Hedging

Morning Consult ran an op/ed about SCR 43See it here.

Pull Quote: “Missouri recently passed Senate Concurrent Resolution 43 that reaffirms the state’s policy of allowing electric utilities to hedge natural gas contracts and supports the state’s utility regulators in their role of ensuring hedging is done prudently… Simply put, hedging is accomplished by taking actions to reduce the risk of unwanted outcomes.  For utilities, and ultimately their customers, these risks are primarily price spikes and disruptions in supply. To help manage these risks, utilities may enter into physical hedges by taking an ownership stake in additional supplies of natural gas. More commonly, utilities execute contracts that put a ceiling on the price. The low cost of planning and executing the contracts is seen as a reasonable expense to protect supply and manage price volatility for the sake of consumers.”

 

Originally in May 31 MOScout.