Ameren Missouri customers will see a 4.7 percent rate increase for natural gas due to the bitterly cold winter season and increased heating demand, utility officials said Thursday.
A revised Purchased Gas Adjustment (PGA) was approved by the Missouri Public Service Commission (PSC) and becomes effective today.
The PGA rate change will increase natural gas bills by approximately 4.7 percent for customers in Jefferson City. That amounts to a total increase of approximately $36.94 per year, or $3.08 per month for residential customers, officials said.
"Wholesale gas prices aren't regulated-market supply, and demand conditions will cause increases and decreases in price," said Jim Massmann, Ameren Missouri's gas supply director. "Since the wholesale price of natural gas changes daily - while the PGA is held steady through most of the year - the PGA must be periodically adjusted to compensate for differences between actual wholesale natural gas supply costs and revenues collected from customers for these costs. Purchased gas costs are passed through to customers on a dollar-for-dollar basis without any markup or profit to Ameren Missouri."
The PGA reflects the wholesale cost of natural gas, plus the cost of transporting gas to the company's system.
In preparation of the winter season, Ameren Missouri hedges about 75 percent of its natural gas to protect customers from market price spikes, utility officials said. This projection is based on data and research, which includes temperature averages and demand that reflects a normal winter season.
"Overall, hedging benefits our customers by helping to dampen the impact of price swings and secure adequate supplies to meet their needs," Massmann said.
Ameren Missouri, like other natural gas providers in Missouri, is allowed to make up to four changes to the PGA per year and no more than one change per any two consecutive months. Throughout the year, the company reviews the under- and over-collection PGA balance to assess reflection of costs and the impact of future gas costs on its customers.