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Support grows for for House bill that would place restrictions on pre-buy oil contracts

State House Bureau

April 08. 2014 7:30PM

CONCORD — Most heating fuel industry organizations support a bill that would make failure to deliver heating oil or fuel a violation under the state Consumer Protection Act.

At a public hearing Tuesday on House Bill 1282, heating fuel industry representatives said the number of companies who fail to make good on pre-buy contracts is very small, but they give everyone in the industry a black eye.

Robert Sculley, executive director of the Oil Heat Council of New Hampshire, said “They are a very small of percentage of companies, but it gets big headlines,” noting the Fred Fuller case this winter when pre-buy customers failed to receive heating oil when it was supposed to be delivered.

But one heating oil dealer said the new bill does very little to protect those who have paid for the heating oil in advance.

Tom Rymes of Rymes Propane and Oil, told the committee companies that want customers to pay more than a 20 percent deposit for their oil should have to either have a surety bond or letter of credit, something allowed under the state law but companies do not use because of the cost.

“Nothing in this bill would have done anything to help anybody with this winter’s problem,” Rymes told the Senate Commerce and Consumer Protection Committee. “Nothing could have been done to get anyone’s money back.”

But Joseph Rose of the Propane Gas Association of New England said bonds would add 8 to 10 cents a gallon to the cost. “That will really drive up costs to consumers,” he said. “Energy prices are already too high.”

Under the bill, companies would be prevented from offering pre-buy contracts before May 1. Some companies offer pre-buy contracts after the beginning of the year.

The later date would prevent financially troubled companies from using customers’ money for the next heating season during the current one, several said and that is positive.

Current law requires dealers to have 75 percent of the pre-buy fuel covered through futures contracts, surety bond or letter of credit. The bill adds existing inventory to the list.

The bill also requires dealers to register with the Secretary of State’s Office and file an annual report demonstrating how the company will satisfy its obligations to consumers.

And the bill would make failure to deliver heating oil under a prepaid contract a violation of the consumer protection act. In most instances the offense would be a class B misdemeanor but it could be increased to a class A misdemeanor under the bill.

That section of the act places the responsibility where it belongs, on the dealers, said Rep. Gary Richardson, D-Hopkinton. “It simply says if you accept pre buys, you have to live up to the obligation,” he said.

Senior Assistant Attorney General James Boffetti, who heads the consumer protection division, said his agency is giving the bill its qualified support.

He said the real problem is how to secure pre-buy contracts. Despite the changes in the bill, “we’re still left with insufficient security with customers’ money,” he said.

He said he fears requiring dealers to register with the Secretary of State will give consumers a false sense of security.

The committee did not make an immediate recommendation on the bill.

The bill has already passed the House.

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