2008-030-ORD-APPROVING A NEGOTATED RESOLUTION BETWEEN THE ATMOS CITIES STEERING COMMITTEE AND ATMOS ENERGY CORP., MID-TEX DIVISION ("ATMOS MID-TEX" OR "THE COMPANY") REGARDING THE COMPANY'S RATE REVIEW MECHANISM FILING IN ALL CITIES

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Lloyd 816 Congress Avenue, Suite 1900 Austin, Texas 78701 Gosselink Telephone: ( 325 Facsimile: (512) 12) 472 -00532 2 �•••••• ATTORNEYS AT LAW www.iglawfirm.com Ms. Doyle's Direct Line: (512) 322 -5820 Email: kdoyle @lglawfirm.com MEMORANDUM TO: Atmos City Steering Committee (ACSC) Members FROM: Geoffrey Gay Kristen Doyle DATE: August 13, 2008 RE: FINAL ACTION BY OCTOBER 1sT — Atmos RRM Settlement The ACSC Settlement Committee (Jay Doegey — Arlington, Danny Reed — Fort Worth, Mark Israelson — Plano, Don Wilson — Eastland, Cathy Cunningham — various ACSC cities, Phil Boyd — Lewisville, Rodney Adams — Irving), with the advice and input of ACSC consultants and lawyers, has worked to resolve the Company's pending $33.5 million Rate Review Mechanism ( "RRM ") rate increase request without the necessity of a protracted and costly: contested case proceeding. The attached tariff that reflects rates that will increase Atmos' revenues by $20 million. The negotiated result represents a 35 percent reduction in Atmos' requested rate increase. The monthly bill impact for an average residential customers is $0.81. The RRM process was created by Atmos and ACSC to eliminate the piecemeal ratemaking GRIP process in favor of an expedited rate review controlled by cities The Company's filing is the first filing pursuant to the agreed RRM process. The ACSC Executive Committee recommends approval of the negotiated resolution because it represents an outcome that is equal to or better than the outcome expected from a lengthy contested case proceeding, and maintains cities' role as a regulator of natural gas rates. Please schedule consideration of the ordinance for your next available council meeting. Final council action to approve the ordinance must take place by October 1St. To assist you, several documents are attached: • An ordinance setting new rates. The approved Ordinance should include the attached Tariff ( "Attachment A" to the Ordinance) and Proof of Revenues ( "Attachment B ") • A model staff report • An explanation of key provisions of the RRM tariff and filing Please contact Kristen (512/322 -5820, kdoyle @lglawfirm.com) immediately if your city is unable to meet the October 1St deadline for final action. Once final action has been taken by your city, please forward a copy of the ordinance to Atmos Mid -Tex and to our paralegal, Gary Stiffler (fax number: 512/472 -0532, gstiffler @lglawfirm.com). Lloyd Gosselink Rochelle & Townsend, P.C.