2012-056 RES DENYING REQUEST OF ATMOS ENERGY MID-TEX DIVISION FOR ANNUAL GAS RELIABILITY INFRASTRUCTURE PROGRAM (GRIP) RATE INCREASERESOLUTION NO. 2012-056
A RESOLUTION OF THE CITY OF PARIS, TEXAS, DENYING THE REQUEST
OF ATMOS ENERGY CORP., MID-TEX DIVISION, FOR AN ANNUAL GAS
KELIABILITY INFRASTRUCTURE PROGRAM (GRIP) RATE INCREASE IN
ri'HIS MUNICIPALITY, AS A PART OF THE COMPANY'S STATEWIDE GAS
UTILITY DISTRIBUTION SYSTEM; SUPPORTING STATUTORY REFORM OF
THE TEXAS GRIP STATUTE, FINDING THAT THE MEETING AT WHICH
THIS RESOLUTION IS PASSED IS OPEN TO THE PUBLIC; MAKING OTHER
FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND
I)ECLARING AN EFFECTIVE DATE.
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,
«'HEREAS, in 2003, TXU Gas filed a statewide rate case which became known at the Railroad
Commission of Texas ("RRC") as Gas Utilities Docket ("GUD") No. 9400. That same year the Texas
Legislature passed legislation referred to as the Gas Reliability Infrastructure Program ("GRIP") which
authorized annual piecemeal rate reviews that Texas courts have concluded significantly restrict city
jurisdiction, participation, and input. Shortly after GUD No. 9400 was decided in 2004, Atmos Energy
purchased TXU Gas and created what is known as Atmos Energy Corp., Mid-Tex Division. The City of
Paris is within the Atmos Mid-Tex Division; and,
VVHEREAS, Atmos Mid-Tex filed four GRIP cases before filing a traditional rate case in
Septembe;r, 2007. As part of ACSC'S Settlement Agreement with Atmos of the 2007 rate case, ACSC and
Atmos cr�ated a substitute process for annual piecemeal GRIP cases. That substitute process was called a
Rate Review Mechanism ("RRM") and was intended as an expedited but comprehensive rate review that
included a number of fixed values and constraints. The RRM was intended as a three-year experiment.
Last year, it was extended for a fourth year with some slight modifications to the original formulas. ACSC
negotiated with Atmos in the final quarter of last year to further extend the RRM process, but no agreement
was reaclled. Atmos has expressed a desire to reach a settlement of the January 31, 2012 filing that
includes a revised RRM process; and,
WHEREAS, Atmos Mid-Tex filed a Statement of Intent on January 31, 2012, seeking to increase
system-wide base rates (which exclude the cost of gas) by approximately $49 million or 11.94%.
However, the Company is requesting an increase of 13.6%, excluding gas costs, for its residential
customers. Additionally, the application would change the way that rates are collected, by increasing the
residential fixed-monthly (or customer) charge from $7.50 to $18.00 and decreasing the consumption
charge frc�m $025 per 100 cubic feet ("ccf ') to $0.07 per ccf; and,
VVfIEREAS, ACSC engaged attorneys and consultants to review Atmos Mid-Tex's proposed
rate increase. Additionally, the ACSC cities (including Paris) passed suspension resolutions earlier this
year, extending the effective date of Atmos Mid-Tex's proposed rate increase to June 4, 2012, in order to
permit the cities time to review Atmos Mid-Tex's Statement of Intent. During their review, ACSC;s
consultants found justification that Mid-Tex's rates should be decreased. On Apri125, 2012, the Company
extended the effective date of its proposed rate change, which similarly extended cities' jurisdictional
deadline to June 11, 2012; and,
WHEREAS, ACSC and the Company have engaged in some settlement discussions but have not
yet reached agreement. ACSC is hoping to achieve settlement with the Company in order to perpetuate the
RRM process. The ACSC Settlement Committee therefore recommends denial of the Company's
proposed rate increase rather than a rate decrease to facilitate further settlement discussions. The
resolution prevents the Company's proposed rates from automatically going into effect on June 11, 2012.
The Company has expressed a desire for settlement while an appeal from the cities' denial of the rate
increase is pending at the RRC. Should a settlement be reached, the City of Paris may be required to pass
an ordinance setting new rates pursuant to the settlement; and,
WHEREAS, the purpose of the resolution is to deny Atmos Mid-Tex's proposed rate increase
pending further settlement discussions and to prevent Atmos' proposed rate increase from automatically
taking effect on June 11, 2012
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
PARIS, TEXAS:
Section 1. That the findings set out in the preamble to this resolution are hereby in all things
approved.
Section 2. That the Company's GRIP rate increase reyuest is found to be unreasonable and
inconsistent with the Texas Utilities Code and Railroad Commission final arder in GUD 9670, Atmos
Mid-Tex most recent rate case, and is therefore denied in all respects.
Section 3. This Resolution shall become effective immediately from and after its passage, as
the law and charter in such cases provide.
Section 4. That the City hereby advocates statutory reform of the Texas GRIP statute to
ensure fairness to ratepayers and to eliminate piecemeal recovery for any change to invested recovery.
Section 5. That it is hereby officially found and determined that the meeting at which this
Resolution is passed is open to the public as required by law and that public notice of the time, place and
purpose of said meeting was given as required.
Section 6. This resolution is to deny Atmos Mid-Tex's proposed rate increase pending further
settlement discussions and to prevent Atmos' proposed rate increase from automatically taking effect on
June 11, 2012.
DULY PASSED and approved by the City Council of the City of Paris, Texas, on this the 31 st
day of May, 2012.
ATTEST:
( , ,
nice Ellis, City Clerk
APPROVED AS TO FORM:
,
W. Kent McIlyar, ity ttorney
STAFF REPORT
The City of Paris, along with over 150 other cities served by Ahnos Energy Corp., Mid-
Tex Division ("Atmos Mid-Tex" ar"Company"), is a member of the Atmos Cities Steering
Committee ("ACSC" or "Steering Committee"). On or about January 31, 2012, Atmos Mid-Tex
filed with the City of Paris a Statement of Intent to increase rates within the City.
Background
In 2003, TXU Gas filed a statewide rate case which became known at the Railroad
Commission of Texas ("RRC") as Gas Utilities Docket ("GUD") No. 9400. That same year the
Texas Legislature passed legislation referred to as the Gas Reliability Infrastructure Program
("GRIP") which authorized annual piecemeal rate reviews that Texas courts have concluded
significantly restrict city jurisdiction, participation, and input. Shortly after GUD No. 9400 was
decided in 2004, Atmos Energy purchased TXU Gas and created what is known as Atmos
Energy Corp., Mid-Tex Division. The City of Paris is within the Atmos Mid-Tex Division.
Atmos Mid-Tex filed four GRIP cases before filing a traditional rate case in September,
2007. As part of ACSC's Settlement Agreement with Atmos of the 2007 rate case, ACSC and
Atmos created a substitute process for annual piecemeal GRIP cases. That substitute process
was called a Rate Review Mechanism ("RRM") and was intended as an expedited but
comprehensive rate review that included a number of fixed values and constraints. The RRM
was intended as a three-year experiment. Last year, it was extended for a fourth year with some
slight modifications to the original formulas. ACSC negotiated with Atmos in the final quarter
of last year to further extend the RRM process, but no agreement was reached. Atmos has
expressed a desire to reach a settlement of the January 31, 2012 filing that includes a revised
RRM process.
Discussion and Purpose
Atmos Mid-Tex filed a Statement of Intent on January 31, 2012, seeking to increase
system-wide base rates (which exclude the cost of gas) by approximately $49 million or 11.94%.
However, the Company is requesting an increase of 13.6%, excluding gas costs, for its
residential customers. Additionally, the application would change the way that rates are
collected, by increasing the residential fixed-monthly (or customer) charge from $7.50 to $18.00
and decreasing the consumption charge from $0.25 per 100 cubic feet ("ccfl') to $0.07 per ccf.
ACSC engaged attorneys and consultants to review Atmos Mid-Tex's proposed rate
increase. Additionally, the ACSC cities (including Paris) passed suspension resolutions earlier
this year, extending the effective date of Atmos Mid-Tex's proposed rate increase to June 4,
2012, in order to permit the cities time to review Atmos Mid-Tex's Statement of Intent. During
their review, ACSC's consultants found justification that Mid-Tex's rates should be decreased.
On April 25, 2012, the Company extended the effective date of its proposed rate change, which
similarly extended cities' jurisdictional deadline to June 11, 2012.
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ACSC and the Company have engaged in some settlement discussions but have not yet
reached agreement. ACSC is hoping to achieve settlement with the Company in order to
perpetuate the RRM process. The ACSC Settlement Committee therefore recommends denial of
the Company's proposed rate increase rather than a rate decrease to facilitate further settlement
discussions. The resolution prevents the Company's proposed rates from automatically going
into effect on June 11. The Company has expressed a desire for settlement while an appeal from
the cities' denial of the rate increase is pending at the RRC. Should a settlement be reached, the
City of Paris may be required to pass an ordinance setting new rates pursuant to the settlement.
The purpose of the resolution is to denv Atmos Mid-Tex's proposed rate increase
pending further settlement discussions and to nrevent Atmos' proposed rate increase from
automatically taking effect on June 11, 2012.
Recommendation
The City Staff recommends adoption of the resolution denying Atmos Mid-Tex's
proposed rate increase.
2056490.1