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Rate Review Mechanism Fact Sheet *The Rate Review Mechanism (RRM) was created as part of a collaborative agreement between ACSC and Atmos. It replaces the unworkable and contentious Gas Reliability Infrastructure Program (GRIP) surcharge process. *The RRM authorizes cities to meaningfully review and dispute the company's annual rate filings in an expedited rate proceeding at the city level. This authority was lacking under the GRIP process. *The RRM will function as a substitute for future GRIP filings during the three-year trial period. *The RRM permits the Company to seek an annual review of its revenues, estimated cost of operations, and capital investments. In most cases, the company cannot seek rate adjustments greater than 5 percent. The Company must provide evidence as part of the annual review process that Cities can assess and, if necessary, challenge. *The RRM process allows Atmos to seek a surcharge from ratepayers if its anticipated expenses exceed its anticipated revenues for a 12 month period. However, if the Company's revenues exceed its authorized rate of return, it must issue refunds. Costs Expresslv Prohibited from Recoverv Under the RRM: First class air-fare, travel, meals or entertainment for employee's spouse, alcohol, sports events, entertainment, arts and cultural events, sponsorship of sports, arts or cultural events, and social club membership dues. The RRM is applicable only to the Company's base rates - the cost of delivering natural gas to customers. The commodity price of natural gas is a pass-through cost to customers that can change monthly based upon the price of naiural gas. Process for RRM Filing: Cities have 90 days to review the Company's RRM filing. After the 90-day "Review Period," the 30-day "Response Period" allows Cities to work with the Company regarding issues identified by the city during the Review Period. Atmos Mid-Tex' first RRM was made April 14, 2008. In subsequent years, Atmos will make its RRM filing with Cities on or after April 1" of each year. (The filing date is referred to as the "Annual Evaluation Date" in the tariff.) The City and the Company commit to act collaboratively during this process. However, if Cities and the Company cannot come to agreement at the end of the Response Period, the Company may appeal a city's action or inaction on the RRM to the Railroad Commission. W. o00116/