47kg Propane Calor Gas Prices - What are you paying?

The_Landlord

All supply contracts carry pros and cons. No, I do not own the tank and the reason for this I'll explain later. You can negotiate a yearly contract and it works exactly the same as commercial electricity or mains gas contract. Although you may have to agree to a lengthier contract to get the best negotiated rates : Take mains gas for example as a model, Transco (British gas) own all the pipework where the gas is 'held'. They have to make available a charge for all other suppliers for using their pipework. This charge is regulated and is the same for every supplier, including B.Gas which is why Transco (a separate company) had to be formed, who own all the pipework and supply network to every property. Every property has a regulated 'price' set by the regulator and payable to Transco. Even BG has to pay Transco, even though they overall own Transco. That price is exactly the same for every supplier for that particular property. Therefore the whole thing presents a 'level playingfield' for any supplier. The price you pay is therefore made up of 2 parts, the fixed cost of using the pipework and the cost of the gas. Since the first part is fixed, how much the individual gas supplier charges you is down to the overheads they have, their ability to negotiate their bulk supply, their ability to forecast the consumption over the next 12 to 18 months and how much profit they want to put on. This is where competition comes into play. If one gas company runs it's business efficiently, buys at the right price, correctly estimates it's consumption so that it doesn't over buy (costing them storage fees with Transco) and doesn't under-buy (causing penalty late buy prices, which could be twice as much per therm as they have quoted their customers) and keeps its overheads low, it can offer a low price but maintain it's profit margin and therefore be cheaper than the next. The reason for contracts is so that a supplier can have a reasonable estimating of the amount of gas it is going to need to satisfy it's customers and the longer those contracts are the further into the future they can risk buying. In a rising market they will buy as far into the future as their customer contracts will allow, if the market is falling they may hold off buying too much until they feel the price has bottomed out. How well they can trust their buyers to make these calls is a big factor in what they can offer to customers. This is the risk the supply company takes and WHY they build in such margins to allow for error.
Propane is now able to mimic this formula with some limitations. The new supplier will buy the tank at a regulated price from the original installer. The sale cannot be blocked by the original owner and neither can the price be altered. This is the fixed part. The propane provider forward orders its propane from the manufacture and agrees a price. Since price fluctuates, for the supplier they will try to provide a price which is as stable as possible and this means that they build in a fair degree of margin to allow for error. This is the part you can negotiate down.The deal you strike with the incoming supplier is up to you and the supplier. The sort of thing you can negotiate are the price per liter which can be a fixed low rate for a period, typically 3 to 6 months and this needs to be negotiated to be during the winter months so you benefit from the highest consumption. (Be sure to get topped up a day or so before the low fixed price deadline runs out). Contracts can be 12 mnths, 18mnths 24mnths or 36mnths. Personally I push for a 12 mnth and they for 36mnth +. so we meet in the middle by a degree of lower pence per liter, fixed low price period trade off against a 18 -24mnth contract. Once you have this deal DON'T sign! Now is the time you go back to your existing supplier and push them for a better deal to retain your business.
Now ; owning your own tank! The other option of course is to Buy you tank from the supplier and this leaves you free to negotiate prices for every fill up. Sounds good right? There is no fixed regulated price for you to buy your tank and the supplier can ask you whatever they choose. Of course you can always ask them to remove the tank from your property but remember if you buy your on tank it must be fitted by authorised gas installers and be certificated. I think this is far too much work and risk because if anything does go wrong with the tank or the pressure regulators or the pipework it's all down to you to fork out for the lot! Do you really want to spend an hour every time you need a gas top up? I insisted on having a 1 ton tank installed from the beginning whereas most domestic tanks are 1/2 ton. I know when I negotiate a fixed low rate that I can accommodate twice the amount at that lower price than normal and the sales rep never asks what size your tank is, they always assume, if you are domestic, you are 1/2 ton. There is one futher BIG risk with owning your own tank and for that matter changing suppliers and that is Current compliance. Legislation on installation of bulk tanks keeps changing and if your tank is compliant in say 2009 when it was installed by the original supplier then they can continue to supply, even if the tank now falls below current installation standards as it is considered a 'continuation' of supply. Whereas a new supplier taking over an older tank has to ensure it meets CURRENT standards or they cannot supply, it's treated like a new installation! Now if you own that tank then it is YOU that has to pay for all the modifications including moving the tank, building blast walls, removing trees or whatever is required, that's a risk I'm not prepared to take. If the incoming supplier is prepared to take on your tank then it is they who has to ensure it meets current legislation for start of a new supply.
Just so you know, Until 2005 I ran an independent utility investigation company where we negotiated with all suppliers (gas, elect, water, sewerage, on behalf of industry and businesses to reduce their expenditure, sometimes by 60% through analysis change of tariffs and hard negotiations playing one supplier off against another. On other occasions the saving might only be 10%.
Anyway this is getting off the subject of bottled gas, but you did ask!!

nwigg

Hello, we are currently paying £54.60 for 47kg bottle (delivered) in Hampshire (near Petersfield). This has risen from £49.35 in November 2011. We converted from storage heaters when we bought our house last March. Received a partial grant to remove the old storage heaters and buy a new boiler Valliant Ecotech plus and complete heating system. Since Nov last year to mid September this year we have ordered 18 bottles (as much as 2 every 2 weeks in Jan/Feb to a 16 week gap Mid may-mid sept). We have a 4 bed house with 2 young children. We have had cavity wall insulation, new windows and doors and roof insulation (thought we may as well go for it, not planning to move again!). Decided against a large tank with the reg's around distance, cost of sinking it and being tied into a contract (or cost for new tank to change). Our supplier is great, always very quick to deliver when we know we are low (or have run out on Christmas Day!!!!) .

fallen121

47kg £70 delivered in East Fife. But only one company for MILES, so even though we have a truck we would burn expensive diesel trying to fetch it ourselves from Edinburgh and we don't have a trolley.

mardatha

£69 delivered in the Borders, again only one place will deliver to me

nesssie1702

£87 for a 47kg cylinder here in the Hebrides!

mardatha

My god!! xxx you have my sympathy pet!

bobhawke

fallen121 wrote: »

47kg £70 delivered in East Fife. But only one company for MILES, so even though we have a truck we would burn expensive diesel trying to fetch it ourselves from Edinburgh and we don't have a trolley.

mardatha wrote:

£69 delivered in the Borders, again only one place will deliver to me

Where in Fife and Borders are you two? Those are some silly prices :mad:

frugalstephen

Still £97 here in Northern Ireland, I think you'll find that when it comes to ripping folk off, we do it best!! :j

mardatha

Bob if anybody is a lot cheaper in Edinburgh then please PM me his phone number because I'm top end of the Borders with an Edinburgh postcode and he just might deliver to me...

LittleVermin

If your options for buying bottled gas have decreased now BP and Flogas are no longer competitors you might want to write to the Office for Fair Trading - by November 1st.

Here's the web page for info:
http://www.oft.gov.uk/OFTwork/mergers/Mergers_Cases/2012/Flogas

and here's who to write to:

Please send written representations about any competition or public interest issues to:
Tom Heideman
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London EC4Y 8JX
Email: [EMAIL="%20tom.heideman@oft.gsi.gov.uk"]tom.heideman@oft.gsi.gov.uk [/EMAIL]
Fax: 020 7211 8916

Some of the people who use Bulk LPG - in tanks - are also writing. See here.
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