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PRICE
ADJUSTMENT POLICY AND INDEX
EFFECTIVE MARCH 29, 2004 – Rev2 May 1, 2006
As a result of significant commodity fluctuations in the
market, Virginia Transformer Corp has established a Price Adjustment Policy
effective March 29, 2004 as described below. Further, this policy has been
revised to a monthly index from quarterly index as of January 1, 2005 and has
been further revised to adjust the commodity weightings as of May 1, 2006.
POLICY:
VTC’s selling price will be subject to adjustment at the
time of shipment based on a monthly price index as described in this policy.
Any adjustment equal to or less than ± 2% will not be assessed but adjustments
exceeding ± 2% will be assessed at full value. The current price index will be
based on the commodity costs for the prior month. The price at shipment will be
the quoted price times the price index ratio at the time of shipment. Any
resulting purchase order must acknowledge this Price Adjustment Policy.
A1. PRICE INDEX:
A monthly price index (Iq) will be based on the
Comex, Core, Steel, Oil, Major Accessories and Labor costs at the middle of each
month for the month. Iq for January 2004 will be 1.0.
The price index will be published to the VTC web site at
the beginning of each month and will be effective for the whole month. The
index will be based on the prior month’s prices.
A2. PRICE ADJUSTMENT CALCULATION:
The price index will be used to calculate the adjustment
applied to the price at shipment per the below equation:
Where:
Iq = New Price Index for
month of shipment
I0 = Original Price Index
at time of quote
Pn = New Price at shipment
after adjustment
P0 = Original Price at time
of quote
If the price adjustment is less than ± 2% then no change in
the price will be assessed. Customer price will be increased or decreased
at the time of shipment as indicated by the index ratio. The quote
proposal will contain the index used at time of proposal.
Virginia Transformer Price Index tracking began on January
1, 2004 with a base index of 1.00
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