Fuel Price Hedging Program

Today the city announced their participation on the Indiana Bond Bank Fuel. The Hedging program is basically an insurance policy that protects the city against fluxuating gas prices. The citys goal in participating in the program is to safe-guard their budget against sky rocketing gas prices. In 2008 the city spent about two million dollar on gas to fuel their fleet of 17-hundred cars. Mayor Tom Henry says “We can effectively estimate how much gasoline we will need in a given year, but the changing price can make it difficult to make an accurate budget.” The program works by setting a floor and ceiling on the price per gallon. If the price goes above the cap, the Bond Bank makes up the difference, not tax payers. The Mayor sasy “This tool allows us to effectively plan for expenditures. Not just useful, but ultimately protects Fort Wayne tax payers.” John Regheimer, with Maverick Energy Consultants, says “If its going to exceed the ceiling, they are going to get money back.” The city has a 2009 contract with the Hedging program. In this years contract they are paying $1.95 per gallon, plus a program fee of $0.07 a gallon. The contract lets them buy 65% of gas they use at the discounted price. Jim Howard, the City Purchasing Director, says “The city couldnt have done this on their own. We need to work with other cities to do these hedges.” Fort Wayne is one of six cities in the program. Officials say the more cities that join, the cheaper the price. The citys current contract will expire in December. They will negotiate 2010 contract in the Fall. They hope to include both Fort Wayne Community Schools and the County in next years agreement. The city is not purchasing gas from Bond Bank. They will continue to use the same gas distributors they currently have.