Ameren customers could see lowest rate in 15 years

Ameren Missouri residential customers would pay the lowest Purchased Gas Adjustment (PGA) rates in 15 years under a proposed rate decrease filed Thursday with the Missouri Public Service Commission (PSC).

The market-driven proposal calls for a PGA rate of $0.50 per 100 cubic-feet (Ccf) of natural gas, down by 7 percent from the current rate of $0.54/Ccf and 24 percent from the $0.66/Ccf rate approved in October 2014. If approved by the PSC, the new PGA rate would take effect Nov. 1.

Compared to the rates enacted in October 2014, the proposed PGA would save an average residential customer in Jefferson City, approximately $98 per year.

PGA rates have been dropping for the last year to reflect wholesale natural gas price decreases caused by growing supplies generated by shale production. Ameren Missouri customers would continue to benefit from the trend under the company's PGA rate proposal.

"Lower natural gas wholesale prices make it possible for us to propose rate reductions," said Jim Massmann, Ameren Missouri's gas supply director. "Our proposed PGA rate is the lowest it's been since 2000."

The PGA reflects the wholesale cost of natural gas, the cost of transporting gas to the company's system plus an adjustment to compensate for under- or over-collection of actual costs in previous periods. Wholesale gas prices aren't regulated, and price changes are the result of market conditions of supply and demand. Wholesale costs consequently change daily, while the PGA rate is held stable over a period of months.

Throughout the year, Ameren Missouri monitors the PGA under- and over-collection balance to assess the need to adjust gas rates. Ameren Missouri passes the PGA costs on to customers on a dollar-for-dollar basis without any markup or profit, and is allowed to make up to four changes to the PGA per year. No more than one change may be made during any two consecutive months.