Title
Consider/Discuss/Act on an Ordinance Approving a Negotiated Resolution Between the Atmos Cities Steering Committee and Atmos Energy Corporation, Mid-Tex Division Regarding the Company’s 2016 Annual Rate Review Mechanism Filing
Summary
COUNCIL GOAL: Financially Sound Government
MEETING DATE: June 7, 2016
DEPARTMENT: Financial Services
CONTACT: Mark Holloway, Acting Chief Financial Officer
RECOMMENDED CITY COUNCIL ACTION:
• Approve the Ordinance.
ITEM SUMMARY:
• The City, along with other similarly situated cities served by Atmos Energy Mid-Tex Division (“Atmos Mid-Tex” or “Company”), is a member of the Atmos Cities Steering Committee (“ACSC”). On or about March 1, 2016, Atmos Mid-Tex filed with the City an application to increase natural gas rates pursuant to the Rate Review Mechanism (“RRM”) tariff renewed by the City in 2013 as a continuation and refinement of the previous RRM rate review process. This is the first annual RRM filing under the renewed RRM tariff.
• If the Company had used the GRIP (Gas Reliability Infrastructure Program) process rather than the RRM process, it would have received a $41 million increase, or about $11 million more than will be approved by the Ordinance. ACSC and the Company have reached an agreement, reflected in the Ordinance, to reduce the Company’s request by $5.5 million, such that the Ordinance approving new rates reflects an increase of $29.9 million on a system-wide basis, or $21.9 million for Mid-Tex Cities, exclusive of the City of Dallas.
• The Ordinance and Settlement tariffs approve rates that will increase the Company’s revenues by $29.9 million for the Mid-Tex Rate Division, effective for bills rendered on or after June 1, 2016. The monthly residential customer charge will be $19.10. The consumption charge will change from $0.09931 per Ccf to $0.11378 per Ccf. The monthly bill impact for the typical residential customer consuming 46.8 Ccf will be an increase of $1.26 (about a 2.43% increase in the base bill). The typical commercial customer will see an increase of $3.81 or 1.43%.
• The ACSC Executive Committee and its designated legal counsel and consultants recommend that all Cities adopt the Ordinance with its attachments approving the negotiated rate settlement resolving the 2016 RRM filing, and implementing the rate change.
BACKGROUND INFORMATION:
• The RRM tariff was originally approved by ACSC Cities as part of the settlement agreement to resolve the Atmos Mid-Tex 2007 system-wide rate filing at the Railroad Commission. In early 2013, the City adopted a renewed RRM tariff for an additional five years. Atmos Mid-Tex’s March 2016 filing was made pursuant to the renewed RRM tariff.
FINANCIAL SUMMARY:
• Franchise revenue from Atmos Gas is about $1.2 million per year. There will not be a significant change in the current revenue.