Title
Consider/Discuss/Act on a Resolution of the City Council of the City of McKinney, Texas, Approving A Negotiated Settlement Between the Atmos Cities Steering Committee (“ACSC”) and Atmos Energy Corp., Mid-Tex Division Regarding the Company’s 2026 Rate Review Mechanism Filing; Declaring Existing Rates to be Unreasonable; Adopting Tariffs That Reflect Rate Adjustments Consistent with the Negotiated Settlement; Finding the Rates to be Set by the Attached Settlement Tariffs to be Just and Reasonable and in the Public Interest; Approving an Attachment Establishing A Benchmark for Pensions and Retiree Medical Benefits; Requiring the Company to Reimburse ACSC’s Reasonable Ratemaking Expenses; Determining That This Resolution was Passed In Accordance with the Requirements of the Texas Open Meetings Act; Adopting a Savings Clause; Declaring an Effective Date; and Requiring Delivery of this Resolution to the Company and the ACSC’s Legal Counsel
Summary
COUNCIL GOAL: Enhance the Quality of Life in McKinney
5.3 Develop Sustainable Quality of Life Improvements within the City of McKinney
MEETING DATE: September 1, 2026
DEPARTMENT: City Manager’s Office
CONTACT: Nimra Zubair, Assistant to the City Manager
RECOMMENDED CITY COUNCIL ACTION:
• Staff recommends Council approve this item.
ITEM SUMMARY:
• On or about April 1, 2026, the Atmos Energy Corporation, Mid-Tex Division (“Company”) filed a rate request under the Rate Review Mechanism (“RRM”) Tariff adopted by ACSC members and subsequently settled the case for $260.5 million, which includes reimbursement of ACSC’s expenses. The new rates will take effect on October 1, 2026, resulting in a monthly increase of 14.15% for residential customers and 9.9% for commercial customers. The Company asserted that its cost of service for the test year ending December 31, 2025, justified additional system-wide revenues.
BACKGROUND INFORMATION:
• The City, along with 181 other Mid-Texas cities served by the Company, is a member of the ACSC. In 2007, ACSC and Atmos Mid-Tex settled a rate application filed by the Company pursuant to Section 104.301 of the Texas Utilities Code for an interim rate adjustment commonly referred to as a GRIP filing (arising out of the Gas Reliability Infrastructure Program legislation). That settlement created a substitute rate review process, referred to as RRM, as a substitute for future filings under the GRIP statute.
• Since 2007, there have been several modifications to the original RRM Tariff. The most recent iteration of an RRM Tariff was reflected in an ordinance adopted by ACSC members in 2018. On or about April 1, 2026, the Company filed a rate request pursuant to the RRM Tariff adopted by ACSC members. The Company claimed that its cost-of-service in a test year ending December 31, 2025, entitled it to additional system-wide revenues of $291.1 million.
• Application of the standards set forth in ACSC’s RRM Tariff reduces the Company’s request to $273.6 million. After reviewing the filing and conducting discovery, ACSC’s consultants concluded that the system-wide deficiency under the RRM regime should be $253.4 million instead of the claimed $291.1 million.
• After several settlement meetings, the parties have agreed to settle the case for $260.5 million. This is a reduction of over $30 million to the Company’s initial request. This includes payment of ACSC’s expenses. The Effective Date for new rates is October 1, 2026. ACSC members should take action approving the Resolution/Ordinance before October 1, 2026.
FINANCIAL SUMMARY:
• The impact of the settlement on average residential rates is an increase of $13.37 on a monthly basis, or 14.15%.
• The increase for average commercial usage will be $44.82 or 9.90%. Atmos provided bill impact comparisons containing these figures.
BOARD OR COMMISSION RECOMMENDATION:
• N/A