HomeMy WebLinkAboutRes 2014-05-02 Denying ATMOS Rate Review Mechanism.pdfCITY OF ANNA, TEXAS
RESOLUTION NO. 2014-05-02
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANNA, TEXAS
DENYING THE RATE INCREASE REQUESTED BY ATMOS ENERGY CORP., MID-
TEX DIVISION UNDER THE COMPANY'S 2014 ANNUAL RATE REVIEW
MECHANISM FILING IN ALL CITIES EXERCISING ORIGINAL JURISDICTION:
REQUIRING THE COMPANY TO REMIBURESE CITIES' REASONABLE
RATEMAKING EXPENSES PERTAINING TO REVIEW OF THE RRM; AUTHORIZING
THE CITY'S PARTICIPATION WITH ATMOS CITIES STEERING COMMITTEE IN
ANY APPEAL FILED AT THE RAILROAD COMMISSION OF TEXAS BY THE
COMPANY; REQUIRING THE COMPANY TO REIMBURSE CITIES' REASONABLE
RATEMAKING EXPENSES IN ANY SUCH APPEAL TO THE RAILROAD
COMMISSION; DETERMING THAT THIS RESOLUITON WAS PASSED IN
ACCORDANCE WITH THE REQUIREMNETS OF THE TEXAS OPEN MEETINGS
ACT; ADOPTING A SAVINGS CLAUSE; AND REQUIRING DELIVERY OF THIS
RESOLUTION TO THE COMPANY AND THE STEERING COMMITTEE'S LEGAL
COUNSEL.
WHEREAS, the City of Anna, Texas ("City") is a gas utility customer of Atmos
Energy Corp., Mid -Tex Division ("Atmos Mid -Tex" or "Company"), and a regulatory
authority with an interest in the rates and charges of Atmos Mid -Tex; and
WHEREAS, the City is a member of the Atmos Cities Steering Committee
("ACSC"), a coalition of approximately 164 similarly situated cities served by Atmos Mid -
Tex that have joined together to facilitate the review of and response to natural gas
issues affecting rates charged in the Atmos Mid -Tex service area; and
WHEREAS, pursuant to the terms of the agreement settling the Company's 2007
Statement of Intent to increase rates, ACSC Cities and the Company worked
collaboratively to develop a Rate Review Mechanism ("RRM") tariff that allows for an
expedited rate review process controlled in a three-year experiment by ACSC Cities as
a substitute to the current Gas Reliability Infrastructure Program ("GRIP") process
instituted by the Legislature; and
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WHEREAS, the City took action in 2008 to approve a Settlement Agreement with
Atmos Mid -Tex resolving the Company's 2007 rate case and authorizing the RRM tariff;
and
WHEREAS, in 2013, ACSC and the Company negotiated a renewal of the RRM
tariff process for an additional five years; and
WHEREAS, the City passed an ordinance renewing the RRM tariff process for
the City for an additional five years; and
WHEREAS, the RRM renewal tariff contemplates reimbursement of ACSC Cities'
reasonable expenses associated with RRM applications; and
WHEREAS, on or about February 28, 2014, the Company filed with the City its
second annual RRM filing under the renewed RRM tariff, requesting to increase natural
gas base rates by $45.7 million; and
WHEREAS, ACSC coordinated its review of Atmos Mid-Tex's RRM filing through
its Executive Committee, assisted by ACSC attorneys and consultants, to investigate
issues identified by ACSC in the Company's RRM filing; and
WHEREAS, ACSC attorneys and consultants have concluded that the Company
is unable to justify a rate increase of the magnitude requested in the RRM filing; and
WHEREAS, ACSC's consultants determined the Company is only entitled to a
$19 million increase, approximately 42% of the Company's request under the 2014
RRM filing; and
WHEREAS, the Company would only be entitled to approximately $31 million if it
had a GRIP case; and
Res. 2014-05-02 ATMOS Energy Rate Review Mechanism PAGE 2 OF 5 05-13-14
WHEREAS, the Company's levels of operating and maintenance expense have
dramatically risen without sufficient justification; and
WHEREAS, the Company has awarded its executives and upper management
increasing and unreasonable levels of incentives and bonuses, expenses which should
be borne by shareholders who received a 23% total return on investment in 2013; and
WHEREAS, the Company requested a drastically high level of medical expense
that is unreasonable and speculatively based upon estimates; and
WHEREAS, ACSC and the Company were unable to reach a compromise on the
amount of additional revenues that the Company should recover under the 2014 RRM
filing; and
WHEREAS, the ACSC Executive Committee, as well as ACSC's counsel and
consultants, recommend that ACSC Cities deny the requested rate increase; and
WHEREAS, the Company's current rates are determined to be just, reasonable,
and in the public interest.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF ANNA, TEXAS:
Section 1. That the findings set forth in this Resolution are hereby in all things
approved.
Section 2. That the City Council finds that Atmos Mid -Tex was unable to justify
the appropriateness or the need for the increased revenues requested in the 2014 RRM
filing, and that existing rates for natural gas service provided by Atmos Mid -Tex are just
and reasonable.
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Section 3. That Atmos Mid -Tex shall reimburse the reasonable ratemaking
expenses of the ACSC Cities in processing the Company's RRM application.
Section 4. That in the event the Company files an appeal of this denial of rate
increase to the Railroad Commission of Texas, the City is hereby authorized to
intervene in such appeal, and shall participate in such appeal in conjunction with the
ACSC membership. Further, in such event Atmos Mid -Tex shall reimburse the
reasonable expenses of the ACSC Cities in. participating in the appeal of this and other
ACSC City rate actions resulting from the 2014 RRM filing.
Section 5. That the meeting at which this Resolution was approved was in all
things conducted in strict compliance with the Texas Open Meetings Act, Texas
Government Code, Chapter 551.
Section 6. That if any one or more sections or clauses of this Resolution is
adjudged to be unconstitutional or invalid, such judgment shall not affect, impair, or
invalidate the remaining provisions of this Resolution and the remaining provisions of
the Resolution shall be interpreted as if the offending section or clause never existed.
Section 7. That a copy of this Resolution shall be sent to Atmos Mid -Tex, care
of Chris Felan, Manager of Rates and Regulatory Affairs, at Atmos Energy Corporation,
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.
Res. 2014-05-02 ATMOS Energy Rate Review Mechanism PAGE 4 OF 5 05-13-14
PASSED AND APPROVED by the City Council of the City of Anna this 13th day of
May, 2014
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