When choosing a fuel oil company, consumers should check, among other things, a company’s oil prices compared to the industry average, what is included in the service agreement, any special offers or discounts available, and the customer experience record of the company with the Better Business Bureau to verify you are dealing with a reputable firm. Consumers should also shop around and get more than one quote before signing a service contract agreement.
Primary Types of Companies
Full Service Fuel Oil Companies: Full service companies, in most cases not only sell fuel oil but also offer a wide range of services, including automatic deliveries, 24 hour emergency service, 30 day credit, “capped” or “fixed” price programs, budget plans, equipment maintenance, service agreements and installation of new equipment, such as boilers, furnaces, burners, hot water heaters, etc.
Discount Fuel Oil Companies: Unlike full service companies, most discounters do not maintain the heating unit or offer any other services. Their exclusive function is to deliver oil, in many cases, on a “cash on delivery” basis. By unbundling traditional services, discounters are able to offer competitive oil prices.
Price of Oil
To make sure a company’s price is in line with the market, you may compare the amount you pay to an industry index. If you live on Long Island, you may call the Oil Heat Institute at (516) 360-0200 or e-mail them at firstname.lastname@example.org for this and other related information. If you live in other areas of New York State, you may contact the Oil Heat Institute of New York by e-mailing them at email@example.com. OHI is an industry group that has access to daily average prices, based on information published in The Journal of Commerce, in addition to weekly or periodic surveys from the State Energy Office and Consumer Protection Board.
Due to the heating oil shortages in recent years President Clinton directed the Department of Energy to create the Northeast Heating Oil Reserve in July of 2000. This action should prevent fuel oil shortages this winter and in turn prevent a rise in New Yorkers’ home heating bills.
A service agreement is a plan offered by a fuel oil company to provide both oil on an automatic basis and service to heating equipment for a pre-set period of time. Unless otherwise specified, the consumer is required to purchase oil from the company exclusively in order to maintain the agreement. Service agreements usually provide for emergency service, as well as maintenance and replacement of all working parts specified in the agreement. It generally includes an annual tune-up, cleaning, and efficiency check of the heating unit.
In order to consider what you will need in a service agreement, it is important to understand your heating system. There are two basic types of central home heating systems: forced air heating and hot water/hydronic heating.
Forced Air Heating
If you have a forced air system it utilizes ducts and heating vents in either the floor or ceiling of each room and is often used in conjunction with an air conditioning system. If you have this type of system, you must also have a separate heater for your domestic hot water needs. Approximately 15% of the homes on Long Island have forced air systems.
Hot Water/Hydronic Heating
If you have a hydronic or hot water system, the predominant kind used by Long Islanders, the boiler (either made of steel or cast iron) produces hot water, which is then circulated around the house via baseboard heating or upright radiators. While virtually all boilers incorporate a tankless coil for domestic water usage, many manufacturers now promote indirect heaters as a more efficient means of producing hot water.
Both of these systems use a burner, which is the gun through which oil is atomized to produce a flame to heat the water in the boiler or to heat the air circulated in a warm air furnace.
Thermostats or zones are also present in both systems. Zones are where a house has been split into areas for heating purposes, such as living areas in zone 1 and sleeping areas in zone 2. Each zone requires its own thermostat. Additional zones allow greater flexibility in heating choice by keeping one area higher than another, thus lowering the average temperature of the home and reducing consumption. A set-back thermostat, a device that allows zones to be automatically turned off and on is an inexpensive conservation method.
Components of a Service Agreement
The following is an explanation of the various features of a service agreement:
Preventative Maintenance: This may include an annual cleaning, instrument tune-up and adjustments to maintain the maximum operating efficiency of the unit. In most service agreements vacuuming is extra.
Boiler or Furnace Maintenance: This may include normal maintenance, cleaning, and adjustment of structural components of the basic heating unit. Replacement of a defective boiler is almost always covered as a separate item with extra charges or a deductible.
Burner and Controls: This may include adjustment and/or replacement of nozzles, end cones, or other burner parts and associated electronic controls.
Zone Coverage: This should include the first, primary, or main zone of the heating system (i.e. living areas) and generally covers zone valves or circulators. Additional zones, for sleeping areas, finished basements, etc., will usually entail some additional costs.
Service Agreement Components Available at Additional Cost
Separate Oil Tank: The oil tank is the receptacle which holds the oil, usually located in the basement, outside above ground or below the ground. Most service agreements, which include replacement of a tank do not cover in-ground tanks; however, a deductible or partial payment clause may be incorporated into the agreement. Policies to cover replacement and remediation in the event of a leak in a buried tank are also offered by some companies.
Hot Water Heater: A hot water heater is a separate heater for domestic use, such as showers, washing, laundry, etc. It can be used in conjunction with a boiler but it is mandatory with a furnace. In most cases, coverage is not included in the basic service agreement. If coverage is available, it will most likely include maintenance of the burner and component parts, but will not include the replacement of the tank itself.
Service Agreement Checklist
Use the following list to check whether a service plan covers the repair and/or replacement of the following parts:
|Oil Burner Motor||Oil Tank|
|Fuel Pump||Hot Water Heater|
|Burner Fan||Circulator Bearing Assembly|
|End Cone||Expansion Tank*|
|Air Tubes||Exposed Oil Lines|
|Electrodes||Float Type Oil Gauge|
|Nozzle||Hand Feed Valve|
|Ignition Transformer||Gauge Glass|
|Smoke Pipe||Flow Valve*|
|Thermostat**||Blower Belt and Pulley|
*These components do not apply to furnace warm air systems.
**Most service agreements cover one zone or thermostat with additional zones at an extra charge. Boiler: This type of coverage may be available on a select basis, based on the age and type of the unit in place when the agreement commences. If coverage is available, it will most likely apply to an identical size and type of unit. Upgrades may be available at a higher price. Given the high replacement cost of these major items, this type of additional coverage, basically a form of loss coverage, may be advisable for many homeowners.
Vacuums: With the increased use of high speed, retention head burners in most heating systems, a vacuum of the unit is not normally required on an annual basis; however, it should be performed at least every 2 to 3 years. It is further recommended that chimneys be cleaned by a professional service from time to time.
Items Which May Not Be Covered in a Service Agreement
Service agreements generally do not include parts or labor as a result of conditions such as water damage, fire, flood, freeze-ups, hurricane, power interruptions, fire or water in basement, among other possible conditions. Additionally, the agreement may not cover parts for equipment considered obsolete by the company. The service agreement, unless specified, will not cover plumbing or electrical work. Deductibles may apply in the replacement of the burner, tankless, coil, and oil tanks.
Canceling the Service Agreement
Most service agreements are cancelable upon written notice to the company by certified/registered mail. If you choose to cancel the agreement during the time period it is in effect, the company will expect payment for any work previously performed on a time and material basis. This cost should not exceed the total cost of the agreement.
Free Service Agreements: Many companies offer free service agreements in certain circumstances. Among the most common reasons include the installation of new equipment by the company, since many components are covered by manufacturers’ warranties or as an inducement to a new customer for a fixed period of time. Many companies will require that a certain amount of oil be purchased on a yearly basis.
Discounts: Many companies offer a variety of discounts on the price of oil. Discounts are typically offered to the following groups: large volume purchasers, senior citizens, those on fixed incomes or persons living in pre-assigned community groups, such as unions or civic groups and customers who pay their bills within a specified period of time, such as 10 days of delivery or receipt of a bill.
Budget Plans: Most companies allow customers to pay 10 or 12 equal monthly payments based upon their usage in the prior year. Some companies pay interest on any positive credit balance that a customer builds up during the course of the year.
Capped or Fixed Prices: Some companies offer these special programs to customers concerned about price fluctuations which occur during a heating season. Essentially, with a “fixed” price program a predetermined price is established, somewhat lower than would otherwise be anticipated, before the heating season. Thus this “fixed” price remains unchanged throughout the season, regardless of what happens to the price on the open market. Similarly, a “capped” program sets a ceiling on the amount per gallon charged during the heating season.
On Long Island, fuel-oil companies are required to be licensed by the Office of Consumer Affairs, in addition to a number of local municipalities. It is important to note that all work performed, whether regular maintenance or new installations, should be performed by a licensed company. Failure to use a licensed company could be grounds to void a homeowner insurance policy.
Helpful Ways to Lower Your Home Heating Bill
Assistance for Senior Citizens and Low and Fixed Income New Yorkers
The Home Energy Assistance Program (HEAP) is a program that gives monetary assistance to senior citizens and low or fixed income New Yorkers in order to help them pay their home heating bills. Those eligible for this program include those 60 years of age and older, those who are the head of the household and receiving Social Security Disability, and those receiving Supplemental Security Income (SSI-Code A) and living alone or with a spouse only. For more information consumers can call the HEAP Public Information Line at 212-227-2810. For HEAP applications and assistance through the Department of the Aging consumers may call 212-442-1000.
Low income New Yorkers may also call either the New York State Office for the Aging at 1-800-342-9871 or the Office of Temporary and Disability Assistance at 1-800-342-3009 for assistance with home heating oil problems or concerns.