Thursday, March 19, 2009

Natural Gas Customers in Missouri Looking for 25% Rate Cut

The sluggish economy has produced at least one ray of good news for natural gas customers. AmerenUE yesterday filed a request with the Missouri Public Service Commission for a 25 percent rate reduction for residential natural gas service.

Susan Gallagher, AmerenUE spokeswoman, said lower demand nationwide for natural gas is one reason for the second rate reduction in five months for the company’s 127,000 natural gas customers. Electric rates will not be affected.

“When you see a recession like this and demand back off, the pricing also drops in response to that,” Gallagher said.

Kevin Kelly, PSC public information administrator, said commission staff will review the rate-change request, which likely will be on the commission’s March 25 agenda.

AmerenUE has requested that the new rate take effect April 1. This would be Ameren’s second rate reduction since October, reflecting lower wholesale costs from the company’s suppliers.

The new “purchased gas adjustment,” or PGA, rate would decrease from approximately 99 cents per hundred cubic feet of natural gas to 75 cents per hundred cubic feet. Gallagher said customers in the company’s service areas will experience varying savings because of usage differences. For Central Missouri customers, the change in the PGA will result in an average decrease in a customer’s total bill, excluding taxes, of about $6.29 per month during the “non-winter” usage period of April through October.

The rate was reduced from $1.10 per hundred cubic feet to 99 cents last fall. The rate was reduced despite higher wholesale supplier rates, which have decreased in the past four to six weeks, Gallagher said.

The new rate would be in effect until at least June, Gallagher said. Any changes after that would be a direct reflection of wholesale costs.

Thomas Moss, AmerenUE president and CEO, said in a news release that the company’s long-term contracts for wholesale natural gas and the use of storage are factors in controlling market volatility.

The PGA reflects the wholesale cost of natural gas from the company’s suppliers, plus the cost of transporting that gas to the AmerenUE system. Since the wholesale costs change daily, the PGA also includes an adjustment to compensate for any under- or over-collection of actual costs in previous periods. AmerenUE passes these supplier costs on to customers, dollar for dollar, through the PGA.

For residential customers, the PGA accounts for about two-thirds of an average gas bill, excluding taxes, so any change in the PGA can have a significant impact on the total price customers pay.

Kelly said PSC staff will review AmerenUE’s rate request to ensure the accuracy of costs and compliance with current regulations as well as whether the request reflects current market conditions.

Reach Jodie Jackson Jr. at 573-815-1713 or e-mail

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