Title
Consider/Discuss/Act on an Ordinance Approving and Adopting Rate Schedule RRM - Rate Review Mechanism for Atmos Energy Corp, Mid-Tex Division
Summary
MEETING DATE: July 16, 2013
DEPARTMENT: Financial Services
CONTACT: Rodney Rhoades, Chief Financial Officer
RECOMMENDED CITY COUNCIL ACTION:
· Approval of the Ordinance
ITEM SUMMARY:
- Under the terms of the proposed Rate Review Mechanism (RRM) process, rate increases should be lower than rates calculated using the current Gas Reliability Infrastructure Program (GRIP) process.
- The RRM process considers revenues, expenses, and capital investments in determining rates. The GRIP process authorizes automatic rate increases to cover additional invested capital.
- The proposed RRM would limit residential customer increases to not more than $.50 per month. Under the GRIP tariff, residential rates could increase substantially more.
- The new rate will be effective starting October 15, 2013 with an annual effective date of June 1 for subsequent years 2014-2017.
BACKGROUND INFORMATION:
- The RRM was created in 2007 as a part of a collaborative agreement between the Atmos Cities Steering Committee (ACSC) and Atmos to alleviate difficulties in the surcharge process. This first RRM tariff expired in 2011.
- After negotiations, Atmos and ACSC agreed to renew the RRM tariff. This would lower the GRIP calculations which would charge an additional $5 million for capital investments and would be collected through increased customer rates.
- Participating cities must agree to use the RRM process as opposed to the GRIP process.
SPECIAL CONSIDERATIONS:
The City must take action on Atmos' request to adopt the RRM process by July 16, 2013. If no action is taken, the current GRIP model provisions stand.
FINANCIAL SUMMARY: N/A
BOARD OR COMMISSION RECOMMENDATION: N/A