An overview of how our budget payments are calculated
Many clients have asked why their budget payments have gone up this season
When we calculate your budget payment, we take several factors into consideration:•Your current a/r balance (or credit) with us•Your two-year average of fuel usage•The capped pricing for the upcoming seasonThe next screens will break down how each of these can factor into your payment
Example Budget- with a large credit balance
For ease of explaination, let’s say John Smith currently has a $600 CREDIT balance on his account (leftover from prior season), and his budget is about to renew. He uses an average of 700 gallons of fuel oil / year, and the capped price for fuel oil will be $2.00/gallon* . His budget would be calculated as follows:•700 gallons fuel oil X $2.00/gal = $1400 in total heating costs for 1 year•Since Mr. Smith currently has a $600 CREDIT on his account, we would deduct the $600 from the $1400 estimated cost; leaving an $800 difference•Therefore instead of dividing the $1400 into 12 monthly payments, we would divide the $800 into 12 monthly payments. $800 ÷ 12= $66.67 Budget payments are rounded to the nearest $10, therefore Mr. Smith’s payment would be $70/month.
*not actual pricing
Example Budget- without a credit balance
We will now show what happens to the monthly payment if Mr. Smith does NOT have a credit balance on his account.•700 gallons of fuel oil X $2.00/gallon= $1400 in total heating costs for one year.•Since Mr. Smith doesn’t have a credit this year, we are now dividing the full $1400 over 12 months.•$1400 ÷ 12= $116.66, again rounded to the nearest $10, which would make his payment $120.00/ month.•By not having the credit balance, we can clearly see why Mr. Smith’s payment was increased by $50/month.
Budget Payment Changes
When the 2016-2017’s (last season’s) payments were calculated, this area had just come off of
an extremely MILD winter; therefore many of our clients did not use the projected gallons their
budgets were calculated for. This left a number of our clients with large credit balances; there-
fore lowering their payments.
Many of our clients are starting out the 2017-2018 heating season with a much smaller credit, no credit at all, or went over their budget.Let’s show what happens to the budget payment if Mr. Smith used MORE than the 700 gallons his prior season’s budget was calculated on, and has a balance to rollover.
Going over budgeted gallons- what it does to your payment
Instead of the 700 gallons Mr. Smith’s prior season was calculated on, let’s say there was a harsh
winter, and he used an additional $500 worth of oil that season.
•700 gallons fuel oil X $2.00/gal = $1400 in total heating costs for 1 year•We now must add the extra $500 in overage to his budget, making the total amount due for the coming season $1900•$1900 ÷ 12 = $158.33; rounded to the nearest $10, making his new budget payment $160.00We can now see that due to one harsh winter, Mr. Smith’s budget payment can go from $50, to $160/month.
Re-cap of scenarios
#1- With Large Credit
2 year average of 700 gallons X 2.00/gal= $1400$1400- $600 credit=$800 total needed$800 ÷ 12 months= $66.67 Monthly Payment = $70
#2- Without Large Credit
2 year average of 700 gallons X 2.00/gal= $1400$1400- $0 credit=$1400 total needed$1400 ÷ 12 months= $116.66Monthly Payment = $120
#3- Balance Owed
2 year average of 700 gallons X 2.00/gal= $1400$1400 + $500 balance=$1900 total needed$1900 ÷ 12 months= $158.33Monthly Payment = $160
Upon calculating the 2017-2018 budget plans, a vast majority of our clients are
falling in scenario 2 or 3.
Please contact us
As always, if you need additional information, please do not hesitate to contact us at
607-687-1803. Our friendly staff is always here to help!