HomeMy WebLinkAboutItem 14 - Atmos Grip Filing Denial OrdinanceMEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: BRUNO RUMBELOW, ACTING CITY MANAGER
MEETING DATE: NOVEMBER 15, 2005
SUBJECT: ATMOS GRIP FILING DENIAL ORDINANCE
RECOMMENDATION:
City Council to consider a resolution denying a 2004 GRIP rate increase made by Atmos
Energy Corporation.
FUNDING SOURCE:
N/A
BACKGROUND:
Atmos has filed for a 2004 rate increase under the GRIP statute (Gas Reliability
Infrastructure Program). This rate increase would cost the average residential ratepayer
.29¢ per month. The average commercial ratepayer would pay an additional .98¢ per
month and the average industrial user would pay $26.85 more per month.
Consultants working on behalf of the Atmos Cities Steering Committee (ACSC) have
reviewed the filing and find that the increase will produce a greater rate of return for the
company than was authorized by the Railroad Commission in Gas Utilities Docket 9400.
Staff recommends that the Council consider an ordinance denying the requested rate
increase and adopt a show cause resolution that would force the company to file a
uniform and system wide rate -filing package with the ACSC. This will allow our
consultants to further examine the filing and request more information from Atmos.
Rate case expenses will be incurred by the ACSC and reimbursed by the company.
JCH
November 10, 2005 (9:40AM)
6 Akp
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AN ORDINANCE OF THE CITY OF GRAPEVINE, TEXAS,
DENYING THE REQUEST OF ATMOS ENERGY CORP.,
MID-TEX DIVISION, FOR AN ANNUAL GAS RELIABILITY
INFRASTRUCTURE PROGRAM (GRIP) RATE INCREASE
IN THIS MUNICIPALITY, AS A PART OF THE COMPANY'S
STATEWIDE GAS UTILITY DISTRIBUTION SYSTEM;
APPROVING COOPERATION WITH OTHER CITIES
WITHIN THE ATMOS ENERGY CORP., MID-TEX DIVISION
DISTRIBUTION SYSTEM AS PART OF THE ATMOS
CITIES STEERING COMMITTEE (ACSC); AUTHORIZING
ACSC TO HIRE LEGAL AND CONSULTING SERVICES
AND TO NEGOTIATE WITH THE COMPANY AND DIRECT
ANY NECESSARY LITIGATION; AUTHORIZING
INTERVENTION AS PART OF ACSC IN ANY APPEAL OF
THE CITY'S ACTION TO THE RAILROAD COMMISSION;
PROVIDING A REQUIREMENT FOR A PROMPT
REIMBURSEMENT OF COSTS INCURRED BY THE CITY;
FINDING THAT THE MEETING AT WHICH THIS
ORDINANCE IS PASSED IS OPEN TO THE PUBLIC AS
REQUIRED BY LAW; AND PROVIDING FOR NOTICE OF
THIS ORDINANCE TO ATMOS ENERGY CORP., MID-TEX
DIVISION; DECLARING AN EMERGENCY AND
PROVIDING AN EFFECTIVE DATE
WHEREAS, on or about September 17, 2005, Atmos Energy Corp., Mid -Tex
Division, (the "Company") filed with the City of Grapevine ("City"), a request for an
annual gas reliability infrastructure program (GRIP) rate increase for customers on the
Company's statewide gas utility system to be effective November 19, 2005; and
WHEREAS, the City has exclusive original jurisdiction to evaluate the Company's
request as it pertains to the distribution facilities located within the City, pursuant to
Texas Utilities Code §§ 102.001(b) and 103.001; and
WHEREAS, it is reasonable for the City of Grapevine to cooperate with other
cities in a coalition of cities in opposition to the Company's filing at the Railroad
Commission ("Commission"), said coalition being known as Atmos Cities Steering
Committee ("ACSC"), in any appeal of the cities' actions to the Commission; and
WHEREAS, the Gas Utility Regulatory Act grants local regulatory authorities the
right to intervene in rate proceedings filed at the Railroad Commission; and
WHEREAS, the Texas Utilities Code § 103.022 provides that costs incurred by
the City in ratemaking activities are to be reimbursed by the regulated utility; and
WHEREAS, counsel for ACSC, upon review of the Company's filing and upon
consultation with various consultants, recommends finding that the Company's proposal
is unjustified and unreasonable; and
WHEREAS, the Company has publicly stated that it will receive substantial profit
in 2005 and that its expenses are substantially below those on which the GUD No. 9400
rates it is charging were based; and
WHEREAS, the Company's GRIP request fails to account for growth in numbers
of customers, thereby undercounting the revenues it will receive from its proposed GRIP
rate increase; and
WHEREAS, the Company's GRIP request fails to recognize that GUD No. 9400
rates included profit based on TXU Corporation's capital structure rather than Atmos
Energy Corp.'s current capital structure, which justifies a lower rate of return.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF GRAPEVINE, TEXAS:
Section 1. That the Company's GRIP rate increase request is found to be
unreasonable and is therefore denied in all respects.
Section 2. That the City is authorized to cooperate with other Cities within the
Company's Distribution System that have formed ACSC to hire and direct legal counsel
and consultants, negotiate with the Company, make recommendations to the City
regarding reasonable rates and to direct any necessary litigation associated with an
appeal of a rate ordinance and the rate case filed at the Commission.
Section 3. That the costs incurred by the City in reviewing the Company's
GRIP request shall be promptly reimbursed by the Company.
Section 4. That the City is authorized to intervene in any appeal of the city's
action filed at the Commission, and to participate in any such appeal as a member of
ACSC.
Section 5. This Ordinance shall become effective immediately from and after
its passage, as the law and charter in such cases provide.
Section 6. That it is hereby officially found and determined that the meeting at
which this Ordinance is passed is open to the public as required by law and that public
notice of the time, place and purpose of said meeting was given as required.
ORD. NO. 2
Section 7. A copy of this ordinance, constituting final action on the Company's
application, be forwarded to the appropriate designated representative of the Company
within 10 days as follows: Richard T. Reis, Atmos Energy Corporation, 5420 LBJ
Freeway, Suite 1800, Dallas, Texas 75240, and to Geoffrey Gay, legal counsel to the
coalition of cities, at Lloyd Gosselink, P.O. Box 1725, Austin, Texas 78767-1725.
Section 8. The fact that the present ordinances and regulations of the City of
Grapevine, Texas, are inadequate to properly safeguard the health, safety, morals,
peace, and general welfare of the public creates an emergency which requires that this
ordinance become effective from and after the date of its passage, and it is accordingly
so ordained.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS on this the 15th day of November, 2005.
ATTEST:
ORD. NO. 3