Wholesale prices of natural gas are not regulated and, like other market commodities, fluctuate based on supply and demand. Ameren companies receive no markup on the gas, and the cost to customers fluctuates monthly to reflect the utility's actual expense. These charges are itemized on AmerenIP bills as a "Gas Charge," and on AmerenCILCO, AmerenCIPS and AmerenUE bills as a "Purchased Gas Adjustment," or PGA.
The "gas charge" on AmerenIP customers' November bills will be 77 cents per therm of natural gas. For an average residential customer who heats with natural gas, this translates to a November natural gas bill of about $58, compared to about $49 in November 2003.
The November PGA for AmerenCIPS customers will be 76 cents per therm. An average residential customer who heats with gas could expect to pay about $58 in November, an increase of about $4 over a year ago.
AmerenCILCO customers will see a November PGA of 69 cents per therm. The average residential customer of AmerenCILCO could expect a November natural gas bill of about $58, compared to about $54 in November 2003.
The November PGA for AmerenUE gas customers in Illinois will be 66 cents per therm, likely resulting in an average residential bill of about $58, or $2 more than last year.
Heating cost estimates are based on average November usage for a residential customer who heats with natural gas. The cost of the gas itself typically accounts for more than two-thirds of residential customers' gas bills. Unlike gas commodity costs, the utilities' rates do not fluctuate and are regulated by the Illinois Commerce Commission. This portion of the customer's bill reflects the costs of constructing and operating the distribution system that delivers gas to customers.
Early in the season the U.S. Department of Energy predicted that households could pay about 15 percent more for natural gas this winter than last. Ameren expects this winter's overall increase for its customers to be within that range.
Gas storage and supply systems for the three Ameren utility companies operating in Illinois are not interconnected. Their costs vary due to differences in supplier prices, transportation and storage costs, and variations in customer usage patterns.
Scott Glaeser, vice president, Gas Supply, AmerenEnergy Fuels and Services, says nationwide natural gas prices are significantly higher than just a few years ago, reflecting a continued imbalance between supply and demand across the United States and Canada.
"In recent years, federal regulatory and environmental policies have increasingly restricted the ability of gas production companies to find new places to drill for gas," said Glaeser. "At the same time, other environmental regulations have boosted demand by encouraging many industries to switch to clean-burning natural gas for processes that previously used other fuels. "Recently, Hurricane Ivan seriously damaged gas production and pipeline facilities in the Gulf of Mexico, further reducing supply. Record high crude oil prices are also contributing to extreme price volatility in the natural gas markets."
Glaeser says Ameren 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 pipeline transportation and leased storage resources, creating competition among suppliers.
Ameren programs and information help consumers manage bills, control costs Customers seeking to better manage their winter heating bills can sign up for budgeting programs that spread energy costs evenly throughout the year, allowing consumers to avoid seasonal fluctuations in their monthly bills. Customers of AmerenCIPS, AmerenCILCO and AmerenUE can enroll in the Budget Billing program; customers of AmerenIP can enroll in a budgeting program called the Levelized Payment Plan.
Consumers can find practical tips for saving energy and money in a downloadable poster "Cut Your Home Utility Bills," available on the Savings Tips web page at www.ameren.com.
Ameren also encourages income-eligible customers to find out about bill-payment help that's available and when and where to sign up. Government funding to help eligible households pay heating bills is available through the Low Income Home Energy Assistance Program, or LIHEAP. To find the local agency in your area, call 1-800-252-8643.
Eligible AmerenIP customers can apply for help from Warm Neighbors, a heating and weatherization assistance program funded by AmerenIP and its customers. To find out about help from Warm Neighbors, call 1-866-621-1139.
Eligible customers of AmerenCILCO and AmerenCIPS can apply for help from Dollar More, an Ameren energy assistance program. Information about Dollar More is available at www.ameren.com. Customers can also call AmerenCIPS, 1-888-789- 2477; AmerenCILCO, 1-888-672-5252; or AmerenUE, 1-800-552-7583.
AmerenCILCO, based in Peoria, Ill.; AmerenCIPS, based in Springfield, Ill.; and AmerenIP, based in Decatur, Ill.; and AmerenUE, based in St. Louis; are subsidiaries of St. Louis-based Ameren Corporation [NYSE:AEE]. Through its operating companies, Ameren serves 2.3 million electric customers and 925,000 natural gas customers in a 64,000-square-mile area of Missouri and Illinois.
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