Price Protection Programs
It might be an understatement to say that we live in uncertain times. Propane wholesale prices are higher (dramatically), exports consistently are near all-time highs, and national inventory levels are at their lowest levels in years. If this pattern persists and there is a big grain drying season and cold winter, prices may skyrocket. On the other hand, economic slowdowns overseas (perhaps driven by COVID resurgences) and a mild winter could lead to a price collapse.
Now more than ever we urge customers to get some form of Price Protection. If you lease a tank from us you get a $1.89 price cap at no additional charge. Nobody in our delivery area does this. Nobody. Even so, this might be the year to participate in our Fixed Price Program (also known as Pre-Buy) or our Pre-Paid Price Cap Program. If the upfront payment for these programs hard to swallow - we strongly urge you to consider our new Level-Pay Program. The Level-Pay Program is available to both our leased tank customers and our customer-owned tank customers. Here are the benefits:
- Avoid large propane bills by paying equal monthly installments beginning on a date selected by you (to fit into our payroll and retirement deposit schedule)
- Avoid run-outs and run-out fees with the Auto-Fill Delivery Method that comes with participation in the Level-Pay Plan
- Avoid price spikes with a $1.79 cap, but get the market price at delivery if it's lower
Here are the Price Protection Programs for winter 2020-2021, including prices, enrollment periods and other information:
What is a Price Protection Program?
Wall Street calls them hedges and then gives them confusing names like futures, calls, puts, collars and swaps. On main street and at Caywood Propane we call them what they are: Price Protection Programs. These programs protect you from large fluctuations in propane prices. During the winter of 2014, for example, the average price of propane in Michigan spiked to $3.18/gallon; it had been $1.99 at the same time the year before. Customers who participated in our Price Protection Program that year paid $1.68. We are very concerned about winter 2021-2022 supply. We strongly urge all of our customers to participate in a Price Protection Plan this year.
What are the kinds of Price Protection Programs?
We have three kinds of Price Protection Programs:
Level-Pay Plan: This new program is a lot like our pre-paid Price-Cap Program, except you get to pay for your propane in monthly installments year-round. You make the payments, we deliver propane at the market price at the time of delivery or $1.79 (plus tax), whichever is lower. This price is eligible for auto-fill and auto-pay discounts.
Fixed Price: You pay us $1.69/gallon plus sales tax and we deliver propane to you at that price until April 30 or when you run out of Fixed Price gallons, whichever comes first. This price is not eligible for discounts because they already are built into the price.
Price-Cap Price: You are charged the lower of our Market Price or the Capped Price at the time of delivery. For example, if the your Market Price is $1.50 and the Capped Price is $1.89, you pay $1.50 plus sales tax. However, if our Market Price is $1.99 and the Capped Price is $1.89, you pay $1.89 plus sales tax. We will deliver propane to you under this program until April 30 or when you run out of Market Capped gallons, whichever comes first. This price is eligible for auto-fill and auto-pay discounts.
When do I pay for these programs?
Level-Pay Plan: Payments begin on the day of the month selected by you. The amount you pay is based on your historical consumption or a consumption amount we agree on with you. The intent of the program is to budget just the right amount of dollars to keep your tank filled throughout the year, especially during winter.Your payments are based on a capped price of $1.79 plus sales tax, and you are eligible for the Auto-Fill and Prompt-Pay Discounts, which currently total $0.08/gallon. Additional payments will occur only if your usage is greater than expected, you fail to make payments, or you need a delivery before the credit balance on your account is sufficient for a minimum delivery. The need for additional payments almost never occurs.
Fixed Price: Payment is due at the time you sign up for the Fixed Price Program. The minimum purchase is 500 gallons. The purchase period typically runs from about July 1 until the end of August. The Fixed Price for winter 2021-2022 is $1.69/gallon plus sales tax. Prices are subject to change until you sign up for the program.
Market Capped Price: There are three ways to pay for this Program:
- Leased Tank: If you lease a tank from us participation in the Market Capped Program is complementary. Just pay for the gas plus tax under the credit terms that apply to you. The Market Capped Price for winter 2021-2022 is $1.89/gallon plus sales tax.
- Pre-Pay: Payment is due at the time you sign up for the Market Capped Program. The minimum purchase is 500 gallons. The purchase period typically runs from about July 1 until the and of August. The pre-pay Market Capped Price for winter 2020-2021 is $1.79/gallon. Prices are subject to change until you sign up for the program.
- Coverage Fee: You pay a non-refundable coverage fee of $0.10 per gallon at the time you sign up. The minimum purchase is 500 gallons. The purchase period typically runs from about July 1 until the end of August. The Market Capped Price for this program is $1.89/gallon. The Capped Price is subject to change until you sign up for the program.
When does the 2020-2021 winter enrollment period begin?
Level-Pay Plans: The enrollment period is ongoing. Payments begin on the day of the month selected by you.
All Other Plans: The enrollment period begins July 1 and ends September 6.