11 Fiscal ManagementCITY COUNCIL AGENDA ITEM BRIEFING SHEET
Submittal Date:
Originating Department:
Presented By:
Agenda Item No.:
8-I 5-2008
Council Date:
Finance
Gene Anderson
11.
8-25-2008
RECOMMENDED MOTION:
Not an action item - first reading
POLICY ISSUE(S):
Fiscal Management
See attached memo for details.
BOARD/COMMISSION RECOMMENDATION:
NONE
EXHIBITS:
Ordinance with attachments; Atmos rate change memo; rate review mechanism fact sheet
ACTION:
BUDGET INFO:
❑ Financial Report ❑ Minute Order
Expense
$NA
❑ Department Report ❑ Resolution
Budgeted Amt.
$NA
❑ Presentation Z Ordinance
y'I'D Actual
$NA
❑ Public Hearing ❑ Other
Acct. Name
NA
Acct. Number
NA
FISCAL NOTES:
None
REVIEWED AND APPROVED BY:
~ Administration E City Clerk ❑ Community Development ❑ EMS/IT Z Finance ❑ Fire
❑ Municipal Court Z Legal ❑ Library
❑ Police ❑ Eng./Public Works ❑ Utilities
City of Paris Revised 2/04/08
• 000045
D RAFT
Attomey\ordwork\current\.4tmos Rate Review Mechanism 2008
ORDINANCE N0.
AN ORDINANCE OF THE CITY COUIVCIL OF THE CITY OF PARIS, TEXAS,
("CITY") APPROVING A NEGOTIATED RESOLUTION BETWEEN THE ATMOS
CITIES STEERING COMMITTEE AND ATMOS ENERGY CORP., MID-TEX
DIVISION ("ATMOS MID-TEX" OR "THE COMPANY") REGARDING THE
COMPANY'S RATE REVIEW MECHANISM FILING IN ALL CITIES EXERCISING
ORIGINAL JURISDICTION; DECLARING EXISTI111G RATES TO BE
UNREASONABLE; ADOPTING TARIFFS THAT REFLECT RATE ADJUSTMENTS
CONSISTENT WITH THE NEGOTIATED SETTLEMENT AND FINDING THE
RATES TO BE SET BY THE ATTACHED TARIFFS TO BE JUST AND
REASOIVABLE; APPROVING ATMOS' PROOF OF REVENUES; ADOPTING A
SAVINGS CLAUSE; DETERMINING THAT THIS ORDINANCE WAS PASSED IN
ACCORDANCE WITH THE REQUIREMENTS OF THE TEXAS OPEN MEETINGS
ACT; DECLARING AN EFFECTIVE DATE; AND REQUIRING DELIVERY OF THIS
ORDINANCE TO THE COMPANY AND LEGAL COUNSEL.
WHEREAS, the City of Paris, Texas ("City") is a gas utility customer of Atmos Energ,y
Corp., Mid-Tex Division ("Atmos Mid-Tex" or "the Company"), and a regulatory authority with an
interest in the rates and charges of Atmos Mid-Tex; and
WHEREAS, the City is a member of the Atmos Cities Steering Committee ("ACSC"), a
coalition of more than 150 similarly situated cities served by Atmos Mid-Tex that have joined
together to facilitate the review and response to natural gas issues affecting rates charged in the
Atmos Mid-Tex service area (such participating cities are referred to herein as "ACSC Cities");
and
WHEREAS, Atmos and ACSC Cities have been in continuing disagreement, dispute, and
litigation over the implementation of GRIP surcharges pursuant to Section 104.301 of the Texas
Utilities Code; and
WHEREAS, as part of the negotiations to resolve Atmos' 2007 rate case, ACSC Cities and
the Company worked collaboratively to develop the Rate Review Mechanism ("RRM") tariff that
allows for an expedited rate review process controlled by Cities as a substitute to the current
GRIP process instituted by the Legislature; and
WHEREAS, the City took action earlier this year to approve a Settlement Agreement with
Atmos Mid-Tex resolving the Company's 2007 rate case and authorizing the RRM Tariff; and
WHEREAS, on or about April 14, 2008, Atmos Mid-Tex filed with the City its first
application pursuant to the RRM tariff to increase natural gas rates by approximately $33.5
million, such increase to be effective in every municipality that has adopted the RRM tariff within
its Mid-Tex Division; and
Atmos RRM Ordinance 1
-.000046
WHEREAS, ACSC Cities coordinated its review of Atmos' RRM filing and designated a
Negotiation Committee made up of ACSC representatives and assisted by ACSC attorneys and
consultants to resolve issues identified by ACSC in the Company's RRM filing; and
WHEREAS, the Company has filed evidence that existing rates are unreasonable and
should be changed; and
WHEREAS, independent analysis by ACSC's rate expert concluded that Atmos is able to
justify a rate increase of $19.8 million; and
WHEREAS, the ACSC Executive Committee, as well as ACSC lawyers and consultants,
recommends ACSC members approve the attached rate tariffs ("Attachment A" to this
Ordinance) that will increase the Company's revenue requirement by $20 million; and
WHEREAS, the attached tariffs implementing new rates and Atmos' Proof of Revenues
("Attachment B" to this Ordinance) are consistent with the negotiated resolution reached by
ACSC Cities (including but not limited to a reduction of the residential customer monthly charge
to $7.00 per month) and are just, reasonable, and in the public interest; and
WHEREAS, it is the intention of the parties that ACSC Cities receive the benefit of any
Settlement Agreement that Atmos enters into with other entities arising out of its RRM or any
associated appeals of a decision entered by the Railroad Commission regarding the Company's
request to increase rates. The ACSC Cities' acknowledge that the exercise of this right is
conditioned upon the ACSC Cities' acceptance of all rates, revenues, terms and conditions of any
other Settlement Agreement or associated appeals arising out of the Company's RRM filing in
toto; and
WHEREAS, the negotiated resolution of the Company's RRM filing and the resulting rates
are, as a whole, is in the public interest.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PARIS,
TEXAS:
Section 1. That the findings set forth in this Ordinance are hereby in all things approved.
Section 2. That the Ciry Council finds that the existing rates for natural gas service
provided by Atmos Mid-Tex are unreasonable and new tariffs and Atmos' proof of revenues,
which are attached hereto and incorporated herein as Attachments A and B, are just and
reasonable and are hereby adopted.
Section 3. That to the extent any resolution or ordinance previously adopted by the
Council is inconsistent with this Ordinance, it is hereby repealed.
Section 4. That the meeting at which this Ordinance was approved was in all things
conducted in strict compliance with the Texas Open Meetings Act, Texas Government Code,
Chapter 551.
Atmos RRM Ordinance 2
,-000047
Section 5. That if any one or more sections or clauses of this Ordinance is adjudged to be
unconstitutional or invalid, such judgment shall not affect, impair or invalidate the remaining
provisions of this Ordinance and the remaining provisions of the Ordinance shall be interpreted
as if the offending section or clause never existed.
Section 6. That if ACSC Cities determine any rates, revenues, terms and conditions, or
benefits resulting from a Final Order or subsequent negotiated settlement approved in any
proceeding addressing the issues raised in Atmos' RRM filing would be more beneficial to the
ACSC Cities than the terms of the attached tariff, then the more favorable rates, revenues, terms
and conditions, or benefits shall additionally accrue to the ACSC Cities. Exercise of this right is
conditioned upon ACSC Cities' acceptance of all rates, revenues, terms and conditions of any
other Settlement Agreement or associated appeals arising out of the Company's RRM filing in
toto.
Section 8. That a copy of this Ordinance shall be sent to Atmos Mid-Tex, care of David
Park, Vice President Rates and Regulatory Affairs, at Atmos Energy Corporation, 5420 LBJ
Freeway, Suite 1800, Dallas, Texas 75240, and to Geoffrey Gay, General Counsel to ACSC, at Lloyd
Gosselink Rochelle & Townsend, P.C., P.O. Box 1725, Austin, Texas 78767-1725.
Section 9. Introduced and read on first reading on August 25, 2008, at a regular meeting
of the City Council of the City of Paris and read and passed on second reading on September 8,
2008, at a regular meeting of the City Council of the City of Paris; the same being two (2)
separate regular meetings of the City Council of the City of Paris.
Section 10. This ordinance shall become effective immediately upon passage on second
reading with rates authorized by attached Tariffs to be effective for customer bills delivered on
or after October 1, 2008.
PASSED AND ADOPTED on second and final reading this 8th, day of September 2008.
Jesse James Freelen, Mayor
ATTEST:
Janice Ellis, City Clerk
APPROVED AS TO FORM:
W. Kent McIlyar, City Attorney
Atmos RRM Ordinance 3
m Wt' oo V V 4V
ATTACHMENT A
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
RRC TARIFF NO: 19843
REVISION NO: 0
RATE SCHEDULE:
R- RESIDENTIAL SALES
APPLICABLE T0:
Entire Division (except Environs areas and the City of Dallas)
EFFECTIVE DATE:
10/01/2008
PAGE: 23
Application
Applicable to Residential Customers for all natural gas provided at one Point of Delivery and measured
through one meter.
Type of Service
Where service of the type desired by Customer is not already available at the Point of Delivery, additional
charges and special contract arrangements between Company and Customer may be required prior to
service being furnished.
Monthly Rate
Customer's monthly bill will be calculated by adding the following Customer and Mcf charges to the
amounts due under the riders listed below:
Charge
Amount
Customer Charge per Bill
$ 7.00 per month
Commodity Charge - All Mcf
$2.2410 per Mcf
Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated
in accordance with Part (a) and Part (b), respectively, of Rider GCR.
Weather Normalization Adjustment: Plus or Minus an amount for weather normalization
calculated in accordance with Rider WNA.
Rate Review Mechanism: Commodity Charge includes an amount calculated in accordance with
Rider RRM.
Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider
FF. Franchise Fees are to be assessed solely to customers within municipal limits. This does not
apply to Environs Customers.
Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX.
Surcharges: Plus an amount for surcharges calcutated in accordance with the applicable rider(s).
Ag reement
An Agreement for Gas Service may be required.
Notice
Service hereunder and the rates for services provided are subject to the orders of regulatory bodies
having jurisdiction and to the Company's Tariff for Gas Service.
Issued By: David J. Park Vice President, Rates and Regulatory Affairs
Date Issued: 08/13/2008
1 1 00V00
ATTACHMENT A
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
RRC TARIFF NO: 19844
REVISION NO: 0
RATE SCHEDULE:
C- COMMERCIAL SALES
APPLICABLE TO:
Entire Division (except Environs areas and the City of Dalias)
EFFECTIVE DATE:
1010112008
PAGE: 24
Application
Applicable to Commercial Customers for all natural gas provided at one Point of Delivery and measured
through one meter and to Industrial Customers with an average annual usage of less than 3,000 Mcf.
Type of Service
Where service of the type desired by Customer is not already available at the Point of Delivery, additional
charges and special contract arrangements between Company and Customer may be required prior to
service being furnished.
Monthly Rate
Gustomer's monthly bill will be calculated by adding the following Customer and Mcf charges to the
amounts due under the riders listed below:
Charge
Amount
Customer Charge per Bill
$ 13.50 per month
Commodity Charge - All Mcf
$ 0.9809 per Mcf
Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated
in accordance with Part (a) and Part (b), respectively, of Rider GCR.
Weather Normalization Adjustment: Plus or Minus an amount for weather normalization
calculated in accordance with Rider WNA.
Rate Review Mechanism: Commodity Charge includes an amount calculated in accordance with
Rider RRM.
Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider
FF. Franchise Fees are to be assessed solely to customers within municipal limits. This does not
apply to Environs Customers.
Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX.
Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s).
Agreement
An Agreement for Gas Service may be required.
Notice
Service hereunder and the rates for services provided are subject to the orders of regulatory bodies
having jurisdiction and to the Company's Tariff for Gas Service.
Issued By: David J. Park Vice President, Rates and Regulatory Affairs
Date Issued: 08/13/2008
W 000050
ATTACHMENT A
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
RRG TARIFF NO: 19842
REVISION NO: 0
RATE SCHEDULE:
I- INDUSTRIAL SALES
APPLICABLE TO:
Entire Division (except Environs areas and the City of Dailas)
EFFECTIVE DATE:
10101/2008
PAGE: 25
Application
Applicable to Industrial Customers with a maximum daily usage (MDU) of less than 3,500 MMBtu per day
for all natural gas provided at one Point of Delivery and measured through one meter. Service for
Industrial Customers with an MDU equal to or greater than 3,500 MMBtu per day will be provided at
Company's sole option and will require special contract arrangements between Company and Customer.
Type of Service
Where service of the type desired by Customer is not already available at the Point of Delivery, additional
charges and special contract arrangements between Company and Customer may be required prior to
service being furnished.
Monthly Rate
Customer's monthly bill will be calculated by adding the following Customer and MMBtu charges to the
amounts due under the riders listed below:
Charge
Amount
Customer Charge per Meter
$ 425.00 per month
First 0 MMBtu to 1,500 MMBtu
$ 0.2733 per MMBtu
Next 3,500 MMBtu
$ 0.1993 per MMBtu
All MMBtu over 5,000 MMBtu
$ 0.0427 per MMBtu
Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated
in accordance with Part (a) and Part (b), respectively, of Rider GCR.
Rate Review Mechanism: Commodity Charge includes an amount calculated in accordance with
Rider RRM.
Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider
FF. Franchise Fees are to be assessed solely to customers within municipal limits. This does not
apply to Environs Customers.
Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX.
Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s).
Curtaitment Overpull Fee
Upon notification by Company of an event of curtailment or interruption of Customer's deliveries,
Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay
Company 200% of the midpoint price for the Katy point listed in Platts Gas Daily published for the
applicable Gas Day in the table entitled "Daily Price Survey."
Issued By: David J. Park Vice President, Rates and Regulatory Affairs
Date Issued: 08/13l2008
000051
ATTACHMENT A
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
RRC TARIFF NO: 19842
REVISION N(3: 0
RATE SCHEDULE:
I- INDUS7RIAL SALES
APPLICABLE TO:
Entire Division (except Environs areas and the City of Dallas)
EFFECTIVE DATE:
10/0112008
PAGE: 26
Replacement Index
In the event the "midpoinY" or "common" price for the Katy point listed in Plafts Gas Daify in the table
entitled "Daily Price Survey" is no longer published, Company will calculate the applicable imbalance fees
utilizing a daily price index recognized as authoritative by the natural gas industry and most closely
approximating the applicable index.
Agreement
An Agreement for Gas Service may be required.
Notice
Service hereunder and the rates for services provided are subject to the orders of regulatory bodies
having jurisdiction and to the Company's Tariff for Gas Service.
Special Conditions
In order to receive service under Rate I, Customer must have the type of ineter required by Company.
Customer must pay Company all costs associated with the acquisition and installation of the meter.
Issued By: David J. Park Vice President, Rates and Regulatory Affairs
Date Issued: 08/13/2008
. 000052
ATTACHMENT A
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
RRC TARIFF NO: 19845
REVISION NO: 0
RATE SCHEDULE:
T - TRANSPORTATION
APPLICABLE TO:
Entire Division (except Environs areas and the City of Dallas)
EFFECTIVE DATE:
10/01/2008
PAGE: 27
Application
Applicabie, in the event that Company has entered into a Transportation Agreement, to a customer
directly connected to the Atmos Energy Corp., Mid-Tex Division Distribution System (Customer) for the
transportation of all natural gas supplied by Customer or Customer's agent at one Point of Delivery for
use in Customer's facility.
Type of Service
Where service of the type desired by Customer is not already available at the Point of Delivery, additional
charges and special contract arrangements between Company and Customer may be required prior to
service being furnished.
Monthly Rate
Customer's bill will be calculated by adding the following Customer and MMBtu charges to the amounts
and quantities due under the riders listed below:
Charge
Amount
Customer Charge per Meter
$ 425.00 per month
First 0 MMBtu to 1,500 MMBtu
$ 0.2733 per MMBtu
Next 3,500 MMBtu
$ 0.1993 per MMBtu
All MMBtu over 5,000 MMBtu
$ 0.0427 per MMBtu
Upstream Transportation Cost Recovery: Plus an amount for upstream transportation costs in
accordance with Part (b) of Rider GCR.
Rate Review Mechanism: Cornmodity Charge includes an amount calculated in accordance with
Rider RRM.
Retention Adjustment: Plus a quantity of gas as calculated in accordance with Rider RA.
Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider
FF. Franchise Fees are to be assessed solely to customers within municipal limits. This does not
apply to Environs Customers.
Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX.
Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s).
Imbalance Fees
All fees charged to Customer under this Rate Schedule will be charged based on the quantities
determined under the applicable Transportation Agreement and quantities will not be aggregated for any
Customer with multiple Transportation Agreements for the purposes of such fees.
Issued By: David J. Park Vice President, Rates and Regulatory Affairs
Date Issued: 08/13/2008
0 000051
ATTACHMENT A
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
RRC TARIFF NO: 19845
REVISION NO: 0
RATE SCHEDULE:
T - TRANSPORTATION
APPLICABLE TO:
Entire Division (except Environs areas and the City of Dallas)
EFFECTIVE DATE:
10101/2008
PAGE: 28
Monthly Imbalance Fees
Customer shall pay Company the greater of (i) $0.10 per MMBtu, or (ii) 150% of the difference per MMBtu
between the highest and lowest "midpoint" price for the Katy point listed in Platts Gas Daily in the table
entitled "Daily Price Survey" during such month, for the MMBtu of Customer's monthly Cumulative
Imbalance, as defined in the applicable Transportation Agreement, at the end of each month that exceeds
10% of Customer's receipt quantities for the month.
Curtailment Overpull Fee
Upon notification by Company of an event of curtailment or interruption of Customer's deliveries,
Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay
Company 200% of the midpoint price for the Katy point listed in Platts Gas Daily published for the
applicable Gas Day in the table entitled "Daily Price Survey."
Replacement Index
In the event the "midpoinY" or "common" price for the Katy point listed in Platts Gas Daily in the table
entitled "Daily Price Survey" is no longer published, Company will calculate the applicable imbalance fees
utilizing a daily price index recognized as authoritative by the natural gas industry and most closely
approximating the applicable index.
Agreement
A transportation agreement is required.
Notice
Service hereunder and the rates for services provided are subject to the orders of regulatory bodies
having jurisdiction and to the Company's Tariff for Gas Service.
Special Conditions
In order to receive service under Rate T, customer rnust have the type of ineter required by Company.
Customer must pay Company all costs associated with the acquisition and installation of the meter.
Issued By: David J. Park Vice President, Rates and Regulatory Affairs
Date Issued: 08/13/2008
• 000054
ATTACHMENT A
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
REVISION NO: 0
RIDER:
GCR - GAS COST RECOVERY
APPLICABLE TO:
Entire Division
EFFECTIVE DATE:
10101/2008
PAGE: 40
Applicable to Rate R, Rate C, and Rate I for all gas sales made by Company, and applicable to Rate R,
Rate C, Rate 1, and Rate T for recovery of Pipeline System costs. The total gas cost recovery amount
due is determined by adding the gas cost calculated in Section (a) below and the pipeline cost calculated
in Section (b) below.
The amount due for gas cost (Section (a)) is determined by multiplying the Gas Cost Recovery Factor
(GCRF) by the Customer's monthly volume. For Customers receiving service under Rate R and Rate C,
monthly volume will be calculated on a Mcf basis. For Customers receiving service under Rate 1,
monthly volume will be calculated on an MMBtu basis and the quantities will be adjusted as necessary to
recover actual gas costs.
The amount due for pipeline cost (Section (b)) is determined by multiplying the Pipeline Cost Factor
(PCF) by the Customer's monthly volume. For Customers receiving service under Rate R and Rate C,
monthly volume will be calculated on an Mcf basis. For Customers receiving service under Rate I and
Rate T, monthly volume will be calculated on an MMBtu basis and the quantities will be adjusted as
necessary to recover actual gas costs.
(a) Gas Cost
Method of Calculation
The monthly gas cost adjustment is calculated by the application of a Gas Cost Recovery Factor (GCRF),
as determined with the following formula:
GCRF = Estimated Gas Cost Factor (EGCF) + Reconciliation Factor (RF) + Taxes (TXS)
EGCF = Estimated cost of gas, including lost and unaccounted for gas attributed to residential,
commercial, and industrial sales, and any reconciliation balance of unrecovered gas costs, divided
by the estimated total residential, commercial, and industrial sales. Lost and unaccounted for gas is
limited to 5%.
RF = Calculated by dividing the difference between the Actual Gas Cost Incurred, inclusive of
interest over the preceding iwelve-month period ended June 30 and the Actual Gas Cost Billed
over that same twelve-month period by the estimated total residential, commercial, and industrial
sales for the succeeding October through June billing months. The interest rate to be used is the
annual interest rate published by the PUC every December. The interest rate of 2008 is 4.69%.
Actual Gas Cost Incurred = The sum of the costs booked in Atmos Energy Corp., Mid-Tex
Division account numbers 800 through 813 and 858 of the FERC Uniform System of Accounts,
including the net impact of injecting and withdrawing gas from storage. Also includes a credit or
debit for any out-of-period adjustments or unusual or nonrecurring costs typically considered gas
costs and a credit for amounts received as Imbalance Fees or Curtailment Overpull Fees.
Actual Gas Gost Billed = EGCF multiplied by the monthly volumes billed to Residential,
Commercial and Industrial Sales customers, less the total amount of gas cost determined to have
been uncollectible and written off which remain unpaid for each month of the reconciliation period.
Issued By: David J. Park Vice President, Rates and Regulatory Affairs
Date Issued: 08/13/2008
w 000055
ATTACHMENT A
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
REVISION NO: 0
RIDER:
GCR - GAS COST RECOVERY
APPLICABLE TO:
Entire Division
EFFECTIVE DATE:
10I0112008
PAGE: 41
Any amount remaining in the reconciliation balance after the conclusion of the period of
amortization will be maintained in the reconciliation balance and included in the collection of the
next RF.
Atmos Energy shall file annual reports with the Commission, providing by month the following
amounts: Gas Cost Written Off. Margin Written Off, Tax and Other Written Off, Total Written Off,
Gas Cost Collected and Margin Collected.
TXS = Any statutorily imposed assessments or taxes applicable to the purchase of gas divided by
the estimated total residential, commercial, and industrial sales.
ADJ = Any surcharge or refund ordered by a regulatory authority, inclusive of interest, divided by the
estimated total residential, commercial, and industrial sales is to be included as a separate line item
surcharge.
(b) Pipeline Cost
Method of Calculation
Each month, a Pipeline Cost Factor (PCF) is calculated separately for each Pipeline Cost Rate Class
listed below. The formula for the PCF is:
PCF = PP / S, where:
PP =(P - A) x D, where:
P= Estimated monthly cost of pipeline service calculated pursuant to Rate CGS
D= Pipeline service allocation factor for the rate class as approved in the Company's most recent
rate case, as follows:
Pi eline Cost Rate Class
Allocation Factor D
Rate R - Residential Service
.634698
Rate C - Commercial Service
.302824
Rate I- Industrial Service and Rate T- Trans ortation Service
.062478
A= Adjustment applied in the current month to correct for the difference between the actual and
estimated pipeline cost revenue of the second preceding month, calculated by the formula:
A = R - (C - A2), where:
R= Actual revenue received from the application of the PP component in the second preceding
month.
C= Actual pipeline costs for the second preceding month.
A2 = The adjustment (A) applied to the PP component in the second preceding month.
Issued By: David J. Park Vice President, Rates and Regulatory Affairs
Date Issued: 08/13/2008
000056
ATTACHMENT A
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
REVISION NO: 0
RIDER:
GCR - GAS COST RECOVERY
APPLICABLE TO:
Entire Division
EFFECTIVE DATE:
10/01I2008
PAGE: 42
S= Estimated Mcf or MMBtu for the rate class for the current billing month.
The PCF is calculated to the nearest 0.0001 cent.
The Pipeline Cost to be billed is determined by multiplying the Mcf or MMBtu used by the appropriate
PCF. The Pipeline Cost is determined to the nearest whole cent.
Issued By: David J. Park Vice President, Rates and Regulatory Affairs
Date Issued: 08/13/2008
.1 000057
ATTACHMENT A
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
REVISION NO: p
RIDER:
CEE - CONSERVATION & ENERGY EFFICIENCY
APPLICABLE TO:
Entire Division
EFFECTIVE DATE:
10/01I2008
PAGE: 58
Purpose
Atmos Energy Mid-Tex is proposing to institute a complete Conservation & Energy Efficiency program
which will offer assistance to qualified customer segments in reducing energy consumption and lowering
energy utility bills. The proposal is one where Atmos Energy shareholders will fund a percentage of the
allowable expenses incurred annually, with a customer rate component providing the remainder of the
funding. Following is a high-level, concept summary of the proposal. Atmos Energy Mid-Tex Division
proposes to work with the communities it serves to develop the details of a new tariff and programs
addressing conservation and energy efficiency.
SVnopsis:
Voucher system to provide free energy savings materials and supplies to qualifying customers of Atmos
Mid-Tex. Qualified Customers will receive up to two hundred dollars ($200.00) worth of caulking,
weather-stripping, sheathing, sealing, water heater blankets, and like materials, other energy saving
devices such as clock-thermostats, set-back devices ("covered items") from approved suppliers / retailers.
Company will undertake efforts to enlist support from community groups, including its own Employee
Action Program, to assist customers with installation. If it is determined that professional installation
capabilities are necessary, the parties will agree on labor assistance amounts.
Eli ibilit
Low Income - Low-income rate-payers that qualify for heating bill assistance through LIHEAP
agencies and all agencies that distribute Atmos "Share the Warmth" funds. Agencies that allocate
assistance funds denote customer as Low Income, a status that lasts for one year.
Senior Citizen - Primary account holder can request eligibility through ATM call center or web-site.
Customer provides primary SSN which is verified through Social Security Administration. And account
holder that is or turns 65 years old in that year becomes eligible.
Fundin
Initial program funding will be at two million dollars ($2,000,000). Atmos Energy shareholders will
contribute one million dollars ($1,000,000.00) to this initiative annuatly with ratepayers providing one
million dollars ($1,000,000.00) per year. It is proposed that the program operate on an October 1 through
September 30 year, with benefits being capped at the two million dollar level for the initial program period.
Administration:
A third-party administrator will coordinate qualification of customers, voucher distribution, subsequent
verification and reimbursement of eligible expenditures and general program administration. Program
administration expenses will be funded from the annual approved budget.
Audits will be provided all interested parties within 120 days of the end of each program year to determine
effectiveness.
Issued By: David J. Park Vice President, Rates and Regulatory Affairs
Date Issued: 08/13/2008
000058
ATTACHMENT A
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
REVISION NO: 0
RIDER:
CEE - CONSERVATION & ENERGY EFFICIENCY
APPLICABLE TO:
Entire Division
EFFECTIVE DATE:
10/01/2008
PAGE: 59
Reqort
Atmos shall file an annual report detailing cost to administer the program with details of the amounts paid
out of program for energy conversation assistance. The report shall also detail number of applicants,
number rejected and accepted and reason rejected. The report shall be filed with the Gas Service
Director.
Issued By: David J. Park Vice President, Rates and Regulatory Affairs
Date Issued: 08/13/2008
11 000(l59
ATTACHMENT A
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
REVISION NO: 0
RIDER:
FF - FRANCHISE FEE ADJUSTMENT
APPLIGABLE TO:
Entire Division
EFFECTIVE DATE:
1010112008
PAGE: 43
Application
Applicable to Customers inside the corporate limits of an incorporated municipatity that imposes a
municipal franchise fee upon Company for the Gas Service provided to Customer. Franchise Fees to be
assessed solely to customers within the municipal limits. This does not apply to Environs customers.
Monthly Adjustment
Company will adjust Customer's bill each month in an amount equal to the municipal franchise fees
payable for the Gas Service provided to Customer by Company. Municipal franchise fees are determined
by each municipality's franchise ordinance. Each municipality's franchise ordinance will specify the
percentage and applicability of franchise fees.
From time to time, Company will make further adjustments to Customer's bill to account for any over- or
under-recovery of municipal franchise fees by Company.
Issued By: David J. Park Vice President, Rates and Regulatory Affairs
Date Issued: 08/13/2008
woooO~U
ATTACHMENT A
TARfFF FOR GAS SERVICE
ATMOS ENERGY CORP.,
MID-TEX DIVISION
RIDER:
Rider WNA - Weather Normalization Adjustment
APPLICABLE TO:
Entire System (except Environs areas
and the City of Dallas)
REVISION:
DATE:
EFFECTIVE DATE:
11/01/2008
PAGE: 1 OF 2
RIDER WNA - Weather Normalization Adiustment
Provisions for Adjustment
The base rate per Mcf (1,000,000 Btu) for gas service set forth in any Rate Schedules utilized by the
cities of the Mid-Tex Division service area for determining normalized winter period revenues shall be
adjusted by an amount hereinafter described, which amount is referred to as the "Weather Normalization
Adjustment." The Weather Normalization Adjustment shall apply to all temperature sensitive residential,
and commercial bills based on meters read during the revenue months of November through April. The
five regional weather stations are Abilene, Austin, Dallas, Waco, and Wichita Falls.
Computation of Weather Normalization Adjustment
The Weather Normalization Adjustment Factor shall be computed to the nearest one-hundredth cent
per Mcf by the following formula:
(HSFi x (NDD-ADD) )
WNAFi = Ri
(BLi + (HSFi x ADD) )
Where
= any particular Rate Schedule or billing classification within any such
particular Rate Schedule that contains more than one billing classification
WNAFi = Weather Normalization Adjustment Factor for the ith rate schedule or
classification expressed in cents per Mcf
Ri = base rate of temperature sensitive sales for the ith schedule or
classification approved by the entity exercising original jurisdiction.
H5Fi = heat sensitive factor for the ith schedule or classification calculated as the
slope of the linear regression of average sales per bill (Mco and actual
heating degree days by month for the test year by schedule or classification
and weather station as part of the RRM filing.
NDD = billing cycle normal heating degree days caiculated as the simple ten-year
average of actual heating degree days.
ADD = billing cycle actual heating degree days.
Bli = base load sales for the ith schedule or classification calculated as the y-
intercept of the linear regression of average sales per bill (Mcfl and actual
heating degree days by month for the test year by schedule or classification
and weather station as part of the RRM filing.
The Weather Normalization Adjustment for the jth customer in ith rate schedule is computed as:
WNA; = WNAF; x q;j
- 000061
ATTACHMENT A
TARIFF FOR GAS SERVICE
ATMOS ENERGY CORP.,
MID-TEX DIVISlON
RATE SCHEDULE:
Rate WNA - Weather Normalization Adjustment
APPLICABLE 70:
Entire System (except Environs areas
and the City of Dallas)
REVISION:
DATE:
EFFECTIVE DATE:
11I01/2008
PAGE: 2 OF 2
Where q;j is the relevant sales quantity for the jth customer in ith rate schedule.
Filinqs with Entities Exercisinq Oriqinal Jurisdiction
As part of its annual RRM filing the Company will file (a) a copy of each computation of the Weather
Normalization Adjustment Factor, (b) a schedule showing the effective date of each such Weather
Normalization Adjustment, (c) a schedule showing the factors of values used in calculating such
Weather Normalization Adjustment and (d) a random sample and audit of thirty (30) actual customer
bills, with customer information deleted, for each rate schedule or classification to which the WNA was
applied in the preceding 12 month period. To the extent that source data is needed to audit the WNA
application, such data will be provided by the Company as part of the annual RRM filing.
If the RRM is discontinued, as provided in the Rider RRM tariff, the information required herein to be
filed with the entities exercising original jurisdiction shall be filed on March 1 of each year.
Base Use/Heat Sensitivitv (HSF) Factors
Residential Commercial
Base use HSF Base use HSF
\A/-0hor C#~#inn RArf F%ArfJNftfl Mr.f Mcf/HDD
Abilene
1.27
.0130
10.93
.0638
Austin
1.29
.0133
18.47
.0641
Dallas
1.79
.0186
20.83
.0878
Waco
1.30
.0141
11.41
.0617
Wichita
Falls
1.35
.0143
11.62
.0540
Sample WNAFj Calculation:
.1533 per Mcf =
Where
i =
Ri =
1.2267 x
+ (.0131 x 17) )
Residential Singte Block Rate Schedule
1.2267 per MCF (Rate R- Final Order GUD No. 9670)
(.0131
(1.14
x (30-17) )
HSFi = .0131 (Residential - Abilene Area)
NDD = 30 HDD (Simple ten-year average of Actual HDD for Abilene Area - 9/15l06
-10/14/06)
ADD = 17 HDD (Actual HDD for Abilene Area - 9/15/06 -10/14/06)
BLi = 1.14 Mcf (Residential - Abilene Area)
" 0001162
ATTACHMENT B
ATMOS ENERGY CORP., MID-TEX DIVISION
SUMMARY PROOF OF REVENUE AT PROPOSED RATES
TEST YEAR ENDING DECEMBER 31, 2007
Line Description Totai Reference
(a) (b) (c)
Rafe R
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Rate Characteristics:
Customer Charge
Consumption Charge ($/Mcf)
2007 RRM True-up ($/Mco
Rider GCR Part A
Rider GCR Part B
BillinQ Units (1):
BIIIS
Total MCF
Proposed Revenue:
Customer Charge
Consumption Charge
Base Revenue
Rider GCR Part A
Rider GCR Part B
Subtotal
Revenue Related Taxes
Total Proposed Revenue- Rate R
RRM Settlement
Agreement,
$7.00 Pg 2, Item 5
$2.1600
$0.0810
$8.1244
$0.6243
17,069,679
78,708,921
$ 119,487,753
176,385,175
$ 295,872,928
639,460,135
49,140,231
$ 984,473,295
59,244,614
$ 1,043,717,909
Note 1: See Billing Determinants Study for details.
A 000063
Settlement Allocation
Settiement Allocation
Schedule H
Schedule i
WP_J-1.1
WP_J-1.1
ATTACHMENT B
ATMOS ENERGY CORP., MID-TEX DIVISION
SUMMARY PROOF OF REVENUE AT PROPOSED RATES
TEST YEAR ENDING DECEMBER 31, 2007
Line Description Total Reference
(a) (b) (c)
Rate C
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Rate Characteristics:
Customer Charge
Consumption Charge ($/Mcfl
2007 RRM True-up ($/Mcq
Rider GCR Part A
Rider GCR Part B
Billinq Units (1):
BIIlS
Total MCF
Proposed Revenue:
Customer Charge
Consumption Charge
Base Revenue
Rider GCR Part A
Rider GCR Part B
Subtotal
Revenue Related Taxes
Total Proposed Revenue- Rate C
RRM Settlement
Agreement,
$13.50 Pg 2, item 5
$0.9442
$0.0367
$8.1244
$0.5228
1,434,516
50,233,642
$ 19,365,966
49,273,373
$ 68,639,339
408,116, 524
26,261,046
$ 503,016,909
30,271,052
$ 533,287,962
Note 1: See Billing Determinants Study for details.
~ oooos:4
Settlement Allocation
Settlement Allocation
Schedule H
Schedule I
WP_J-1.2
WP_J-1.2
ATTACHMENT B
ATMOS ENERGY CORP., MID-TEX DIVISION
SUMMARY PROOF OF REVENUE AT PROPOSED RATES
TEST YEAR ENDING DECEMBER 31, 2007
Line Description Totai Reference
(a) (b) (c)
Rate I &T
1 Rate Characteristics:
2
Customer Charge
$
425.00
Settlement Allocation
3
4
Block 1($/MMBTU)
$0.2352
Settlement ANocation
5
Block 2($/MMBTU)
$0.1715
Settlement Allocation
6
Block 3($/MMBTU)
$0.0367
Settlement Allocation
7
2007 RRM True-up ($/MMBTU):
Settlement Allocation
8
Block 1 ($/MMBTU)
$0.0381
9
Block 2 ($/MMBTU)
$0.0278
10
Block 3 ($/MMBTU)
$0.0060
11
Rider GCR Part A
$8.1244
Schedule H
12
Rider GCR Part B
$0.2938
Schedule I
13
14
Consumption Characteristics:
15
Block 1(First 1,500 MMBTU)
0.23502
16
Block 2(Next 3,500 MMBTU )
0.26655
(1)
17
Block 3(Over 5,000 MMBTU )
0.49843
18
19
Billinct Units (1):
20
BIIIS
10,052
WP_J_1
21
Block 1
9,522,217
WP J-1
22
Block 2
10,799,921
WP_J_1
23
B►ock 3
20,195,218
WP_J_1
24
Total MMBTU
40,517,356
25
26
Sales Volumes
2,331,063
WP_J_1
27
28
Proposed Revenue:
29
Customer Charge
$
4,272,100
30
Block 1
2,602,422
31
Block 2
2,152,424
32
Block 3
862,336
33
Base Revenue
$
9,889,282
34
Rider GCR Part A
18,494,542
35
Rider GCR Part B
11,902,411
36
Subtotal
$
40,286,235
37
Revenue Related Taxes
2,424,385
38
39
Total Proposed Revenue- Rate I&T
$
42,710,620
40
41
Note 1: See Billing Determinants Stud
y for details.
^
.oo00s5.
Lloyo 816 Congress Avenue, Suite 1900
Austin, Texas 78701
Gosselink Telephone: (512) 322-5800
Facsimile: (512) 472-0532
ATTORNEYS AT LAW
www.lglawfirm.com
Ms. Doyle's Direct Line: (512) 322-5820
Email: kdoyle@lglawfirm.com
MEMORANDUM
TO: Atmos City Steering Committee (ACSC) Members
FROM: Geoffrey Gay
Kristen Doyle
DATE: August 13, 2008
RE: FINAL ACTION BY OCTOBER 1ST - Atmos RRM Settlement
The ACSC Settlement Committee (Jay Doegey - Arlington, Danny Reed - Fort Worth,
Mark Israelson - Plano, Don Wilson - Eastland, Cathy Cunningham - various ACSC cities, Phil
Boyd - Lewisville, Rodney Adams - Irving), with the advice and input of ACSC consultants and
lawyers, has worked to resolve the Company's pending $33.5 million Rate Review Mechanism
("RRM") rate increase request without the necessity of a protracted and costly contested case
proceeding. The attached tariff that reflects rates that will increase Atmos' revenues by $20
million. The negotiated result represents a 35 percent reduction in Atmos' requested rate
increase. The monthly bill impact for an average residential customers is $0.81.
The RRM process was created by Atmos and ACSC to eliminate the piecemeal
ratemaking GRIP process in favor of an expedited rate review controlled by cities The
Company's filing is the first filing pursuant to the agreed RRM process. The ACSC Executive
Committee recommends approval of the negotiated resolution because it represents an outcome
that is equal to or better than the outcome expected from a lengthy contested case proceeding,
and maintains cities' role as a regulator of natural gas rates.
Please schedule consideration of the ordinance for your next available council
meeting. Final council action to approve the ordinance must take place by October lst. To
assist you, several documents are attached:
• An ordinance setting new rates. The approved Ordinance should include the
attached Tariff ("Attachment A" to the Ordinance) and Proof of Revenues
("Attachment B")
• A model staff report
• An explanation of key provisions of the RRM tariff and filing
Please contact Kristen (512/322-5820, kdoyle@lglawfirm.com) immediately if your city
is unable to meet the October 1 St deadline for final action. Once final action has been taken by
your city, please forward a copy of the ordinance to Atmos Mid-Tex and to our paralegal, Gary
Stiffler (fax number: 512/472-0532, gstiffler@lglawfirm.com).
Lloyd Gosselink Rochelle & 'rownsend, P.C.
M 000066
Rate Review Mechanism
Fact Sheet
*The Rate Review Mechanism (RRM) was created as part of a collaborative agreement between
ACSC and Atmos. It replaces the unworkable and contentious Gas Reliability Infrastructure
Program (GRIP) surcharge process.
*The RRM authorizes cities to meaningfully review and dispute the company's annual rate
filings in an expedited rate proceeding at the city level. This authority was lacking under the
GRIP process.
*The RRM will function as a substitute for future GRIP filings during the three-year trial period.
*The RRM permits the Company to seek an annual review of its revenues, estimated cost of
operations, and capital investments. In most cases, the company cannot seek rate adjustments
greater than 5 percent. The Company must provide evidence as part of the annual review
process that Cities can assess and, if necessary, challenge.
*The RRM process allows Atmos to seek a surcharge from ratepayers if its anticipated expenses
exceed its anticipated revenues for a 12 month period. However, if the Company's revenues
exceed its authorized rate of return, it must issue refunds.
Costs Expresslv Prohibited from Recoverv Under the RRM:
First class air-fare, travel, meals or entertainment for employee's spouse, alcohol, sports
events, entertainment, arts and cultural events, sponsorship of sports, arts or cultural events, and
social club membership dues.
The RRM is applicable only to the Company's base rates - the cost of delivering natural
gas to customers. The commodity price of natural gas is a pass-through cost to customers
that can change monthly based upon the price of naiural gas.
Process for RRM Filing:
Cities have 90 days to review the Company's RRM filing. After the 90-day "Review
Period," the 30-day "Response Period" allows Cities to work with the Company regarding issues
identified by the city during the Review Period.
Atmos Mid-Tex' first RRM was made April 14, 2008. In subsequent years, Atmos will
make its RRM filing with Cities on or after April 1" of each year. (The filing date is referred to
as the "Annual Evaluation Date" in the tariff.)
The City and the Company commit to act collaboratively during this process. However,
if Cities and the Company cannot come to agreement at the end of the Response Period, the
Company may appeal a city's action or inaction on the RRM to the Railroad Commission.
W. o00116/
MODEL STAFF REPORT
The City, along with 150 other cities served by Atmos Energy Mid-Tex Division
("Atmos" or "Company"), is a member of the Atmos Cities Steering Committee ("ACSC"). On
April 14, 2008, Atmos filed with the City an application to increase natural gas rates pursuant to
the Rate Review Mechanism ("RRM") tariff approved by the City earlier this year. The
Company's April RRM filing seeks a$33.5 million rate increase. The City worked with ACSC
to analyze the schedules and evidence offered by Atmos to support its request to increase rates.
The Ordinance and attached tariff approving rates that will increase the Company's revenues by
$20 million effective October 1, 2008, are the result of negotiation between ACSC and the
Company to resolve issues raised by ACSC during the review and evalua.tion of ACSC's RRM
filing. The monthly bill impact for the average residential customer is $0.81. The ACSC
Executive Committee recommends that all ACSC cities adopt the ordinance implementing the
rate change.
RRM Background•
The RRM tariff was approved by cities as part of the settlement agreement to resolve
Atmos' 2007 rate increase case. Atmos' rate request represents the first filing pursuant to the
three-year trial project known as the RRM process. The RRM process was created
collaboratively by the Steering Committee and Atmos as an alternative to the GRIP surcharge
process. The RRM process allows for a more comprehensive rate review and annua.l adjustment
that will function as a substitute for futwe GRIP filings during the three-year trial period
specified by the tariff.
There are two components to the RRM adjustment. The prospective component adjusts
rates for known and measurable changes in O&M and net plant investment. Atmos and ACSC
agreed to cap changes to expenses and invested capital at no more than five percent. The true up
component evaluates whether the Company has over or underrecovered its earnings for the
previous year. For purposes of the RRM true up component, Atmos' rate of return on equity and
its capital structure are frozen to avoid the parent company from manipulating the overall rate of
return. Costs expressly prohibited from recovery through the RRM include first class air-fare,
travel, meals or entertainment for employee's spouse, alcohol, sports events, entertainment, arts
and cultural events, sponsorship of sports, arts or cultural events, and social club membership
dues.
Purpose of the Ordinance:
The purpose of the Ordinance is to approve rate tariffs (Attachment A) that reflect the
negotiated rate change pursuant to the RRM process. The Ordinance also approves the
Company's proof of revenues (Attachment B), a required part of the RRM filing.
As a result of the negotiations, ACSC was able to reduce the Company's requested $33.5
million RRM increase by more than 35 percent. Approval of the Ordinance will result in rates
that implement a$20 million increase in Atmos' revenues effective October 1, 2008.
Atmos RRM Ordinance Staff Report 1
"1 000068
Reasons Justifving Approval of the Negotiated Resolution:
During the time that the City has retained original jurisdiction in this case, consultants
working on behalf of ACSC cities have investigated the support for the Company's requested
rate increase. While the evidence does not support the $33.5 million increase requested by the
Company, ACSC consultants agree that the Company can justify an increase in revenues of at
least $19.8 million.
A contested case proceeding before the RRC on the Company's current application will
take several months and cost ratepayers millions of dollars in rate case expenses and would not
likely produce a request more favorable than that to be produced by the settlement. The ACSC
Executive Committee recommends that ACSC members take action to approve the ordinance
authorizing new rate tariffs.
Explanation of "Be It Ordained" Parasranhs:
1. This paragraph approves all findings in the ordinance.
2. This section adopts the attached tariffs (Attachment A) and Company's proof of
revenues (Attachment B) in all respects and finds the rates set pursuant to the attached tariffs to
be just, reasonable and in the public interest. Note that only new tariffs or existing tariffs that are
being revised are attached to the Ordinance. Existing tariffs that are not being changed in any
way are not attached to the Ordinance.
3. This section repeals any resolution or ordinance that is inconsistent with this
Ordinance.
4. This section finds that the meeting was conducted in compliance with the Texas
Open Meetings Act, Texas Government Code, Chapter 551.
5. This section is a savings clause, which provides that if any section(s) is later
found to be unconstitutional or invalid, that finding shall not affect, impair or invalidate the
remaining provisions of this Ordinance. This section further directs that the remaining
provisions of the Ordinance are to be interpreted as if the offending section or clause never
existed.
6. This section is a"Most Favored Nations" clause, which protects the City by
mandating that if a Final Order or subsequent agreement approved in any proceeding addressing
the issues raised in Atmos' RRM filing results in rates or terms that would be more beneficial to
the ACSC Cities than the terms of this tariff, the City may, at its option, implement such more
favorable rates or terms. The exercise of this right is contingent upon the City agreeing to adopt
the terms of the Final Order or subsequent agreement in toto.
7. This section provides for an effective date upon passage.
8. This paragraph directs that a copy of the signed resolution be sent to a
representative of the Company and legal counsel for ACSC.
Atmos RRM Ordinance Staff Report 2
- ooaOU