13 - ATMOS SETTLEMENT AGREEMENT - Laserfiche WebLink

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Item No. 13 memorandum TO: City Council John Godwin, City Manager FROM: Gene Anderson, Finance Director SUBJECT: ATMOS SETTLEMENT AGREEMENT DATE: May 11, 2015 BACKGROUND: In February 2014, Atmos Mid -Tex filed its second annual filing under the Rate Review Mechanism ( "RRM ") Tariff, seeking a rate increase of $45.7 million. Although ACSC ( Atmos Cities Steering Committee -an organization made up of cities served by Atmos) attempted to reach a settlement with the Company as it had in past years, the wide differences between the Company and ACSC's consultants' recommendations made a compromise impossible. On the recommendation of the ACSC Executive Committee and ACSC's legal counsel, the City in 2014 adopted a Resolution denying the requested rate increase. The Company appealed the City's denial to the Railroad Commission of Texas ( "Commission "), and revised its requested increase to $43.8 million. A hearing was held on the Company's appeal on September 3, 2014. On April 28, 2015, the Commission's Hearings Examiner issued his Proposal for Decision ( "PFD ") in the Company's appeal of the City's denial of the 2014 RRM rate increase. This PFD was not favorable to ACSC, but did recommend a reduction of approximately $860,000 to the Company's adjusted 2014 filing. STATUS OF ISSUE: While the parties were waiting for the PFD from the Hearings Examiner in the appeal of the 2014 RRM filing, on February 27, 2015, Atmos Mid -Tex filed with the City another rate increase request under the RRM Tariff, seeking additional revenues in the amount of $28.762 million (total system) or $24.0 million (affected cities). The City worked with ACSC to analyze the schedules and evidence offered by Atmos Mid -Tex to support its 2015 request to increase rates. The Resolution and attached Settlement Agreement and tariffs are the result of negotiation to resolve issues raised by ACSC during the review and evaluation of Atmos Mid - Tex's filing. The recommended Settlement Agreement requires Atmos to abate its appeal of the City's rejection of the 2014 RRM rate increase pending approval by all ACSC cities of the Settlement Agreement. The Agreement requires Atmos to give the City the benefit of the adjustments to the 2014 rate increase recommended by the PFD. The monthly bill impact for the typical residential customer consuming 60 Ccf will be an increase of $1.14 (about a 1.59% increase in the base bill). The typical commercial customer will see an increase of $2.69 or 0.96 %. BUDGET: There is no impact on the City budget due to this matter. RECOMMENDATION: Motion to approve the resolution and negotiated settlement agreement resolving both the 2014 and the 2015 RRM filings, and implementing the rate change.