Fuel dealers opt out of LIHEAP - WCAX.COM Local Vermont News, Weather and Sports-

Fuel dealers opt out of LIHEAP

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More than 28,000 Vermont households depend on the Low Income Heating Assistance Program -- known as LIHEAP.

This year almost $17 Million will come from the federal  government for the program. The state is adding more than $8 million to the pot, for close to $26 million. But this year at least two fuel dealers, Jack Corse in Cambridge and Bourne's Energy in Morrisville, have decided not to participate.

"Part of the contract that dealers have been grumbling about is the way they set the margins," said Matt Cota with the Vermont Fuel Dealers Association.  He says this year the state has attached some strings to those funds, in the form of pricing formulas to make sure taxpayers are getting the most fuel for their dollars. Some dealers say that is not fair. "There is something called margin over rack pricing and that price is based on a rack price -- the terminal price, the wholesale cost of heating oil delivered the following day -- for many fuel dealers that is not how they purchase product," Cota said. "Many fuel companies with bulk storage purchase fuel through futures contracts. They don't drive to the terminal one day and deliver it the next, but that is how the pricing structure is based."

Bourne's sent a letter out to former LIHEAP customers saying they are going to have to find a  new dealer this season. "So suddenly I have to start going through and finding another fuel provider and then it's making me wonder -- I got this letter from Bourne's and how many others will be shutting down fuel assistance? How hard is this going to be? Other Bourne customers are going to be looking as well.  Suddenly its become a bigger deal," said Kathleen Lovell, a single mother from Morrisville and a Bourne's customer.

In the letter, Peter Bourne explained that under current pricing structures he would have to charge all customers more, or cut pay for his 60 employees.

Vermont Administration Secretary Jeb Spaulding says the program is voluntary.
"It's always been a voluntary program. So far we have heard back from 52 dealers around the state and 50 are continuing to participate, so I think we can see there is a small number of dealers chose not to participate. It is a choice of their own but we are confident we will have coverage statewide," Spaulding said.

Reporter Judy Simpson: You said in the past, 85-percent of the fuel dealers have participated in this program. Are you confident that will be the same, close to the same number this year because of this, or do you think there will be fewer?

Matt Cota: I don't know what the end participation rate will be -- I honestly have no idea. I think it is safe to assume that the administration understands that fewer dealers will participate due to this aggressive pricing.

Secretary Spaulding says things could be even more aggressive. "There are some people that suggested that the state should put the whole thing out to bid to one or two or three big dealers and really drive the price down. We have felt so far we like to support the independent dealers and we can strike a balance where we are getting good value and still allowing our dealers to participate in the program," he said.

The deadline for dealers to sign up for LIHEAP is Friday.  The toll-free number is: 800-479-6151.

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