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Florida Gas Utility urges Lake City to authorize rolling natural‑gas hedging program
Summary
Florida Gas Utility presented hedging tools including futures and call options and recommended a rolling program (75% 1 year, 50% 2 years, 25% 3 years) to reduce price volatility; council heard the briefing during the April 21 meeting; no vote was taken.
Florida Gas Utility presented a briefing to the Lake City Council on April 21 recommending the city adopt a rolling natural‑gas hedging program to reduce future price volatility.
Katie Hall, general manager and CEO of Florida Gas Utility, told the council the objective of hedging is to reduce price risk rather than to “beat the market.” She said, “Hedging is a type of investment that helps reduce the risk of adverse price,” and described two commonly used instruments — futures contracts, which lock a price, and call options, which set a ceiling while allowing the city to benefit if market prices fall.
Hall showed a proposed program that would phase-in…
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