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Global Forces Push Natural Gas Prices Upward, Ameren Illinois Utilities Offer Advice on Managing Energy Usage

Rising worldwide demand for energy is driving up the market prices of both petroleum and natural gas, which will mean higher costs for natural gas customers in Illinois and around the nation.

The Ameren Illinois Utilities (AmerenCILCO, AmerenCIPS, AmerenIP) today announced the actual cost of gas for their residential customers will increase by about 15 percent in June.

“The forces now pushing natural gas prices across the U.S. toward record levels are unprecedented,” said Scott Glaeser, vice president of Ameren Gas Supply and System Control. “Unlike the spike in prices that occurred in the aftermath of Hurricane Katrina in the fall of 2005, we now are witnessing rapidly rising market prices even though there are no disruptions in domestic natural gas production or transportation. Natural gas prices tend to follow oil prices which have recently hit a record price of $130 per barrel. At the same time Liquefied Natural Gas (LNG), which is gas natural produced overseas and transported globally in liquid form, is increasingly being used to fill the gap between the amount of gas produced in the U.S. and total U.S. demand. But the demand for natural gas in Asia and Europe has driven LNG away from the U.S. Finally, the weak dollar and the move by investors to invest in all commodities, including natural gas, are also placing upward pressure on prices.”

Glaeser also adds that government policies are increasing the demand for natural gas while at the same time inhibiting the development of new domestic gas production.

“There are ample natural gas reserves in North America, but various restrictions have put many areas off-limits to exploration and development, such as in the Gulf of Mexico near Florida, at a time when the use of natural gas for power generation and the production of ethanol is increasing,” Glaeser added.

There are steps customers now can take to better manage their energy bills. For example, residential customers may enroll in the Budget Billing plan. This plan allows residential customers to pay the same amount each month. By enrolling now, customers can begin leveling out their monthly payments.

The plan allows customers to pay an average monthly bill amount based on the last 12 months of usage. The payment level is periodically reviewed and adjusted as necessary. On the 12th month, the account is reviewed to calculate the difference between the amount of energy used during the year and the amount paid under Budget Billing. If the amount paid exceeds the actual cost of providing the energy, the customer receives a credit. If the amount billed is less than the actual cost of providing the energy, the customer is billed for the difference.

Customers may enroll in Budget Billing by visiting Ameren’s Web site (www.ameren.com) or by calling their Ameren Illinois Utility company (AmerenCIPS: 1-888-789-2477, AmerenCILCO:1- 888-672-5252, and AmerenIP: 1-800-755-5000). Customers may enroll in the program or drop out at any time. There is no cost to enroll in Budget Billing.

Customers also are encouraged to adopt proven energy conservation practices that will help reduce bills without sacrificing personal comfort. Though residential customers primarily use natural gas for home heating, many customers use it for water heating. To reduce bills, set the water heater temperature at 120 degrees Fahrenheit or on “low.” Using this setting can reduce annual energy costs by 3 to 5 percent. When away from home for an extended period of time, select the “vacation” setting if the unit is so equipped.

Hot water usage can be reduced by using cold or warm water in the washing machine, a step that saves money and extends the life of clothing. Get more life out of the water heater and reduce energy costs by periodically draining the tank to eliminate the buildup of sediment.

Though the heating season is many months away, this is a good time to take steps that can reduce heating bills. A good place to begin is by using caulk and weather stripping to block drafts. Furnaces and flues should be inspected and cleaned annually by a heating system professional.

A complete list of conservation suggestions is available on the Ameren Web site in the “My Home” section under “Energy Savings Tips.”

The Ameren Illinois Utilities purchase natural gas from gas producers located in various U.S. natural gas production areas. 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 without any profit or markup in price, through the Gas Charge (also referred to as the PGA, which means “purchased gas adjustment”). About three-fourths of a residential customer’s bill is the actual cost of natural gas.

The Gas Charge is recomputed each month and may go up or down depending on the wholesale price of natural gas. The Gas Charge is a matter of public record and is available on the Ameren Web site (www.ameren.com) under “Historical PGA Rates” for AmerenCIPS and AmerenCILCO and “Historical Gas Charges” for AmerenIP.

The June 2008 Gas Charge (PGA) for each Ameren Illinois Utility is as follows: AmerenCIPS – 102.34 cents per therm (88.7 cents in May); AmerenCIPS – Metro East – 111.52 cents per therm (98.15 cents in May); AmerenCILCO – 109.81 cents per therm (95.33 cents in May), and AmerenIP – 116.39 cents per therm (101.19 cents in May).

The Ameren Illinois Utilities strive to keep natural gas costs at stable and reasonable rates for their customers, while dampening the effects of market volatility and price spikes from the wholesale gas markets. The utilities utilize sophisticated financial hedging strategies and negotiate both long- and short-term natural gas supply contracts.

The Ameren Illinois Utilities utilize a number of interstate pipeline suppliers, accessing multiple production areas to bring natural gas to Illinois.

The Ameren Illinois Utilities have secured adequate supplies of natural gas to meet customer needs.
The Ameren Illinois Utilities serve 1.2 million electric and more than 840,000 natural gas customers in a 43,700-square-mile area of Illinois. 


CONTACT: Leigh Morris, 217.535.5228, or Neal Johnson, 309.677.5284, both of Ameren Illinois Utilities