|Higher worldwide demand for energy has driven up the market prices of both petroleum and natural gas, which will mean higher 2008-09 heating season costs for natural gas customers in Illinois and around the nation than they experienced in 2007-08.
"The price of natural gas fluctuates from one month to the next, but we believe the price paid by our customers will remain significantly higher than last winter," said Ameren Vice President of Gas Supply and System control Scott A. Glaeser.
"At this time, it appears the price of natural gas for Ameren Illinois Utilities residential customers will be 15 cents to 25 cents higher per therm this heating season than last year. This represents an increase of about 20 to 30 percent over last year's heating season," Glaeser said.
"A bright spot in our outlook is the fact that natural gas prices have somewhat stabilized in recent weeks. We are cautiously optimistic that the most significant increases in the price of natural gas for this year are behind us," Glaeser said.
"We recognize and are concerned about the impact higher natural gas prices may have on our customers," Glaeser said. "We will continue to do all we can to make certain our customers understand this issue and have the information they need to better manage their energy usage."
The Ameren Illinois Utilities are energy delivery companies. As such, they must purchase natural gas from producers for delivery to their customers. The wholesale price paid to producers is not regulated, but rises and falls based upon market conditions caused by supply and demand. The Ameren Illinois Utilities do not profit from the cost of natural gas paid by customers.
Natural gas prices for August 2008 are as follows: AmerenCILCO - 129.69 cents per therm as compared to 81.76 in August 2007, AmerenCIPS - 119.93 cents per therm as compared to 85.25 in August 2007, AmerenIP - 135.44 cents per therm as compared to 89.48 in August 2007, and AmerenCIPS Metro East - 134.57 cents per therm as compared to 87.46 in August 2007.
Glaeser cautioned that the market price of natural gas can change quickly and dramatically due to such unforeseen events such as destructive hurricanes in the Gulf of Mexico. Hurricanes Katrina and Rita pushed natural prices to record levels in 2005.
Glaeser also stressed that the Ameren Illinois Utilities have secured adequate natural gas supplies to meet customer needs during the 2008-09 heating season.
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 can extend 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 a few 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 list of conservation suggestions is available on the Ameren Web site in the "My Home" section under "Energy Savings Tips." There also are conservation tips at the new ActOnEnergy.net Web site.
The Ameren Illinois Utilities, which are energy delivery companies, purchase natural gas from producers located in various U.S. natural gas production areas for delivery to their customers. The price the Ameren Illinois Utilities pay for natural gas is known as the wholesale price and is not regulated. The wholesale price 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 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.
(Information written by Ameren Illinois Utilities)