Laclede Gas Company uses its gas supply risk management program to moderate the impact of price spikes on our customers. The program is designed to target price stability. This involves the utilization of a variety of financial instruments to “hedge” approximately 70 percent of our normal gas purchases.
The Missouri Public Service Commission (MoPSC) encourages the use of financial tools to help stabilize natural gas prices. Prior to 1995, few natural gas utilities used such financial tools. Over the last few years, the combination of generally lower gas prices and prudent gas-purchasing strategies have allowed us to decrease our gas-cost charges going into the winter heating season.
Another way Laclede hedges physically is through the use of our underground gas storage facilities located in northern Louisiana and north St. Louis County. Many utilities such as Laclede use underground storage. Storage can account for half of some utilities’ natural gas supplies on winter’s coldest days – contributing to reliable service. Laclede’s storage facilities allow the Company to purchase natural gas during the summer months, when prices have historically been more favorable, and store it for future use. At the same time, the savings are passed through to customers. Natural gas utilities often purchase natural gas during warm-weather months, and store it for use on cold winter days.
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