Utility fuel hedging involves forward contracts or financial instruments to lock in fuel prices. High levels of hedging protect customers from price spikes by stabilizing fuel costs, while low hedging exposes rates to volatile market swings.
Levels of Utility Fuel Hedging
75% hedged
Direction: Flat
Hedging moderate; exposures remain.
Past Year Trend for Utility Fuel Hedging Levels
Most utilities locked in natural gas supplies through forward contracts to stabilize costs. For example, Decatur Utilities hedged about 80% of its gas needs for winter 2025–2026 at $2.93 per dekatherm, keeping rates stable. High hedging levels reduce exposure to price spikes and support lower electricity rates.
