14-Deliberate and possibly act on ordinance approving the nnegotiated gas rates between the City of Paris and Atmos Energy Mid-Tex Division

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arts and cultural events, sponsorship of sports, arts or cultural events, and social club membership dues. Purpose of the Ordinance: Rates cannot change and the Settlement Agreement with Atmos Mid-Tex cannot be implemented without passage of rate ordinances by cities. No related matter is pending at the Railroad Commission. The purpose of the Ordinance is to approve rate tariffs ("Attachment A") and Proof of Revenues ("Attachment B") that reflect the negotiated rate change pursuant to the RRM process and to ratify a Settlement Agreement recommended by the ACSC Settlement Committee and Executive Committee. As a result of the negotiations, ACSC was able to reduce the Companv's requested $70.2 million RRM increase to $27 million. Approval of the Ordinance will result in the implementation of new rates that increase Atmos Mid-Tex's revenues effective October 1, 2010. The Settlement Agreement ("Attachment C") to be ratified by the Ordinance authorizes an extension of the RRM process, in modified form to eliminate the true-up component, far an additional two annual filings. The Settlement Agreement also addresses the Atmos Mid-Tex steel service line replacement program and authorizes current cost recovery via an adder to residential and commercial customer charges. Reasons Justifying Approval of the Negotiated Resolution: During the time that the City has retained original jurisdiction in this case, consultants working on behalf of ACSC cities have investigated the support for the Company's requested rate increase. While the evidence does not support the $70.2 million increase requested by the Company, ACSC consultants agree that the Company can justify an increase in revenues of $21 million. The agreement on $27 million is a compromise between the positions of the parties. The Settlement Agreement includes an allowance for recovery of direct costs, excluding overheads, of the steel service line replacement program. Current year recovery factors shall be $00.15 for residential customers and $00.41 for commercial customers per month. The rates will be adjusted annually, but shall be capped at $00.44 cents for residential customers and $1.22 for commercial customers. The alternative to a settlement of the RRM filing would be a contested case proceeding before the Railroad Commission on the Company's current application, would take several months and cost ratepayers millions of dollars in rate case expenses, and would not likely produce a result more favorable than that to be produced by the settlement. The ACSC Executive Committee recommends that ACSC members take action to approve the Ordinance authorizing new rate tariffs. Atmos RRM Ordinance Staff Report 2 156