The bitterly cold winter season, with increased heating demand, has had a major impact on the natural gas market – resulting in increased wholesale costs. As a result, Ameren Missouri customers will pay higher rates for natural gas supply under a revised Purchased Gas Adjustment (PGA). The higher rates, approved by the Missouri Public Service Commission (MPSC), are a direct result of wholesale market price increases. The new PGA becomes effective March 7, 2014.
The PGA rate change will increase natural gas bills by approximately 4.7 percent for customers in Columbia, Jefferson City, Mexico, Wentzville, Cape Girardeau and Marble Hill. That amounts to a total increase of approximately $36.94 per year, or $3.08 per month for residential customers. For Rolla residential customers, the total increase will be approximately $32.22 per year, which amounts to about $2.68 per month.
“Wholesale gas prices aren’t regulated. Market supply and demand conditions will cause increases and decreases in price,” said Jim Massmann, Ameren Missouri’s gas supply director. “Since the wholesale price of natural gas changes daily – while the PGA is held steady through most of the year – the PGA must be periodically adjusted to compensate for differences between actual wholesale natural gas supply costs and revenues collected from customers for these costs. Purchased gas costs are passed through to customers on a dollar-for-dollar basis without any markup or profit to Ameren Missouri.”
The PGA reflects the wholesale cost of natural gas, plus the cost of transporting gas to the company’s system.
In preparation of the winter season, Ameren Missouri hedges about 75 percent of its natural gas to protect customers from market price spikes. This projection is based on extensive data and research, which includes temperature averages and demand that reflects a normal winter season. Hedging more than 75 percent could result in purchasing too much gas supply for an abnormally warm winter.
“Overall, hedging benefits our customers by helping to dampen the impact of price swings and secure adequate supplies to meet their needs,” Massmann said.
Ameren Missouri, like other natural gas providers in the state of Missouri, is allowed to make up to four changes to the PGA per year and no more than one change per any two consecutive months. Throughout the year, the company reviews the under- and over-collection PGA balance to assess reflection of costs and the impact of future gas costs on its customers.
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Ameren Missouri has been providing electric and gas service for more than a century, and our electric rates are among the lowest in the nation. We serve 1.2 million electric and 127,000 natural gas customers in central and eastern Missouri. Our mission is to meet their energy needs in a safe, reliable, efficient and environmentally responsible manner. Our service area covers 63 counties and more than 500 towns, including the greater St. Louis area. For more information, visit AmerenMissouri.com.