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<br />.... <br /> <br />(" <br /> <br />MODEL STAFF REPORT <br />ON A TMOS MID- TEX GRIP DENIAL ORDINANCE <br /> <br />Purpose of the Ordinance: <br /> <br />". '" <br /> <br />The law requires that a Gas Reliability Infrastructure Program (GRIP) surcharge request <br />cannot become effective until sixty (60) days following a filing. The Company can set the <br />"effective date" for any date after the 60th day. The effective date may be suspended by a city <br />for 45 days. The ordinance denies the surcharge request on the grounds that it does not comply <br />with the law and is not reasonable. <br /> <br />What is GRIP: <br /> <br />GRIP is piecemeal ratemaking and would be illegal under traditional ratemaking in the <br />public interest. Atmos persuaded the legislature in 2003 to make an exception to the prohibition <br />against piecemeal ratemaking to encourage increased investment in distribution pipe by allowing <br />prompt recovery despite the possibility that increased revenues and declining costs would more <br />than offset increased investment. The "compromise" that Atmos made in 2003 to get the statute <br />changed was to permit cities an unlimited time for suspension and consideration. Atmos <br />betrayed its "deal" and successfully persuaded the Legislature (or at least Representative <br />"Buddy" West and Senator Kenneth Armbrister) to change the statute to allow only 45 days for <br /> <br />. <br />suspenSIon. <br /> <br />NOTE: IF YOU HAVE ALREADY ADOPTED A SUSPENSION RESOLUTION, THIS <br />DENIAL ORDINANCE NEEDS TO BE PASSED NO LATER THAN JANUARY 3, 2006. <br /> <br />NOTE: IF YOU HAVE NOT ADOPTED A SUSPENSION RESOLUTION, IT IS <br />CRITICAL THAT YOU PASS THE DENIAL ORDINANCE BEFORE NOVEMBER 19, <br />2005. <br /> <br />Observations on the Filine: <br /> <br />First, once the GRIP surcharge is in place, it is updated annually until the next general <br />rate case; however, that next case can be delayed by the Company for more than five years. <br />Second, while predicated as a surcharge to promptly recover investment in new and replacement <br />infrastructure designed to improve system safety and reliability, a substantial portion of this <br />GRIP request is based upon new office furniture, computers and other cost efficiency measures <br />more likely to benefit shareholders than ratepayers. <br /> <br />Ex lanation of "Be It Resolved" Para ra hs: <br /> <br />1. This paragraph simply sets out the finding that the Company's request is <br />unreasonable. <br /> <br />~ <br />~ <br />" <br /> <br />1668\ 13\sent to cities\othO51 0 14 <br /> <br />1 <br /> <br />T <br /> <br />I <br />