LANSING, Mich. — The Michigan Attorney General (AG) announced last week a settlement with a major supplier of propane in Michigan over problems last winter with pricing and other issues. 

“Cooler autumn weather means many Michigan families are already anxious about upcoming heating bills,” AG Bill Schuette said in a statement. “I’m happy we can put money back into the wallets of hard-working families who paid steep prices to heat their homes last winter while already trying to make ends meet.”

According to the Oct. 22 announcement, the AG’s corporate oversight division has secured more than $500,000 for more than 5,600 Michigan propane consumers to resolve customer complaints against AmeriGas concerning propane-pricing issues during last winter’s heating season.

This settlement marks a key development in his ongoing investigation into hundreds of consumer complaints related to propane pricing and delivery during the 2013-2014 winter season.

In September, Schuette filed a lawsuit against AmeriGas alleging violations of the Michigan Consumer Protection Act. AmeriGas is the nation’s largest residential supplier of propane with service in all 50 states.

In a conference call with reporters, Schuette said Michigan is in the top 10 of propane users in the United States. 

“It’s heavily used in rural areas,” Schuette said. “About 800,000 citizens who used propane last winter in Michigan got a big jolt. What my office has done is work on the issue for some time. We wanted to get this money into people’s hands before winter sets in. I’m pleased with this settlement.”

Problems raised by consumers and addressed by the settlement include locked price customers: These were hundreds of AmeriGas customers charged prices that were higher than the per-gallon rates they had locked in for winter last year, the AG said. Many had still not gotten their bills properly adjusted. These customers will have their billings corrected to the appropriate per-gallon rate and will receive an additional 50 percent of the difference to compensate them. 

“We’ve insisted that a sweetener be added in the amount of 50 percent,” Schuette said. 

About 140 customers were affected. A total reimbursement for these customers comes to $31,441. Also, some so-called will-call customers were charged per-gallon prices at the time of delivery that were higher than the price that was in effect at the time they placed their order for propane, the AG says. 

AmeriGas is reimbursing customers who placed their orders and received deliveries from Jan. 14 through Jan. 28, 2014. Customers who were charged a higher price on delivery will receive the lower price that was in effect at the time of the order. The 833 customers falling into this category will receive reimbursements in the amount of the difference between the prices on the delivery and order dates, plus 50 percent. 

AmeriGas has also changed its processes to ensure that customers will not be charged a higher price at delivery than the price in effect at the time of the order. Total reimbursements under this category come to $58,123.

In the lawsuit, Schuette stated AmeriGas charged some customers prices “grossly in excess” of prices being charged by other propane retailers throughout Michigan. To settle the case, more than 5,000 affected customers will have their per-gallon rates from last January and February rolled back to specific price points outlined in the agreement, plus the 50 percent sweetener. The price points are based on survey prices reported by the Michigan Public Service Commission. Total reimbursements for this category come to $479,008.

“The message should be clear: No rip-offs of consumers are allowed in the state of Michigan,” Schuette said. “If you’re putting in a crop and you get hit with extra costs, it hits you just as if you’re using it to heat your home.”

While having reached a settlement with the AG, AmeriGas denies any wrongdoing or overcharging customers. AmeriGas has issued a statement saying it’s pleased to have reached an agreement with the Michigan Attorney General so that “we can focus on our Michigan customers for this upcoming winter season. Nonetheless, AmeriGas maintains that it complied with the Michigan Consumer Protection Act. In cooperation with the Attorney General, we identified a small number of customers who were incorrectly billed this past winter. We have reviewed our policies and made corrections as appropriate and as outlined in the Settlement Agreement.”