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Live Oak council approves rolling natural gas hedging directive, gives city manager authority
Summary
The City of Live Oak City Council approved a rolling hedging directive allowing the city manager to authorize futures contracts or call options to stabilize natural gas costs, with layered hedges covering up to 75% of year‑one usage and a strike price tied to the city—s budgeted rate.
The City of Live Oak City Council voted to authorize a rolling hedging directive that allows the city manager to approve futures contracts or call options to stabilize natural gas costs for city accounts.
City staff said the directive would permit staggered, layered hedges: up to 75% of average daily usage for the first 12 months, 50% for months 13–24 and 25% for months 25–36. The strike price for options or futures would be set to match or be below the city—s budgeted price per therm, with transportation/basis differentials deducted as appropriate.
The presentation explained the difference between futures contracts and call options, and why a mix may be appropriate. The presenter (energy consultant) said a…
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