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    PERC Asks Propane Industry to Help Improve Metrics on Propane Sales and Odorization

     

    Download PERC Asks Propane Industry to Help Improve Metrics on Propane Sales and Odorization 


    WASHINGTON, DC, February 9, 2007 -- The Propane Education & Research Council (PERC) is launching a major campaign in 2007 to improve the accuracy and usefulness of the propane industry’s metrics on odorization and sales of propane.  The campaign’s focus is to expand industry participation in the annual Sales of Natural Gas Liquids and Liquefied Refinery Gases survey conducted by the American Petroleum Institute (API), and the terminal operators’ odorization reports that PERC uses to benchmark its assessment collections.

    “Unlike agriculture check-off programs whose sales information is collected by the government on a mandatory basis, both of the propane industry’s key odorization and sales metrics are collected voluntarily,” PERC President and CEO Roy Willis explained. “PERC cannot change that, but we can encourage the industry to work with us, to participate in both reports, in order to improve their accuracy and to ensure a level playing field for assessment collections. That’s the purpose of this campaign.”

    API Survey. PERC has invested considerable time and professional effort in improving the API Survey and increasing its reliability, but Willis said the single most important improvement in accuracy depends on increasing the industry’s response rate substantially. Although the 2005 survey saw a small increase in industry participation, only 58 percent of marketers responded to the survey.

    “The API Survey is important for three reasons,” said PERC Chairman John Gawronski, Targa Resources (Houston, TX). “First, it is our industry’s basic benchmark for overall propane sales and assessment collections. Secondly, it is our primary source of data on market-specific propane sales – that is, how much propane goes to residential, commercial, engine fuel, agriculture, etc. Finally, the API Survey’s state-by-state sales table is critical to the allocation of state rebates, which accounts for one out of every five dollars PERC oversees.”

    “When marketers don’t respond to the API Survey – or don’t fill it out completely – that inevitably creates errors in the state-by-state and market sector statistics,” Gawronski added.  “That non-participation erodes the survey’s accuracy and makes survey results more volatile year to year, which can affect the amount of rebate dollars each state is eligible to get.”

    The API Survey on 2006 propane sales is being mailed in March to all active marketers. All marketers are encouraged to reply to the survey.

    Odorization Reports. The Propane Education and Research Act (PERA) requires companies that own propane when it is odorized or that import odorized propane to pay the half-cent per gallon assessment. Neither the states nor federal government collect propane odorization or import information. Moreover, PERA does not specifically require terminal operators to disclose to PERC how much propane they odorized for others, so PERC is encouraging them to expand their voluntary participation.

    Since 1998, PERC has requested all terminal operators to submit monthly reports on volumes odorized and the owner of the propane odorized. “The Terminal Operator Reports are an important cross-check for PERC to verify the accuracy of assessment payments,” Willis said, “and without these reports PERC must try to find the data elsewhere, and that’s very difficult without government sources to turn to.”

    PERC has the right under PERA to bring a lawsuit in federal court to compel payment of assessments, but the Council has not used that authority yet. PERC also can charge interest and late fees on assessments not submitted in a timely manner.

    To improve its collections data and systems, PERC set up an Assessment Collections Task Force comprised of Council members. The task force is chaired by W.J. (Bill) McAdam, president and CEO, Aux Sable Liquid Products (Morris, IL), who said the objective of the task force is to “make sure that everyone who should be paying the assessment is paying.”

    “We believe that the assessment collection process can be made more effective and easier to follow for assessment payers and that the monitoring/checking process used by PERC can be improved” ” McAdam said.  “The Council members and PERC staff are dedicating significant time and energy to identifying and implementing improvement steps to help meet the task force’s objective”   The task force will issue a report later this year on its findings.

    “Many of the under-collections in assessments may be attributed to a misunderstanding of the processes and procedures used by the industry,” said PERC CFO and Vice President of Administration Jim Harris. “One step all marketers can take immediately is to review their internal systems to ensure that PERC assessments are properly accounted for.”

    PERC is enhancing its assessment support systems, including publishing updated guidelines, electronic remittance forms, an informational web link, and help desk support.  PERC also has adopted a strict confidentiality policy that precludes any Council or staff member from accessing any company’s volume or assessment information.

    All industry owners and managers are urged to make a renewed effort to ensure that their company participates in the annual API Survey and that their propane assessment is remitted timely.