Editorial: Wanted: help for heating oil customers
If a home-heating fuel company sells you a pricey pre-buy oil contract and then goes out of business, what protection do you have? In New Hampshire, not much.
This isn’t a new issue, nor is it hypothetical; in recent year customers of Rumford Oil and Flynn’s Oil found themselves in just such a predicaments. Today, the panic over the ability of Fred Fuller Oil to promptly deliver to its customers during the recent bitter cold stretch has renewed legislators’ interest in the vulnerability of fuel customers. That’s a good first step. And though they’ve so far been unable to come to consensus on a plan, we encourage them to go back to the drawing board in the coming weeks.
At issue is legislation that would require home heating fuel suppliers to secure customers’ prepaid deposits by maintaining an escrow account, a letter of credit or a surety bond of a specified amount with the office of the attorney general as the beneficiary.
Currently, oil suppliers can forgo such options, provided they obtain a futures contract to lock in a price months before delivery – an option that does not require them to pay for the fuel up front. This gives homeowners some assurance that their dealer will have access to a sufficient supply of oil, but it doesn’t do anything to guarantee that the company will have the money to actually purchase and deliver that oil. There’s little to keep an oil dealer from spending pre-buy money for more urgent needs, rather than saving it to buy those consumers’ oil when the time comes. The proposed legislation is aimed at providing tougher consumer protection.
A legislative committee wrestling with the bill, however, has recommended overwhelmingly that the House kill it. Lawmakers were concerned that it presented too great a burden for oil dealers and banks. And, they said, they were unconvinced that the escrow accounts could be adequately monitored.
The committee also considered the Maine model, in which all companies offering pre-buy contracts must register with the state, pay a small fee and submit an annual report of their pre-buy contracts to the state. New Hampshire fuel companies that do business in Maine were not averse to this solution, according to lawmakers. But committee members ultimately rejected the notion when they learned that the registration fee would not be enough to hire more staff at the consumer protection bureau to oversee the registration and reporting obligations.
And so, the bill was scheduled to die in the full House this month without debate – until the Fuller crisis caught the attention of lawmakers.
Keeping the bill alive this week will give legislators more time to find a solution. Even the committee that recommended killing the legislation appears to be eager for a better outcome. “The inability to find a way protect consumers from these catastrophic business failures continues to be a source of great concern and frustration to many on the committee,” noted Rep. Joe Scarlotto.
Indeed. The issue is not partisan, and helping consumers in this area would be a significant accomplishment for members of the 2014 Legislature to bring home to their constituents. Whether it means requiring oil suppliers and banks to change their approach or requiring the state to spend what’s necessary to regulate, finding a way to protect home-heating oil customers before the next crisis is urgent.