2005-029-ORD DENYING REQUEST OF ATMOS ENERGY CORP MID-TEX DIVISION FOR ANNUAL GAS RELIABILITY INFRASTRUCTURE PROGRAM (GRIP) RATE INCREASE

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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, ACSC's rate case expenses incurred in this proceeding are reasonable and . should be reimbursed by the Company; 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, unreasonable and is not in compliance with the GRIP statute (Texas Utilities Code ~ 104.301) either in fact or in law; and, WHEREAS, information provided by the Company in response to ACSC's requests for information indicates that the Company actually decreased per-customer investment in infrastructure during calendar year 2003; and, WHEREAS, the Company has publicly stated that it will receive substantial profit in 2005 over that approved by the Commission in GOO No. 9400; 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 GOO 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 retum; and WHEREAS, the information reviewed by the ACSC consultants indicates that implementation of the Company's GRIP request would result in further over-earning by the Company above that approved by the Commission in GOO No. 9400; and WHEREAS, in consideration of the city taking action before August 12, 2005, on the currently pending GRIP request, the Company has agreed not to file any additional GRIP requests before September 15,2005; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS: Section 1. That the findings set out in the preamble to this ordinance are hereby in all things approved. Section 2. That the Company's GRIP rate increase request is found to be unjustified, unreasonable and in violation of the GRIP statute and is therefore denied in all respects. The defects in the request include, but are not limited to, the following: (a) the Company improperly calculated its 2003 rate base; (b) the Company included in its calculation projects unrelated to system improvement; (c) the Company failed to recognize the increased revenues it is now receiving due to increased rates approved by the Commission in GOO No. 9400 and due to t 668\ 12\Ordinance 2