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15-Proposed rate changes with Atmos Energy
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15-Proposed rate changes with Atmos Energy
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CITY CLERK
Doc Name
15
Doc Type
Agenda
CITY CLERK - Date
8/10/2009
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STAFF REPORT <br />The City of Paris, along with 150 other cities served by Atmos Energy Mid-Tex Division, <br />is a member of the Atmos Cities Steering Committee (ACSC). On March 6, 2009, Atmos Mid- <br />Tex filed with the City of Paris an application to increase natural gas rates pursuant to the Rate <br />Review Mechanism (RRM) tariff approved by the City as part of the settlement of the Atmos <br />Mid-Tex 2007 Statement of Intent to increase rates. <br />The Atmos Mid-Tex March RRM filing soup-ht a$20.2 million rate increase. The City <br />worked with ACSC to analyze the schedules and evidence offered by Atmos Mid-Tex to support <br />its request to increase rates. The Ordinance and attached RRM tariff are the result of negotiation <br />between ACSC and Atmos to resolve issues raised by ACSC during the review and evaluation of <br />Atmos' RRM filing. The Ordinance and RRM tariffs approve rates that will increase the <br />Coinpanv's revenues by $2.6 million effective for bills rendered on or after August l, 2009. The <br />monthly bill impact for the average residential customer will be a$0.15 increase (about a 0.22% <br />increase in the total bill). <br />Please note that current rates contain a true-up component ($9 million to be collected <br />over twelve months) from the first RRM in 2008. Collection of the 2008 true-up amount is <br />scheduled to end on November 1, 2009. The rate impact of that 2008 true-up amount for the <br />period August l- October 31, 2009 is $1,006,073. To simplify the process and to reduce rate <br />fluctuations, the parties have agreed to eliminate collection of the 2008 true-up on August 1, <br />2009 rather than November 1, 2009. The remaining $1,006,073 that is still owed from the 2008 <br />true-up will be recovered as part of the 2009 true-up over 12 months rather than 3 months. This <br />change related to the 2008 true-up amount is revenue and rate impact neutral. <br />RR1V1 Background• <br />The RRM tariff was approved by ACSC Cities as part of the settlement agreement to <br />resolve the Atmos Mid-Tex 2007 rate increase case. Atmos Mid-Tex's current action represents <br />the second filing pursuant to the three-year trial project known as the RRM process. The RRM <br />process was created collaboratively by ACSC and Atmos Mid-Tex as an alternative to the GRIP <br />surcharge process. The RRM process allows for a more comprehensive rate review and annual <br />adjustment that will function as a substitute for future GRIP filings during the three-year trial <br />period specified by the tariff. <br />There are two components to the RRM adjustment. The prospective component adjusts <br />rates for known and measurable changes in O&M and net plant investment. Atmos Mid-Tex and <br />ACSC agreed to cap changes to expenses and invested capital at no more than 5%. The true-up <br />component evaluates whether the Company has over or underrecovered its earnings for the <br />previous year. For purposes of the RRM true-up component, the Atmos Mid-Tex rate of return <br />on equity and its capital structure are frozen to avoid the parent company from manipulating the <br />overall rate of return. Costs expressly prohibited from recovery through the RRM include first- <br />class air fare, travel, meals or entertainment for an employee's spouse, alcohol, sports events, <br />entertainment, arts and cultural events, sponsorship of sports, arts or cultural events, and social <br />club membership dues. <br />Atmos RRM Ordinance Staff Report 1 <br />. - . 148 <br />
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