Combind Energy Services
Combind Energy Services

Home Owned vs. Supplier Loaned Propane Tank - Which is Better?

Posted by Katrina DiCostanzo on Jun 23, 2016, 5:33:36 PM


The decision of using a home owned vs supplier loaned propane tank is dependent on many factors, such as personal preference, equipment usage and budget.  

Additionally, propane companies have different policies that factor into the decision of whether to buy or use a supplier loaned tank.

Most propane customers in the U.S. loan / lease their tank(s) from a supplier.  However, some users own their tanks.  

Below are some pros & cons to having a home owned vs supplier owned propane tank:

Home Owned vs Supplier Owned Propane Tank 

Home Owned Tank

Pro

  • Not being tied to a single propane supplier - however, if the homeowner lies about owning a loaned / leased tank and a propane company fills up a tank owned by another company, the homeowner is legally responsible for the fine which can be up to $10,000 in some states (National Propane Gas Association). 

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  • Possibility of negotiation rates - each company has their own policies when it comes to price per gallon and tank ownership.

  • No rental costs - when you own your own tank, there are no rental costs associated.  

Con

  • Purchasing a propane tank is an expensive investment - initial costs include the purchase of the tank (which can run you a few thousand dollars depending on tank size), permits, trenching, piping and fittings. (How much does a propane tank cost?).

  • Supply shortages - normally, the first customers to get cut off from gas deliveries if a supply shortage occurs due to weather or terminal problems where supply simply can't get to gas dealers fast enough to meet demand, are the home owned tank customers. Gas companies will take care of customers with loaned equipment over customers that own their own tank, since purchases may not be steady or on automatic delivery.  Staying with one supplier is very important especially when supply gets tight during long, cold winters; and tank ownership plays a big part as to who gets gas and who may be left out in the cold.  
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  • Homeowner is responsible for the installation and maintenance of the tank - and all costs associated with it.  One service call could end up costing the homeowner more than the annual rental or minimum use fee for low usage customers.

  • Proper tank installation requires knowledge of industry regulations for proper installation - most areas have specific regulations governing where and how a tank can be installed.  Your propane company is already familiar with your state regulations and can easily determine specs.

  • Safety of the tank is homeowners responsibility - most municipalities / counties / states require owners to have their tanks re-certified (sometimes called re-qualified) every 5 - 10 years.  Check with your local building inspector or state fire marshal before purchasing and installing a tank.

  • Homeowner's Insurance companies can charge higher premiums since now the tank and everything affixed to it is on you, no longer the gas supplier.  Before purchasing any tank - ask the insurance carrier, not just the agent locally, what their opinion is on propane tank ownership.   Often there are exclusions in policies for "pollution leakage" which insurance companies stretch to include propane leaks that may have caused fires / explosions.  Be sure you are upfront and get the carrier's approval before buying or installing any propane tank you plan on owning and them insuring.  
  • Tank maintenance - in time all propane tanks will need maintenance.  Paint, valve changes, pressure relief valve required replacement, gauge replacements, re leveling, etc.  With a supplier loaned tank, these unknown costs don't come back to the homeowner, especially if there is a leak on the tank which requires immediate service, which could be in the middle of the night or on the weekend.
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  • Underground tanks and anode bags need regular maintenance - underground tanks are especially worrisome since anode bags, which protect the tank from deteriorating, need to be tested upon installation and then on a 24-month basis for the life of the tank.
    With a supplier loaned tank from Combined Energy Services, the testing is done automatically.  Anodes are replaced as needed to protect the tank from rotting and protecting your home & family - all at no cost to you! Without documented regular bi-annual tank testing, you immediately aren't within compliance with NFPA codes and more likely can lead to insurance coverage problems or violations from the building departments when they ask for testing documentation.  Propane tanks, just like oil tanks - can never be buried and forgotten about...  As soon as metal is put in the ground it starts to deteriorate due to an electrical reaction which occurs naturally.  By leasing a tank from CES you're assured the tank is kept within compliance and never an expense to you.

  • Pressure Regulators - propane must be reduced as it leaves the tank and normally again before it enters your structure.  With a loaned or leased tank from a reputable supplier, the high pressure regulator on the tank is normally the responsibility of the company.  When buying your tank - the pressure regulators are your responsiblity along with maintenace or problems.  These need to be replaced on a regular basis per code and manufacturer's guidelines.  Be sure to ask before buying any regulators needed for a tank and supply system.  combined_energy_services_propane_montgomery_ny_propane.jpg

  • The liability is on the homeowner - insurance is required.  Accidents happen whether you own or use a supplier loaned tank, but the owner is liable if the tank caused a mishap because of undetected repairs needed.
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  • If you sell the property, the tank goes with you - that means if there is an underground tank, the homeowner will incur the costs to dig up the tank and the risk of destroying landscape that assists in the buying process; then having to worry about proper transport to your new home.  A huge issue today with real estate sales is the proof of tank testing at the time of closing.  If you don't have proof of continued testing - you could be faced with a hefty tank removal cost or dedcution at the closing table.  Consult with your attorney before selling a home where you own the tank since this could be a hidden liabilty the buyer could say you didn't disclose after the sale holding you responsible.  

Supplier Loaned Tank

Pro

  • Most companies will provide, install and maintain a supplier loaned propane tank.   Most of the time the gas company will install the tank at no cost or a minimal cost.  This may or may not include pressure reducing regulators, piping, fittings, parts and connections.  Be sure to ask ahead as to who covers what costs of the install.  (At CES - most of the time when used for home heating there is no cost for any parts or installation from tank to the house.  Ask a rep for more info).  

  • Company owned tanks are maintained by the propane company and all the costs for any repairs are covered. This includes replacing the tank if any problems occur such as leaks on the valves, gauge, or welds.  There is never a charge to a CES customer when we provide a loanded propane tank.

  • Supplier loaned tanks are regularly tested, certified and kept within compliance by the company and at no cost to the homeowner! 
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  • In most cases, the tank is free to use if the homeowner buys a minimum amount of propane each year.  We base the tank size to your usage to ensure adequate supply when you need it.  "Minimum use charges" take place annually if a certain amount of gas hasn't been used in a year for that particular size tank.  An example would be a customer needs a 500 gal tank for their 25 kw generator but used no gas in the last year - in this case an annual minimum use fee (basically a tank rental) would be charged.  For steady usage such as water heating, home heating, cooking - the tank is sized in accordance with what your usage is and a fee isn't charged, just on very low usage customers is an annual fee assessed.   Ask us to explain the annual min usage expected on various size tanks to make sure you get the proper size to meet your needs. 

  • One year loan / lease amount is usually less expensive than one service call on a home owned tank.  For steady customers that use gas, there's never an annual fee.  For those sporadic users such as back-up generators or a rarely used space heater or pool heater - there could be a fee if the usage is low. In these cases we do offer tank purchases but many consumers have found that one repair or replacement cost of that tank within several years makes leasing a much better option than owning.  

  • No need to worry about the tank when moving - the propane service gets passed onto the new home owner.
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Con

  • Changing suppliers can often involve termination fees, delays while supplier removes their/your tank.

EXAMPLE OF TANK MAINTENANCE:

Combined Energy Services takes their tank maintenance very seriously.  This is for the protection of the home owner, the fuel company and the environment.  

From the moment the tanks goes into the ground, natural reactions cause it to begin the corrosion process.  In order to continue to keep the tank in the ground without damage, maintenance is required.  And if it's a home owned tank, the owner is financially for the maintenance, and liable if any incidents occur resulting from tank negligence.

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Anode Bags which protect the tank from deteriorating don't last forever depending on soil conditions.  These must be checked, replaced as needed and documentation of the test must be performed every two years by state & federal codes. Without documented testing the tank is essentially junk and must be dug out when caught by the building inspector or state agency that regulates propane in your jurisdiction.  

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Rotten underground propane tank that needed to be dug out after found to be leaking, more than likely for years.  Propane tanks can never be buried and forgotten since in time - they will deteriorate. 

Rotten_underground_propane_tank.jpgUnderground tanks need to be maintained - this one was pulled out leaking, the anodes had deteriorated long before.  This cost the homeowner endless money in lost propane but worse - the gas could have migrated to a basement or structure causing a fire or explosion.  
 Propane_Tanks_Need_Maintenance.jpgPropane tanks need constant maintenance, valve replacement & repairs, gauge replacement and retesting.  Before ever buying a tank - think about what happens when these eventual problems occur and who can do the work and at what cost.  Leasing a tank from a reputable supplier is a much better choice than owning since problems never occur at the "right time" often during the winter.

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Company owned / leased tanks are evacuated of gas, sand blasted, retested, primed, painted and all new valves installed.  This is the responsibility of the gas supplier when utilizing their tank.  This process is time consuming and costly, but every tank has a life expectancy and must be mainted properly to ensure safety.  

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Those who do not care for the regular maintenance of a tank, using a supplier loaned tank is an attractive option.  For others, the ability to seek out the best priced supplier is worth the additional time and expense of owning and maintaining your own tank. 

Ultimately, buying or renting a propane tank will depend on your usage of the equipment, mechanical knowledge and budget, making the use of a supplier loaned propane tank an attractive, risk-free option.  

With Combined Energy Services you can be assured of hassle free service for your propane tank, distribution equipment and supply of gas!  

Contact us today to assist you in making an informed decision.


About Combined Energy Services

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Family owned and operated since 1968, Combined Energy Services is one of the largest propane gas and fuel suppliers in the Catskills, Hudson Valley and surrounding areas.

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With four offices in operation, CES provides customers throughout the Catskills (Sullivan, Orange County), Hudson Valley (Ulster County), Eastern Pennsylvania (Pike County) and Northern New Jersey (Sussex County)with dependable propane gas, fuel oil and kerosene deliveries, as well as un-matched, around-the-clock repair service.

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Topics: Switch to Gas, We'll Pull the Oil Tank for FREE, propane gas, propane gas ny, propane gas nj, Propane gas pa, propane tank

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