In order to keep electricity prices relatively stable.  We enter into contracts for the purchase of coal and natural gas.  Approximately 67% of our electricity comes from coal and 29% comes from natural gas. Over the last several years, we have continued to see the cost of new coal contracts come in at higher prices than the former. Contracting for coal is a relatively simple process.  Requests for coal deliveries are issued and suppliers submit their prices.  Unfortunately, prices continue to rise, primarily due to worldwide demand for coal.  Natural gas is a little more complicated, however.  In order to forward buy natural gas at a certain price.  We must “hedge” the purchase price ahead of time, usually several months.  Unfortunately, this is very much like buying corn futures.  If you buy low and the price goes up, you feed your animals at a lower price than if you had bought off the open market.  If however, the price goes down after you buy the corn futures, then you pay a higher than market price when the corn is delivered.  For most of 2008, natural gas prices including “hedges” or futures were well above today’s natural gas prices.

As I hope this explains, we are paying more for coal and natural gas than we were last year.  Unfortunately, these commodities continue to rise due to worldwide demand.  If we want them, we must pay the price, or they go somewhere else.  The increase implemented amounts to $2.00 per 1,000 kilowatt hours on an electric bill.

You will find information offered in your bill this year offering ways that you can conserve electricity in order to reduce your electric usage.  Also, there are many suggestions listed here on our website.