We purchase financial instruments to provide protection from high gas prices in the winter months. We buy gas under long-term contracts to secure a reliable supply. We also use short-term purchases when it s cost effective. Why gas prices will increase. As with all products and services, the cost of natural gas is a function of supply and demand.
Weather is always a key factor.
U.S. natural gas demand is expected to grow about 3 percent during the next 12 months. The use of gas-fueled power plants is increasing, as is the demand for natural gas to fuel these power plants. Lower gas prices in the past few years have resulted in less gas exploration and, as a result, less gas production. This means that, regardless of who we buy from, natural gas will cost more than it did last year. By Kansas Corporation Commission regulation, we do not benefit from these unusual circumstances, we pass on the cost of gas to our customers without markup.