With a costless collar, customers set a maximum and a minimum level for their gas price. A floor and a ceiling are set simultaneously, with offsetting premiums. Therefore, the customer does not have to pay for this collar. The price of gas will float with the market price until it reaches either the lower or upper level and then the price stays at that level.

Advantages:
With a costless collar, NFM can help the producer or the utility better manage its gas costs. The customer can still take advantage of favorable changes in the market, but is protected.

Example:
A utility customer in Colorado wants to pay a market-based price for its gas, but knows its PUC has set a limit of $4.00 per MMBtu. Therefore, this utility contacted NFM to set a maximum price of $4.00. In return for this ceiling, an offsetting floor of $3.00 was set by NFM. The utility pays no premium for this exchange and is certain that a market based price will be paid for gas, but the price of gas will never be more than $4.00 or less than $3.00.