It is anticipated the average Ameren Illinois residential customer will pay about $20 more for natural gas for the month of November 2005, as compared to November of 2004, assuming normal temperatures. The increase for customers will be higher if temperatures are colder than normal.
The impact of this year's hurricane season on natural gas production in the Gulf of Mexico has aggravated the already critical balance between supply and demand in the U.S. Furthermore, record high crude oil prices have contributed to higher natural gas prices. Ameren officials warn that below normal temperatures this winter could push natural gas market prices even higher.
Ameren's Illinois utilities purchase natural gas from wholesale producers located in various U.S. natural gas production areas. Ameren does not produce natural gas and must purchase its natural gas supply in the wholesale markets. The wholesale price is not regulated, but rises and falls based upon market conditions caused by supply and demand. The Ameren Illinois utilities pass the cost of natural gas on to customers, dollar for dollar, through the purchased gas adjustment (PGA) rate. About three-fourths of a residential customer's bill is the actual cost of natural gas from these suppliers recovered through the PGA, without any markup in price.
Ameren's Illinois utilities do not profit from the PGA. Listed as the "Gas Charge" or "PGA" on individual customer bills, the PGA is recomputed each month and may go up or down depending on the wholesale price of natural gas. The PGA is a matter of public record and is available on the Ameren Web site (www.ameren.com).
Effective Nov. 1, the AmerenCILCO PGA will go from 95.54 cents per therm for October to 106.68 cents per therm for November; the AmerenIP PGA will increase from 96.87 to 107.96 cents per therm; the AmerenCIPS PGA will rise from 105.42 to 114.08 cents per therm; and the AmerenCIPS/Metro East (the Alton-East St. Louis area) PGA will go from 106.57 to 111.29 cents per therm.
The PGA rate is reviewed and approved by the Illinois Commerce Commission to ensure proper cost recovery and that Ameren management was prudent in the purchasing of natural gas.
Ameren takes significant steps to dampen the impact of wholesale gas price volatility on its natural gas customers. The company utilizes sophisticated financial hedging strategies and negotiates both long- and short-term natural gas supply contracts.
Also, Ameren purchases natural gas at lower prices during the summer season and injects this natural gas into extensive underground storage fields, which provide almost half of the natural gas required during the winter heating season.
Ameren utilizes a number of interstate pipeline suppliers, accessing multiple production areas to limit the impact of supply disruptions from any particular area, like the Gulf of Mexico.
Ameren already has secured adequate supplies of natural gas to meet customer needs for this winter season.
"Despite these efforts, natural gas prices continue to rise to record levels - driven by record high prices for crude oil, a devastating hurricane season which has severely impacted off-shore natural gas production in the Gulf of Mexico, and a very hot summer which increased natural gas-fired electricity generation," says Scott Glaeser, vice president, Gas Supply and System Control, AmerenEnergy Fuels and Services.
"In addition, natural gas production has declined for several years now. Many promising areas for exploration of new gas supplies in the U.S. are off limits due to federal policies or environmental regulations. This is a national problem that needs to be addressed."
"While Ameren has adequate supplies of natural gas for the coming winter, customers will experience much higher prices for natural gas," says Scott Cisel, president of Ameren Illinois Energy Delivery.
"We encourage our customers to take the appropriate steps to use energy wisely and conserve where possible. If customers do have difficulty in paying their bills, we urge them to contact us to work out a payment plan. All of our customers will experience the financial impact of higher winter heating bills, and we will continue to pursue supply options which offer the best solutions for our customers."
Ameren is asking all of its customers to seriously consider Budget Billing because it will level out their monthly payments. Approximately 244,000 Illinois customers are now enrolled in Budget Billing.
By enrolling now, customers can begin leveling out their monthly payments. No additional deposit is required for Budget Billing. The plan allows customers to pay an average monthly bill amount based on the last 12 months of usage. The program is open to electric-only, natural gas-only and combination electric and natural gas customers. Customers can enroll in the program or drop out at any time.
Visit the "Natural Gas Center" on Ameren's Web site (www.ameren.com) for additional information. Ameren, through its subsidiaries, serves 2.3 million electric and more than 900,000 natural gas customers in a 64,000-square-mile area of Illinois and Missouri.
Natural Gas Information from Ameren Conservation Tips
To better manage rising natural gas costs, customers should take steps now to conserve energy. Examples of conservation steps include:
• Plug air leaks, apply caulk and install weather stripping.
• Use storm windows or plastic window covering.
• Turn down thermostats (every degree you turn down your thermostat will reduce consumption by 2-3 percent).
• Regularly change furnace filters.
• The water heater is the second largest user of natural gas in the home. Turning a water heater to the lowest setting (usually 120 degrees F) and placing an insulated jacket over the water heater can save on energy bills.
Additional conservation suggestions are available on Ameren's Web site (www.ameren.com).
Billing Tips
• The Ameren Illinois utilities offer Budget Billing, which levels out the impact of higher heating bills throughout the entire year. About 244,000 Ameren Illinois customers are enrolled in Budget Billing.
• Each Ameren Illinois utility offers deferred payment agreements to allow those customers who have fallen behind in bill payments to catch up on those past-due balances.
• The Ameren Illinois utilities again are offering the Good Samaritan special reconnection program, which enables a customer to be reconnected by paying the lesser of $250 or 20 percent of the past due balance.
• The Ameren Illinois utilities waive reconnection fees once each calendar year for any customer who has been previously disconnected for non- payment.
• The Ameren Illinois utilities waive up front deposits for new service applicants who are eligible for LIHEAP (Low Income Home Energy Assistance Program).
• The Ameren Illinois utilities will not apply LIHEAP funds to new reconnection fees or security deposits.
• The Ameren Dollar More and Warm Neighbors assistance programs are funded by voluntary contributions by customers and employees. These programs provide assistance to customers in need of help to pay utility bills.
• Each Ameren Illinois utility offers deferred payment agreements to allow those customers who have fallen behind in bill payments to catch up on those past-due balances.
• Ameren works closely with the 27 LIHEAP agencies located with the Ameren Illinois utility service territories.
• Ameren has partnered with the U.S. Department of Agriculture to promote home repair and weatherization loans to low-income rural home owners. Low- income rural seniors over the age of 62 can apply for federal grants.