We enter into commodity price contracts to actively manage risk associated with price volatility to protect cash flow required to fund our capital program.  We use fixed price and costless collar contracts as well as balancing physical and financial contracts in terms of volumes, timing of performance, and delivery obligations to manage risk. 

 

Commodity hedges were put in place so that the Corporation has natural gas hedged for 54,250 giga joules (“GJ”) per day between an equivalent AECO floor price of $4.50 per GJ and a ceiling price of $7.01 per GJ.  The Corporation has also entered into electricity hedges for a total of 84 mega watt hours (“MWh”) per day at a fixed price of $50.74/MWh.  These hedges will be in effect throughout 2010 and 2011 as follows:

 

Commodity   Term Volume
 Average Price
 Index
Natural gas
    Collar
    Collar
    Collar
Electricity
    Swap		  
Jul./09 – Jun./10
Jul./09 – Jun./11
Jul./09 – Oct./11

Jan./10 – Dec./11
14,000 GJ/d
30,250 GJ/d
10,000 GJ/d

84 MWh/d
$4.50 - $5.80/GJ
$4.52 - $7.01/GJ
$4.50 - $7.00/GJ

$50.74/MWh
AECO
AECO
AECO

AESO

 

Net earnings for the year-ended December 31, 2009, include realized and unrealized gains of $22.8 million (2007 - $1.9 million loss) on these transactions. For the first quarter of 2010, we recognized realized and unrealized gains of $15.0 million from commodity hedge transactions.