HomeMy WebLinkAboutItem 05 - Atmos Rate Increase MEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: JENNIFER HIBBS, ASSISTANT CITY MANAGER?4z.
MEETING DATE: JUNE 5, 2012
SUBJECT: ATMOS RATE INCREASE DENIAL
RECOMMENDATION
City Council consider a resolution denying a rate increase request made by Atmos
Energy.
Atmos Mid-Tex filed a Statement of Intent on January 31, 2012, seeking to increase
system-wide base rates (which exclude the cost of gas) by approximately $49 million or
11.94%. However, the Company is requesting an increase of 13.6%, excluding gas
costs, for its residential customers. Additionally, the application would change the way
that rates are collected, by increasing the residential fixed-monthly (or customer) charge
from $7.50 to $18.00 and decreasing the consumption charge from $0.25 per 100 cubic
feet ("ccf') to $0.07 per ccf.
ACSC engaged attorneys and consultants to review Atmos Mid-Tex's proposed rate
increase. Additionally, the ACSC cities passed suspension resolutions earlier this year,
extending the effective date of Atmos Mid-Tex's proposed rate increase to June 4,
2012, in order to permit the cities time to review Atmos Mid-Tex's Statement of Intent.
During their review, ACSC's consultants found justification that Mid-Tex's rates should
be decreased. On April 25, 2012, the Company extended the effective date of its
proposed rate change, which similarly extended cities' jurisdictional deadline to June 11,
2012.
ACSC and the Company have engaged in some settlement discussions but have not
yet reached agreement. ACSC is hoping to achieve settlement with the Company in
order to perpetuate the RRM process. The ACSC Settlement Committee therefore
recommends denial of the Company's proposed rate increase rather than a rate
decrease to facilitate further settlement discussions. The resolution prevents the
Company's proposed rates from automatically going into effect on June 11. The
Company has expressed a desire for settlement while an appeal from the cities' denial
of the rate increase is pending at the RRC. Should a settlement be reached, the City
may be required to pass an ordinance setting new rates pursuant to the settlement.
Staff and City Council i it Committee recommend approval.
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RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS, DENYING ATMOS ENERGY CORP.,
MID-TEX DIVISION'S ("ATMOS MID-TEX") REQUESTED
RATE CHANGE; REQUIRING THE COMPANY TO
REIMBURSE THE CITY'S REASONABLE RATEMAKING
EXPENSES; FINDING THAT THE MEETING AT WHICH
THIS RESOLUTION IS PASSED IS OPEN TO THE PUBLIC
AS REQUIRED BY LAW; REQUIRING NOTICE OF THIS
RESOLUTION TO THE COMPANY AND ACSC'S LEGAL
COUNSEL AND PROVIDING AN EFFECTIVE DATE
WHEREAS, the City of Grapevine, Texas ("City") is a gas utility customer of
Atmos Energy Corp., Mid-Tex Division ("Atmos Mid-Tex" or "Company"), and is a
regulatory authority under the Gas Utility Regulatory Act ("GURA") and under Chapter
104, §104.001 et,seq. of GURA, has exclusive original jurisdiction overAtmos Mid-Tex's
rates, operations,.and services within the City; and
WHEREAS, the City is a member of the Atmos Cities Steering Committee
("ACSC"), a coalition of over 150 similarly situated cities served by the;Company that
have joined togefher to facilitate the review and response to natural gas issues affecting
rates charged in the Atmos Mid-Tex Division; and
WHEREAS, pursuant to the terms of the agreement settling the Company's 2007
Statement of Intent to increase rates, ACSC and the Company worked collectively to
develop a Rate Review Mechanism ("RRM") tariff that allows for an expedited rate
review process controlled in a three-year experiment by ACSC as a substitute to the
current GRIP process instituted by the Legislature; and
WHEREAS, ACSC and the Company agreed to extend the RRM process in
reaching a settlement in 2010 on the third RRM filing; and
WHEREAS, in 2011, ACSC and the Company engaged in good faith negotiations
regarding the continuation of the RRM process, but were unable to come to ultimate
agreement; and ..
WHEREAS, on or about January 31, 2012, the Company filed a Statement of
Intent with the cities retaining original jurisdiction within its Mid-Tex service division to
increase rates by approximately $49 million; and
WHEREAS, Atmos Mid-Tex proposed March 6, 2012, as the effective date for its
requested increase in rates; and
WHEREAS, the City suspended the effective date of Atmos Mid-Tex's proposed
rate increase for the maximum period allowed by law and thus extended the City's
jurisdiction until June 4, 2012; and
WHEREAS, on April 25, 2012, the Company extended the effective date for its
proposed rates by one week, which similarly extended the City's jurisdiction until
June 11, 2012; and
WHEREAS, the ACSC Executive Committee hired and directed legal counsel
and consultants to prepare a common response to the Company's requested rate
increase and to negotiate with the Company and direct any necessary litigation; and
WHEREAS, ACSC's consultants conducted a review of the Company's
requested rate increase and found justification that the Company's rates should be
decreased; and
WHEREAS, ACSC and the Company have engaged in settlement discussions
but will be unable according to Company representations to reach settlement in
sufficient time for cities to act before June 11, 2012; and
WHEREAS, failure by ACSC members to take action before June 11, 2012
would allow the Company the right to impose its full request on residents of said ACSC
members; and
WHEREAS, the ACSC Settlement Committee recommends denial of the
Company's proposed rate increase in order to continue settlement discussions pending
the Company's appeal of cities' denials to the Railroad Commission of Texas; and
WHEREAS, the GURA § 103.022 provides that costs incurred by cities in
ratemaking activities are to be reimbursed by the regulated utility.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF GRAPEVINE, TEXAS:
Section 1. That the rates proposed by Atmos Mid-Tex to be recovered through
its gas rates charged to customers located within the City limits, are hereby found to be
unreasonable and shall be denied.
Section 2. That the Company shall continue to charge its existing rates to
customers within the City and that said existing rates are reasonable.
Section 3. That the City's reasonable rate case expenses shall be reimbursed
by the Company.
RES. NO. 2
Section 4. That it is hereby officially found and determined that the meeting at
which this resolution is passed is open to the public as required by law and the public
notice of the time, place, and purpose of said meeting was given as required.
Section 5. That a copy of this resolution shall be sent to Atmos Mid-Tex, care
of David Park, Vice President Rates & Regulatory Affairs, at Atmos Energy Corporation,
Mid-Tex Division, 5420 LBJ Freeway, Suite 1862, Dallas, Texas 75240, and to Geoffrey
Gay, General Counsel to ACSC, at Lloyd Gosselink Rochelle & Townsend, P.C., P.O.
Box 1725, Austin, Texas 78767-1725.
Section 6. That this resolution shall take effect from and after the date of its
passage.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS on this the 5th day of June, 2012.
APPROVED:
ATTEST:
APPROVED AS TO FORM:
RES. NO. 3