09-A Suspending Atmost Requested Rate Increase
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CITY OF PARIS, TEXAS
CITY COUNCIL AGENDA REQUEST
MEETING DATE: I October 8,2007
o Discussion Dlnformation DRefer to:
SUBMITTED BY:
I Gene Anderson, Finance Director
DESCRIPTION:
Resolution suspending the effective date of Atmos Energy's requested rate
increase for the maximum period permitted by law to allow the City time to
evaluate the filing, determine whether the filing complies with law, and if lawful, to
determine what further strategy, including settlement, to pursue.
BACKGROUND INFORMATION:
The Railroad Commission issued a Final Order approving new system-wide rates
for customers of Atmos Energy's Mid-Tex Division in May. Residential rates were
increased by $10 million annually. Also in May, Atmos filed an application for its
fourth GRIP (infrastructure) surcharge in four years seeking to increase the rates
of all customers by $12 million annually. Despite both of these recent actions to
increase customers' rates, Atmos has filed an application with cities retaining
original jurisdiction over rates and services to increase system-wide rates by
another $52 million. This rate change would increase residential rates 8.27%,
commercial rates 22.72%, and industrial & transportation rates 38.95%.
The law provides that a rate request made by a natural gas utility cannot become
effective until 35 days following the filing of the application to change rates. The
law permits the City to suspend the effective date for 90 days. If the City does not
take action to suspend the filing, Atmos may begin charging the increased rates
after October 25,2007.
The City has participated in prior Atmos Gas rate matters with a coalition of cities
known as the Atmos Cities Steering Committee (ACSC). ACSC is a permanent
standing committee with 99 members who have passed resolutions authorizing
ACSC to intervene on behalf of their city in natural gas matters pending before the
Railroad Commission, the Courts, or the Legislature. A total of 141 cities are
currently working with ACSC with some of them participating on an ad hoc basis.
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CITY OF PARIS, TEXAS
CITY COUNCIL AGENDA REQUEST
FISCAL AUTHORITY:
Not applicable. The City does not incur liability for payment of rate case expenses
by adopting the suspension resolution. Attorney fees are handled through ACSC
and the City of Arlington.
LEGAL REVIEW:
I~
MANAGER'S RECOMMENDATION:
DRAFT
RESOLUTION NO.
f:attoroey\reswork\current\Atmos Suspend Res 10-8-07
October 1, 2007
RESOLUTION OF THE CITY OF PARIS, TEXAS SUSPENDING THE
OCTOBER 25, 2007, EFFECTIVE DATE OF A TMOS ENERGY CORP., MID-
TEX DIVISION REQUESTED RATE CHANGE TO PERMIT THE CITY
TIME TO STUDY THE REQUEST AND TO ESTABLISH REASONABLE
RATES; APPROVING COOPERATION WITH ATMOS CITIES STEERING
COMMITTEE AND OTHER CITIES IN THE ATMOS ENERGY CORP.,
MID- TEX DIVISION SERVICE AREA TO HIRE LEGAL AND
CONSUL TING SERVICES AND TO NEGOTIATE WITH THE COMPANY
AND DIRECT ANY NECESSARY LITIGATION AND APPEALS;
REQUIRING REIMBURSEMENT OF CITIES' RATE CASE EXPENSES;
FINDING THAT THE MEETING AT WHICH THIS RESOLUTION IS
PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW;
REQUIRING NOTICE OF THIS RESOLUTION TO THE COMPANY AND
LEGAL COUNSEL; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, on or about September 20, 2007, Atmos Energy Corp., Mid- Tex Division
(Atmos), pursuant to Gas Utility Regulatory Act ~ 104.102 filed with the City of Paris, Texas a
Statement of Intent to change gas rates in all municipalities exercising original jurisdiction within
its Mid-Tex Division service area effective October 25,2007; and WHEREAS, it is reasonable for
the City of Paris to maintain its involvement in the Atmos Cities Steering Committee (ACSC) and
to cooperate with the 141 similarly situated city members and other city participants of ACSC in
conducting a review of the Company's application and to hire and direct legal counsel and
consultants and to prepare a common response and to negotiate with the Company and direct any
necessary litigation; and
WHEREAS, the Gas Utility Regulatory Act S 104.107 grants local regulatory authorities the
right to suspend the effective date of proposed rate changes for ninety (90) days; and
WHEREAS, the Gas Utility Regulatory Act ~ 103.022 provides that costs incurred by Cities
in ratemaking activities are to be reimbursed by the regulated utility.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF PARIS, TEXAS:
Section 1. That the findings set out in the preamble to this resolution are hereby in all things
approved.
Section 2. That the October 25,2007, effective date of the rate request submitted by Atmos
on or about September 20,2007, be suspended for the maximum period allowed by law to permit
adequate time to review the proposed changes and to establish reasonable rates.
Section 3. That the City is authorized to cooperate with ACSC and its member cities in the
Mid- Tex service area 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
administrative proceedings or court litigation associated with an appeal of a rate ordinance and the
rate case filed with the City or Railroad Commission.
Section 4. That the City's reasonable rate case expenses shall be reimbursed by Atmos.
Section 5. That it is hereby officially found and determined that the meeting at which this
Resolution is passed is open to the public as required by law and the public notice of the time, place,
and purpose of said meeting was given as required.
Section 6. A copy of this Resolution shall be sent to Atmos, care of Joe T. Christian,
Director of Rates, at Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1800, Dallas, Texas
75240, and to Geoffrey Gay, General Counsel to ACSC, at Lloyd Gosselink Blevins Rochelle &
Townsend, P.c., P.O. Box 1725, Austin, Texas 78767-1725.
ATTEST:
Jesse James Freelen, Mayor
City of Paris, Texas
Janice Ellis, City Clerk
APPROVED AS TO FORM:
w. Kent McIlyar, City Attorney
STAFF REPORT
The Railroad Commission issued a Final Order approving new system-wide rates for
customers of Atmos Energy's Mid- Tex Division in May. Residential rates were increased by
$10 million annually. Also in May, Atmos Mid-Tex filed its application for its fourth GRIP
surcharge in four years, seeking to increase the rates of all customers by $12 million annually.
Despite both of these recent actions to increase customers' rates, Atmos Mid- Tex has filed an
application with cities retaining original jurisdiction over rates and services to increase system-
wide rates by another $52 million.
The Company's application was filed with the City on September 20, 2007. Atmos asks
the City to approve an 8.27% increase in residential rates, a 22.72% increases in commercial
rates, and a 38.95% increase in industrial and transportation rates.
Purpose of the Resolution:
The resolution suspends the effective date of the Company's rate increase for the
maximum period permitted by law to allow the City time to evaluate the filing, determine
whether the filing complies with law, and if lawful, to determine what further strategy, including
settlement, to pursue.
The law provides that a rate request made by a natural gas utility cannot become effective
until 35 days following the filing of the application to change rates. The law permits the City to
suspend the effective date for 90 days. If the City does not take action to suspend the filing,
Atmos Mid- Tex may begin charging increased rates after October 25, 2007. According to
Atmos, annual rates would increase by approximately $20 for residential customers.
The City has participated in prior Atmos Gas rate matters with a coalition of cities now
known as Atmos Cities Steering Committee (ACSC). ACSC is a permanent standing committee
with 99 members who have passed resolutions authorizing ACSC to intervene on behalf of the
city in natural gas matters pending before the Railroad Commission, the Courts or the
Legislature. There are currently 141 cities participating with ACSC, including cities that are
participating with ACSC on an ad hoc basis. A list of the current members and participants is
attached.
EXDlanation of "Be It Resolved" Para!!raphs:
Section 1. The city is authorized to suspend the effective date for 90 days for any
legitimate purpose. Time to study and investigate the application is always a legitimate purpose.
Please note that the resolution refers to the suspension period as "the maximum period allowed
by law" rather than ending by a specific date. This is because the Company controls the
effective date and can extend the deadline for final city action to increase the time that the City
retains jurisdiction if necessary to reach settlement on the case. If the suspension period is not
increased by the Company, the City must take final action on Atmos' request to raise rates by
January 24,2007.
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Section 2. Negotiating clout and efficiency are enhanced by the City cooperating with
other ACSC cities in a common review and common purpose. Additionally, rate case expenses
are minimized when ACSC hires one set of attorneys and experts who work under the guidance
and control of the ACSC Executive Committee. This provision authorizes the ACSC to act on
behalf of the City at the local level in settlement discussions, and in preparation of a rate
ordinance and on appeal of the rate ordinance to the Railroad Commission and on appeal to the
Courts. Any settlement negotiated by ACSC must be approved by all ACSC member city
councils through new rate ordinances.
Section 3. Cities, by statute are entitled to recover their reasonable rate case expenses
from the utility. Legal counsel and consultants approved by the ACSC Executive Committee
will submit monthly invoices to the City of Arlington that will be forwarded to Atmos for
reimbursement. No individual city incurs liability for payment of rate case expenses by adopting
a suspension resolution.
Section 4. This section merely recites that the resolution was passed at a meeting that
was open to the public and where the consideration of the Resolution was properly noticed.
Section 5. This section provides that both Atmos and counsel to ACSC will be notified
of the City's action by sending a copy of the approved and signed resolution to certain
designated individuals.
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Charles R. Yarbrough, II
Vice President i , ',:'_'}., ..';.',.
Rates & Reaulatorv AffafrS\;A,,'
September 24, 2007
City Official
Re: Rider GCR - Rate Filing under Docket No. 9670
Enclosed is Atmos Energy Corp., Mid-Tex Division's Statement of Rider GCR
applicable for the October 2007 billing periods. This Statement details the gas cost
component of the residential, commercial, and industrial sales rates for customers
within your city. Please note that the refund related to the Annual Gas Cost
Reconciliation, which normally begins in October, is not included on this filing. The
Commission has suggested that the refund occur over a 4-month period this year
beginning in November. We are in the process of obtaining final approval for that 4-
month refund. This filing is for informative proposes only and no action is required on
your city's part.
Should you have any questions, please let me know.
Sincerely,
Attachment
Atmos Energy Corporation
5420 LBJ Freeway, Suite 1800
Dallas, TX 75240
P 214-206-2809 F 214-206-2126 charles.yarbrough@atmosenergy.com
ATMOS ENERGY CORP., MID-TEX DIVISION
STATEMENT OF RIDER GCR
October. 2007
PREPARED IN ACCORDANCE WITH
GAS UTILITIES DOCKET NO. 9670
Line Part (a) - Mid- Tex Commodity Costs
13
14
15
16
17
18
19
20
21
22
23
24
1
2
3
Estimated Gas Cost per Unit:
Estimated City Gate Deliveries:
Estimated Gas Cost:
$7.4746
5,813,365
$43,452,846
Btu Factor
1.024
Fixed Costs
Fixed Costs Allocation Factors [Set in GUD 9670]
a. Current Month Fixed Costs ot Pipeline Services
b. Plus: Second Prior Month Recovery Adjustment
Net Fixed Costs
Total
Rate R - Residential
62.7262%
$1,881,192
$0
$1,881,192
$626,654
($212,085)
$414,569
$2,295,760
2,433,568 Mct
$0.9434 Met
$8.5568 Met
$9.5002 Mct
1 Industrial Service and Transportation are reported in MMBtu. An MMBtu conversion tactor ot 1.024 is used.
4
5
6
Lost and Unaccounted For Gas %
Estimated Lost and Unaccounted tor Gas
Total Estimated City Gate Gas Cost:
2.5932%
$1,126,813
$44,579,659
7
Estimated Sales Volume:
5,209,852
8
Estimated Gas Cost Factor - (EGCF)
$8.5568
9
10
11
Reconciliation Factor - (RF):
Taxes (TXS):
Adjustment - (ADJ):
$0.0000
$0.0000
$0.0000
12
Gas Cost Recovery Factor - (GCRF)
$8.5568 per Met
Part (b) - Pipeline Services Costs
100.0000%
$2,999,053
$0
$2,999,053
Commodity Costs
a. Estimated Commodity Cost ot Pipeline Services
b. Plus: Second Prior Month Recovery Adjustment
Net Commodity Cost ot Pipeline Services
$1,958,587
($257,244)
$1,701,343
Total Estimated Pipeline Costs (Line 16 + Line 19)
$4,700,398
Estimated Billed Volumes
Pipeline Cost Factor (PCF) [Line 20 I Line 21]
Gas Cost Recovery Factor - (GCRF) [Line 12]
Rider GCR
Per MMBtu
$8.3563
Rate C - Commercial
29.7022%
$890,784
$0
$890,784
$586,087
($99.874)
$486,213
$1,376,996
2,594,479 Mct
$0.5307 Mct
$8.5568 Mct
$9.0875 Met Rate I-
Rate T -
Rate I - Industrial Service
Rate T - Transportation'
7.5717%
$227,079
$0
$227,079
$745,847
$54,715
$800,562
$1,027,641
3,546,584 MMBtu
$0.2898 MMBtu
$8.3563
$8.6461 MMBtu
$0.2898 MMBtu