What’s been happening with natural gas prices?		Why are natural gas prices so volatile this year?
	What prices can we expect for the upcoming heating season?		What is MGE doing to reduce gas price volatility?
	How do natural gas prices compare to other fuels for commercial and industrial customers?		How can MGE help customers manage costs?
	For more information

What’s been happening with natural gas prices?

Natural gas has had extreme price swings often following the domestic and global oil markets. Natural gas is traded as a commodity on the New York Mercantile Exchange (NYMEX).

• During the summer of 2007 natural gas prices averaged about $7 per dekatherm.
• By June 2008, natural gas futures jumped about 80% and hovered at or above $13.
• In late July, prices began to decline, largely due to the fuel market's response to a global recession
• At the end of September 2008, prices were in the $7 to $8 range.
• By the end of February 2009, prices were near $4 per dekatherm, off 70% from their 2008 peak.
• Throughout the 2009-2010 heating season, prices continued to be well below their 2008 record levels.

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Why are natural gas prices so volatile?

Natural gas is a worldwide commodity. The market’s volatility is due to:

• Tighter supplies.
• Global tensions.
• High cost of competing fuels such as oil and propane.
• Decreasing natural gas supplies from Canada.
• Weather, such as extreme cold weather or hurricanes that may damage gas drilling or refining facilities.
• Increasing international demand for natural gas.

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What prices can we expect for the upcoming heating season?

No one can predict where natural gas prices may head due to the volatility. Natural gas prices can be quickly affected by hurricanes, cold weather, global tensions and the oil market.

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What is MGE doing to reduce gas price volatility?
MGE works to control natural gas prices to minimize price swings for our customers. We:

• Begin to buy gas supplies in the summer and put this gas into storage to ensure adequate supplies for winter and hedge against possible higher winter prices.
• Employ a financial risk management program to reduce price swings that could be caused by volatile gas prices.

How do natural gas prices compare to other fuels for commercial and industrial customers?

How can MGE help customers manage costs?
We encourage you to begin preparing for the colder months ahead. Conserving energy and planning your energy budget can help:

• Visit www.mge.com/business for energy-saving tips, to learn about our specialized services to increase energy efficiency in your business and to track your business energy use online.
• Call the Business Help Line at 252-7007 to get answers to specific questions.
• If you get behind on your energy bills, contact MGE at 252-7007 as soon as possible to set up a payment plan.

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For more information for industry sources:
The Energy Information Administration (U.S. Department of Energy)
The Natural Gas Supply Association
American Gas Association
Commercial & Industrial - Understanding Natural Gas Price Volatility [PDF - 168 KB]