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Item. No. 14 <br />R M2! <br />TO: City Council <br />John Godwin, City Manager <br />FROM: Gene Anderson, Finance Director <br />SUBJECT: ORDINANCE ADOPTING NEW ATMOS RATE REVIEW MECHANISM <br />DATE: February 14, 2018 <br />BACKGROUND: The previously agreed to rate review mechanism (RRM) ended last year. The <br />RRM is the preferred method by which Atmos Energy interim late 'increase requests are <br />reviewed for reasonableness. <br />STATUS OF ISSUE: Negotiations over the past few months by the Steering Committee of Cities <br />served by Atmos have resulted in. a revised RRM that has been agreed to by Atillos, 'The previous <br />RRM allowed a rate of return on equity of 10.50%, The revised RRM reduces that to 9.8%. The <br />revised RRM also captures the reduction in federal income tax rates from 35% to 211YO, and <br />should result in a rate reduction eff'ective by rilid-March, 2018. The prior RRM allowed Cities <br />only three months to review the Company's filing, The new RRM expands that time period by <br />two months. New rate applications by Atmos should be made on or about April I of each year, <br />with any approved new rates effective October .1. <br />BUDGET: This ordinance will not have a budgetary 1111pact, <br />RECOMMENDATION: Motion to approve all ordinance establishing a new rate review <br />mechanism for Atmos Energy Corporation. <br />