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AmerenUE Files for Missouri Rate Adjustment to Reflect Changes in Wholesale Natural Gas Costs
AmerenUE has filed a request with the Missouri Public Service Commission (PSC) for a change in the Purchased Gas Adjustment (PGA) to reflect changes in the cost of natural gas from the company's suppliers. Subject to PSC review and approval, the new PGA would become effective Nov. 1 for AmerenUE's 114,000 Missouri gas customers.

Wholesale costs of natural gas 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.

For most customers, the new PGA would mean higher natural gas bills than under the current PGA, although a small number of customers would see a decrease.

Based on average usage, and excluding taxes, residential customers in central and eastern Missouri would pay a total of about $616.93 during the upcoming heating season of November through March. That total is $37.95, or 7 percent, more than under current pricing. Customers in Rolla, Salem and Owensville, who were formerly served by Aquila, Inc., would pay about $687.16, which is $41.09, or 6 percent, more than under current pricing. Customers in the southeast Missouri counties of Cape Girardeau, Scott and most of Stoddard would pay about $637.94, which is $48.19, or 8 percent, more than under current pricing.

However, customers in the southeast Missouri counties of Butler and Bollinger, and the Stoddard County community of Advance, would pay about $509.75, which is $60.18, or 11 percent, less than under current pricing.

These amounts vary among these different geographical areas\-which are not interconnected\-due to differences in supplier costs, transportation and storage costs, differences in average customer usage, and an adjustment to reflect any under-collection or over-collection of actual costs incurred by AmerenUE in previous periods.

AmerenUE officials also caution that these cost estimates are based on normal seasonal usage, and do not reflect the impact of weather changes. For example, if this winter turns out to be colder than normal, customer bills would be higher due to higher usage.

AmerenUE is required to file a PGA adjustment to be effective in November of each year, with up to three additional filings permitted during a calendar year. However, the company has not filed for any additional PGA changes since Nov. 1, 2003.

Scott Glaeser, vice president, Gas Supply, for AmerenEnergy Fuels and Services, says nationwide natural gas prices are significantly higher than they were 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," Glaeser says. "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 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 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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