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Tuesday, June 10, 2014

Fuller Oil pre-buy business affected by delivery problems, faces challenges with new state law

HUDSON – Fred Fuller Oil and Propane Co.’s practice of selling heating-oil contracts a year in advance was hit hard by much-publicized delivery problems last winter, according to state officials, and now, Gov. Maggie Hassan looks likely to sign a bill that would curtail the firm’s practice of selling such contracts so early in the year.

“Fuller Oil has provided us with futures contracts to support their pre-buys, which shows that their pre-buy business is down substantially, based on number of gallons,” said James Boffetti, chief of consumer protection for the New Hampshire Department of Justice. ...

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HUDSON – Fred Fuller Oil and Propane Co.’s practice of selling heating-oil contracts a year in advance was hit hard by much-publicized delivery problems last winter, according to state officials, and now, Gov. Maggie Hassan looks likely to sign a bill that would curtail the firm’s practice of selling such contracts so early in the year.

“Fuller Oil has provided us with futures contracts to support their pre-buys, which shows that their pre-buy business is down substantially, based on number of gallons,” said James Boffetti, chief of consumer protection for the New Hampshire Department of Justice.

The Hudson-based company, one of the three largest heating oil and propane delivery firms in New Hampshire, faced sharp criticism this winter when customers reported that some automatic refills were not being made, but they couldn’t reach the company’s half-dozen offices around the state. Many customers reported to The Telegraph and other news outlets that they had run short of fuel or out of fuel during the “polar vortex” in January and another cold snap in early March.

Complaints grew so widespread that New Hampshire established a 24-hour hotline, which handled hundreds of calls over five days. The state eventually billed Fuller Oil $21,000 for the service, which the company paid. The Justice Department also required Fuller to provide information showing that it had the wherewithal to meet all the pre-buy contracts it had sold.

Fuller Oil established a fund of similar size to reimburse customers who requested assistance who had damages, such as burst pipes, because of failed deliveries.

Calls to the Hudson office Monday about this fund were forward to Fred Fuller, the company president, who was not available.

The company said customers’ inability to reach its offices around the state were because of telephone system problems.

Pre-buy contracts will be different next year. The New Hampshire House and Senate last week passed a bill that would change state laws about such contracts, and Hassan seems likely to sign the bill.

For one thing, the proposed new law would push back the date at which pre-buy contracts could be advertised for the following heating season, from Jan. 1-May 1, although customers still can request such contracts earlier.

“Companies will effectively get beyond the existing heating season before looking at the next heating season,” Boffetti said.

Fuller Oil, which has been in business 45 years, has long been unusual among the state’s oil delivery industry via its aggressive sales of pre-buy contracts. Most firms in New Hampshire don’t sell such contracts until March or April, but Fuller has consistently sold contracts in January, often at very low prices.

This year, Fuller Oil began selling pre-buy contracts for next winter in early January, even as it was having trouble delivering existing pre-buy contracts.

Pre-buy contracts usually involve advance payments of $1,500 to $3,000. For a firm the size of Fuller Oil, which serves around one-third of the state’s 245,000 homes that use heating oil, they can total millions of dollars in collections.

For another thing, the bill makes it a misdemeanor to not deliver heating fuel under a pre-buy contract. Currently, the state has no way to enforce such contracts.

The situation with Fuller was alarming partly because there have been cases in the past in which New Hampshire heating-fuel firms went out of business in mid-winter, leaving customers who had paid in advance without recourse. In December 2009, for example, Flynn’s Oil, of Exeter, went bankrupt and more than 300 of its customers lost a total of $550,000 from pre-paid contracts.

Boffetti said the state would discuss the issue further with Fuller Oil and others.

“We need to figure out how that went so badly and to see if there’s anything that we can do to prevent that sort of collapse from happening again,” he said. “I really wanted to get through this heating season first. Mercifully, the heating season is finally over.”

David Brooks can be reached at 594-6531 or dbrooks@nashua
telegraph.com. Also, follow Brooks on Twitter (@GraniteGeek).