Variable Fuel Factor
The frequent fluctuations in the price of fuel has impacted on many New Zealand businesses. We have maintained our vigilance in regards to cost control however it became clear in June 2008 that we needed to introduce a flexible element in our pricing structure to take into account the variable nature of fuel costs. For more information about our Variable Fuel Factor please click on the links below.
- What is the Variable Fuel Factor (VFF)?
Fuel costs are a significant cost to our contractors' businesses and a Variable Fuel Factor was introduced in June 2008 to recover some of the increased costs of diesel. The majority of this is passed on to our contractors so they are able to cover these additional costs.
- How much will the VFF be?
As the cost of fuel fluctuates on a regular basis we are unable to set an across the board VFF.
We use the monthly price of diesel to determine what the VFF rate will be which has a lag. ie the diesel price in January will be used to determine what the VFF will be effective 1st March.
- How is the VFF worked out?
We will use a base rate of $1.03 (diesel pump price including GST).
Every 1c movement above $1.03 in the average pump price, will result in an increase of 0.1% in our pricing. The average diesel pump price is published by the Ministry of Economic Development. The VFF is updated monthly and automatically adjusted on your invoice.
If the average monthly diesel price reduces below the base rate of $1.03, the variable fuel factor will be 0%
- How do I manage this increase within my business?
The variable fuel factor calculation is based on a lag to give our customers adequate notice of the fuel factor percentage. Our website will be updated each month detailing the increase/decrease for that month.
- When is the variable fuel factor reviewed?
We review the VFF each month using the average diesel price from months prior. The VFF is updated monthly on our website.
- Does the variable fuel factor apply to all services?
No. The fuel factor does not apply to bicycle services or surcharges.
- How long will the variable fuel factor apply?
The VFF is her to stay, however if the price of diesel falls below our basline price of $1.03 the VFF% will drop to zero.
- How has GST effected the VFF?
With the increase in GST changing from 12.5% to 15% (effective 1st October 2010) we have amended the base rate of the VFF to reflect this. Prior to 1st October 2010 the base rate was $1.20.