For residential and most other customers, the increase would amount to 10 cents per Ccf (hundred cubic feet) compared to the current PGA. Subject to PSC review and approval, the new PGA would become effective Sept. 1 for AmerenUE's 114,000 Missouri gas customers.
During the upcoming heating season, the new PGA would result in an average increase of about $10 per month in a residential customer's natural gas bill, excluding taxes, although the actual amount would vary based on individual usage. AmerenUE officials caution that the estimate is based on normal seasonal usage, and does not reflect the impact of weather changes. If this winter turns out to be colder than normal, customer bills would be higher due to higher usage.
AmerenUE does not produce natural gas, but purchases it from wholesale suppliers for distribution to customers. Wholesale costs from the company's suppliers are not regulated, and go up or down based on market conditions caused by supply and demand. Upon PSC review and approval, AmerenUE passes these costs on to customers, dollar for dollar, through the PGA, without "markup."
For residential customers, the PGA accounts for about two-thirds of an average bill, excluding taxes. The remainder of the bill is regulated by the PSC, and reflects the costs of constructing, operating and maintaining the distribution system that delivers gas to customers.
AmerenUE is required to file a PGA adjustment to be effective in November of each year. Although up to three additional filings are permitted during a calendar year, the company's current PGA has been in effect since Nov. 1, 2004.
Scott Glaeser, vice president, Gas Supply and System Control, AmerenEnergy Fuels and Services, says nationwide natural gas prices are significantly higher than they were just last year, reflecting a continued imbalance between supply and demand across the United States and Canada.
"Natural gas prices have increased significantly this summer, driven by record high prices for crude oil\-which are near $67 per barrel\-and the extremely active hurricane season which has threatened offshore gas production platforms in the Gulf of Mexico," Glaeser says. "In addition, the U.S. has endured a hot summer this year. This has driven up the demand for natural gas used for electric power generation, while, at the same time, the production of gas in the U.S. has stagnated or declined. Many promising areas for exploration to find new natural gas resources are currently off-limits due to federal policies or environmental regulations."
Glaeser says AmerenUE uses several strategies to help minimize volatility in wholesale natural gas prices. Those strategies include:
• Using financial "hedging" instruments and negotiating long and short- term gas supply contracts to dampen price volatility;
• Using gas storage for price hedging and operational flexibility, as well as to help ensure an adequate supply during the high-demand winter months;
• Diversifying, to the extent possible, the company's interstate pipeline transportation and leased storage resources, creating competition among suppliers.
AmerenUE provides services and information to customers to help them manage their bills and control energy costs. One of the most popular programs\-Budget Billing\-enables customers to avoid big seasonal changes in their monthly energy bills by spreading those costs evenly throughout the year.
Information on this and other programs, along with energy conservation tips, is available on the Ameren Web site (www.ameren.com). Information is also available by calling 800-552-7583.
AmerenUE is a subsidiary of St. Louis-based Ameren Corporation. The Ameren companies serve 2.3 million electric customers and 900,000 natural gas customers in a 64,000-square-mile area of Missouri and Illinois.
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