2006-025-RES-ATMOS Energy GRIP
ORDINANCE NO. 2006-025
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PARIS,
TEXAS, DENYING THE REQUEST OF ATMOS ENERGY CORP., MID- TEX
DIVISION, FOR AN ANNUAL GAS RELIABILITY INFRASTRUCTURE
PROGRAM (GRIP) RATE INCREASE IN THIS MUNICIPALITY, AS A
PART OF THE COMPANY'S STATEWIDE GAS UTILITY DISTRIBUTION
SYSTEM; APPROVING COOPERATION WITH OTHER CITIES WITHIN
THE ATMOS ENERGY CORP., MID-TEX DIVISION DISTRIBUTION
SYSTEM AS PART OF THE ATMOS CITIES STEERING COMMITTEE
(ACSC); AUTHORIZING ACSC TO HIRE LEGAL AND CONSULTING
SERVICES AND TO NEGOTIATE WITH THE COMPANY AND DIRECT
ANY NECESSARY LITIGATION; AUTHORIZING INTERVENTION AS
PART OF ACSC IN ANY APPEAL OF THE CITY'S ACTION TO THE
RAILROAD COMMISSION; PROVIDING A REQUIREMENT FOR A
PROMPT REIMBURSEMENT OF COSTS INCURRED BY THE CITY;
FINDING THAT THE MEETING AT WHICH THIS ORDINANCE IS
PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW; AND
PROVIDING FOR NOTICE OF THIS ORDINANCE TO ATMOS ENERGY
CORP., MID-TEX DIVISION; MAKING OTHER FINDINGS AND
PROVISIONS RELATED TO THE SUBJECT; AND PROVIDING FOR AN
EFFECTIVE DATE.
WHEREAS, on or about March 30, 2006, Atmos Energy Corp., Mid-Tex Division, (the
"Company") filed with the City a request for an annual gas reliability infrastructure program
("GRIP") rate increase for customers on the Company's statewide gas utility system to be effective
May 30, 2006; and
WHEREAS, the City has exclusive original jurisdiction to evaluate the Company's request
as it pertains to the distribution facilities located within the City, pursuant to Texas Utilities Code
SS 102.001 (b) and 103.001; and
WHEREAS, it is reasonable for the City to cooperate with other cities in a coalition of cities
in opposition to the Company's filing at the Railroad Commission ("Commission"), said coalition
being known as Atmos Cities Steering Committee ("ACSC"), in any appeal ofthe cities' actions to
the Commission; and
WHEREAS, the Gas Utility Regulatory Act ("GURA") grants local regulatory authorities
the right to intervene in rate proceedings filed at the Railroad Commission; and
WHEREAS, the Texas Utilities Code S 103.022 provides that costs incurred by the City in
rate-making activities are to be reimbursed by the regulated utility; and
WHEREAS, counsel for ACSC, upon review of the Company's filing and upon consultation
with various consultants, recommends finding that the Company's proposal is unjustified and
unreasonable; and
WHEREAS, the Company has publicly stated that it will receive substantial profit in 2005
and that its expenses are substantially below those on which the GUD No. 9400 rates it is charging
were based; and
WHEREAS, the Company's GRIP request fails to account for growth in numbers of
customers, thereby undercounting the revenues it will receive from its proposed GRIP rate increase;
and
WHEREAS, the Company's GRIP request fails to recognize that GUD No. 9400 rates
included profit based on TXU Corporation's capital structure rather than Atmos Energy Corp.'s
current capital structure, which justifies a lower rate of return; and
WHEREAS, under the provisions of ~ 104.301 of GURA, the interim rate adjustment is
subject to true-up in a general rate case filed within five years of the effective date of the interim rate
surcharge; and
WHEREAS, the Company has, on May 31, 2006, filed a Statement ofIntent to increase its
distribution rates on a system-wide basis, using calendar year ending December 31,2005, as its test
year; and
WHEREAS, the capital investment made by Atmos during 2005 will be reviewed in the
Statement ofIntent filing, making the 2005 GRIP filing superfluous, duplicative, and unnecessary;
NOW, THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS,
TEXAS:
Section 1. That the findings set out in the preamble to this ordinance are hereby in all things
approved.
Section 2. That the Company's GRIP rate increase request is found to be unreasonable,
superfluous, duplicative, and unnecessary, and is therefore denied in all respects.
Section 3. That the City is authorized to cooperate with other Cities within the Company's
Distribution System that have formed ACSC to hire and direct legal counsel and consultants,
negotiate with the Company, make recommendations to the City regarding reasonable rates, and to
direct any necessary litigation associated with an appeal of a rate ordinance and the rate case filed
at the Commission.
Section 4. That the costs incurred by the City in reviewing the Company's GRIP request
shall be promptly reimbursed by the Company.
Section 5. That the City is authorized to intervene in any appeal of the City's action filed
at the Commission and any related litigation, and to participate in any such appeal or litigation as
a member of ACSC.
Section 6. This Ordinance shall become effective immediately from and after its passage,
as the law and charter in such cases provide.
Section 7. That it is hereby officially found and determined that the meeting at which this
Ordinance is passed is open to the public as required by law and that public notice of the time, place
and purpose of said meeting was given as required.
Section 8. That a copy of this ordinance, constituting final action on the Company's
application, be forwarded to the following:
Richard T. Reis
Atmos Energy Corporation
5420 LBJ Freeway, Suite 1800
Dallas, Texas 75240
Lloyd Gosselink Blevins Rochelle & Townsend
c/o Geoffrey Gay
P.O. Box 1725
Austin, Texas 78767-1725.
Section 9. That this ordinance shall become effective from and after its date of passage.
DULY PASSED and APPROVED by the City Council of the City of Paris, Paris, Texas,
on this the 12th day of June, 2006.
~~
Richard Manning, Mayor
ATTEST:
I ~'rn,
Q~~
ice Ellis, City Clerk
APPROVED AS TO FORM:
;L
hn D. Lestock, Assistant
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