Crossing Consortium FAQ
Updated April 13, 2019
What is this all about? In 2015 we joined another neighborhood in Washington Crossing to combine our “purchasing power” for propane. We talked to multiple suppliers and selected Cress. For 2019-2020 we have again selected Cress, now part of AmeriGas.
Do I need to join the Consortium? No – it’s entirely up to you. The Consortium will be asking for competitive bids each year from at least two suppliers and this will lower the cost per gallon for members.
Do I need to buy my tank? Except in rare cases, your tank is owned by Cress which means you are locked into Cress pricing. By purchasing the tank you can buy propane at the Consortium Price which is fixed for any given year and cannot increase. The tank buy-out prices have been negotiated by the Consortium and are very low compared to an individual purchase. This accelerates your payback even more.
What does it mean to own my tank? – You have much more flexibility in where you buy and what you pay. If your tank is currently owned by Cress (or another company), you are forced to purchase propane from them at generally the highest pricing tier. By owning it, you can benefit from lower pricing offered by a different supplier. It’s also seen as a benefit when you list your house for sale in that a new owner is not locked into your supplier.
Are there negatives about owning my tank? – once you own your tank you are responsible for it which includes repair should that be needed. This is very uncommon – one supplier said they did 6 repairs in a recent year out of thousands of tanks. Underground tanks last upwards of 40 years according to some sources. Regardless of ownership, there is a cost to maintain and depreciate the tank which you will pay for one way or the other. The suppliers have been charging you about .20 more per gallon to take this responsibility.
Is there anything else I should know? We have asked the suppliers to inspect tanks regularly as part of the Consortium arrangement. You should check with your homeowner’s insurance company to see if there are insurance-related issues that apply to you.
Can I join the Consortium and still have Cress own my tank? Yes, and if Cress is the chosen supplier for any given year, you will have the advantage of a somewhat lower price, but not the lowest price. The downside is that if the Consortium chooses another supplier for a given year, you will have to continue to purchase propane from Cress, in which case you will likely be back to full market price.
How do I cost-justify my tank purchase? – Easily – our average tank buyout is around $600, and our average consumption is about 1,500 gal/year. Even without a Consortium, you pay about .20 less per gallon when you own the tank. .20*1500= 300/yr, or about 2 years to pay back. With the Consortium we expect to be at least .60 less than full market price in which case the payback is less than one heating season.
What if I decide later I don’t want to own my tank? All the suppliers we talked to will gladly pay you for your tank to be able to lock you into their delivery system. That is their preferred approach.
I have had run-out problems in the past – will this help? – Since propane is a commodity and does not differ from supplier to supplier, customer service is an important differentiator. Negotiations with the suppliers have focused on higher levels of customer service, including filling tanks earlier and even providing a credit if there should be a run-out situation. We expect run-outs to be greatly minimized within the Consortium and there are some things you can do to prevent a run-out.
When will the 2019 details be finalized? – To join the Consortium for 2019-2020, there is a simple one-page agreement whereby you are guaranteed a fixed price for a 12-month period and you agree to purchase all your propane through the Consortium provider. If you have an existing Agreement from a prior year you are automatically rolled into the new year. Pricing for 2019-2020 has come down since last year. If you own your tank: $1.36/gal, for a leased tank: $1.61/gal.
Questions? email Dale Van Aken at email@example.com