The cost of propane gas has gone up but residents are still getting a good deal, the community's largest propane provider says.  

Tye Rommel, manager of Kamps Propane, met with a dozen residents Thursday morning at the RMA Building to discuss pricing and other issues.

"The value and the advantage of us delivering fuel in here is huge. ... We actually have facts and figures of what it takes to operate here," he told the group, adding that Kamps has 720 customers in the community.

"I used to get propane for 52 cents a gallon," Kamps Propane manager Tye Rommel told Murieta customers. "Now I'm paying $2.04, $2.05 a gallon."

RMA General Manager David Stiffler called the meeting after receiving comments from residents as propane costs approached $2.50 a gallon this winter.  (Neighbors provided pricing information in comments on a previous story [0].)

Kamps entered into a five-year agreement with the Rancho Murieta Association to form a propane cooperative in 1999. At that time, pricing was set at the cost of propane plus a margin of 37 cents.

The margin was increased to 41 cents when a committee reviewed the contract in 2004, Rommel said. Although the contract was never signed and there is currently no agreement in place, he said Kamps continues to use cost-plus-margin pricing of 41 cents, and charges for installing tanks, labor rates and service fees "have never changed."

Co-op customers also receive a 50 percent reduction in the annual cost of leasing a standard 500-gallon tank.

RMA Director Mel Standart, a member of the audience, remarked, "I have a serious problem doing business on a handshake."

Stiffler replied, "One of the outcomes of this meeting is to provide information to the board."

Rommel said it used to be that when gas prices went up at the pump, the price of propane would go down, "but now they kind of mirror each other."

In winter, "there's a supply and demand factor," he said.  "Anything that has an energy value has gone up and it's going to continue to go up unless somehow someone gets a hold of the market. What it boils down to is refineries. ... I used to get propane for 52 cents a gallon. Now I'm paying $2.04, $2.05 a gallon."

He said Kemps adjusts propane rates on a weekly basis to reflect costs.

When Kamps entered into the co-op agreement with RMA, "Every other competitor said they were going to compete, they were going to do their job, and you know what? They haven't," Rommel recalled. "The longer we've been having this contract the more money it costs them to operate in here. It's 42 cents a gallon to deliver fuel outside this gate. It's about 28 cents a gallon for us to deliver in here because we have such a large group of customers. ... I don't think anyone else would want to bid it."

A resident in the audience disagreed, saying he found another local supplier was charging 8 or 9 cents less, and prices 20 cents a gallon cheaper could be found on the Internet. "There's no way you can deliver gas at 19 cents above cost and stay in business," Rommel responded. "It's 42 cents to get it to the customer. Hell, the insurance is 25 cents a gallon. ... The only way I can keep my product down at a lower price is to tighten up operations."

To do that, Kamps has invested in a meter technology that provides information about propane levels in homeowners' tanks remotely to reduce deliveries. "With the smart system working, you won't run out of gas," Rommel said. A prototype for underground tanks is now being tested.

Not every above-ground tank is equipped with the smart meter system, and one audience member told of running out of propane while houseguests were visiting.  

A woman asked if she could continue to rent a tank from Kamps if she changed to a different propane supplier. Rommel said Kamps would have to sell the tank to the supplier because there is a minimum yearly usage requirement for a rental tank. He added that homeowners aren't allowed to own underground tanks based on the fire code.

Delivering propane to Rancho Murieta can present unique problems, Rommel said. Tanks are often located 80 feet or more from the street. "This particular location actually wears the guys out. ... We had to have a custom truck made to deliver to this community," he said. "That hose weighs probably about 165 pounds empty and he's dragging it to the house."

During the freeze last year, delivery crews trying to keep up with the demand ran afoul of gate policy when they tried to deliver on Sunday and were denied entry. That has since been straightened out, Rommel said, and this winter deliveries were made seven days a week.