Nationwide, 24 states have declared propane shortage emergencies, according to the Michigan Public Service Commission (MPSC), and regional inventories are 43 percent below this time in 2013. This shortage affects about 9 percent of Michiganders using propane as their primary heating fuel, as well as three Michigan electric co-ops that provide propane service.
“We have notified all our propane customers of the shortage, and also that we are are ‘short-filling’ tanks to 60 percent to spread the supply,” reports Mark Kappler, general manager at HomeWorks Tri-County Electric. The co-op has also asked its 3,640 propane members to ‘dial down’ to help conserve the supply for themselves and others. “There is a real possibility of propane ‘outages’ should supply not make it to the states with shortages,” Kappler explains.
Thumb Electric has also asked its 1,100 propane members to conserve by turning down thermostats, and the co-op will be putting only 200 gallons on a fill. “Right now we are able to get supplies of propane, but continued cold weather may interrupt the supply if storage facilities are unable to keep up with demand,” says Brad Essenmacher, member services and marketing manager. “We are being assured there will be ample supply to get us through the season, but we also wanted our members to be aware of the situation so they can be prepared if an interruption does occur.”
At Midwest Energy, CFO John Miner says their co-op has been able to fully serve its 6,362 propane members’ needs, but is also fine-tuning its delivery practices, deferring acceptance of new customers, and monitoring the situation daily to react to any supply disruption. And, they are receiving more phone calls from concerned members.
While Midwest arranged several months ago to secure their propane supply for this season, Miner has concerns about their unhedged supply. “The portion of our supply which was not hedged and stored is amounting to a substantially higher volume due to the increased weather-driven consumption by our customers. It is this unhedged propane which is much less certain of delivery and bearing a much higher cost to us.”
MPSC Chairman John Quackenbush says the supply is expected to get even tighter and last through at least the end of January.
Factors contributing to the shortage include a late, wet harvest season (propane is used for drying corn), extreme cold temperatures, heavy snowfall, pipeline disruptions/shutdowns, a rail closure in Canada, and difficult driving conditions.
Gov. Rick Snyder has already issued two propane state of emergency orders – with the second including heating oil – through Jan. 31. As in most states, the orders exempt fuel transporters from hours-of-service regulations.
