Detroit Lakes man battled company over Ferrellgas charges as state files lawsuit
Minnesota Attorney General Lori Swanson says something stinks about the way Ferrellgas does business in Minnesota -- and it isn't the propane.
Swanson on Monday filed a lawsuit against Ferrellgas, LP, a large national propane energy company, alleging that it deceived Minnesota consumers about the rates and fees charged for propane for heating.
The news didn't surprise Dean Leitheiser, who lives a few miles northeast of Detroit Lakes.
He dumped Ferrellgas about a year ago and switched to another propane provider, after repeatedly having to battle Ferrellgas over bills that were double what they should have been.
"Several years ago, they delivered propane to my house," he said. "I unfolded the bill and looked at it and said 'Holy cow,' and stuck it on my refrigerator.
"It was at that point where everything was going up, I mean everything -- I thought propane was part of it," Leitheiser said.
His son-in-law, who had just bought propane from another supplier, noticed the Ferrellgas bill on the refrigerator and pointed out that Leitheiser had been billed about twice the going rate.
"I called (Ferrellgas) and asked what was going on," Leitheiser said. "They said it must have been a mistake with the meter on the (delivery) truck.
"They asked what I wanted them to do -- I said I wanted it at the market rate, I'll pay what's fair."
He waited until he received a revised bill and paid it.
The next time he had propane delivered from Ferrellgas, it happened again -- the bill was nearly twice the market rate on the day of delivery.
"The first time, sure, a mistake can be made, but a second time?" said Leitheiser. "I called up and asked, 'Hey, what's going on here?'"
Angry words were exchanged, he added, and, "I said, 'How many people has this happened to today? Am I one out of 100? There's no way I should have to do this -- negotiate a price when all the other dealers in town are within one or two cents.'"
Again, the bill was adjusted to reflect the day's market price for propane.
Then it happened a third time.
Leitheiser said he was so angry "I was walking on a cloud ... now I'm wondering not only about myself, but everybody else in several states."
After a "verbal battle" over the phone, the bill was adjusted again, and Leitheiser told Ferrellgas to come pick up their tank.
"I told them if you don't come and get it, I will take it out," he said. It was picked up the next day.
Leitheiser sits on the board of Bakke Lutheran Church, and he said the church had the same over-billing problem with Ferrellgas until it switched providers.
A Ferrellgas manager in Detroit Lakes referred calls to the company's headquarters in Liberty, Mo. No one returned a phone message left with the public relations department there.
In a recent Star Tribune story, the company insisted it hasn't violated any laws.
Jim Saladin, a spokesman for Ferrellgas, said "We're very upfront about pricing with anyone who asks."
The attorney general's lawsuit alleges that Ferrellgas failed to disclose specific per-gallon prices to consumers when they called to fill their tanks. Further, it represented in its fine-print contracts that it would charge "our current market price," even though Ferrellgas often charged above-market rates and in many cases charged rates substantially above the average market rate on file with the state and federal government.
"For many people living in rural areas, the only available energy source to heat their home is propane," said Attorney General Swanson.
"This propane energy company deceptively failed to disclose its prices and fees and then twisted its fine-print contract language to charge above-market rates," she charged.
Leitheiser is concerned about propane customers paying too much for fuel in tight economic times.
And he worried about those on fuel assistance being cheated.
Energy suppliers are paid via electronic transfer, from an account set up in the name of those who qualify for energy assistance, said Nancy Cummings, energy programs coordinator with Mahube Community Council.
Households receive the bill from providers and need to make sure it is accurate, or their energy assistance money won't last as long.
Mahube, which administers energy assistance programs in Becker, Mahnomen and Hubbard counties, has been aware of billing problems with Ferrellgas for several years.
"Two winters ago we heard about this problem," said Cummings. "We sent out letters to people to watch their billing."
Mahube has no immediate plans to drop Ferrellgas from its list of providers. The agency can warn customers to be careful, but is supposed to be neutral and is not in a position to dictate which company people buy propane from, Cummings said.
"Households choose their vendors," she added.
When confronted with over-billing, Ferrellgas often adjusts the bill to lower-than-market rates, which actually saves money for those who are alert and call the company to get their bill adjusted, said Cummings.
The attorney general's lawsuit alleges that Ferrellgas' advertisements were designed to create the impression among consumers that the company charges a competitive market price for its propane. When consumers called to fill their propane tanks, Ferrellgas did not inform the consumer of the actual price to be charged.
The company also represented in a 24-page contract that it would charge "our current market price" for propane gas.
The lawsuit states that the rates charged by Ferrellgas often exceeded competitive market rates and were at times double the average rates charged by the propane industry, as filed with state and federal governments.
The lawsuit also alleges that Ferrellgas charged Minnesota consumers significant fees without adequately disclosing them, including "low usage" fees of up to $199 for consumers who in its judgment did not use enough propane, as well as tank pick-up fees of up to $99.
In 2008 Ferrellgas reported sales of approximately $2.2 billion. In 2007, the Arkansas attorney general filed a similar lawsuit against the company, for charging fees that were not adequately disclosed. Ferrellgas has approximately 50,000 customers in Minnesota.
Attorney General Swanson noted that with winter approaching, many Minnesotans will soon be filling up their propane tanks for the winter.
She cautioned consumers to ask suppliers to document their actual per-gallon price before filling a tank, as well as to disclose any fees.
The lawsuit, which alleges that the company violated the state's consumer fraud and deceptive trade practices laws, was filed in Ramsey County District Court, and seeks restitution for consumers, injunctive relief, and civil penalties.
To file a consumer complaint, contact the Minnesota Attorney General's Office by calling 1-800-657-3787 or 651-296-3353. Consumers may also download a Complaint Form from the state's Web site, and mail the completed form to the Attorney General's Office at: 1400 Bremer Tower, 445 Minnesota Street, St. Paul, MN 55101-2131.