There are organizations currently soliciting for companies with significant utility bills to discuss an arrangement where they can receive a “fixed price” for their utility bills. They pay a flat rate to a third party (flat rate based on historical utility usage) and the third party takes care of the utility bills. If it’s a cold winter, the sales pitch goes, you won’t care because this arrangement has you covered. Spike in oil or natural gas prices, no problem! The flat payment is valid through the contract term regardless of such fluctuations. Sounds like a great deal and it can be, but where there is reward there is usually also risk.
Before you sign on to an arrangement like this, read the fine print – it is likely you will be still be ultimately responsible for payment and you will be left holding the bag if the third party defaults. Can’t happen, they’ll say, we have hedged the risks perfectly. Well, it did happen recently – please call us if you are thinking about entering into this type of arrangement.
If you have any questions or would like more information, please contact:
Pete Kennedy
302-656-6632
PKennedy@CoverRossiter.com