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Missouri PSC Orders Utility Supply Plan with 55% of Winter Gas under Fixed Prices

The Missouri Public Service Commission (PSC) has approved an agreement requiring Southern Missouri Gas Co., which serves about 7,250 residential, commercial and industrial customers in the state, to have a gas supply plan in place before next winter with 55% of its supply locked in under fixed prices or hedged against market exposure.

The PSC's Office of Public Counsel filed a complaint against the utility company last fall alleging that Southern Missouri Gas had failed to comply with commission rules that required the company to "undertake diversified natural gas purchasing activities as part of a prudent effort to mitigate upward natural gas volatility and secure adequate natural gas supplies for [its] customers." On March 13, Public Counsel, PSC staff and Southern Missouri filed a unanimous stipulation and agreement resolving all disputes between the parties regarding the Public Counsel's complaint.

The stipulation, which was approved by the PSC, requires the company to file a gas supply plan this month detailing how it will implement its natural gas buying strategies for the winter of 2006-2007 and following winters. As part of its plan, Southern Missouri Gas must shield its customers from market price volatility on a majority of its supply by Oct. 1.

Despite the regulatory oversight, the PSC noted that Southern Missouri Gas still will be responsible for its decisions regarding gas purchasing and hedging but will remain subject to prudence reviews.

The agreement also calls for more lenient payment terms for customers who are disconnected and are seeking to be reconnected. Customers may enter into a payment arrangement that would recover any past due amounts above the minimum payment requirement under the so called "Cold Weather Rule" over an 18-month period instead of 12-months. The utility company also has agreed to a rebate program to encourage the installation of new energy efficient natural gas furnaces and natural gas water heaters in its service area.

Southern Missouri Gas serves natural gas customers in five Missouri counties.

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