“ ICPA recommends that consumers do business with heating oil dealers that have reputations in their communities for honoring commitments to consumers – and recommends consumers deal with members of ICPA as those companies have made a commitment under our Code of Ethics in serving consumers, and further are the best informed and most up-to-date on the latest regulatory requirements in being in the oil industry.”

PROTECT YOURSELF

WHAT CONSUMERS NEED TO KNOW ABOUT PRE-BUY HEATING OIL CONTRACTS

[Cromwell, CT]  Warm weather is when heating oil retailers begin reaching out to consumers to engage in pre-buy heating oil contracts and The Independent Connecticut Petroleum Association [ICPA] wants to make sure that they are protected.  Representing the majority of the state’s heating oil retailers serving more than 680,000 of our state’s citizens with heating oil, ICPA announced today sweeping changes coming to the industry’s requirements for offering pre-buy heating oil contracts.  Several years ago some consumers suffered the losses due to a company In Newtown, CT that failed to make good on its promises.  This year has seen one company in Waterbury and one in Rocky Hill similarly fail to deliver on their promises to consumers.

ICPA’s members ascribe to a Code of Ethics wherein they commit themselves to best industry practices to ensure consumers receive what they are promised, and have further prepared this advice for consumers to make sure as consumers prepare for the next heating season, they will receive what they buy.

All consumers are strongly encouraged to heed this advice as we are entering a time of year when pre-buy contracts become available for next year.  Unlike previous years, from now on all heating oil dealers who offer these programs will need to make a great deal more information available to consumers that will work to ensure consumers will receive the heating oil they have pre-paid for.

Consumers should ask questions about the terms of a price protection plan, get everything in writing, and keep a copy of the contract and related materials for their records. Before signing a home heating oil contract, ICPA suggests that consumers pay particularly close attention to at least the following in consideration of entering into pre-buy agreements:

• That the dealer is properly registered with the Department of Consumer Protection, in accordance with state law,
• The fixed price or cap price per gallon,
• The start and end dates of the contract,
• The amount of any prepayment required,
• The volume or number of gallons to be purchased,
• Default terms, or liquidation damages. These are penalties that a consumer would sustain if the consumer leaves the contract before it ends,
• The steps the dealer has taken to make sure that a sufficient amount of oil will be available to cover all of the dealer’s price protection or pre-buy contracts. [see below]

Consumers need to understand their responsibilities under these agreements.  Once a consumer enters into a contract to purchase heating oil it is incumbent on both the consumer and the heating oil dealer to honor the contract.  Pay close attention to provisions for liquidated damages as if a consumer wishes to abandon a contract once signed, consumers will likely find penalties under their agreements.

Thanks to legislation that ICPA worked on with the Connecticut Attorney General and the Department of Consumer Protection, legislation expected to be sent by the General Assembly to Governor Rell for her signature soon, new requirements are placed on all dealers offering price protection programs that require consumers to pre-pay for heating oil for delivery at a later time. 

New pre-buy heating oil contract requirements are:

• The length of the contract may not be longer than eighteen [18] months.  This is the maximum length of time one may secure a heating oil futures contract on the New York Mercantile Exchange;

• The dealer offering the pre-buy program must state in the contract offer that the dealer has secured one of the following as insurance that the dealer is capable of delivering on the contract offer, [a] has secured a bond in the amount of 50% of the cash taken in from consumers responding to the offer, or [b] has secured contracts from upstream suppliers in an amount equal to 75% of the gallons being made available to consumers in the contract offer.

The heating oil industry is comprised of hundreds of competitors and this competition benefits consumers as long as the competition exists legally and serves the interests of consumers.  The legislation the industry has written with the help of government will work to better insure that when consumers respond to pre-buy offers that the offers are genuine and that the dealer[s] making the pre-buy offers have taken all the prudent and necessary steps to honor the offers.

ICPA recommends that consumers do business with heating oil dealers that have reputations in their communities for honoring commitments to consumers – and recommends consumers deal with members of ICPA as those companies have made a commitment under our Code of Ethics in serving consumers, and further are the best informed and most up-to-date on the latest regulatory requirements in being in the oil industry.

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ICPA represents more than 459 Connecticut based independent businesses. These businesses employ 13,000 Connecticut citizens and supply the majority of our state's 1,600 motor fuels outlets and 350 heating fuels dealers. ICPA's offices are at 10 Alcap Ridge, Cromwell, CT  06416.  For more information about today's Press Release, contact Gene Guilford or Chris Herb.