Title
Consider/Discuss/Act on a Resolution to Suspend Atmos Mid-Tex’s Rate Increase
Summary
MEETING DATE: February 21, 2012
DEPARTMENT: City Manager’s Office
CONTACT: Aretha Harvey, Assistant to the City Manager
RECOMMENDED CITY COUNCIL ACTION:
• Approve Resolution
ITEM SUMMARY:
• 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.
• The application also proposes to change the way 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 (“ccf”) to $0.07 per ccf.
• The law provides that a rate request made by a gas utility cannot become effective until at least 35 days following the filing of the application to change rates.
• The purpose of this resolution is to extend the effective date of the Atmos Mid-Tex’s proposed rate increase to give the City time to review the rate-filing package. The resolution suspends the March 6, 2012 effective date of the Company’s rate increase for the maximum period permitted by law (90 days) to allow the City, working in conjunction with the other ACSC cities, to evaluate the filing, determine whether the filing complies with law, and if lawful, to determine what further strategy to pursue, including settlement and ultimately to approve to approve reasonable rates.
• If the City fails to take action regarding this filing before the March 6, 2012 effective date, Atmos’ rate request is deemed administratively approved.
BACKGROUND INFORMATION:
• 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 Corporation, Mid-Tex Division. The City 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 Cities’ 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; however it was extended for a fourth year with som slight modification 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.
FINANCIAL SUMMARY:
• N/A
BOARD OR COMMISSION RECOMMENDATION:
• N/A