HomeMy WebLinkAbout2014-R-03 - Denying Rate Increase By Atmos/� RESOLUTION NO. 2014-02j
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF STEPHENVILLE, 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 REIMBURSE 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; DETERMINING THAT THIS RESOLUTION WAS PASSED
IN ACCORDANCE WITH THE REQUIREMENTS 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 Stephenville, 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
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
Resolution Denying Atmos Rate Increase
Page I 1
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
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 STEPHENVILLE, 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.
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.
Resolution Denying Atmos Rate Increase
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�1 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.
RESOLVED this 61" day of May, 2014.
ATTEST:
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Cindy L. Stford, City Secry
Resolution Denying Atmos Rate Increase
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JerrflIdon, II Mayor
APPROVED AS TO FORM:
Randy Thomas, City Attorney