Common Sense Information About Buying Heating Oil

Contact your local Connecticut Energy Marketer Association oilheat dealer to learn more about types of programs he or she is offering this season. You may search a list of reputable dealers who ascribe to the CEMA Code of Ethics, and so have a higher interest in protecting consumers, in your area by following this link > http://www.icpa.org/consumerInfoOilHeat/oilHeatRetailer.php

Here is what consumers need to be sure of in selecting a heating oil supplier;

  1. That you find your heating oil dealer at http://www.icpa.org/consumerInfoOilHeat/oilHeatRetailer.php, or your bioheat dealer at http://www.icpa.org/consumerInfoOilHeat/bioHeatRetailer.php That is your greatest measure of protection that you are dealing with a company that complies with state laws, ascribes to the CEMA Code of Ethics, offers products and services that are fairly priced and through contracts that meet or exceed state standards.
  2. Here is the CEMA Code of Ethics 
  3. Be wary of a supplier offering prices or services substantially below the rest of the competitors in your market.  Recently, this has been a sign of desperation by a company trying to recoup cash through offering contract oil and then eventually the company ends up failing and not delivering fuel;
  4. Never buy from a company that is not registered with the Department of Consumer Protection. First, go here > https://www.elicense.ct.gov/Lookup/LicenseLookup.aspx
  • From the LICENSE TYPE menu, scroll down and select HOME HEATING FUEL DEALER
  • Next, right below LICENSE NUMBER, enter the BUSINESS NAME/DBA of the company you are checking
  • Next, under STATE, select Connecticut
  • If the search is successful you will see the company's name and valid licenses below this section of the DCP website.

There are several options of how you may buy heating oil, depending on what your dealer provides.

Everyone wants the best value for their money  - regardless of what we buy.  Heating oil is no exception.  CEMA's heating oil members have signed a Code of Ethics that pledges their business operations to a higher level of consumer confidence, regulatory compliance and environmental protection.  The lowest price isn't always the best value.

I.  Fixed price contracts

A contract to purchase a set amount of gallons of fuel for a fixed price during a specific period of time. The dealer usually requires payment up front. Buying a fixed price contract is nothing more than a guarantee of stability and certainty - it is never a guarantee of cost savings as no one can tell the consumer whether markets will go up, down or stay the same. This type of program is insurance against uncertainty - just as with your auto insurance or homeowners insurance - you may never use it but you know you are protected against the unforeseen. Just as with insurance, you don't get your money back simply because you didn't need it. When you sign buying contract oil, you own it. Failure to abide by the contract may result in your paying expensive cancellation fees and liquidated damages costs. Under Connecticut law these contracts must be in writing and consumers must sign their contract, along with the retailer, in order to be valid.


Ii. CAP Price CONTRACTS/DOWNSIDE PROTECTION

A contract to purchase a set amount of gallons of fuel at a price that is "Capped," meaning the consumer will never pay more than the CAP price, during a specific period of time. If the customer has chosen a CAP price program and then during the winter, for various reasons the commodity cost of oil drops, the CAP contract price can also drop. This option usually carries a premium cost per gallon, much like an insurance premium, to protect the downside price. What this means is, if you want to pay no more than a specific amount and, at the same time, pay a lower price if the market declines - you can generally expect to pay a premium price for that protection as it costs your oil supplier more money to have that same protection from wholesale suppliers. Consumers should take care in reading their contracts to be sure the contract specifies how the CAP plan works and how, and under what circumstances, their price will decline. Not all dealers offer this type of plan. Not all CAP plans work the same. Under Connecticut law these contracts must be in writing and consumers must sign their contract, along with the retailer, in order to be valid.

III. Budget Programs

You can establish a monthly budgeted amount to pay for your heating costs that spreads equal payments out across 8 or 10 months. No more worries about the single large delivery cost, your heating bill is in equal monthly installments.


iv. General Information

The consumer must remember that contract prices are offered generally between spring and fall. All dealers do not offer fixed price or cap program contracts. The consumer must also consider that when they agree to buy from a dealer at a fixed or capped price, the dealer has to go to the market with the wholesaler and buy the contracts to cover their purchase, as is required by Connecticut state law [see CGS ยง16a-23n [c], found here http://www.cga.ct.gov/2007/pub/Chap296a.htm#Sec16a-23n.htm]. Unless you have paid the premium for downside protection, the dealer cannot lower the price to you if the market price drops.

Consumers need to also understand that when they sign a contract they have bought the oil, as the dealer has bought the oil for the consumer to be delivered later.  Consumers cannot just walk away from a contract without the dealer exercising a strong liquidated damages clause in the contract reflecting that the consumer would need to buy his/her way out of a contract in the very same way as what happens if a consumer leaves a cell phone contract, a car lease or home mortgage before the term is complete.