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December 21, 2012

Vermonters Form Fuel-Buying Cooperative to Leverage Lower Prices


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While Sen. Bernie Sanders has been railing against the high price of gasoline in Chittenden County, a buyers' cooperative in northwestern Vermont is focused on the cost of a different kind of fuel.

The Hilltop Energy Buyers Group, a new fuel-buyers' cooperative that launched over the summer, uses the collective buying power of its members to negotiate below-market prices for home heating fuel.

Peter Katz is co-founder of Hilltop Energy Buyers Group. Since June, when Katz and his partner, Jason Marias, first began negotiations with local fuel providers, the group has signed up about 200 members, who were able to lock in a one-year fixed rate for propane at below-market prices.

"We’re definitely getting some favorable feedback," says Katz. "People are talking about us, and I know the [fuel] companies are talking about us. They now know we’re out there."

Katz explains how the buyers’ group works: Members pay a $50 annual fee to join, which allows Hilltop Energy to act as their fuel "broker" and negotiate the lowest price for members. Customers still continue dealing with the provider — which this year is Amerigas — for service and maintenance, and pay their bills directly to that company.

For now, propane is the only home heating fuel for which Hilltop has been able to secure a discounted price. Still, the savings have been impressive. For the 2012-13 season, Hilltop clients are paying $2.60 per gallon for up to 400 gallons, $2.25 per gallon for 400 to 899 gallons, and $2.10 per gallon for 900 gallons or more. Those prices are fixed until August 2013.

How do those rates stack up to current market prices?

According to the latest figures from the U.S. Energy Information Administration, residential propane users in November and December were paying $3.17 to $3.25 per gallon throughout Vermont. The last time Vermont’s residential propane prices were below $2.10 per gallon was in November 2004.

"Bernie Sanders is always talking about gasoline and how their markup is whatever they want to throw up there," Katz says. "But if you look at the propane industry, the markup is even more, sometimes 200 to 300 percent. There’s no regulation whatsoever. It’s insane."

Although Hilltop was able to secure a deal for propane only this year, in the future Katz hopes to negotiate similar discounts on home heating oil, cord wood and wood pellets, as well as heating-related services, such as boiler technicians and solar installations.

Alas, Vermonters who want to join the buyers' cooperative will have to wait until ther 2013-14 season to do so; the cutoff for this winter season was November 14. However, Katz urges interested members, be they residential or commercial fuel buyers, to contact him as soon as possible through his website, or by emailing him at petrokatz@yahoo.com.

"Obviously, the more people we can accumulate over the winter, the more leverage we’ll have to start our negotiations come spring," he says.

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