As the winter months fade into spring, it’s easy to try and forget about heating and all the costs it incurs. For managers, board members and others with an eye on a co-op or condo building’s budgetary bottom line, now may be the perfect time to start planning ahead and taking advantage of the best options available from the city’s fuel providers. Because most companies provide some sort of flexible billing or payment option, it never hurts to shop around and see what can be done to tailor a payment program to a building’s very specific needs.
There are a number of different options available when it comes to finding the right billing plan. “Co-ops and condos can opt for floating pricing or some other type of pricing contract that may allow for a fixed price,” says Carla L. Romita, senior vice president of Castle Oil Corporation, based in Harrison, New York. “Fixed price contracts come with volume requirements within a specific time frame.”
As Fred Tamburino, vice president/commercial sales at Brooklyn-based Approved Oil Corp., explains, “You say, ‘If I wanted to buy 100,000 gallons of fuel, what would be my locked in or fixed rate?’” In order to get that rate, the building must purchase those 100,000 gallons of fuel within a year or other predetermined period of time.
There is an additional premium built into the fixed rate as well, says Mark Loughlin, vice president of the family-owned Ferrantino Fuel, based in Brooklyn, New York. “When fixing a price, there is inherent risk built into the futures market and so often, there is a premium for such a contract. Right now, there is political instability and a security premium of about ten cents per gallon built into the market.”
“Boards must remember that fixed pricing involves a binding contract between the co-op or condo and the supplier,” says Romita. “There are risks inherent for each side and these contracts must only be entered into when the board fully understands and accepts these risks.”