The EQT / Homer City deal made headlines. Your project is not Homer City.
EQT locked in 665,000 MMBtu/day as both producer and exclusive supplier - no competitive tension on price, and the buyer carries the basis exposure. For a 4.4 GW hyperscale campus with Knighthead's equity structure, that may be a defensible trade-off.
For a mid-market BTM project, it's a blueprint for a bad outcome. Any serious project finance lender will ask hard questions about fuel cost exposure. Here's what your agreement actually needs.
Index pricing means nothing if the gas doesn't show up.
Your agreement needs an explicit firm delivery obligation - not "best efforts," not interruptible. Firm supply AND firm transportation. A firm supply contract that moves on interruptible pipeline capacity is not firm delivery. Define what happens on a non-delivery event: financial remedy, replacement supply, or both. Data center SLAs require five nines of uptime. An interruptible fuel supply is structurally incompatible with that obligation.
Henry Hub is a reference price. Your delivery point is where you actually pay.
On January 26, 2026, Henry Hub set an all-time record at $30.565/MMBtu during Winter Storm Fern. TETCO M-2 basis - which typically trades at a discount of $0.50 to $1.50 below Henry Hub - flipped to a premium of +$0.05 that day. That's not a tail risk. That's the pipeline system this deal is priced on. Lock the basis differential for the first 3 to 5 years at or near execution. When basis blows out, you're watching from the sideline instead of explaining cost overruns to equity.
Your equity sponsors may not want full fixed-price exposure. Fine. A collar isn't full fixed price.
A costless collar - buy a call (cap), sell a put (floor) structured to net zero premium - caps catastrophic upside while letting you participate in lower prices down to the floor. The floor is a real commitment: below that strike, you pay above-market. Understand it before you execute it. Project finance lenders for merchant gas generation require fuel and spark-spread risk to be mitigated - through hedging, contractual pass-through to a creditworthy offtaker, or tolling - before they size to a meaningful DSCR. Build it in early. Retrofitting under pressure is expensive.
Sellers know when they're the only option. They price accordingly.
Running two or three suppliers through origination simultaneously creates competitive tension, improves pricing, and gives you a fallback if your primary supplier has a credit event or operational issue. EQT has publicly confirmed a "tactical curtailment strategy" across three consecutive quarterly releases - targeting uncommitted spot volumes to optimize realized pricing. Their corporate posture entering 2026 is "largely unhedged" by design (Toby Rice, Q1 2026 earnings call). A single-supplier counterparty running unhedged has different incentives during a price spike than a diversified portfolio supplier under fixed-price obligations. Address it in contract structure.
Pipeline access is not the same as supply redundancy.
Dual-path delivery is table stakes - two independent interstate systems to the meter. Homer City checks this box: TETCO and Eastern Gas Transmission and Storage. But pipeline redundancy without supplier redundancy is incomplete. Redundancy means having secondary supply relationships you can activate, not just a second pipe that your single exclusive supplier may or may not flow gas into. Document the contingency supply path in the agreement. Not in a side conversation.
Firm delivery commitment ~ Terms not publicly disclosed (AIP stage)
Basis hedge at execution ✗ Delivery at M-2, no disclosed hedge
Price collar ✗ Terms undisclosed, no collar reported
Multiple counterparties ✗ EQT is producer AND exclusive supplier
Supply redundancy ✓ Dual-pipe confirmed (TETCO + EGTS)
Toby Rice got a great deal - for EQT. Unhedged seller, captive buyer, no disclosed collar, and M-2 that printed above $50 in January 2026. That's not a model. That's a cautionary tale.
If you're in planning or pre-construction on a BTM gen or grid-connected project, let's talk through what the fuel side actually looks like when it's structured properly. Not the press release. The real terms.
Digby Ferrara is a natural gas originator and Director of Energy Services at Aggressive Energy in Brooklyn, NY, focused on behind-the-meter on-site generation and grid-connected power. He structures supply around how your project actually consumes fuel: firm delivery, basis hedges at execution, collar structures, and multi-producer supply stacks built to satisfy project finance lenders. Contact Digby to talk through your project's fuel side.