LP Gas • March 2022 • ON YOUR MARKETS

The cannabis market is unique, full of promise for propane retailers but complex due to differing state regulations and no federal oversight.

The National Propane Gas Association (NPGA) highlighted the market through a panel discussion at its winter meetings in Palm Springs, California. The panel, moderated by NPGA regulatory affairs manager Twana Aiken, featured Bruce Swiecicki of NPGA, Jeff Stewart of Blue Star Gas and Lezli Engelking, president of the Foundation of Cannabis Unified Standards (FOCUS).

Stewart says a cannabis growing operation can use 10,000 gallons to 25,000 gallons of propane per year for applications such as power generation, hot water heaters, space heating and carbon dioxide generation. But as he points out, the market is high risk and high reward.

“From a marketer’s perspective, it can be significant gallons and also a tremendous amount of credit risk,” says Stewart, president of Blue Star Gas and vice chair of NPGA. “It’s the highest risk market we engage in.”

Engelking works in the area of voluntary- consensus standards. According to its website, FOCUS involves volunteers from the cannabis industry, regulators, the public and other stakeholders to establish cannabis standards that protect public health, consumer safety and safeguard the environment.

She welcomes the propane industry’s involvement, saying, “It’s critical we understand things from other industries in this space.”

With cultivators in the cannabis industry spending an estimated $6 billion on energy in 2020, Engelking explains, there’s “a huge need for your industry to get involved.”

The National Fire Protection Association (NFPA) is developing a standard that covers cannabis growing and processing facilities, with Swiecicki, NPGA’s senior technical adviser, and Aiken both serving on the newly created NFPA 420 committee.

NFPA 420 will build upon the work started several years ago in NFPA 1, Fire Code, which addresses the fire protection aspects of growing and processing facilities, the fire protection association says.

The International Fire Code includes a chapter (39) about processing and extraction facilities with no specific mention of cannabis.

Currently, more than half of U.S. states have passed laws legalizing cannabis at some level. NPGA offers a cannabis legalization chart by state on the Member Dashboard section of its website (npga.org).

The Propane Education & Research Council also offers information on its website (propane.com) about how propane can fuel the needs of growers.

Consumers seek backup power one year after Texas storm

More than a year after Winter Storm Uri caused widespread power outages in Texas, consumers are turning to generators to mitigate power disruptions caused by severe weather, according to a study commissioned by the Propane Education & Research Council (PERC).

Designed to gauge consumer confidence in the electric grid, the study showed 23 percent of the more than 4,000 respondents purchased a generator over the past two years, and 54 percent considered one.

During Winter Storm Uri, many Texas communities relied on propane as an emergency power source when the electric grid failed.

After going days without power during Uri, the Chappell Hill, Texas, volunteer fire department installed a 1,000-gallon propane tank and standby generator to ensure they can deploy their trucks and power their facility for residents who need a warm, safe place to stay, reports PERC.

Over the past four decades, extreme weather events have increased, on average, by 4.4 percent in the U.S., according to the National Oceanic and Atmospheric Administration. More than 300 weather events that each caused over $1 billion in damage have hit the U.S. since 1980, with high-impact disasters increasing significantly since 2007.

“We encourage city leaders to include propane on their emergency checklist,” says Tucker Perkins, president and CEO of PERC. “Uri showed us the severe complications that arise when electricity is not available for extended periods of time, and we’re committed to providing a reliable and affordable energy source for all Americans.”

A look at one propane retailer’s generator business

Mark Wood, vice president of operations at SchagrinGas in Middletown, Delaware, shares insights about the company’s generator business.

Wood: We are a Generac Elite Plus dealer, so we sell, install and service their residential and commercial standby generators.

LP Gas: Why get involved in the generator space – what spurred the decision and when did it start?

Wood: We started selling generators in the mid to late 1990s to help some of our propane customers fulfill their backup power needs. Fears surrounding Y2K produced a spike in sales that cemented our place in the market for installation and service. Over the past 20 years, home standby generators have gone from a luxury item to a “must have” for many people.

LP Gas: How many employees are involved in this segment and who does the generator installs?

Wood: We have four locations that install generators throughout Delaware and parts of Maryland and Pennsylvania, and it’s usually a two-person crew to set the generator and do the gas piping. We’ve also got installation coordinators that schedule the work and make sure permits and inspections are taken care of. Our generator installation crews also install the other gas appliances that we sell and service, such as hearth products, grills, tank and tankless water heaters, and HVAC equipment. We’ve also got one full-time generator service technician that we keep busy doing routine maintenance and repairs in our highest density areas, along with several other cross-trained technicians to ensure coverage over our entire customer base.

LP Gas: Is this segment growing? How do you market this side of the business to customers?

Wood: It’s definitely growing, and we typically see some seasonality with hurricane season and winter storms. Our area had some severe storms including a rare tornado in August 2020 that gave us a bump in sales, and we’ve seen a sustained increase in demand that we attribute to “work from home” customers impacted by the COVID- 19 pandemic. We market using print, social media, radio, vehicle graphics, email and invoice stuffers.

Wood: A typical air-cooled residential generator burns around 2 to 3 gallons per hour, depending on load. It can be a little higher if everything is maxed out, but most people don’t run everything all-out, 24 hours a day.

Wood: Our customers love their generators. Generators provide peace of mind that comes from knowing we can continue to enjoy the necessities and comfort items we’re accustomed to – heat, air conditioning, lights, internet connectivity and, around here, sump pumps – no matter what Mother Nature sends our way. It’s taking control of your home instead of being dependent on utility power.