Thursday, May 29, 2008 6:24 PM CDT
Ameren customers will see 15 percent increase in natural gas costs in June
By TONY REID, Staff Writer
DECATUR — Hard-pressed residential utility customers in Central Illinois just got more bad news: Their natural gas bills are about to jump 15 percent.
The Ameren Corp. Illinois utilities — AmerenIP, AmerenCIPS and AmerenCILCO — say wholesale costs of natural gas are rocketing upward and those costs must be passed on to consumers.
The increases will hit in June and work out like this: for the AmerenIP service area, gas will go from 101.19 cents a therm in May to 116.39 cents a therm in June. For AmerenCIPS, it will rise from 88.7 cents to 102.34, while the AmerenCILCO per therm cost rises from 95.33 cents to 109.81.
Defining gas usage for the average customer is difficult because it varies so much month by month, but Ameren says consumption of 785 therms a year is a good typical number for residential customers.
Whatever the figure, it couldn’t come at a worst time for consumers. The Ameren utilities have asked power regulators for an increase worth more than $240 million in the delivery rates they charge to bring both electricity and natural gas to homes and businesses. Those increases would add 8.5 percent to the average AmerenIP electricity bill and see natural gas bills rise by 11.6 percent.
The cost increase coming in June can be passed straight through to customers because it reflects the raw cost of gas — which the utilities pass on without profit — not the fee to deliver it.
Ameren says the rising wholesale market cost is linked to escalating prices for gasoline at the pump; the charges for both commodities have a history of chasing each other up.
But the latest natural gas price jumps are still unusual, and come at a time when supplies have been flowing without interruption, although world demand is also on the rise.
“The forces now pushing natural gas prices across the U.S. toward record levels are unprecedented,” said Scott Glaeser, vice president of Ameren Gas Supply and System Control.
“We now are witnessing rapidly rising market prices even though there are no disruptions in domestic natural gas production or transportation.”
What’s even worse, the price jumps are hitting home at a time of the year when natural gas prices are usually lower and when the utilities seek to lock in future contracts at better rates. Ameren spokesman, Leigh Morris, said the utilities don’t have much choice about paying market prices. “You have to remember, we’re at the end of the heating season,” he added.
“We’re buying gas because our reserves were depleted during the winter.”
When natural gas prices jumped three years ago, Illinois Attorney General Lisa Madigan joined with three other attorneys general in neighboring states to investigate the markets. Their report concluded the price spikes could not be accounted for by normal market forces and warned that speculators, like hedge funds, were making investments designed to drive the market up.
Ameren hints at that in its statement on the June price hike, with Glaeser noting: “Finally, the weak dollar and the move by investors to invest in all commodities, including natural gas, are also placing upward pressure on prices.”
Ameren urges consumers to conserve as much as they can but says North America does have adequate gas reserves — if it’s allowed to exploit them. The company blames government restrictions for shutting down gas exploration at the same time other policies are encouraging the production of ethanol, which uses big quantities of natural gas in its production process.
Ameren’s moves are being watched closely by the Citizens Utility Board, a consumer watchdog group. It says the utilities will have to account for their gas purchase policy to the Illinois Commerce Commission, which regulates the utility industry.
“At that point we’ll know whether Ameren has done everything it can to keep prices down,” said the utility board’s executive director, David Kolata.
But Kolata also said he was troubled by what was happening in the natural gas market. “The market is not working well for consumers,” he added. “And if prices stay the way they are now, we’re on the precipice of a disaster when winter comes; people will just not be able to afford to pay their gas bills.”
Tony Reid can be reached at treid@herald-review.com or 421-7977.
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Rotty wrote on May 30, 2008 12:25 AM:
Those contributing to rising health care costs, oil tycoons, & those who support them, a truely uncaring government & the rest of the rotten politicians, the Mr. & Mrs. Big's of the utility companies, & many many others should be labeled as such.
People don't know, from one day to the next, where they should lay down their hard fought few dollars, & think how can we survive & go on, & what should we, & what shouldn't we, pay towards next?
Are we facing the end of the world?
Is this where the rich get richer, & the poor get even poorer?
Are we doomed?
Will we live to see tomorrow?
Who knows, but those at Population Thinners Inc. need to be put out of business, & darn soon, before all of our lights are extinguished forever.
The buck has definitely got to stop here. "