Swanson sues Ferrellgas over propane prices

Minnesota Attorney General Lori Swanson is suing Ferrelgas, a propane distributor, for allegedly charging residential customers higher than promised prices and punitive fees.

Swanson announced the lawsuit at a Capitol news conference Friday flanked by elderly people who heat their homes with propane.

Swanson said Ferrelgas promised Minnesota customers that they would pay market prices for propane, but then charged them prices that were double and triple that amount.

"They advertise that they charged low rates, they don't disclose the rates. The law says if you don't do that, coupled with this contract, you have to charge a competitive market price," said Swanson. "They're not charging a competitive market price. In many cases, they're charging far in excess of any semblance of a competitive market price."

Swanson also said some customers were charged fees for not using enough propane. She said her office first started receiving complaints in 2007.

Ferrelgas currently serves 50,000 customers in Minnesota. Jim Saladin, a spokesman for the Overland Park, Kan.-based company, accused Swanson of trying to regulate propane prices.

Saladin said Ferrellgas wouldn't be the largest propane retailer in the state if its prices weren't competitive. And he added that the company discloses all its fees to customers.

Ferrellgas anticipated Swanson's lawsuit, filing a pre-emptive complaint against the attorney general in Ramsey County on Wednesday.

"We worked hard to build a good reputation in Minnesota, and we felt that it was important at a very basic level to protect that reputation," Saladin said.

Former Ferrellgas customers told of getting bills for propane at per-gallon prices far above the market rates published by the state Department of Commerce.

Ray Gierszewski, a retired plumbing and heating company owner who lives on Social Security in Hawley, Minn., said the company billed him $5.27 per gallon for one delivery when the state listed the market price at $1.77 per gallon.

Gierszewski said he also had problems getting Ferrellgas to remove its tank from his property when he asked, and got hit with a $199 fee for "low usage."

Ambrose Nowacki, a retiree in Detroit Lakes, Minn., said he took matters into his own hands after Ferrellgas charged him far above the state-listed market rate more than once.

"My tank rent was up in September of '07, so I called my friend and I said, 'Come over, we're going to load this up and we're going to dump it in their yard.' He said, 'It's illegal.' I said, 'Then we'll go to jail both.'"

Nowacki said they delivered the tank: "Done deal," he said.

Gierszewski said he quit using propane altogether after his run-ins with Ferrellgas.

"I went to electric -- it's cheaper," he said.

This is Swanson's fourth move to defend consumers in the past two weeks. Last week she targeted flimsy health insurance and unfulfilled job placement services for the unemployed. The week before it was debt assistance companies that provided little relief.

Swanson, a first-term Democrat, is up for re-election next year. So far, no challengers have stepped forward.