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Utility fuel ‘hedging' put on hold

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TALLAHASSEE, Fla. – State regulators Wednesday approved an agreement that calls for at least a temporary moratorium on "hedging" of natural-gas prices by electric utilities.

Hedging is a financial practice aimed at addressing the volatility of prices for natural gas used to fuel power plants. But the state Office of Public Counsel, which represents consumers, and business groups have argued that hedging has led to losses for utility customers.

The state Public Service Commission on Wednesday approved an agreement reached by the utilities and hedging critics to place a moratorium on new hedges through 2017 while the parties study and negotiate the issue.

The agreement was initially filed last month by Duke Energy Florida, Gulf Power, Tampa Electric Company, the Office of Public Counsel, the Florida Retail Federation and the Florida Industrial Power Users Group.

Florida Power & Light has agreed in a separate rate case to a halt on hedging and also said it would be willing to go along with the agreement reached by the other utilities.

Jon Moyle, an attorney for the Florida Industrial Power Users Group, which includes large commercial electricity users, said his group would prefer that hedging stop.

"From FIPUG's perspective, hedging has not worked well," Moyle said.

Public Service Commission Chairwoman Julie Brown supported the moratorium but also said she thinks hedging is important.

"We want utilities to do it smarter. Hedging needs to be done smarter, (a) more responsible way of hedging as we move forward with all the facts and evidence that we have to date," she said.