Price Cap Price Protection: Safeguard Against Volatile Heating Oil Prices
We recently talked about the benefits of making your home heating oil payments more predictable in the coming year with our E-Z Pay option – something particularly important in light of ongoing COVID-19 challenges.
But there’s an even better way to make heating oil payments more manageable in 2020-21: combine EZ Pay with Price Cap protection from Scott Williams.
EZ Pay with Price Cap: A one-two punch of predictability
If you choose the Price Cap option with EZ Pay, you’ll still get the same predictable 12 bills per year you’ll pay with standard EZ pay, but with price protection for every gallon you buy.
Here’s how Price Cap protection works:
- You’ll pay either a fixed maximum price or the pay-as-you-go market price, whichever is lower on the day of delivery. That means you’re protected whether prices go up or down.
- An enrollment fee is charged for this upside and downside price protection. The fee is needed because our suppliers charge us a premium for the flexibility that allows us to lower your price if market prices fall.
- To offer fuel at a capped price, we purchase both fixed price futures contracts AND more expensive “call options” to act as a kind of insurance against the risk of oil prices rising. By doing this, we guarantee that your price won’t go above a certain price, but can go down if market prices fall lower than the day we bought the fixed price contracts. We add the premium we pay for call options to your fuel cost in the form of an enrollment fee; we never profit from the extra cost.
Pay as you go option also available
Although customers have saved a lot of money by choosing Price Cap protection, you are not obligated to sign up for these programs. If you don’t, we will simply charge you the variable market rate on the day of delivery.
Want a little more certainty in uncertain times? Sign up for EZ Pay with Price Cap protection from Scott Williams. Enrollment is open until 9/1, so act soon!