Smart Pay is really a hybrid program that includes a monthly budget plan and price cap protection. A price cap is a ceiling on the price you will pay for your heating oil for a specified period of time. Specifically, if the market price of heating oil rises during the heating season, you’ll never pay more than your cap or ceiling price with Smart Pay. Smart Pay also includes downside protection, which means that if our daily market price for heating oil drops between May 1, 2011 and April 30, 2012, your price will go down, too. If our daily market price is lower than your cap when you receive a delivery, you’ll pay the lower of the two prices, guaranteed.

 People really appreciate Smart Pay because it helps them avoid big winter fuel bills and helps make paying for their heating oil much easier to manage. Our customers who enroll in Smart Pay also choose it because the price cap and downside protection gives them peace of mind.  They know that no matter what happens with the fuel markets, they are protected from wild price swings. If prices go up, they know that their price can only go so high; and if prices go down, they’ll pay the lower daily market price.

In order to protect our customers' price, we purchase Call Options which are a form of insurance.  The "hedging fee" that is charged for the SmartPay Program is to cover this non-oil cost that provides your price protection.  The hedging fee is invoiced to your account at the beginning of the program in May, but is paid for as part of your 12 monthly payments for convenience.  This hedging cost has always been part of the cost of the SmartPay Program, but has now been broken out so customers can see what is being paid for oil versus what costs are associated with the hedging insurance.

It is important to know that there are other types of budget programs being offered in the home heating oil industry that do not provide the necessary protection that most homeowners need.  Market price budget programs charge you whatever the market price is at the time of your deliveries.  There is no price protection and your budget payments may change (meaning go up) several times over the year.  Fixed price budget programs will provide a stable price, but there is no downside movement of your price should prices go down.

Whether you select Smart Pay is entirely up to you. Our only advice is that you weigh your choices carefully and choose the purchase option that makes you most comfortable.