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Florida Gas Utility presents hedging option to Live Oak council, urges ongoing program to stabilize prices
Summary
Katie Hall, general manager and CEO of Florida Gas Utility, briefed the City Council on natural gas hedging—describing it as a risk-management tool aimed at reducing price volatility—and discussed the rationale for an ongoing hedging program that could stabilize future gas costs for customers.
Katie Hall, general manager and CEO of Florida Gas Utility, gave a presentation to the City Council explaining natural gas hedging and why a municipality might adopt an ongoing hedging program.
Hall said hedging is a form of investment intended to reduce the risk of adverse price movements rather than to secure the lowest possible price. “Hedging is not lowest price available. What we're trying to do is have a stable price,” she said, adding that the approach functions like an insurance policy to protect residents—particularly those on fixed incomes—against sudden price spikes.
Hall explained common hedging instruments such as futures contracts and call options and said the optimal timing for hedging is when market prices are low and stable, not during a price spike. She noted recent historical volatility—some municipalities that hedged during price spikes locked rates near $6 per dekatherm in 2022, while others with ongoing programs secured rates around $2 per dekatherm when market prices were higher. Hall said current market prices at the time of her presentation were about $3–$4 per dekatherm (about $0.30–$0.40 per therm).
Hall also described demand and infrastructure considerations that can affect prices: increased demand from liquefied natural gas (LNG) export facilities, cruise ship and industrial usage, and pipeline bottlenecks that constrain delivery into Florida during high-demand periods. She said the U.S. has substantial gas supply but that Florida’s peninsula geography creates transmission constraints that can raise regional prices.
The presentation outlined the city-level policy choice of whether to pursue an ongoing hedging program. The council asked questions about mechanics and timing; the transcript excerpt records the presentation and an offer from Hall to take the council deeper into slide material on request. No formal action to adopt a hedging program was recorded in the provided excerpt.
