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State plans to probe Fred Fuller Oil's pre-buy contracts

New Hampshire Union Leader

January 13. 2014 8:07PM

With Fred Fuller Oil and Propane now apparently caught up on fuel deliveries, state officials say they will look into whether the owner has complied with state law — inadequate as it is — that requires some financial guarantees for prebuy oil customers.

New Hampshire consumer protection chief James Boffetti spoke Monday, after spending last week overseeing a crisis of missed and late deliveries for Fuller Oil, a crisis that started during the cold snap of early January.

"Mr. Fuller needs to regain the trust of his customers. That's his job, reassure his customers to make sure they stay with him," said Boffetti, an assistant New Hampshire attorney general.

On Sunday, the state shut down an emergency hotline. The hotline started a week ago today, when the company said its phone system was not working and it could not take orders of customers running short of oil.

More than 1,850 customers used the hotline, according to Gov. Maggie Hassan. A recorded message at the hotline said it is no longer staffed and urged callers to contact Fuller Heating Oil directly.

"It may take a couple times to get through, as they are experiencing heavy call volumes," the message says.

Fuller Oil lawyer Simon Leeming said Monday that the company appreciates the efforts the state undertook when it experienced a perfect storm of cold weather and its telephone equipment malfunctioned.

He said the company had to use overtime to get tanks filled last week. This time of year it is virtually impossible to find and hire additional drivers with the proper licenses to deliver fuel oil, he said.

He said Fuller Oil was caught up with back deliveries by Friday, and the telephone system was properly working. By Saturday, hotline operators were referring callers to the company, he said.

Boffetti said the weather played a role in Fuller Oil's problems. And he said the company absolutely had problems with its telephone equipment.

Boffetti said now he will turn his attention to company documents to see if Fuller complies with state law governing prebuy contracts. The law requires a fuel oil company to secure a futures contract for 75 percent of a heating oil prebuy within seven days of signing a contract. As an alternative, the company can show a bond or a letter of credit.

"As inadequate as that statute is, we want to make sure he's complying with it," Boffetti said. A violation of the law could result in felony charges against the company, a misdemeanor charge against a company official or a civil case that could generate fines of up to $10,000 per violation.

Boffetti said the state could easily obtain a subpoena for the records, but there is no indication from Fuller that the state will have to.

Leeming said, "We've been cooperating since Day One." He would not discuss how the company guarantees its prebuy contracts.

As written, the current law does not guarantee that prebuy money paid by a customer will be available for the next heating season. The attorney general favors a change that would require a dealer to place prebuy money in escrow, obtain a bond or have a letter of credit to purchase oil for the upcoming season.

At present, a prebuy payment is an interest-free loan to an oil company, Boffetti said. "He can use that money for anything he needs to run that business."

A bill supported by the attorney general was set to be killed last week in the House, but it was pulled off the consent calendar. It's expected to be taken up later this month.

Leeming indicated that Fuller Oil will not penalize current prebuy customers who turned to another dealer to fill their tank last week, an action that is a violation of the prebuy contract. But he said he would not discuss damages — such as frozen pipes — that might have taken place when a house ran out of heat.

"As a lawyer," he said, "I'm not allowed to make a blanket statement."

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