2005-131-RES ORDER REQUIRING ATMOS ENERGY TO SUBMIT A RATE PACKAGE
RESOLUTION NO. 2005-131
A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF PARIS,
PARIS, TEXAS ORDERING ATMOS ENERGY, MID-TEX DIVISION TO
SHOW CAUSE REGARDING THE REASONABLENESS OF ITS
EXISTING NATURAL GAS DISTRIBUTION RATES WITHIN THE
CITY; REQUIRING ATMOS ENERGY, MID-TEX DIVISION TO
SUBMIT A RATE PACKAGE BASED ON A RATE YEAR ENDING JUNE
30, 2005j DIRECTING THAT SUCH FILING SHALL BE MADE BY
DECEMBER 31, 2005; REQUIRING REIMBURSEMENT OF
REASONABLE LEGAL AND CONSULTANT EXPENSESj REQUIRING
DELIVERY OF THIS RESOLUTION TO THE COMPANY AND LEGAL
COUNSEL; MAKING OTHER FINDINGS AND PROVISIONS RELATED
TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE.
WHEREAS, the City is a regulatory authority under the Gas Utility Regulatory Act
("GURA") and has original jurisdiction over the gas utility rates of Atmos Mid- Tex; and
WHEREAS, the City has the authority under SS 103.001 and 104.151, GURA, to initiate
a proceeding to determine whether the existing rates of a gas utility are unreasonable or in any
way in violation of any provision of law; and
WHEREAS, upon making a finding of unreasonableness, the City may determine the
just and reasonable rates to be charged by Atmos Mid-Tex; and
WHEREAS, Atmos Energy Corporation, the parent company of Atmos Mid- Tex has
recently experienced system-wide cost reductions due to the doubling of its nationwide customer
base with the acquisition of the assets of TXU Gas, and has reported to its investors that it has
experienced a significant increase in profits related to its Texas divisions; and
WHEREAS, Atmos Mid- Tex is charging rates approved based on the higher expenses
and equity-to-debt ratio of TXU Gas, rather than rates that would be justified based on Atmos'
lower expenses and equity-to-debt ratio; and
WHEREAS, ratepayers of Atmos Mid- Tex, including the City and its residents, will
suffer further unreasonable adverse impact from the GRIP rate increases approved by the Texas
Railroad Commission and the second GRIP filing recently made by Atmos Mid- Tex; and
WHEREAS, the Commission's failure to consider testimony and argument offered by
Cities during its consideration of the Company's piecemeal GRIP rate applications leaves Cities
no functional choice but to exercise its statutory right to exercise original jurisdiction over
Atmos' base rates and compel a comprehensive rate review; and
WHEREAS, the City has reason to believe that Atmos Mid- Tex is over-earning and that
its rates are excessive; and
WHEREAS, Cities and their residents are about to experience unprecedented increases
in the cost of natural gas during the heating season and protection of the public interest requires a
comprehensive review of Atmos' cost of service to determine whether rates and services are just
and reasonable; and
WHEREAS, Atmos Mid- Tex should be required to justifY its rates on a system-wide
basis; and
WHEREAS, the coalition of cities formed to review Atmos' GRIP filings (the Atmos
Cities Steering Committee, or "ACSC") can most efficiently review the Atmos filing on behalf
of the City; and
WHEREAS, the reasonable costs associated with the City's review of the Company's
rates are reimbursable from Atmos Mid- Tex; NOW, THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS,
TEXAS:
Section 1. That the findings set out in the preamble to this resolution are hereby in all
things approved.
Section 2. That Atmos Mid- Tex is hereby directed to show cause regarding the
reasonableness of its existing natural gas distribution rates within the City. Atmos shall file with
the City information sufficient to determine the Company's rate base, expenses, investment, and
rate of return. Such filing shall be on a system-wide basis and shall be based upon a rate year
ending June 30, 2005. Atmos Mid-Tex is directed to file its rate filing package to comply, at a
minimum, with the regulations and requirements of the Railroad Commission. The filing shall
be made with the City on or before December 31, 2005. An electronic copy of the filing shall be
made with the City simultaneously with the written filing on December 31,2005. This filing
shall be the same filing as made with the first coalition city to pass the same or similar Show
Cause Resolution.
Section 3. That the City's designated representatives shall have the right to obtain
additional information from Atmos through the filing of written requests for information, to each
of which Atmos shall respond in writing within fourteen (14) calendar days from the receipt of
each such request for information.
Section 4. That a public hearing shall be conducted by the City. Based upon such
hearing, the briefing of staff, and the consultants' findings, a determination of the reasonableness
of the existing rates of Atmos shall be made by the City and, if necessary, just and reasonable
rates shall be determined to be thereafter observed and enforced for all services of Atmos within
the City.
Section 5. That the City may, from time to time, amend this procedural schedule and
the filing requirements, and enter additional orders as may be necessary in the public interest and
to enforce the provisions hereof.
Section 6. That Atmos Mid-Tex shall promptly reimburse the City's reasonable
monthly costs associated with the City's activities related to the rate review.
Section 7. That a copy of this Resolution shall be sent to Atmos Mid-Tex, care of
Richard T. Reis, at Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1800, Dallas, Texas
75240, and to Geoffrey Gay, legal counsel to the coalition of cities, at Lloyd Gosselink, P.O.
Box 1725, Austin, Texas 78767-1725.
Section 8. That this Resolution shall be effective from and after its date of passage.
PASSED AND APPROVED by the City Council of the City of Paris, Texas, on this the
24th day of October, 2005.
ATTEST:
~(W~
ice Ellis, City Clerk
APPROVED AS TO FORM: