Md. PSC Authorizes WGL Hedging Through 2011-12 Winter Only

June 9, 2011
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The Maryland PSC denied Washington Gas Light's application for a permanent gas supply hedging program, but did authorize hedging through the 2011-12 winter (Case 9224).

"The Commission recognizes that a gas hedging program that protects customers against catastrophically high future natural gas prices is in the public interest, but only to the extent that the 'premiums' are reasonable and are subject to safeguards and reporting requirements to protect the customers from potential harm caused by payment of the 'premiums,'" the Commission said.

"The Commission, therefore, agrees with both Staff and OPC [Office of People's Counsel] that granting the Company’s request for permanent approval of its hedging program is not in the public interest," the PSC said.

Instead, the PSC granted WGL authorization to undertake its proposed 2011 summer storage injection hedging program and the 2011-12 winter baseload hedging program. Hedging after that date will require further authorization from the Commission.

Any costs incurred as a result of the hedging programs will be subject to a prudency review in WGL's purchased gas charge proceeding, rather than automatically included in the PGC rate.

The PSC also required to WGL to report on its hedging results using appropriate benchmarks and metrics, such as:

- Program costs versus program benefits;

- WGL's gas prices as benchmarked against appropriate comparison or indices;

- WGL's un-hedged and hedged prices; and

- Cumulative or total new loss or gain on transactions.

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