Behind the Meter on Propane

Did you know the Michigan Public Service Commission launched a new podcast, Behind

the Meter: An MPSC Podcast, at the beginning of this year?

This past month's episode hosted by Mark Burn with Commissioner Alessandra Carreon featured Andrew 'Andy' Vanderboegh, Chairman of the Michigan Propane Commission (MPC) and Alexander 'Alex' Morese, manager of the MPSC's Energy Security Section. The MPC provides propane and rebates along with education on safe handling of propane throughout the state. The Energy Security Section of the MPSC is responsible for ensuring that the state has adequate energy supplies from natural gas & electricity to driving (gasoline) and heating fuels (like propane) as well as overseeing the cyber and physical security programs at the MPSC.

The MPSC is known for regulating utilities that include gas, electricity and even telecommunication servicers but this Propane episode highlights another critical and underrecognized service provided by the MPC. Commissioner Carreon mentions, "Because the commission only regulates the fares, fees, service quality rules of electricity and natural gas; and then to a limited extent for telecommunications...our work and our involvment with propane looks fundamentally different and that's primarily through our role in monitoring irregulatities with fuel supply". This is primarily done through the MPSC's Energy Security Section espcially during energy emergencies particularly during severve weather conditions, which was covered extensivly in the MPSC's last Severe Weather, Power Outages and Power Restoration episode.

Propane is a petroleum refined heating fuel that's critical for residents, businesses and low emmissions transporation used especially in rural areas where electric and natural gas distribution isn't widely available. The main difference between propane with the electricity and natrual gas markets is that the proprane market is completely unregulated and though much smaller, as a result is highly competitive. Though the market for petroleum fuel as a competive commodity is unregulated, safety and esmissions standards are. Alex shares further, "That's where the commssion steps in as Commissioner Carreon mentioned to get a hold of, to monitor those energy supplies, the infrastructure that supports these industries to make sure that if there's a refinery breakdown in Wisconsin or in Chicago area or pipeline breakdown that we're aware that may impact the supply that may be delivered to the state of Michigan then thus the citizens here, so we closely monitor these industries and looking for any imbalance whether it be in price or supply or inventories throughout the year".

Surprisingly, Michigan is the largest user of propane in the U.S. due to having a larger number of rural areas than in other states including more populated states like Texas or California. Michigan currently has 8.6% of residental households that depend on propane as their primary home heating fuel source. Close to half of the state's counties have over 20% of households depending on propane, with three of those counties usuage being greater than 50%. Understanding that the MPSC doesn't set the price of propane like they do for electricity and natural gas, propane prices are dependant on open market factors like weather conditions, tarriffs, infrastructure reliability, availablity and other economic variables. It's important to note that the price of propane is greatly tied to the shift in price of natural gas as well.

This episode so heavily encouraged residents who rely on propane fuel to consider participating in propane marketing programs like price-cap, pre-buy or budgeting programs rather than just ordering on a will-call basis.

1. Price-cap program: Customer pays a "nominal fee" to lock in their price that won't increase beyond that amount in the event of a market spike

2. Pre-buy program: Customer will buy what they annually use upfront at a lower price

3. Budgeting program: Helps customer determine a monthly price based upon a the customer's past propane usage

For those uninterested in the above programs, the MPC urges households ordering on at will-call basis not to wait until their propane take is at 5% or even 10% to call for a refill, especailly during the winter. For those getting refills in the winter, staff also share the importance of removing snow from driveways as a courtesy for propane trucks to enter and connect their hoses more effectively to be able serve their home and other households more quickly without sliding, limiting risk of injury.

Overall this was an informative episode that introduced listeners to the MPC, it's functions and the MPSC's responsibilities around propane. We were also able to learn how uniquely positioned the state of Michigan is in the propane market as the largest user in the country.