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Gray, Gray & Gray 2021 Energy Survey Results

Fuel dealers are confident and prepared despite significant challenges

Energy industry accounting and advisory firm Gray, Gray & Gray, LLP has released the results of its 30th annual Energy Industry Survey.

“It was a demanding year for fuel oil and propane marketers on many fronts, with constant governmental pressures related to the COVID-19 pandemic and climate,” said Marty Kirshner, CPA, MSA, partner and chair of Gray, Gray & Gray’s Energy Practice Group. “But the results of our survey speak to the resilience and perseverance that has long been a trademark of our industry and the business owners who continue to rise to the occasion to meet challenges head on. We hope the numbers we are presenting will be put to good use as companies evaluate their own performance.”

For the 30th version of the survey, Gray, Gray & Gray incorporated research from data analytics provider Angus Energy. “We were pleased to partner with the team at Angus Energy for additional insights that were culled from their analysis of industry trends,” said Kirshner. “It added more depth to the data points presented in our findings.”

The survey, which is often used as a benchmark for fuel oil and propane marketers, was distributed to retail dealers throughout the U.S., who supplied operational and financial data for the heating season stretching from April 2020 through March 2021. Some highlights from the results of the 2021 Energy Industry Survey include:

61% of customers have been with the same supplier for 5 years or more, indicating a high level of customer loyalty and satisfaction
Employee retention is growing in importance, with 84% of respondents raising wages and 61% offering bonuses to keep good people
A significant majority of companies reported they were “Highly confident” (38%) or “Confident” (43%) that they would remain a viable energy provider despite political and environmental pressures
Half of all respondents said they plan to acquire another company, a sign of optimism for the future of the industry
62% reported that COVID-related personnel issues were their biggest challenge during the past heating season

Complete results of the 2021 Energy Industry Survey, including a breakdown by company size, are available on Gray, Gray & Gray’s website at gggllp.com or by calling 781-407-0300.

What percentage of your employees are service technicians? 25%

How many customers do you have per service technician? 796

What percentage of your service technicians are employed year-round versus seasonally (heating season only)?
Year-Round: 67%   Seasonally: 37%

What percentage of your employees are delivery drivers? 20%

What percentage of your delivery drivers are employed year-round versus seasonally (heating season only)?
Year-Round: 50%   Seasonally: 50%

What percentage of your delivery drivers are also cross-trained as HVAC technicians? 14%

What is the HOURLY rate you pay?
Delivery Drivers: $24.49
Dispatchers: $25.30
Customer Service Representatives: $20.32
Accounts Payable/Receivable Staff: $22.61
IT Manager: $33.63
HR Manager: $36.47
Heating Service Technicians:   $28.47
AC Service Technicians: $29.80
Service Manager: $36.72
Controller/Accounting Manager: $40.46
General Manager: $45.83
Operations Manager: $40.34
Office Manager: $32.04
Sales Manager: $39.66

How much do you pay a salesperson for bringing in a new heating account, in dollars? $120

What commission do you pay a salesperson for bringing in a new equipment installation? 8%

Outside of payroll what operating expenses have increased in the last 1-2 years and why?
Updating software: 31%
Liability insurance: 58%
Health insurance: 69%
Environmental: 7%
Vehicle: 45%
Other: 4%
Reasons given:

Offered health insurance to all full-time employees
Claims and repairs/tows
Rising cost of new vehicles, new equipment, and health insurance
Insurance costs continue to rise with market risk
Rising software and IT expenses due to the need to stay up to date with the current market demand
Fuel costs
Rates and regulations
Need to update trucks
Cybersecurity and modernization
Vehicle losses
Rising insurance premium costs – driver accidents, medical diagnoses, forced upgrades, worker’s compensation claims
Material and steel costs

What are you offering to retain employees?
Raising wages: 84%
Converting hourly employees to salaried: 4%
Improving benefits: 32%
Paying bonuses: 61%
Deferred compensation/ “Golden Handcuffs” plan: 3%
Increased 401(k)/pension contribution: 21%
Health insurance: 52%
N/A: 9%
Other: 6%

Employee appreciation day
Positive work environment
Flexible scheduling
Engagement through outside activities
Gift cards to local restaurants
Educate on our plan vs. other companies

If you lost customers last year, to what do you most attribute their leaving?
Competitor with similar pricing: 8%
Competitor with lower prices: 42%
Gas conversion: 22%
Heat pump conversion: 7%
Other: 21%

Customer moved
Customer died
Job loss
Customer issues (slow pay, unwilling to make safety upgrades)
Failed tank inspections

At what point do you consider a customer “lost” and remove them from your customer list?
After no deliveries in 6 months: 7%
After no deliveries in 12 months: 55%
After no payment in 12 months: 4%
When they notify us in writing: 12%
Never take customers off list: 10%
Other: 12%

When we pick up our tank
When they move
Phone or verbal notification

How long have your current customers been with your company (by percentage)?
Less than 1 year: 10%
1-2 years: 9%
2-3 years: 8%
3-4 years: 6%
4-5 years: 6%
5+ years: 61%

How are you protecting your business against a cyberattack and data loss?
Encrypted cloud-based data storage: 47%
Anti-malware software/Endpoint protection: 67%
Secure data backup for disaster recovery and business continuity: 78%
Written information security plan (WISP): 14%
Staff training: 37%
Cybersecurity insurance: 37%
Not sure what I should be doing: 12%
Other: 8%

Hosted software
Managed IT services
Do not take credit card payments through website
Local system with local backup not connected to network

Are you considering any of the following?
Acquiring a company: 50%
Selling your company: 14%
Transitioning to the next generation: 46%
Conducting a business valuation: 18%
Developing a new bulk plant: 29%
Retiring: 25%
Merging into a joint venture: 5%
Updating accounting software: 14%

If conducting a business valuation, what is the purpose?
External sale: 26%
Internal sale/gift: 44%
Family issues/divorce: 13%
Financing: 13%
Other: 17%

What were your biggest business headaches over the last 12 months?
Loss of service technicians: 34%
Loss of delivery drivers: 29%
Working remotely: 4%
Timely collection of customer payments: 11%
Government regulations (CARES Act): 26%
Other government concerns: 21%
COVID-related personnel challenges: 62%

Other: 12%
Warm weather
Competitors with lower prices
Inability to find labor to expand
Permitting

Given environmental concerns and the political climate, how confident are you in your company’s ability to remain a viable energy provider?
Highly confident: 38%
Confident: 43%
Somewhat confident: 12%
Not confident: 1%
Unsure: 6%

Do you blend biofuel?
Yes: 28% No: 72%

If yes, what percentage-blend of biofuel? 15%

Is your organization ready to increase the percentage of biofuel blending?
Yes: 36% No: 64%

If yes, how are you communicating that to your customers?
Word of mouth: 50%
Newsletters: 58%
Website: 65%
Not communicating it to our customers: 23%
Other 8%

Emails
Social media

What percentage of your customer list is on automatic delivery versus will call?
Automatic: 60%`Will call: 40%

What was your average margin for sales during the heating season that just ended?
Fuel Oil – Residential: $0.77 per gallon
Fuel Oil – Commercial: $0.55 per gallon
Propane – Residential: $1.03 per gallon
Propane – Commercial: $0.55 per gallon

What was your average margin on propane gallons sold for the following non-heating applications during the heating season that just ended?
Grills: $2.66
Pool Heaters: $1.53
Autogas: $0.93
Agriculture: $0.54
Home Use (cooking, laundry): $1.96
Generators: $1.72
Other: $0.88

What percentage of your active customers uses a budget plan? 22%

What percentage of your active customers uses a price protection plan? 27%

How many gallons do you sell on pricing plans (as a percentage of total gallons)?
Cap price plan: 5%
Fixed price plan: 10%
Variable price plan: 85%

How many gallons does your company deliver on average per stop?
Gallons per stop: 201
Stops per hour: 2.5
Gallons per hour: 475

What is your average customer tank size in gallons?
Fuel Oil – Residential: 350
Fuel Oil – Commercial: 1,014
Propane – Residential: 700
Propane – Commercial: 780

Do you offer tank monitoring?
Fuel Oil: Yes – 38%   No – 62%
Propane: Yes – 69%   No – 31%

If you lose a customer, do you pick up the tank monitor?
Yes: 48%   No: 3%   N/A: 49%

Did you implement or increase a delivery fee to recover costs due to COVID?
Yes: 3%   No: 94%   N/A: 3%

Do you charge a delivery fee to propane customers?
Yes: 20%   No: 80%

If yes, how much do you charge on average? $7.11

How many paid service contracts do you have?
Fuel Oil: 1,432
Propane: 500

What is the average renewal price you charge for a service contract on heating equipment?
Fuel Oil: $292
Propane: $273

What is the average hourly labor rate you charge for service?
Fuel Oil: $123.31
Propane: $114.77
Air Conditioning: $141.40
Plumbing: $135.52
Pipeline Gas: $125.85
Other: $124.33

What percentage of customer propane tanks do you own?
Aboveground: 75%
Underground: 29%

Do you charge annual rental fees for customer propane tanks?
Yes: 65%   No: 35%

If yes, how much do you charge on average? $97.06

Do you charge a minimal use fee for propane tanks?
Yes: 55%   No: 45%

If yes, how much do you charge on average? $115

How many of your customers have a multi-year contract on propane tanks?
For Aboveground Tanks: 56%
For Underground Tanks: 56%

How long is the average contract for customers that have a multi-year contract on propane tanks?
For Aboveground Tanks: 4 years
For Underground Tanks: 4 years

If your customer list grew last year, to what do you most attribute the increase?