Duke Energy...Hedging

Greg Kearns of Duke Energy's Gas Supply Department graciously called me August 1, 2007 @ 2:35 pm. They have a Hedging Plan which is a "% of base," meaning residential and small commercials. Larger customers take care of themselves and Duke does not have to supply their gas, except for transporting it.

Duke May do 5% 1 year ahead. Committee meets once a month.

Duke is very careful not to fall into a trading mode.

So...Question...What will be the cost of natural gas to the residential user in January? $8.41 (NYMEX futures) + $2.00 for Duke + misc incomprehensible things = $10.60, say. Or, to convert to the way the customer sees it on his bill, $1.06 per ccf.

BUT THAT'S USING THE NYMEX FUTURES, which Duke doesn't trade. (They only buy from their established private sources, which are long-term gas suppliers.)

My guess for next Winter, then... $1.15 per ccf.














"We never sall a hedge."






We do not do anything through the financial markets, but with our private counterparties.






We do not trade the market.






We looked good in Winter of 2005-2006






We looked bad and took a hit last summer (2006). Prices were lower than we had bought.






All of this gets ironed out in later GCR hearings before the PUCO. i.e. the customer ends up paying or getting the benefit, etc.