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Attachment C to Ordinance <br />6. Atmos and ACSC agree that the projected incremental direct costs incurred to replace <br />steel service lines on or after October 1, 2010 shall be separately identified and sha11 <br />not be subject to or included in the rate cap limitations set forth in subsection IV (a)- <br />(b) of the Rider RRM tariff. Atmos and ACSC fiu-ther agree that such projected direct <br />incremental costs incurred to replace steel service lines after October l, 2010, shall be <br />separately calculated and recavered as a discrete component of customer charges in the <br />Company's annual RRM filings as set forth below: <br />a. Atmos and ACSC agree that Atmos shall be entitled to separately adjust rates for <br />the Rate Effective Period as defined in the Rider RRM tariff to allow recovery of <br />the projected annual revenue requirement associated with direct incremental costs <br />to be incurred in connection with a steel service line replacement program, that <br />are not otherwise included within the RRM cost of service, including a return on <br />equity of 9.0% within the overall weighted cost of capital applied to net <br />investment (net plant additions, less accumulated depreciation and accumulated <br />deferred income taxes), depreciation,expense and applicable taxes; <br />b. Atmos and ACSC further agree that the capital structure used to calculate the steel <br />service line replacement rate adjustment will be the actual Evaluation Period (as <br />defined in the Rider RRM tariff) ratio of long-term debt and equity, with an <br />equity percentage not to exceed 50%; <br />c. Rate recovery associated with a steel service line replacement program shall occur <br />through an adjustment to the Residential and Comznercial customer charges. <br />Cunent year recovery factors as of October 1, 2010 shall be $0.15 for residential <br />customers and $0.41 for commercial customers. The rates will be adjusted <br />annually, however, Atmos and ACSC agree that in no case will the per customer <br />monthly cost recovery factors attributable to a steel service line replacement <br />program exceed $0.44 for residential customers or $1.22 for commercial <br />customers, either prior to or during the pendency of the general rate case Atmos <br />will file on or before June l, 2013. <br />d. Atmos and ACSC further agree that any per customer amount attributable to cost <br />recovery for a steel service line replacement program sha11 be subject to review by <br />the regulatory authority in a subsequent Evaluation Period as defined in the Rider <br />RRM tariff and all incremental costs associated with a steel service line <br />replacement program shall be subject to a prudence/reasonableness review in the <br />general rate case to be filed by Atmos on or before June l, 2013. <br />7. With respect to the Company's annual RRM filings, Atmos agrees to pay a11 <br />reasonable and necessary expenses of each entity having original jurisdiction that are <br />incurred to review the Company's annual RRM filings. Atmos further agrees that in <br />calculating the proposed rate for any Rate Effective Period, the Company sha11 not <br />include: (1) any external legal, expert, or consultant costs to prepare and/or provide <br />supportive information related to its filing; or (2) reimbursements to original <br />jurisdiction entities. <br />8. Notwithstanding paragraph 7 of this Settlement Agreement, Atmos and ACSC agree <br />that in the event of an appeal of an original jurisdiction entity's decision regarding a <br />proposed RRM adjusttnent, recovery of rate case expenses shall be determined <br />