Vol. 22   No. 3
Fall 2016
  • MGE Talks Business
News Briefs

Natural Gas Outlook is Promising as We Move Into Heating Season

Community Energy Workshop Helps Advance Energy 2030


Natural gas supply remains strong and prices stable as we make our way through fall and head into the winter heating season.

While natural gas prices are higher than they were last year, they are still low when compared to historical averages, and natural gas remains a great value for its users. Perhaps most importantly this time of year, strong and stable are the words we're hearing.

"We expect natural gas prices to stay where they are in the near term, in large part due to the continued strong supply," explained John Jicha, MGE Director of Energy Supply and Trading. "Natural gas production has slowed a little compared to last year, but storage levels remain higher than last year and the previous five-year average. There is more than enough supply right now to meet the winter demand."

Due to those strong supplies and ample storage/transportation facilities, based on normal winter weather conditions, natural gas prices are expected to be relatively stable this winter. However, natural gas is still a commodity traded on the open market and the price can fluctuate.

"If we have an extended period of extreme cold, like we saw with the polar vortex in early 2014, we would expect to see regional and daily volatility in prices," Jicha added.

In addition to buying extra gas during the summer when it is typically less expensive and putting it into underground storage, MGE also uses a risk management program for a portion of its natural gas supplies. Similar to insurance, this provides some protection from the potential extreme price increases during the high-demand winter months.