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Purpose of the Ordinance: <br />The purpose of the Ordinance is to approve rate tariffs ("Attachment A") and Proof of <br />Revenues ("Attachment B") that reflect the negotiated rate change pursuant to the RRM process. <br />ln addition to the RRM tariffs, the Ordinance also approves a revision to the Atmos Mid-Tex <br />current Gas Cost Recovery ("GCR") tariff to allow the Company to recover certain hedging costs <br />associated with natural gas futures through the GCR tariff. <br />As a result of the negotiations, ACSG was able to reduce the Company's requested $20.2 <br />million RRM increase by more than 70%. Approval of the Ordinance will result in rates that <br />implement a$2.6 million increase in Atmos' revenues effective August 1, 2009. <br />Reasons Justifvin2 Apuroval of the Negotiated Resolution: <br />During the time that the City of Paris has retained original jurisdiction in this case, <br />consultants working on behalf of ACSC cities have investigated the support for the Company's <br />requested rate increase. While the evidence does not support the $202 million increase <br />requested by the Company, ACSC consultants agree that the Company can justify a slight <br />increase in revenues. The agreement on'$2.6 million is a compromise between the positions of <br />the parties. <br />The alternative to a settlement of the RRM filing would be a contested case proceeding <br />before the Railroad Commission of Texas (RRC) on the Company's current application, would <br />take several months and cost ratepayers millions of dollars in rate case expenses and would not <br />likely produce a result more favorable than that to be produced by the settlement. The ACSC <br />Executive Cominittee recommends that ACSC members take action to approve the Ordinance <br />authorizing new rate tariffs. <br />With regard to the revision to the GCR tariff, ACSC has advocated that the Company use <br />hedging as a risk management tool to help mitigate volatile natural gas prices. The tariff change <br />is consistent with ACSC's prior position. <br />Atmos RRM Ordinance Staff Report 2 <br />4- I Ixj <br />