Loading...
2008-030-ORD-APPROVING A NEGOTATED 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 CITIESORDINANCE NO. 2008 -030 AN ORDINANCE OF THE CITY COUNCIL 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 EXISTING 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 REASONABLE; 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 Energy 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 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 Atmos RRM Ordinance 1 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 City 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. 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. Atmos RRM Ordinance 2 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. J sse Jame reelen, Mayor ATTEST: Nicki Brown, Deputy City Clerk APPROVED AS TO FORM: W. Kent a , Ci Attorney Atmos RRM Ordinance 3 ATTACHMENT A ATMOS ENERGY CORPORATION MID -TEX DIVISION RRC TARIFF NO: 19843 REVISION NO: 0 RATE SCHEDULE: R — RESIDENTIAL SALES APPLICABLE TO: 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 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 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 Dallas) EFFECTIVE DATE: 1 010112 0 0 8 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 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 $ 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 ATTACHMENT A ATMOS ENERGY CORPORATION MID -TEX DIVISION RRC TARIFF NO: 19842 REVISION NO: 0 RATE SCHEDULE: 1— INDUSTRIAL SALES APPLICABLE TO: Entire Division (except Environs areas and the City of Dallas) EFFECTIVE DATE: 10/01/2008 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 MM13tu $ 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). 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." Issued By: David J. Park Vice President, Rates and Regulatory Affairs Date Issued: 08/13/2008 ATTACHMENT A ATMOS ENERGY CORPORATION MID -TEX DIVISION RRC TARIFF NO: 19842 REVISION NO: 0 RATE SCHEDULE: I — INDUSTRIAL SALES APPLICABLE TO: Entire Division (except Environs areas and the City of Dallas) EFFECTIVE DATE: 10/01 /2008 PAGE: 26 Replacement Index In the event the "midpoint" 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 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 meter 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 Iiaar_Ty:11kTd:04tr -1 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: 27 Application Applicable, 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: Commodity 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: 08113/2008 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: 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 "midpoint" 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 must have the type of meter 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 ATTACHMENT A ATMOS ENERGY CORPORATION MID -TEX DIVISION REVISION NO: 0 RIDER: GCR — GAS COST RECOVERY APPLICABLE TO: Entire Division EFFECTIVE DATE: 10/01/2008 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 I, 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 I, 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 twelve -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 Cost 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 _ _ I __ -. .T _.- ATTACHMENT A ATMOS ENERGY CORPORATION MID -TEX DIVISION REVISION NO: 0 RIDER: GCR — GAS COST RECOVERY APPLICABLE TO: Entire Division EFFECTIVE DATE: 1010112008 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 1.634698 Rate C - Commercial Service 302824 Rate I - Industrial Service and Rate T - Transportation Service 1.062478 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 ATTACHMENT A ATMOS ENERGY CORPORATION MID -TEX DIVISION REVISION NO: 0 RIDER: GCR — GAS COST RECOVERY APPLICABLE TO: Entire Division EFFECTIVE DATE: 10/01/2008 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 ATTACHMENT A ATMOS ENERGY CORPORATION MID -TEX DIVISION REVISION NO: 0 RIDER: CEE — CONSERVATION & ENERGY EFFICIENCY APPLICABLE TO: Entire Division __TPAGE: EFFECTIVE DATE: 10/01/2008 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. Synopsis: 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. .. 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 annually 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 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 TPAGE: 59 Report 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 ATTACHMENT A ATMOS ENERGY CORPORATION MID -TEX DIVISION REVISION NO: 0 RIDER: FF — FRANCHISE FEE ADJUSTMENT APPLICABLE TO: Entire Division EFFECTIVE DATE: 10/01/2008 PAGE: 43 Application Applicable to Customers inside the corporate limits of an incorporated municipality 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 ATTACHMENT A TARIFF 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: 11/0112008 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 i = 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. HSFi = heat sensitive factor for the ith schedule or classification calculated as the slope of the linear regression of average sales per bill (Mcf) 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 calculated 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 (Mcf) 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; = WNAFi x q;; ATTACHMENT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: Rate WNA — Weather Normalization Adjustment APPLICABLE TO: Entire System (except Environs areas and the City of Dallas) REVISION: DATE: EFFECTIVE DATE: 11/0112008 PAGE: 2 OF 2 Where q;; is the relevant sales quantity for the jth customer in ith rate schedule. Filinas with Entities Exercisina Oriainal 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 Sensitivity (HSF) Factors Residential Commercial Base use HSF Base use HSF VUaathPr Rtatinn Mrf Mnf /Hnn Mcf 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 WNAF� Calculation: .1533 per Mcf = 1.2267 x Where Ri = (.0131 x (30 -17) ) (1.14 + (.0131 x 17) ) Residential Single Block Rate Schedule 1.2267 per MCF (Rate R - Final Order GUD No. 9670) HSFi = .0131 (Residential -Abilene Area) NDD = 30 HDD (Simple ten -year average of Actual HDD for Abilene Area — 9/15/06 —10/14/06) ADD = 17 HDD (Actual HDD for Abilene Area — 9/15/06 — 10/14/06) BLi = 1.14 Mcf (Residential - Abilene Area) 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 R 1 Rate Characteristics: RRM Settlement Agreement, 2 Customer Charge $7.00 Pg 2, Item 5 3 4 Consumption Charge ($ /Mcf) $2.1600 Settlement Allocation 5 2007 RRM True -up ($ /Mcf) $0.0810 Settlement Allocation. 6 Rider GCR Part A $8.1244 Schedule H 7 Rider GCR Part B $0.6243 Schedule 1 8 9 Billing Units (1): 10 Bills 17,069,679 WP_J-1.1 11 Total MCF 78,708,921 WP—J-1.1 12 13 Proposed Revenue: 14 Customer Charge $ 119,487,753 15 Consumption Charge 176,385,175 16 Base Revenue $ 295,872,928 17 Rider GCR Part A 639,460,135 18 Rider GCR Part B 49,140,231 19 Subtotal $ 984,473,295 20 Revenue Related Taxes 59,244,614 21 22 Total Proposed Revenue- Rate R $ 1,043,717,909 23 24 Note 1: See Billing Determinants Study for details 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 Rate Characteristics: 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Customer Charge Consumption Charge ($ /Mcf) 2007 RRM True -up ($ /Mcf) Rider GCR Part A Rider GCR Part B Billing Units (1): Bills 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. Settlement Allocation Settlement Allocation Schedule H Schedule I W P_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 Total Reference (a) (b) (c) Rate 1 &T 1 Rate Characteristics: 2 Customer Charge $ 425.00 Settlement Allocation 3 4 Block 1 ($ /MMBTU) $0.2352 Settlement Allocation 5 Block 2 ($ /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 1 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 (1) 18 19 Billing Units (1): 20 Bills 10,052 WP_J_1 21 Block 1 9,522,217 WP_J_1 22 Block 2 10,799,921 WP_J_1 23 Block 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 $ 41272,100 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 $ 42,7.10,620 40 41 Note 1: See Billing Determinants Study for details. Lloyd 816 Congress Avenue, Suite 1900 Austin, Texas 78701 Gosselink Telephone: ( 325 Facsimile: (512) 12) 472 -00532 2 �•••••• ATTORNEYS AT LAW www.iglawfirm.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 1St. 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 1St 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 & Townsend, P.C. 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 Expressly Prohibited from Recovery 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 natural 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 1St 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. 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 evaluation 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 annual adjustment that will function as a substitute for future 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 Reasons Justifying 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" Paragraphs: 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