State Heating Oil and Propane Program (SHOPP)

October is National Energy Awareness Month, which serves to underscore how critical energy is to our prosperity, security, and environmental well-being. Throughout the month of October, TDEC’s Office of Energy Programs will highlight a variety of case studies and tips to promote energy conservation, resiliency, and smart energy management. Through these efforts, we rededicate ourselves to a more conscious use of energy, so that we can continue to strive for a cleaner, stronger, and more secure future.

While some may remember the ice storms that struck the Cumberland Plateau after Valentine’s Day in 2015, few likely know of the impact felt by Tennessee’s poultry industry. In an odd confluence of events – a very wet Midwest using propane to dry corn crops, the normal shift of moving stored propane into the Northeast, and extremely cold weather – created a distribution problem for propane.   Plenty of supply existed elsewhere, but the increased demand experienced during the ice storm led to distribution companies running critically low in Tennessee.

The low propane supplies became problematic for the poultry industry in Tennessee, as many commercial poultry operations rely on propane to heat their poultry facilities. According to the Tennessee Poultry Association, icy road conditions also made it difficult to deliver feed for the birds in 1,650+ commercial houses located in 550+ family farms across the state.

In response, the Office of Energy Programs’ (OEP) Emergency Service Coordinators (ESCs) were activated by TEMA and worked closely with the Tennessee Propane Association and Tennessee Poultry Association to keep propane supplied to the poultry industry. (OEP is responsible for the Emergency Support Function 12 / Energy (ESF-12) mission related to transportation and heating fuels as defined under the Tennessee Emergency Management Plan.) At the request of these industries and the Tennessee Grocers & Convenience Store Association, OEP and TDEC Office of General Counsel collaborated with the Tennessee Department of Agriculture and Department of Transportation to structure a request to the Governor’s Office to provide increased flexibility for supplying propane and animal feed. On February 18, 2015, Governor Haslam signed Executive Orders 43 and 45 declaring a State of Emergency for the purpose of waiving federal hours of service requirements for commercial drivers. These declarations ensured uninterrupted delivery of necessary food supplies, animal feed and heating fuels to Tennesseans.

While working with numerous Southern states that winter to address propane concerns, the U.S. Energy Information Administration (EIA) determined that the South uses nearly as much propane for agricultural heating as the Midwest uses for home heating.[1] (EIA is the federal agency responsible for collecting, analyzing, and distributing impartial energy information about electricity and fuels such as petroleum, heating oil, and propane.) Afterward, EIA expanded the State Heating Oil and Propane Program (SHOPP) from 24 to 38 states, with the additions mainly in the South. SHOPP participants collect weekly residential heating oil and propane prices at the state level from October through March. Industry analysts, policymakers, and consumers use this data to better predict propane supplies and anticipate possible disruptions.

Distribution of primary home heating sources by region (EIA).

Distribution of primary home heating sources by region (EIA).

Tennessee joined the SHOPP effort in the fall of 2014. Data collection in Tennessee is a cooperative effort between OEP and EIA. OEP makes the individual calls to selected suppliers and reports it to EIA, which provides weekly status reports tracking pricing and state inventory levels. OEP also maintains valuable relationships with the Tennessee Poultry Association and the Tennessee Propane Association in order to know the status of propane use and storage.

EIA presented their Winter Fuels Outlook webinar on October 13. Average U.S. household energy expenditures are projected to increase from last winter; EIA projects bills during the upcoming winter heating season could increase by 26% for propane and 22% for natural gas. Overall, EIA expects households using propane to spend less on heating this winter than in eight of the past ten winters, but more than last winter. For EIA’s Heating Oil and Propane Updates, see http://www.eia.gov/petroleum/heatingoilpropane/.

To learn more about Propane in the Agriculture Market, take a look at the presentation by Mike Caldarera of the National Propane Gas Association.

ABOUT EMERGENCY SUPPORT FUNCTION (ESF) 12 (ENERGY ASSURANCE):

Emergency Support Functions are mechanisms developed under the National Response Framework to provide federal, state, and local governments a common language and organization structure for responding to natural disasters, terrorist attacks, and other catastrophic events. Each of the 15 ESFs has a corresponding organization or agency tasked with overseeing the preparedness, response, and recovery phases of incident management. Tennessee was one of the first to integrate the ESF concept and TEMA was tasked to manage the activities of the ESCs.

The purpose of ESF-12 Energy is to facilitate energy assurance in areas of the State affected by an emergency. While TVA is responsible for electricity generation and the electric grid, OEP has primary responsibility for monitoring the status of the transportation and heating fuel distribution network, and, if necessary, coordinating the State response to fuel disruptions. Working with our public sector partners, such as TEMA, the Governor’s Office, Department of Agriculture, Department of Commerce and Insurance, and the Department of Safety and Homeland Security, the State is able to convene the necessary government agencies and private sector stakeholders to ensure a continuous supply of transportation and heating fuels to citizens throughout the State.

If you would like to learn more about ESF-12, please contact ben.bolton@tn.gov (Primary ESC for ESF-12).

[1] Specifically, the East South Central states of Tennessee, Kentucky, Mississippi, and Alabama use propane for agricultural heating nearly as much as the much colder East North Central states of Michigan, Ohio, Illinois, Indiana, and Missouri use it for residential heating. (EIA SHOPP Workshop, July 13, 2016).

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