Title
Consider/Discuss/Act on a Resolution to Deny Atmos Mid-Tex's Proposed Rate Increase
Summary
MEETING DATE: May 15, 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.
· ACSC engaged attorneys and consultants to review Atmos Mid-Tex's proposed rate increase. Justification was found that Mid-Tex's rates should be decreased.
· ACSC and Atmos Mid-Tex have engaged in settlement discussions but have not yet reached an agreement. ACSC is hoping to achieve settlement with the Company in order to perpetuate the RRM process, and therefore recommends denial of the Company's proposed rate increase rather than a rate decrease to facilitate further settlement discussions.
· The purpose of 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.
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