Higher natural gas prices and market volatility directly affect Madison Gas and Electric and its customers. Natural gas is traded as a commodity on the New York Mercantile Exchange (NYMEX) with demand worldwide. The natural gas market often follows the domestic and global markets for oil.  

Recent prices
During 2008, natural gas prices have experienced record volatility.

• In June, natural gas futures jumped about 80% and were priced above $13 per dekatherm.
• In late July, prices began to decline and were trading below $9 in August.
• As of September, prices were in the $7 to $8 range.

What will happen with natural gas prices this heating season?
No one can predict where natural gas prices may head. Natural gas prices may be affected by cold weather, hurricanes, supply, global tensions and other factors. MGE has limited control over natural gas prices — similar to the limited control a gas station owner has over the price of gasoline.

We can help you manage costs
We encourage you to conserve energy and plan your energy budget:

• Visit mge.com/home for energy-saving tips. 
• To see your past energy use, sign in at My Account.
• Call our Home Energy Line at 252-7117 to talk to one of our energy experts and get answers to specific questions.
• Our Budget Payment Plan spreads your energy costs more evenly over a 12-month period and reduces the impact of higher winter or summer bills. Give us a call at 252-7080.
• If you get behind on your energy bills, contact MGE at 252-7222 to set up a deferred payment plan. Once established on this plan, you also are eligible for the Budget Payment Plan.

MGE efforts
MGE uses strategies to minimize natural gas price swings and ensure adequate supplies for the winter.

• MGE begins to buy gas supplies in the summer and put this gas into storage.
• MGE employs a financial risk management program to reduce price swings for customers caused by volatile gas prices.

MGE does not profit from higher gas costs
Because MGE owns no gas production, the vast majority of our gas earnings are derived from the delivery of natural gas to customers.

• The cost of natural gas is passed through to customers as a separate charge on bills. This changes monthly, depending on the current prices for natural gas in the national market.    
• If MGE can purchase gas supply at a cost lower than a market benchmark set by the state Public Service Commission, the resulting savings are shared between customers and MGE shareholders. 

Impact on electric prices
More natural gas is used to generate electricity because it burns cleanly and produces fewer emissions than other fuels. Higher natural gas costs are raising electricity prices across the country, including Wisconsin. Higher prices for natural gas increase the cost:

• To generate electricity.
• To purchase power on the regional energy market.

For more information
Residential - Understanding Natural Gas Price Volatility [PDF - 168 KB]
Commercial and Industrial - Understanding Natural Gas Price Volatility [PDF - 168 KB]