Gas Hedging Keeps Rates Stable

For many years, Decatur Utilities has purchased volumes of natural gas on the futures market in an effort to keep rates more stable for DU's natural gas customers. Weather patterns, political conflicts, demand by data processing centers and increased need for Liquified Natural Gas (LNG) in Europe and Asia have continued to drive spot market pricing higher in recent months. However, DU's "hedging" of its natural gas supply has kept retail gas rates for local customers much more stable.

“For many years, DU has strategically purchased future volumes of natural gas, especially those volumes needed for usage during winter months,” said Gary Borden, DU Operations Manager. “By making these bulk purchases when prices are lower, we were able to minimize the impact of market volatility."

DU hedged approximately 80% of its natural gas needs over the past five years. From November 2025 through March of 2026, DU has locked in gas at an average price of $2.93/dekatherm (one million BTU). Projected gas pricing is expected to soar to above $4.50 in 2026-2028. Spot market pricing hit a high of $12.44/dekatherm in August of 2022.

Had DU not made future natural gas purchases at lower wholesale prices, DU customers would have seen a dramatic increase in retail rates.

“DU is fortunate to have an in-house expert purchasing gas on behalf of our customers,” said Ray Hardin, DU General Manager. “Gary and Debra Curtis, DU’s Energy Supply Coordinator, continuously monitor the gas markets to make purchases for future needs. This winter, we will see the benefits of purchase decisions that were made over the past 2 years. " Hardin added that DU's hedging program has also been a key factor in keeping DU's retail natural gas rates the lowest in the state.

“This is one of the ways a public-owned utility works for the customer each day. We are not trying to produce a dividend for stockholders, but working for the customer,” Borden said. “This hedging program is just one of the ways we strive to make sure our rates are kept as low as possible for everyone.”

While market volatility is making it more difficult to lock-in natural gas futures at present, Borden and Curtis will continue to monitor market trends, looking for volumes of gas available at competitive pricing in the future.