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