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AmerenUE Files for Rate Adjustment to Reflect Increases In Wholesale Natural Gas Prices
AmerenUE customers would pay more for natural gas this winter, but the increase would be significantly less than recent government projections under a new Purchased Gas Adjustment (PGA) the company has filed with the Missouri Public Service Commission (MPSC). The PGA, which accounts for about three-quarters of an average residential customer's total bill, excluding taxes, is comprised of the wholesale cost of natural gas from the company's suppliers. Subject to MPSC review and approval, the new PGA would become effective Nov. 1 for AmerenUE's 120,000 Missouri natural gas customers.

Under the new adjustment, an average residential customer would pay from $17 to $38 more per month than last winter, assuming normal weather\-a 12 to 30 percent increase. AmerenUE officials caution that if this winter is colder than normal, the increase would be greater due to higher usage. The estimates vary due to differences in supplier costs and customer usage in the four different geographic regions of Missouri where AmerenUE provides natural gas service.

In contrast to AmerenUE's projected increases, the most recent forecast by the U.S. Energy Information Administration (EIA) predicts an average increase in natural gas prices over last winter of 61 percent for the Midwest.

AmerenUE's new PGA charges would also apply to commercial and industrial customers, but their usages vary much more widely than for residential customers, making it impractical to give averages.

AmerenUE purchases natural gas from wholesale suppliers located in various U.S. natural gas production areas. The wholesale price is not regulated, and rises or falls based on market conditions caused by supply and demand. AmerenUE passes the cost of natural gas on to customers, dollar for dollar, through the PGA, without any "markup" in price.

For AmerenUE natural gas customers in central and eastern Missouri, the increase over last winter would average $21.86 per month, or 17.7 percent, during the peak winter heating season of November through March. For customers in Rolla, Salem and Owensville, the increase would average $16.88, or 12.3 percent, per month. Customers in the southeast Missouri counties of Cape Girardeau, Scott and most of Stoddard would pay an average of $37.80, or 29.6 percent, more per month. And customers in the southeast Missouri counties of Butler and Bollinger, and the Stoddard County community of Advance, would pay an average of $24.13, or 23.7 percent, more per month.

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

"The main reason for the most recent spike in natural gas prices is the impact of Hurricanes Katrina and Rita, which disrupted natural gas production in the Gulf of Mexico and along the Gulf Coast, where 25 percent of the natural gas in the U.S. is produced," says Scott Glaeser, vice president, Gas Supply and System Control, for AmerenEnergy Fuels and Services.

Glaeser says the longer-term reason for high natural gas prices is that gas production in the U.S. has stagnated or even declined, while demand for natural gas continues to increase.

"There are new natural gas resources available, but many promising areas for natural gas exploration are presently off-limits due to federal policies or environmental restrictions," Glaeser adds.

Ameren takes significant steps to minimize the impact of wholesale price volatility in the natural gas market, including:

• Using financial "hedging" instruments and negotiating both long and short term natural gas supply contracts to mitigate price volatility.

• Purchasing natural gas when prices are lower and storing the gas in underground storage fields, which then provide almost half of the natural gas required during the winter heating season.

• Diversifying interstate pipeline suppliers and accessing multiple production areas to minimize the impact of supply disruptions from any particular area such as the Gulf of Mexico.

"While the cost of natural gas for AmerenUE customers is not expected to rise as much as the U.S. Energy Information Administration is predicting for the Midwest, it is still a cause for concern and we urge our customers to be prepared," says Richard Mark, AmerenUE senior vice president, Missouri Energy Delivery.

"Take steps now to weatherize your home and make sure your furnace is working efficiently," Mark says. "You can also minimize the impact of higher natural gas prices by signing up for our Budget Billing program, which spreads your payments out throughout the year."

One of the easiest ways customers can conserve energy is by setting their thermostats a little lower. For each degree a thermostat is lowered, you can save two to three percent on heating costs.

For customers who want to upgrade their natural gas equipment, AmerenUE's Missouri Energy Efficient Natural Gas Equipment Rebate Program offers rebates for a portion of the cost of new Energy Star(R) qualified natural gas furnaces and certain other energy-saving products. Applications for this pilot program will be accepted until April 1, 2006, subject to remaining funds.

Information about the rebate program, Budget Billing, sources of energy assistance and energy-saving tips are available under "Natural Gas Center" on the Ameren Web site: www.ameren.com.

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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