increases to you but will notify you reasonably in advance of the same, giving you a reasoned justification for the increase".
In such cases, short of taking the matter up with Consumer Direct (and I would strongly suggest that you do!) or taking direct legal action on the basis that the contract is legally "unfair" and allows for unfettered price rises, you have little choice but to grit your teeth with every price rise and make darned sure that you never sign with them again.Surcharges and Other "Exceptional" IncreasesConfused? I hope not - but basically, it's all down to reading the small print carefully and critically to make sure that you fully undertsand it. With some contracts, this can be pretty straightforward; with others, I am afraid, less so.
There is a nasty sting in the tail here in some contracts. Some companies (although by no means all) explicitly include the right to include a surcharge or to increase the price beyond any stated limit, should the wholesale price rise by more than a predetermined amount. For example, LPG Homeheat included the following clause in their 2009 contract in respect of "fixed price" agreements:
and BP included the following "escape-clause escape-clause" (if you see what I mean) in their 2009 contract:4. (a) "Where a "fixed price" agreement is entered into we reserve the right to add a surcharge to the price if the monthly ANSI agreed price increases by more than 20% above that of the agreement date."
It is probably worth scouring the small-print of your contract in advance, to check whether or not it permits the supplier to impose any surcharge. Prices seem to be more than usually volatile at present and I don't think it will be long before we see the bigger companies trying to slip price rises in, thinly veiled as surcharges (see my post on Shell's surchages of 2008). Most of the contracts that I have seen do not include any right for the supplier to impose this kind of "surcharge", so check your contract. Unless it does explicitly permit your supplier to levy a surcharge, the chances are that they have no contractual right to do so and would therefore be in breach of contract, and you will need to hit them hard and fast if they try to pull that particular nasty little trick!5.6 The Buyer will not be entitled to terminate the Agreement under Clause 5.4 [the cusomer's escape clause] if the value exceeding the Maximum Price Increase reflects an equivalent increase in the cost of LP Gas as measured by reference to the propane market. The market benchmark used will be the spot rate for large propane cargos shipped to North West Europe. To rely on this Clause 5.6, BP must notify the Buyer of the current benchmark rate and the historic benchmark rate at the time BP's standard retail price was last changed so as to demonstrate that the value exceeding the Maximum Price Increase is no higher than the increase in the cost of LP Gas.0 -
Hatelpg - Many thanks for your post above.
It is a refreshing change to have explained, in considered terms, unlike some posters, the various pricing strategies that are employed.
It has to some extent, make me review my own rants regarding the 'capped' price issues.
As you point out, I guess it's necessary to just grin and bear it in these volatile times and to regard lpg suppliers on their current and past performance when deciding who to go with or switch to.
My remaining rant would still be the obfuscation that prevails with suppliers regarding their 'standard' tariffs. I do realise that it would not be in the interests for all suppliers to follow the Extragas model, but surely they could do better in some respects?0 -
When I asked for quote from countywide 14 months ago they were ludicrously high higher than you are now??
This really is a lottery!
I've just been quoted 43p per litre by Countrywide for a new contract. I'm currently with Calor (have been for over 20 years), paying 43p, but I have just given them notice after the recent contract breaking 4p per litre rise.
Shell have quoted me 45.5p or 47p fixed for 12 months.
BP have quoted 53p.
I'm in Hampshire and use about 4000 litres per annum.0 -
As you point out, I guess it's necessary to just grin and bear it in these volatile times and to regard lpg suppliers on their current and past performance when deciding who to go with or switch to.
My remaining rant would still be the obfuscation that prevails with suppliers regarding their 'standard' tariffs. I do realise that it would not be in the interests for all suppliers to follow the Extragas model, but surely they could do better in some respects?
Yes. And No!
As I have said here and elsewhere a number of times, there is no substitute for reading your contract in depth and understanding it fully.- If you are lucky enough to have a fixed price or capped price, make sure you enforce it - some suppliers seem to have, shall we say, something of a "blind spot" when it comes to adhering to such clauses!
- If you have an capped rise escape clause, think carefully and at least consider the economics of moving whenever you are hit with a price rise that gives you the opportunity to invoke such a clause.
- If you have a truly variable price contract and get hit by a steep price rise or rises (such as the two recently imposed by Flogas), consider asking your supplier for a full written and qualified justification, with supporting figures. If they won't supply this, or the justification they supply is not reasonable, give serious consideration to making a formal complaint to Consumer Direct. Even if you are with a supplier that supposedly tracks the wholesale price - it is probably still worth considering whether any increase is justified. Contract law does not allow contracts that enable suppliers to impose unfettered and unjustified price rises (see my post on unfair contracts). Note also, that the OFT ruled on a previous Flogas contract in 2005 and expressed concerns over the pricing policy, but reserved judgement at that time (see post #582). Not only might this help you to extricate yourself from your contract or get a better price, it is the only realistic way we have of making the worst of the suppliers modify their behaviour.
As far as LPG contracts as a whole goes, you are bang on the money, in my opinion. There are many ways to skin a cat, and I could suggest a number of alternatives that would be equally fair to all suppliers, whether large or small, and would protect both the supplier and the customer from severe fluctuations in the LPG price in either direction. The current OFT Off Mains study (see post #820 for more details) is a perfect opportunity to put forward such concerns and any viable alternatives that you might consider worthy of consideration.0 -
Even the Department of Energy and Climate Change has no idea what the current price of LPG should be (or how to make any kind of sensible comparison between on-grid and off-grid energy prices, for that matter!). The following is an extract from a written answer given by Charles Hendry on 4th April 2011:
See http://www.theyworkforyou.com/wrans/?id=2011-04-04a.50481.h for the full text.Off-grid fuels sold by the litre are domestic heating oils-either Standard Grade Burning Oil (SGBO) or Gas Oil-and Liquid Petroleum Gas (LPG). DECC does not currently have any prices for LPG.
If nothing else, this is further evidence of the opacity and secrecy inherent in the LPG market and is probably another point worthy of inclusion in any OFT submission!0 -
Good to see that the Daily Mail is on the Ball and has picked up on this story so quickly. And apparently have no undertsanding whatsoever of how the LPG market works, either!
If we LPG users thought we had it bad, maybe it's time to shed a tear for some of the less fortunate Oil users out there:
See http://www.dailymail.co.uk/money/article-1373785/Homeowners-burned-oil-gas-hikes.html for the full story.Prices vary wildly across the UK, with some suppliers charging 50p a litre while others charge £2 a litre, according to Consumer Focus.
Still, even if not perfect, I guess it's still all publicity, and as far as I'm concerned, there's no such thing as bad publicity in this respect.0 -
This really is a lottery!
I've just been quoted 43p per litre by Countrywide for a new contract. I'm currently with Calor (have been for over 20 years), paying 43p, but I have just given them notice after the recent contract breaking 4p per litre rise.
Shell have quoted me 45.5p or 47p fixed for 12 months.
BP have quoted 53p.
I'm in Hampshire and use about 4000 litres per annum.
Calor seem quite reasonable considering you have been with them for so long, normaly they are charging signicantly more over time. I can only assume you have been a hard negotiater? at least at the end of your last contract???
43p sounds reasonable and BP are clearly not after your business at 53p. Have you told them (BP)about the 43p.
BUT 4000 litres is a lot of LPG I assume you have told them this?? I have always thought that cost of housing therefore land therefore the cost of the depot would be reflected in the price. But clearly not at 43p as I am pretty sure that Countrywide asked for 50ppl+ 14 months ago. Maybe there depot is a long way away........like Madagascar.0
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