Heating costs expected to be higher for Ameren customers this winter

Monday, August 25, 2008

Natural gas customers in Missouri and Illinois can expect to see a significant increase in their heating costs this winter, according to Ameren officials.

More demand for energy across the globe has increased the price of natural gas, a fuel used for heating some homes.

That could mean customers could pay 20 to 30 percent more in the coming months compared to last winter.

"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 Scott Glaeser, Ameren vice president of gas supply and system control. "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."

Of its 127,000 customers in the state who use natural gas to heat their homes, 21,500 live in Southeast Missouri. More than 840,000 customers in Illinois use natural.

Ameren spokeswoman Susan Gallagher said about 75 percent of a residential customer’s bill covers the cost of the natural gas. As a distributor, Ameren purchases the fuel from production areas for delivery to its customers. The wholesale price paid to producers is not regulated, but rises and falls based on market conditions.

Glaeser said the market price of natural gas could change quickly and dramatically because of events such as destructive hurricanes in the Gulf of Mexico. But Gallagher said Ameren will do its best to control heating costs for its natural gas customers.

"AmerenUE strives 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," Gallagher said. "The utilities utilize sophisticated financial hedging strategies and negotiate both long and short-term natural gas supply contracts."

Bruce Domazlicky, an economics professor at Southeast Missouri State University in Cape Girardeau, said the increase is not good news to consumers.

"If anything positive is to come out of this, it is that the higher prices will give people even more incentive to become more efficient in their use of energy — more insulation, lower thermostat settings in winter, more efficient heating systems, etc.," he said. "I suspect that energy costs will continue to rise in the foreseeable future, which means that the drive to increase efficiency in energy usage will increase."

Ameren officials said customers can take measures to decrease their heating costs, such as enrollment in its Budget Billing plan. The program allows residential customers to pay the same amount each month based on the past 12 months of usage.

On the twelfth month, the account is reviewed to calculate the difference between the amount of energy consumed during the year and the amount paid under Budget Billing. If the amount exceeds the actual cost of providing the energy, the customer receives a credit. But if the amount is less, the customer is billed for the difference.

The company also suggests customers set their water temperature at 120 degrees or lower. This can reduce energy costs by 3 to 5 percent each year.

Other cost-saving tips include closing fireplace and wood stove dampers when not in use, opening curtains and blinds on sunny days while closing them at night, changing furnace filters on a regular basis, and properly sealing heating system ducts, which can improve the system’s efficiency by up to 20 percent.

"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."

bblackwell@semissourian.com

335-6611, extension 137

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