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HomeMy WebLinkAbout01-28-08 TC Agenda PacketTOWN OF WESTLAKE, TEXAS BOARD OF ALDERMEN PRE -BOARD MEETING AGENDA JANUARY 28, 2008 WESTLAKE CIVIC CAMPUS - DINING HALL 2600 J. T. OTTINGER ROAD 5:00 P.M. 5:00 P.M. 1. CALL TO ORDER. 2. DISCUSS OIL AND GAS WELL DRILLING ORDINANCE. 6:00 p.m. 3. HEAR AND DISCUSS REPORT FROM GIDEON TOAL REGARDING PROPOSED ARTS AND SCIENCES CENTER BUILDING. 6:45 p.m. 4. REVIEW OF REGULAR AGENDA ITEMS. 6:50 p.m. 5. TOWN MANAGER'S REPORT. 6:55 p.m. 6. ADJOURNMENT. CERTIFICATION I certify that the above notice was posted at the Town Hall of the Town of Westlake, 3 Village Circle, Westlake, Texas and the Westlake Civic Campus, 2600 J.T. Ottinger Road, Westlake, Texas, on Friday, January 25, 2008 by 5:00 p.m. under the Open Meetings Act, Chapter 551 of the Texas Government Code. t 'm utter, TRMC, Town Secretary If you plan to attend this public meeting and have a disability that requires special needs, please advise the Town Secretary 48 hours in advance at 817 - 490 -5710 and reasonable accommodations will be made to assist you. TOWN OF WESTLAKE, TEXAS BOARD OF ALDERMEN REGULAR MEETING AGENDA JANUARY 28, 2008 WESTLAKE CIVIC CAMPUS 2600 J. T. OTTINGER ROAD 7:00 p.m. 1. CALL TO ORDER. 2. CITIZENS' PRESENTATIONS: This is an opportunity for citizens to address the Board on any matter whether or not it is posted on the agenda. The Board cannot by law take action nor have any discussion or deliberations on any presentation made to the Board at this time concerning an item not listed on the agenda. Any item presented may be noticed on a future agenda for deliberation or action. 3. HEAR A REPORT FROM WESTLAKE ACADEMY FOUNDATION PRESIDENT CHRIS NOONAN. 4. HEAR STATUS REPORT ON CONSTRUCTION OF ARTS AND SCIENCES CENTER BUILDING. 5. CONSIDER A RESOLUTION APPOINTING A MEMBER TO THE WESTLAKE HISTORICAL PRESERVATION SOCIETY BOARD OF DIRECTORS. 6. CONSIDER AN ORDINANCE APPROVING A SETTLEMENT AGREEMENT BETWEEN THE TOWN AND ATMOS ENERGY CORP., MID -TEX DIVISION CATMOS MID -TEX" OR "THE COMPANY ") REGARDING THE COMPANY'S STATEMENT OF INTENT TO CHANGE GAS RATES IN ALL CITIES EXERCISING ORIGINAL JURISDICTION. 7. CONSENT AGENDA: All items listed below are considered routine by the Board of Aldermen and will be enacted with one motion. There will be no separate discussion of items unless a Board member or citizen so requests, in which event the item will be removed from the general order of business and considered in its normal sequence. A. Review and approve minutes of the Board of Aldermen pre -board and regular meetings held on January 14, 2008. B. Review and approve any outstanding bills. 8. STAFF REPORTS. A. Update from DPS Director Don Wilson regarding the Fire Department and Emergency Management. 9. TOWN MANAGER'S REPORT. 10. MAYOR AND ALDERMEN REPORTS / COMMENTS. 11. ADJOURNMENT. CERTIFICATION I certify that the above notice was posted at the Town Hall of the Town of Westlake, 3 Village Circle, and Westlake Civic Campus, 2600 J.T. Ottinger Road, Westlake, Texas, on Friday, January 25, 2008, by 5 p.m. under the Open Meetings Act, Chapter 551 of the Texas Government Code. in utter, TIZMZC, Town Secretary If you plan to attend this public meeting and have a disability that requires special needs, please advise the Town Secretary 48 hours in advance at 817 - 490 -5710 and reasonable accommodations will be made to assist you. Town of Westlake Memo To: Honorable Mayor and Members of the Board of Aldermen From: Joe C. Hennig, Interim Town Manager Kim Sutter, Town Secretary Subject: Regular Meeting of January 28, 2008 Date: January 22, 2008 ITEM Consider a resolution appointing a member to the Westlake Historical Preservation Society Board of Directors. BACKGROUND The WHPS was created by the Board of Aldermen in February 2000 for the purpose of preserving and recording the rich history of the Town. The Board consists of 10 members and currently one vacancy exists on the Board. Lisa Councilman has submitted an application for consideration of appointment to serve on the Board. APPROVED BY: T�vn Secretary's Office TOWN OF WESTLAKE RESOLUTION NO. 08 -03 APPOINTING A MEMBER TO THE WESTLAKE HISTORICAL PRESERVATION SOCIETY BOARD OF DIRECTORS. WHEREAS, the Westlake Historical Preservation Society Board of Directors currently has one vacancy with a term expiring June 2009. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF ALDERMEN OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: That the Board of Aldermen of the Town of Westlake, Texas, does hereby appoint the follwAring individual to serve as a member of the Westlake Historical Preservation Society Board of Directors for the designated terms: Lisa Councilman expiring term of June 2009 SECTION 2: That this Resolution shall become effective upon the date of its passage. PASSED AND APPROVED ON THIS 28 DAY OF JANUARY 2008. ATTEST: Kim Sutter, TRMC, Town Secretary APPROVED AS TO FORM: L. Stanton Lowry, Town Attorney Scott Bradley, Mayor Joe C. Hennig, Interim Town Manager Town of Westlake Memo To: Honorable Mayor and Members of the Board of Aldennen From: Joe C. Hennig, Interim Town Manager Subject: Regular Meeting of January 28, 2008 Date: January 10, 2008 ITEM Consider an Ordinance approving a settlement agreement between the Town and ATMOS Energy Corp., MID-TEX Division ( "Atmos MID-TEX" or "the company ") regarding the company's Statement of Intent to change gas rates in all cities exercising original jurisdiction. BACKGROUND The ACSC Settlement Committee (Jay Doegey — Arlington, Danny Reed — Fort Worth, Mark Israelson — Plano, Don Wilson — Eastland, Doreen McGookey — Sherman, Tom Akins — Denison, Cathy Cunningham — various ACSC cities), with the advice and input of consultants and lawyers retained by ACSC, has worked since October to explore options to resolve the Company's pending $52 million rate increase request without the necessity of a protracted and costly contested case proceeding. The attached Settlement Agreement is a result of their efforts. It reduces Atmos' rate increase by more than 80 percent, resolves several outstanding issues on appeal, requires reimbursement of more than $500,000 expended by ACSC to litigate GRIP cases, and eliminates the piecemeal ratemaking GRIP process in favor of an expedited rate review process controlled by cities. The ACSC Executive Committee recommends approval of the settlement agreement because it provides rate certainty, represents an outcome that is equal to or better than the outcome expected from a lengthy contested case proceeding, and maintains cities' role as a regulator of natural gas rates. The Town, along with 150 other cities served by Atmos Energy Mid -Tex Division ( "Atmos" or "Company "), is a member of the Atmos Cities Steering Committee ( "ACSC "). Since October, ACSC members have worked diligently with Atmos representatives to explore options to address Atmos' latest request to increase rates by $52 million and to resolve other outstanding issues. The ordinance and tariffs (Attachment B to the Ordinance) reflect the agreement reached between ACSC and Atmos Mid -Tex to reduce Atmos' requested increase by more than 80 percent and ensure that the Company is able to provide safe and reliable natural gas service. The Settlement Agreement (Attachment A to the Ordinance) also provides rate certainty for customers by resolving outstanding appeals, creates a new process for expedited rate review by the cities, eliminates piecemeal ratemaking, reimburses ACSC for rate case expenses associated with the GRIP surcharge cases, and avoids the necessity of costly litigation. Page 1 of 4 The ACSC Executive Committee recommends that ACSC members approve the Settlement Agreement. Purpose of the Ordinance: The purpose of the Ordinance is to endorse the Settlement Agreement between ACSC and Atmos regarding the Company's Statement of Intent to increase rates and to approve tariffs that implement the terms of the Settlement Agreement. Approval of the Ordinance will result in a $10 million increase in Atmos' revenues. This is an 80 percent reduction of the $52 million increase requested by Atmos in its Statement of Intent. In addition, the tariffs approved by the Ordinance will replace the current piecemeal ratemaking GRIP surcharge system with an expedited rate review process that ensures that cities can review all components of future Company rate change requests. The Settlement Agreement also resolves all outstanding issues between ACSC and Atmos, including six appeals currently pending in Texas courts. Procedural History and Background on Atmos Rate Increases Since 2004: On September 20, 2007, Atmos filed with the Town the Company's Statement of Intent to increase natural gas rates system -wide by approximately $52 million. The Town suspended the October 25th Effective Date to work with other ACSC members to analyze the schedules and evidence offered by Atmos to support its request to increase rates. In order to facilitate approval of this Ordinance and the attached tariffs, Atmos Mid -Tex has agreed to extend the deadline for final Town action until March 1, 2008. Atmos' rate request represents the seventh increase in natural gas rates for customers in the Atmos Mid -Tex service area since 2004. Four rate increases are the result of Gas Reliability Infrastructure Program (GRIP) surcharges enacted pursuant to the Texas Utilities Code § 104.301. A primary complaint of cities around the state regarding GRIP filings is that it is piecemeal ratemaking and only looks at changes in the utility's invested capital, rather than a more comprehensive review of all components affecting rates charged. Cities thus far have been unsuccessful in defeating GRIP at the Legislature and in court. In addition to the four GRIP surcharges, base rates charged to customers served by Atmos Mid -Tex have increased as the result of two system -wide cost of service rate filings since 2004. The Company's current request to increase base rates would be the third system -wide cost of service increase for customers in Atmos Mid -Tex's service area since 2004. In the most recent cost of service rate request, GUD No. 9670, the Railroad Commission of Texas ( "RRC" or "Commission ") issued an order in March, 2007, approving new system -wide rates for customers of Atmos Mid -Tex. Residential customers were impacted disproportionally by the Commission's final order, with residential rates increasing by $10 million annually, despite an overall system -wide rate increase of $5 million. System -wide rates charged to residential customers in the Atmos Mid -Tex region were also increased by several million dollars in 2004 in GUD No. 9400. In GUD Nos. 9400 and 9670, the hearings examiners that heard the testimony and evaluated the evidence Page 2 of 4 recommended that rates be reduced for customers. However, in both cases, the Railroad Commission reversed key decisions of its own hearings examiners, ultimately issuing final orders that approved rate increases instead of the recommended rate reductions. Reasons Justifying Settlement: During the time that the Town has retained original jurisdiction in this case, consultants working on behalf of ACSC members have investigated the support for the Company's requested rate increase. While the evidence does not support the $52 million increase requested by the Company, ACSC consultants agree that the Company can justify an increase in revenues of at least $8 million and that there is a reasonably high probability that the RRC would award an increase of at least $10 million. A contested case proceeding before the RRC on the Company's current application will take several months and cost ratepayers millions of dollars in rate case expenses and would not likely produce a request more favorable than that to be produced by the settlement. The ACSC Executive Committee recommends that ACSC members take action to approve the Settlement Agreement. This Settlement Agreement achieves several desirable outcomes, including: • Reverses rate design decisions that unfairly impact residential ratepayers • Does away with piecemeal ratemaking problems inherent to the GRIP surcharge process • Eliminates exposure to potential court reversal of the multi - million dollar Poly -1 Pipe disallowance ( Atmos' issue on appeal in Docket No. 9400) • Avoids uncertainty and potential negative consequences of Railroad Commission rate review (in the two most recent rate cases affecting Atmos Mid -Tex customers, the Commission has reversed rate reductions recommended by its own hearings examiners in favor of rate increases) • Implements an expedited rate review process that includes the cities and allows review of all aspects of Atmos' cost of service • Requires Atmos to reimburse ACSC for more than $500,000 paid to litigate GRIP surcharge cases • Protects ACSC members and their citizens from the remote possibility that a litigated outcome or settlement with other parties produces a result more favorable than the ordinance passed by ACSC members by including a Most Favored Nations provision in the Settlement Agreement. Page 3 of 4 Explanation of "Be It Ordained" Paragraphs: This paragraph approves all findings in the ordinance. 2. This section adopts the Settlement Agreement in all respects and finds it to be just, reasonable and in the public interest. 3. This section adopts the attached Tariffs in all respects and finds the rates set pursuant to the attached Tariffs to be just, reasonable and in the public interest. Note that only new tariffs or existing tariffs that are being revised are attached to the Ordinance. Existing tariffs that are not being changed in any way are not attached to the Ordinance. 4. This section repeals any resolution or ordinance that is inconsistent with this Ordinance. 5. This section finds that the meeting was conducted in compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. 6. This section is a savings clause, which provides that if any section(s) is later found to be unconstitutional or invalid, that finding shall not affect, impair or invalidate the remaining provisions of this Ordinance. This section further directs that the remaining provisions of the Ordinance are to be interpreted as if the offending section or clause never existed. 7. This section is a "Most Favored Nations" clause, which protects the Town by mandating that if a Final Order or subsequent settlement agreement approved in any proceeding addressing the issues raised in Atmos' Statement of Intent filing result in rates, revenues, terms and conditions, or benefits that would be more beneficial to the ACSC Cities than the terms of this Settlement Agreement, the Town may, at its option, implement and benefit from such more favorable rates, revenues, terms and conditions, or benefits shall additionally accrue to the ACSC Cities. However, the section makes it clear that application of the Most Favored Nations provision does not affect the approval of the Rider RRM, Rider CEE, Rider GCR and the Rider WNA, which shall continue according to their terms. This section provides for an effective date upon passage. 9. This paragraph directs that a copy of the signed resolution be sent to a representative of the Company and legal counsel for ACSC. FUNDING N/A APPROVED BY. Jul Tetwn a ager's Off e To n Secretary's Office Page 4 of 4 ACSC Cities (151 Total) Abilene Fate Palestine Addison Flower Mound Pantego Allen Forest Hill Paris Alvarado Fort Worth Parker Angus Frisco Pecan Hill Anna Frost Plano Argyle Gainesville Ponder Arlington Garland Pottsboro Bedford Garrett Prosper Bellmead Grand Prairie Putnam Benbrook Grapevine Quitman Beverly Hills Haltom City Red Oak Blue Ridge Harker Heights Reno (Parker County) Bowie Haskell Richardson Boyd Haslet Richland Hills Bridgeport Heath Roanoke Brownwood Hewitt Robinson Buffalo Highland Park Rockwall Burkburnett Highland Village Roscoe Burleson Honey Grove Rowlett Caddo Mills Hurst Sachse Carrollton Iowa Park Saginaw Cedar Hill Irving Seagoville Celeste Justin Sherman Celina Kaufman Snyder Cisco Keene Southlake Cleburne Keller Springtown Clyde Kemp Stamford College Station Kennedale Stephenville Colleyville Kerrville Sulphur Springs Colorado City Killeen Sweetwater Comanche Krum Temple Coolidge Lakeside Terrell Coppell Lake Worth The Colony Corinth Lancaster Throckmorton Corral City Lewisville Tyler Crandall Lincoln Park University Park Crowley Little Elm Venus Dalworthington Gardens Malakoff Vernon Denison Mansfield Waco Desoto McKinney Watauga Duncanville Melissa Waxahachie Eastland Mesquite Westlake Edgecliff Village Midlothian Westworth Village Emory Murphy Whitesboro Ennis Newark White Settlement Euless Nocona Wichita Falls Everman North Richland Hills Woodway Fairview Northlake Wylie Farmers Branch Oak Leaf Farmersville Ovil la Comparison of Customer Impacts: Atmos' Requested Rates as filed (Statement of Intent) and the Settlement Agreement In its Statement of Intent filed with the Cities on September 20, 2007, Atmos Mid -Tex asked for a $52 million increase from total customers revenues of $1,512 million. If approved, the Company's revenues would have increased 3.4 percent. The $10 million revenue increase authorized by the Settlement Agreement represents a 0.66 percent increase in Company revenues. Atmos Requested Rates Settlement Agreement Current Atmos Req. Settlement Monthly Monthly Change ($) Change ( %) Agreement Change ($) Change ( %) Bill Bill Monthly Bill Residential (using 4.4 Mcf $54.99 $57.07 $2.08 3.77% $55.19 $0.20 0.37% per month) Commercial (using 30 Mcf $296.15 $305.36 $9.21 3.11% $299.60 $3.48 1.18% per month) Industrial (using 300 $2,975.21 $3,143.10 $167.89 5.64% $2978.79 $3.58 0.12% MMBTU) Transport (using 300 $519.87 $687.76 $167.89 32.30% $523.45 $3.58 0.69% MMBTU) In its Statement of Intent filed with the Cities on September 20, 2007, Atmos Mid -Tex asked for a $52 million increase from total customers revenues of $1,512 million. If approved, the Company's revenues would have increased 3.4 percent. The $10 million revenue increase authorized by the Settlement Agreement represents a 0.66 percent increase in Company revenues. Atmos Energy - Mid -Tex Division 2007 Rate Case Settlement January 2008 ➢ Atmos Energy filed a request to increase rates with the 439 cities of the Mid -Tex Division on Thursday, September 20, 2007. • Your city acted to suspend the effective date of the rates to January 23, 2008. • The company has voluntarily extended this deadline to February 15, 2008 to allow the city time to consider a settlement agreement. • Your city must take action prior to February 15, 2008 or the rates will be approved as filed by operation of law. • The Company requested a. revenue increase of $1.57 per month for an average residential customer or $51.9 million annually. ➢ Atmos Energy has reached a settlement agreement with the ACSC coalition of cities o This group represents over 130 cities and approximately 54% of the Mid - Tex customers o We are requesting that the city approve the settlement agreement ➢ Summary of the Settlement Agreement • Revenue increase of $10 million effective for billing starting March 1, 2008 • Establishes an annual rate adjustment mechanism to replace GRIP filings (Rider RRM) • Recovery of uncollectible gas cost through the Rider GCR beginning October 1, 2008 • Establishment of an Energy Conservation Program for elderly and low income customers. • Reduction of the monthly customer charge for residential customers to $7 per month effective October 1 • 9.6% Return on Equity and actual capital structure not to exceed 48.1% equity ➢ Customer Impact o Average Residential increase of $0.20 /month, 0.4% overall o Average Commercial increase of $3.92 /month, 1.2% overall 0 300 Mcf Industrial Sales increase of $3.58, 0.1% overall ➢ Benefits of Settlement • Company and the city continue to partner in providing safe and reliable service to our customers • Settlement avoids the cost of litigation that is born by customers • Settlement represents a small increase in rates to customers • Residential customers will see a reduction in the fixed monthly charge beginning October 1. TOWN OF WESTLAKE ORDINANCE NO. 585 AN ORDINANCE OF THE BOARD OF ALDERMEN OF THE TOWN OF WESTLAKE, TEXAS, ( "TOWN ") APPROVING A SETTLEMENT AGREEMENT BETWEEN THE TOWN AND ATMOS ENERGY CORP., MID -TEX DIVISION ( "ATMOS MID -TEX" OR "THE COMPANY ") REGARDING THE COMPANY'S STATEMENT OF INTENT TO CHANGE GAS RATES IN ALL CITIES EXERCISING ORIGINAL JURISDICTION; DECLARING EXISTING RATES TO BE UNREASONABLE; ADOPTING TARIFFS THAT REFLECT RATE ADJUSTMENTS CONSISTENT WITH THE SETTLEMENT AGREEMENT AND FINDING THE RATES TO BE SET BY THE TARIFFS TO BE JUST AND REASONABLE; ADOPTING A SAVINGS CLAUSE; DETERMINING THAT THIS ORDINANCE WAS PASSED IN ACCORDANCE WITH THE REQUIREMENTS OF THE TEXAS OPEN MEETINGS ACT; DECLARING AN EFFECTIVE DATE; AND REQUIRING DELIVERY OF THIS ORDINANCE TO THE COMPANY AND LEGAL COUNSEL. WHEREAS, the Town of Westlake, Texas ( "Town ") is a gas utility customer of Atmos Energy Corp., Mid -Tex Division ( "Atmos Mid -Tex" or "the Company "), and a regulatory authority with an interest in the rates and charges of Atmos Mid -Tex; and WHEREAS, on or about September 20, 2007, Atmos Mid -Tex, pursuant to Gas Utility Regulatory Act § 104.102 filed with the Town a Statement of Intent to increase system -wide gas rates by approximately $52 million, such increase to be effective in all municipalities exercising original jurisdiction within its Mid -Tex Division service area effective on October 25, 2007; and WHEREAS, the Town took action to suspend the October 25, 2007 Effective Date and to coordinate a response to Atmos' filing with more than 130 other similarly situated municipalities through the Atmos Cities Steering Committee ( "ACSC ") (such participating cities are referred to herein as "ACSC Cities "); and WHEREAS, Atmos has agreed to extend the October 25, 2007, Effective Date such that the Town's jurisdiction over this matter ends February 6, 2008; and WHEREAS, the Railroad Commission issued an Order on Rehearing approving new system -wide rates for customers of Atmos Energy's Mid -Tex Division on June 13, 2007, in GUD No. 9670, which increased residential base rates by approximately $10 million annually; and WHEREAS, ACSC and Atmos have each appealed the Railroad Commission's decision in Atmos' most recent system -wide rate increase as well as the decision rendered in GUD No. 9400 to the Travis County District Court; and WHEREAS, Atmos and ACSC have been in continuing disagreement, dispute, and litigation over the application of SECTION 104.301 of the Texas Utilities Code and the resulting rate increases ( "GRIP surcharges ") established by the Railroad Commission of Texas ( "RRC" or the "Commission "); and WHEREAS, Atmos filed its application for its fourth GRIP surcharge in four years on May 31, 2007, seeking to increase the rates of all customers by approximately $12 million annually; and WHEREAS, the ACSC Cities desire to avoid the litigation expense that would result from another lengthy contested rate case proceeding before the Railroad Commission as well as the prosecution of the appeals in Texas District Courts and Court of Appeals of the GRIP surcharges and previous system -wide rate decisions; and WHEREAS, ACSC desires to recoup certain costs it previously incurred in connection with GRIP- related proceedings (costs which Atmos contends are not reimbursable rate case expenses under the Texas Utilities Code), as well as costs incurred in connection with this proceeding; and WHEREAS, on October 18, 2007, more than 60 ACSC members met in Arlington with officers and executives of Atmos to discuss various issues, including rate making, resulting in a mutual pledge to work toward settlement; and WHEREAS, ACSC members designated a Settlement Committee made up of ACSC representatives to work with ACSC attorneys and consultants to formulate and review reasonable settlement positions to resolve outstanding matters with Atmos, including the pending rate increase request; and WHEREAS, the Settlement Committee and lawyers representing ACSC met several times with the Company to negotiate a Settlement Agreement resolving the issues raised in the Company's Statement of Intent filing as well as all outstanding appeals of the two prior rate cases and various GRIP filings; and WHEREAS, the Settlement Committee, as well as ACSC lawyers and consultants believe existing rates are unreasonable and should be changed; and WHEREAS, the ACSC Executive Committee recommends ACSC members approve the negotiated Settlement Agreement and attached tariffs; and WHEREAS, the attached tariffs provide for an expedited rate review process as a substitute to the current GRIP process instituted by the Legislature; and WHEREAS, the expedited rate review process as provided by the Rate Review Mechanism Tariff eliminates piecemeal ratemaking, the ACSC's major objection to the current GRIP process; and WHEREAS, the attached tariffs implementing new rates are consistent with the Settlement Agreement and are just, reasonable, and in the public interest; and WHEREAS, the Settlement Agreement as a whole is in the public interest; NOW, THEREFORE, BE IT ORDAINED BY THE BOARD OF ALDERMEN OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1. That the findings set forth in this Ordinance are hereby in all things approved. SECTION 2. That the Westlake Board of Aldermen finds that the Settlement Agreement, which is attached hereto and incorporated herein as Exhibit A, is in the public interest and is hereby endorsed in all respects. SECTION 3. That existing rates for natural gas service provided by Atmos Mid -Tex are unreasonable and new tariffs which is attached and incorporated herein as Exhibit B, are just and reasonable and are hereby adopted. SECTION 4. That to the extent any resolution or ordinance previously adopted by the Council is inconsistent with this Ordinance, it is hereby repealed. SECTION 5. That the meeting at which this Ordinance was approved was in all things conducted in strict compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. SECTION 6. That if any one or more SECTIONs or clauses of this Ordinance is adjudged to be unconstitutional or invalid, such judgment shall not affect, impair or invalidate the remaining provisions of this Ordinance and the remaining provisions of the Ordinance shall be interpreted as if the offending SECTION or clause never existed. SECTION 7. That if ACSC Cities determine any rates, rate design, or required action resulting from a Final Order or subsequent settlement agreement approved in any proceeding addressing the issues raised in Atmos' Statement of Intent to be more beneficial than the terms of the attached Settlement Agreement, the more favorable rates, rate design, or required action shall additionally accrue to the Town. SECTION 8. That this Ordinance shall become effective from and after its passage with rates authorized by attached Tariffs to be effective for customer bills delivered on or after March 1, 2008. SECTION 9. That a copy of this Ordinance shall be sent to Atmos Mid -Tex, care of Joe T. Christian, Director of Rates, at Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1800, Dallas, Texas 75240, and to Geoffrey Gay, General Counsel to ACSC, at Lloyd Gosselink Blevins Rochelle & Townsend, P.C., P.O. Box 1725, Austin, Texas 78767 -1725. PASSED AND APPROVED THIS 28TH DAY OF JANUARY 2008. Scott Bradley, Mayor ATTEST: Kim Sutter, TRMC, Town Secretary Joe C. Hennig, Interim Town Manager APPROVED AS TO FORM: L. Stanton Lowry, Town Attorney ATTACHMENT A STATEMENT OF INTENT FILED BY ATMOS ENERGY, CORP., MID -TEX DIVISION ON SEPTEMBER 20, 2007 SETTLEMENT AGREEMENT This Settlement Agreement is entered into by and between Atmos Energy Corp.( "Atmos" or "the Company ") and the Atmos Cities Steering Committee ( "ACSC "), whose members include the Cities of Abilene, Addison, Allen, Alvarado, Angus, Anna, Argyle, Arlington, Bedford, Bellmead, Benbrook, Beverly Hills, Blue Ridge, Bowie, Boyd, Bridgeport, Brownwood, Buffalo, Burkburnett, Burleson, Caddo Mills, Carrollton, Cedar Hill, Celeste, Celina, Cisco, Cleburne, Clyde, College Station, Colleyville, Colorado City, Comanche, Coolidge, Coppell, Corinth, Corral City, Crandall, Crowley, Dalworthington Gardens, Denison, DeSoto, Duncanville, Eastland, Edgecliff Village, Emory, Ennis, Euless, Everman, Fairview, Farmers Branch, Farmersville, Fate, Flower Mound, Forest Hill, Fort Worth, Frisco, Frost, Gainesville, Garland, Garrett, Grand Prairie, Grapevine, Haltom City, Harker Heights, Haskell, Haslet, Heath, Hewitt, Highland Park, Highland Village, Honey Grove, Hurst, Iowa Park, Irving, Justin, Kaufman, Keene, Keller, Kemp, Kennedale, Kerrville, Killeen, Krum, Lakeside, Lake Worth, Lancaster, Lewisville, Lincoln Park, Little Elm, Malakoff, Mansfield, McKinney, Melissa, Mesquite, Midlothian, Murphy, Newark, Nocona, North Richland Hills, Northlake, Oak Leaf, Ovilla, Palestine, Pantego, Paris, Parker, Pecan Hill, Plano, Ponder, Pottsboro, Prosper, Putnam, Quitman, Red Oak, Reno (Parker County), Richardson, Richland Hills, Roanoke, Robinson, Rockwall, Roscoe, Rowlett, Sachse, Saginaw, Seagoville, Sherman, Snyder, Southlake, Springtown, Stamford, Stephenville, Sulphur Springs, Sweetwater, Temple, Terrell, The Colony, Throckmorton, Tyler, University Park, Venus, Vernon, Waco, Watauga, Waxahachie, Westlake, Westworth Village, Whitesboro, White Settlement, Wichita Falls, Woodway, and Wylie (collectively "ACSC Cities "). WHEREAS, the Settlement Agreement resolves all issues relating to the Atmos Energy Corp., Mid -Tex Division Statement of Intent filed with the ACSC Cities on September 20, 2007, in a manner that Atmos and ACSC ( "the Signatories ") believe is consistent with the public interest, and the Signatories represent diverse interests; WHEREAS, the Signatories believe that a fully contested hearing in the case would be time - consuming and entail substantial additional expense for all parties and that the public interest will be served by adoption of an ordinance consistent with the Settlement Agreement; NOW, THEREFORE, in consideration of the mutual agreements and covenants established herein, the Signatories, through their undersigned representatives, agree to and recommend for approval by the ACSC Cities the following Settlement Terms as a means of fully resolving all issues raised in the September 20, 2007 Statement of Intent filed by Atmos on behalf of its Mid -Tex division: Settlement Terms Atmos and the ACSC Cities agree to the rates, terms and conditions reflected in the tariffs attached to this Settlement Agreement as Exhibit A. Said tariffs should allow Atmos an additional $10 million in annual revenue by implementation of rates shown in WP J -4 Page 2 of 3 ATMOS ENERGY CORP., MID -TEX DIVISION SUMMARY PROOF OF REVENUE AT PROPOSED RATES TEST YEAR ENDING JUNE 30, 2007 Line Description Total Reference (a) (b) (c) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Rate C Rate Characteristics: Customer Charge $20.28 CCS Consumption Charge ($ /Mcf) $0.7104 CCS Rider GCR Part A $7.5520 Schedule H Rider GCR Part B $0.5001 Schedule I Billing Units (1): Bills 1,471,279 WP_J -1.2 Total MCF 49,665,131 WP—J-1.2 Present Revenue: Customer Charge Consumption Charge Base Revenue Rider GCR Part A Rider GCR Part B Subtotal Revenue Related Taxes Total Proposed Revenue- Rate C $ 29,837,538 35,282,109 $ 65,119,647 375, 072, 987 24,837, 930 $ 465,030,564 27, 016, 551 $ 492,047,115 Note 1: See Billing Determinants Study for details. 32 WP J -4 Page 3 of 3 ATMOS ENERGY CORP., MID -TEX DIVISION SUMMARY PROOF OF REVENUE AT PROPOSED RATES TEST YEAR ENDING JUNE 30, 2007 Line Description Total Reference (a) (b) (c) Rate I &T 1 Rate Characteristics: 2 Customer Charge $344.75 CCS 3 4 Block 1 ($ /MMBTU) $0.2200 CCS 5 Block 2 ($ /MMBTU) $0.1600 CCS 6 Block 3 ($ /MMB -1 -U) $0.0493 CCs 7 8 Rider GCR Part A $7.5520 Schedule H 9 Rider GCR Part B $0.2804 Schedule 10 11 Consumption Characteristics: 12 Block 1 (First 1,500 MMBTU) 0.21691 13 Block 2 (Next 3,500 MMBTU) 0.24651 14 Block 3 (Over 5,000 MMBTU) 0.53657 (�} 15 16 Billing Units (1): 17 Bills 11,542 WP J -1.3 18 Block 1 9,694,939 WP J -1.3 19 Block 2 11,018,084 WP J -1.3 20 Block 3 23,982,442 WP—J-1.3 21 Total MMBTU 44,695,465 22 23 Sales Volumes 2,858,579 WP J -1.3 24 25 Present Revenue: 26 Customer Charge $ 3,979,105 27 Block 1 2,132,887 28 Block 2 1,762,893 29 Block 3 1,182,334 30 Base Revenue $ 9,057,219 31 Rider GCR Part A 21,082,128 32 Rider GCR Part B 12,534,050 33 Subtotal $ 42,673,397 34 Revenue Related Taxes 2,479,166 35 36 Total Proposed Revenue- Rate I &T $ 45,152,563 37 38 Note 1: See Billing Determinants Study for details 33 SETTLEMENT AGREEMENT STATEMENT OF INTENT FILED BY ATMOS ENERGY, CORP., MID -TEX DIVISION ON SEPTEMBER 20, 2007 the proof of revenues attached as Exhibit B. Atmos and the ACSC Cities further agree that the rates, terms, and conditions reflected in Exhibit A to this Settlement Agreement comply with the rate - setting requirements of Chapter 104 of the Texas Utilities Code. The gas rates, terms and conditions established by this Settlement Agreement shall be effective for bills rendered on or after March 1, 2008. 2. The net plant amounts shown in the attached Exhibit B are reasonable for the plant that is used and useful in providing gas utility service. Included as part of Exhibit A is a Rate Review Mechanism ( "Rider RRM ") that provides for an annual rate adjustment to reflect changes in billing determinants, operating and maintenance expense, depreciation expense, other taxes expense, and revenues as well as changes in capital investment and associated changes in gross revenue related taxes. Atmos agrees that effective with the implementation of the first RRM rate adjustment, Atmos shall file with the ACSC Cities a revised Rate R- Residential Sales Tariff to reduce the customer charge per bill from $10.69 per month to $7.00 per month and to increase the volumetric portion of the rate (shown as $1.271 in Exhibit A) to the appropriate level to reflect reduction in customer charge from $10.69 to $7.00, as well as to reflect any change resulting from the RRM implementation. The first RRM rate adjustment is expected to occur October 1, 2008. Atmos and the ACSC Cities agree that following the initial RRM adjustment any subsequent implementation of RRM adjustments shall be supported as described in the Rider RRM, and shall limit changes to residential and commercial customer charge to no more than 20 %. Further, the parties agree that any approved adjustment in excess of the 20% limitation on the residential and commercial customer charge shall be recovered through the volumetric portion of the rate. 4. With respect to the RRM, Atmos and the ACSC Cities agree that the rate increase limitations set forth in Rider RRM under Calculation of Rate Adjustment, subpart (c) shall not preclude Atmos from recovering any excluded costs during a subsequent Evaluation Period in which the 5% limitation for O &M expenses or net plant investment, respectively, is not reached or in a subsequent Statement of Intent case. To the extent that Atmos seeks to recover any excluded costs during a subsequent Evaluation Period in which the 5% limitation for O &M expenses or net plant investment, respectively, is not reached or in a subsequent Statement of Intent case, Atmos shall identify these costs as a specific line item in the schedule accompanying the RRM rate adjustment filing. 5. With respect to the RRM, Atmos further agrees to pay all reasonable and necessary expenses of each entity having original jurisdiction that are incurred to review the Company's annual RRM filings. Atmos further agrees that in calculating the proposed rate for any Rate Effective Period, the Company shall not include: (1) any external legal, expert, or consultant costs to prepare and/or provide supportive information related to its filing; or (2) reimbursements to original jurisdiction entities. 6. Notwithstanding paragraph 5 of this Settlement Agreement, Atmos and ACSC agree that in the event of an appeal of an original jurisdiction entity's decision regarding a proposed RRM adjustment, recovery of rate case expenses shall be determined according to Chapters 103 and 104, TEX. UTIL. CODE ANN. Further, in the event of such appeal(s), 2 SETTLEMENT AGREEMENT STATEMENT OF INTENT FILED BY ATMOS ENERGY, CORP., MID -TEX DIVISION ON SEPTEMBER 20, 2007 Atmos shall recover any reimbursement made to the original jurisdiction entity through a surcharge to customer rates whether such reimbursements are made during the initial review period or appeal period. 7. Atmos agrees that it will make no filings on behalf of its Mid -Tex division under the provisions of TEX. UTIL. CODE ANN. § 104.301 while the Rider RRM is in place, and any such filings pending at the time the RRM is approved will be trued -up for revenue and rate base components prior to implementation of the annual RRM. In the event that a regulatory authority fails to act or enters an adverse decision regarding the proposed annual RRM adjustment, the Railroad Connnission of Texas shall, pursuant to the provisions of the Texas Utilities Code, have exclusive appellate jurisdiction to review the action or inaction of the regulatory authority exercising exclusive original jurisdiction over the RRM request. In addition, the Signatories agree that this Settlement Agreement shall not be construed as a waiver of the ACSC Cities' right to initiate a show cause proceeding or the Company's right to file a Statement of Intent under the provisions of the Texas Utilities Code. Atmos and the ACSC Cities commit that during the Initial Implementation Period, as defined in the RRM tariff, Atmos and the ACSC Cities will not devote resources or efforts to advocate statutory changes involving rate stabilization mechanisms or the Gas Reliability Infrastructure Plan that is currently codified under TEX. UTIL. CODE §104.301. 9. Atmos and the ACSC Cities agree that the gas cost portion of uncollectible expense shall be recovered through the Company's Rider GCR rather than through base rates. The change in accounting for the gas cost portion of uncollectible expense (including both the accrual of expense and write -off of accounts) shall become effective with the implementation of the first RRM rate adjustment. The first RRM rate adjustment is expected to occur October 1, 2008. In calculating the rate for the first Rate Effective Period, the Company shall utilize the same methodology as used in the Company's September 20, 2007 Statement of Intent with the only modification being to exclude the effects of the gas cost portion of uncollectible expense from the base rate calculation. 10. Atmos and the ACSC Cities further agree that expense associated with lost and unaccountable gas shall, based on an annual period, be recoverable through the Company's Rider GCR up to a maximum of five (5) percent of the quantity of metered gas, as provided under Commission Rule 7.5525, Lost and Unaccounted for Gas. Such change shall be effective with the complete 12 month reporting period ending June 30, 2008. 11. Included as part of Exhibit A to this Settlement Agreement is a new gas conservation program tariff (Rider CEE) that will be effective October 1, 2008. Atmos and the ACSC Cities agree that Atmos will fund $1 million of the allowable expenses incurred annually, with a customer rate component providing the remainder $1 million of funding. All customer - supplied funds will, prior to the commencement of the program, be used toward program implementation efforts and, upon implementation, be applied directly to the gas conservation materials and supplies. SETTLEMENT AGREEMENT STATEMENT OF INTENT FILED BY ATMOS ENERGY, CORP., MID -TEX DIVISION ON SEPTEMBER 20, 2007 12. Atmos and the ACSC Cities agree that the Company's requested revision of its weather normalization adjustment ( "WNA ") mechanism is appropriate, as modified by ACSC, and should be approved as set forth in Exhibit A to this Settlement Agreement. Specifically, the revision excludes non - weather sensitive commercial customers and modifies the WNA mechanism to calculate the WNA adjustment based on weather stations at a regional level rather than under the current practice of associating all customers with a single weather location for purposes of determining the WNA adjustment. 13. Atmos and the ACSC Cities agree that the three -year gas cost review process that is currently in effect for the Mid -Tex division should be eliminated. Atmos and the ACSC Cities further agree to collaborate to establish an alternate process wherein the prudence of gas costs recovered through the Rider GCR can be addressed. Until an agreed upon replacement mechanism has been established, the current gas cost review process shall remain in effect, unless changed by order of the Commission. 14. It is the intention of the Signatories that the ACSC Cities receive the benefit of any settlement agreement that Atmos enters into with other entities arising out of GUD No. 9672 (consolidated cases) or any associated appeals of GUD No. 9672. Therefore, Atmos agrees that if the rates, revenues, terms and conditions, or benefits accruing to the settling entity would be more beneficial to the ACSC Cities than the terms of this Settlement Agreement, as determined by the ACSC Cities, such more favorable rates, revenues, terms and conditions, or benefits shall additionally accrue to the ACSC Cities. Similarly, if the Final Order in GUD No. 9672 or orders resulting from any associated appeals are determined by the ACSC Cities to result in rates, revenues, terms and conditions, or benefits that are more beneficial than the terms or this Settlement Agreement, such more favorable terms, revenues, terms and conditions shall additionally accrue to the ACSC Cities. However, the Signatories agree that the approval of the Rider RRM, the Rider WNA, the Rider CEE, and the Rider GCR, as shown in Exhibit A hereto, shall not be affected by the application of the "most favored nations" provisions contained in this paragraph, it being the understanding and the intent of the Signatories hereto that such tariffs shall continue in effectiveness according to their terms. The Signatories further agree that the agreement reflected in paragraph 10 of this Settlement Agreement shall not be affected by the application of the "most favored nations" provisions contained in this paragraph. 15. Atmos agrees to reimburse the ACSC Cities previously incurred rate case expenses within 30 days of the date the last ACSC City ordinance approving this Settlement Agreement is entered, and any additional rate case expenses incurred through the date of the entry of the last ACSC City ordinance, within 30 days of receipt of invoices. 16. Atmos agrees to reimburse the ACSC Cities for expenses associated with all 2003, 2004, 2005, and 2006 GRIP filings and related court appeals up to $567,213 within 30 days of the date the last ACSC City ordinance approving this Settlement Agreement is entered. 17. Atmos and the ACSC Cities further agree that all expenses reimbursed pursuant to paragraphs 15 and 16 of this Settlement Agreement, as well as all reasonable rate case M SETTLEMENT AGREEMENT STATEMENT OF INTENT FILED BY ATMOS ENERGY, CORP., MID -TEX DIVISION ON SEPTEMBER 20, 2007 expenses directly incurred by Atmos in connection with the September 20, 2007 Statement of Intent filed on behalf of its Mid -Tex Division through February 29, 2008, shall be recoverable through a surcharge to customer rates within the ACSC Cities. With respect to the rate case expenses directly incurred by Atmos, the amount to be recovered through the surcharge to customers within the ACSC Cities shall be determined on a pro rata basis, consistent with the ACSC Cities' percentage of total Mid -Tex residential load (52 %). The surcharge shall be recovered over a twelve month period beginning in April of 2008. 18. Within 30 days of the date the last ACSC City ordinance approving this Settlement Agreement is entered, Atmos and the ACSC Cities agree to file a Notice of Non -Suit or Motion to Dismiss, whichever is applicable, in the following proceedings: Cause No. D- 1- GN -06- 000337 (Consolidated), Atmos.Cities Steering Committee v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. This case includes the following cases: a. Cause No. D- 1- GN -06- 000333; Atmos Cities Steering Committee v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. b. Cause No. D- 1- GN -06- 000334; Atmos Cities Steering Committee v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. C. Cause No. D- 1- GN -06- 000335; Atmos Cities Steering Committee v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. d. Cause No. D- 1- GN -06- 000336; Atmos Cities Steering Committee v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. e. Cause No. D- 1- GN -06- 000332; Atmos Cities Steering Committee v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. f. Cause No. D- 1- GN -05- 002182; Atmos Cities Steering Committee v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. g. Cause No. D- 1- GN- 06- 004206; Atmos Cities Steering Committee v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. Cause No. D- 1- GN -06- 001612; Atmos Cities Steering Committee v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. Cause No. D- 1- GN -06- 001852; Atmos Cities Steering Committee v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. Cause No. D- 1- GV -06- 000603; Atmos Cities Steering Committee v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. Cause No. D- 1- GV -06- 000605; Atmos Cities Steering Committee v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. SETTLEMENT AGREEMENT STATEMENT OF INTENT FILED BY ATMOS ENERGY, CORP., MID -TEX DIVISION ON SEPTEMBER 20, 2007 Cause No. D- 1- GN -06- 004518; Atmos Cities Steering Committee v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. Cause Number: 03- 06- 00580 -CV; Atmos Energy Corporation, as successor by merger to TXU Gas Company, Allied Coalition of Cities, and City of Dallas v. Railroad Commission of Texas; In the Third. District Court of Appeals at Austin, Texas. Cause No. D- 1- GN -07- 002871, Atmos Cities Steering Committee v. Railroad Commission of Texas, In the 53rd District Court, Travis County, Texas. Cause No. D- 1- GN -07- 002796, Atmos Energy Corporation v. Railroad Commission of Texas, In the 250th District Court, Travis County, Texas. Cause No. GV5- 00875; Allied Coalition of Cities v. The Railroad Commission of Texas, In the 345th District Court, Travis County, Texas. 19. Atmos and the ACSC Cities agree that Atmos may make all future filings, including, but not limited to, the annual RRM adjustment and any Statement of Intent filing with the ACSC Cities on an electronic basis, rather than by paper copy. Electronic Filings shall fulfill the requirements of TEx. UTIL. CODE §104.103. The appropriate ACSC Cities representative shall provide a list of the ACSC Cities to Atmos by March 1, 2008, and agrees to notify Atmos of any change in the ACSC Cities Coalition within 30 days of the effective date of any such change in order for Atmos to maintain adequate service records. Atmos further agrees to make paper copies of filings available to any ACSC City that requests a copy. 20. Atmos and the ACSC Cities agree that the ACSC Cities should pass ordinances approving the Settlement Agreement and establish rates and services for the ACSC Cities consistent with those set forth in Exhibit A to this Settlement Agreement. 21. The Signatories agree that the terms of the Settlement Agreement are interdependent and indivisible, and that if any ACSC City enters an order that is inconsistent with this Settlement Agreement, then any Signatory may withdraw without being deemed to have waived any procedural right or to have taken any substantive position on any fact or issue by virtue of that Signatory's entry into the Settlement Agreement or its subsequent withdrawal. 22. The Signatories agree that all negotiations, discussions and conferences related to the Settlement Agreement are privileged, inadmissible, and not relevant to prove any issues associated with the September 20, 2007 Statement of Intent filed by Atmos on behalf of its Mid -Tex Division pursuant to Texas law. 23. The Signatories agree that neither this Settlement Agreement nor any oral or written statements made during the course of settlement negotiations may be used for any purpose other than as necessary to support the entry by the ACSC Cities of an order implementing this Settlement Agreement. SETTLEMENT AGREEMENT STATEMENT OF INTENT FILED BY ATMOS ENERGY, CORP., MID -TEX DIVISION ON SEPTEMBER 20, 2007 24. The Signatories agree that this Settlement Agreement is binding on each Signatory only for the purpose of settling the issues set forth herein and for no other purposes, and, except to the extent the Settlement Agreement governs a Signatory's rights and obligations for future periods, this Settlement Agreement shall not be binding or precedential upon a Signatory outside this proceeding. 25. The Signatories agree that this Settlement Agreement may be executed in multiple counterparts and may be filed with facsimile signatures. 7 SETTLEMENT AGREEMENT STATE -MEINT OF INTENT PILED BY ATMOS ENERGY, CORP., 114ID -TEX DIVISION ON SEPTEMBER 20, 2007 WITH "1'hlE, ACSC COALITION Or CI7'II S Agreed to this 9 °i day of January, 2008. ATMOS ENERGY CORP., MID -TEiX DIVISIOi f Jot A. Paris President, Mid-Tex Division SETTLEMENT AGREEMENT STATEMENT OF INTENT FILED BY ATMOS ENERGY, CORP., MID -TEX DIVISION ON SEPTEMBER 20, 2007 Agreed to this 91h day of January, 2008. ATTORNEY FOR ATMOS CITIES STEERING COMMITTEE, WHOSE MEMBERS INCLUDE THE CITIES OF ABILENE, ADDISON, ALLEN, ALVARADO, ANGUS, ANNA, ARGYLE, ARLINGTON, BEDFORD, BELLMEAD, BENBROOK, BEVERLY HILLS, BLUE RIDGE, BOWIE, BOYD, BRIDGEPORT, BROWNWOOD, BUFFALO, BURKBURNETT, BURLESON, CADDO MILLS, CARROLLTON, CEDAR HILL, CELESTE, CELINA, CISCO, CLEBURNE, CLYDE, COLLEGE STATION, COLLEYVILLE, COLORADO CITY, COMANCHE, COOLIDGE, COPPELL, CORINTH, CORRAL CITY, CRANDALL, CROWLEY, DALWORTHINGTON GARDENS, DENISON, DESOTO, DUNCANVILLE, EASTLAND, EDGECLIFF VILLAGE, EMORY, ENNIS, EULESS, EVERMAN, FAIRVIEW, FARMERS BRANCH, FARMERSVILLE, FATE, FLOWER MOUND, FOREST HILL, FORT WORTH, FRISCO, FROST, GAINESVILLE, GARLAND, GARRETT, GRAND PRAIRIE, GRAPEVINE, HALTOM CITY, HARKER HEIGHTS, HASKELL, HASLET, HEATH, HEWITT, HIGHLAND PARK, HIGHLAND VILLAGE, HONEY GROVE, HURST, IOWA PARK, IRVING, JUSTIN, KAUFMAN, KEENS, KELLER, KEMP, KENNEDALE, KERRVILLE, KILLEEN, KRUM, LAKESIDE, LAKE WORTH, - LANCASTER, LEWISVILLE, LINCOLN PARK, LITTLE ELM, MALAKOFF, MANSFIELD, MCKINNEY, MELISSA, MESQUITE, MIDLOTHIAN, MURPHY, NEWARK, NOCONA, NORTH RICHLAND HILLS, NORTHLAKE, OAK LEAF, OVILLA, PALESTINE, PANTEGO, PARIS, PARKER, PECAN HILL, PLANO, PONDER, POTTSBORO, PROSPER, PUTNAM, QUITMAN, RED OAK, RENO (PARKER COUNTY), RICHARDSON, RICHLAND HILLS, ROANOKE, ROBINSON, ROCKWALL, ROSCOE, ROWLETT, SACHSE, SAGINAW, SEAGOVILLE, SHERMAN, SNYDER, SOUTHLAKE, SPRINGTOWN, STAMFORD, STEPHENVILLE, SULPHUR SPRINGS, SWEETWATER, TEMPLE, TERRELL, THE COLONY, THROCKMORTON, TYLER, UNIVERSITY PARK, VENUS, VERNON, WACO, WATAUGA, WAXAHACHIE, WESTLAKE, WESTWORTH VILLAGE, WHITESBORO, WHITE SETTLEMENT, WICHITA FALLS, WOODWAY, AND WYLIE. By: Geoffrey ay 0 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: TABLE OF CONTENTS APPLICABLE TO: Entire System REVISION DATE: February 1, 2008 EFFECTIVE DATE: PAGE: 1 OF 1 February 1, 2008 UTILITY OPERATIONS II. CITIES AND COUNTIES SERVED III. DEFINITIONS IV. GAS SERVICE RATES & RIDERS Rate R - Residential Sales Rate C - Commercial Sales Rate I - Industrial Sales Rate T - Transportation Rider CT — Competitive Transport Rider GCR - Gas Cost Recovery Rider FF - Franchise Fee Adjustment Rider SUR — Surcharges Rate LEP — Line Extension Policy Rate M - Miscellaneous Charges Rider RA - Retention Adjustment Rider TAX - Tax Adjustment Rider WNA —Weather Normalization Adjustment Rider RRM — Rate Review Mechanism Rider CEE — Conservation and Energy Efficiency V. SERVICE RULES AND REGULATIONS 10 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: Rate R - Residential Sales APPLICABLE TO: Entire System REVISION: $1.2710 per Mcf DATE: EFFECTIVE DATE: PAGE: 1 OF 1 February 1, 2008 RATE R - RESIDENTIAL SALES Application Applicable to Residential Customers for all natural gas provided at one Point of Delivery and measured through one meter. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and Mcf charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Bill $ 10.69 per month Commodity Charge — All Mcf $1.2710 per Mcf Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Weather Normalization Adjustment: Plus or Minus an amount for weather normalization calculated in accordance with Rider WNA. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX, Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Agreement An Agreement for Gas Service may be required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. 11 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., min_ rFx MVIRMN RATE SCHEDULE: Rate C - Commercial Sales APPLICABLE TO: Entire System REVISION: $ 0.7104 per Mcf DATE: EFFECTIVE DATE: PAGE: 1 OF 1 February 1, 2008 RATE C - COMMERCIAL SALES Application Applicable to Commercial Customers for all natural gas provided at one Point of Delivery and measured through one meter and to Industrial Customers with an average annual usage of less than 3,000 Mcf. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished_ Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and Mcf charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Bill $ 20.28 per month Commodity Charge - All Mcf $ 0.7104 per Mcf Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Weather Normalization Adjustment: Plus or Minus. an amount for weather normalization calculated in accordance with Rider WNA. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Agreement An Agreement for Gas Service may be required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. 12 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: Rate I - Industrial Sales APPLICABLE TO: Entire System REVISION: $ 0.2200 per MMBtu Next 3,500 MMBtu DATE: EFFECTIVE DATE: $ 0.0493 per MMBtu PAGE: 1 OF 2 February 1, 2008 RATE I - INDUSTRIAL SALES Application Applicable to Industrial Customers with a maximum daily usage (MDU) of less than 3,500 MMBtu per day for all natural gas provided at one Point of Delivery and measured through one meter. Service for Industrial Customers with an MDU equal to or greater than 3,500 MMBtu per day will be provided at Company's sole option and will require special contract arrangements between Company and Customer. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and MMBtu charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Meter $ 344.75 per month First 0 MMBtu to 1,500 MMBtu $ 0.2200 per MMBtu Next 3,500 MMBtu $ 0.1600 per MMBtu All MMBtu over 5,000 MMBtu $ 0.0493 per MMBtu Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Curtailment Overpull Fee Upon notification by Company of an event of curtailment or interruption of Customer's deliveries, Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay Company 200% of the midpoint price for the Katy point listed in Platts Gas Daily published for the applicable Gas Day in the table entitled "Daily Price Survey." 13 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: Rate I - Industrial Sales APPLICABLE TO: Entire System REVISION: DATE: EFFECTIVE DATE: PAGE: 2 OF 2 February 1, 2008 Replacement index In the event the "midpoint" or "common" price for the Katy point listed in Platts Gas Daily in the table entitled "Daily Price Survey" is no longer published, Company will calculate the applicable imbalance fees utilizing a daily price index recognized as authoritative by the natural gas industry and most closely approximating the applicable index. Agreement An Agreement for Gas Service may be required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. Special Conditions In order to receive service under Rate I, Customer must have the type of meter required by Company. Customer must pay Company all costs associated with the acquisition and installation of the meter. 14 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: Rate T — Transportation APPLICABLE TO: Entire System REVISION: $ 0.2200 per MMBtu Next 3,500 MMBtu DATE: EFFECTIVE DATE: $ 0.0493 per MMBtu PAGE: 1 OF 2 February 1, 2008 RATE T - TRANSPORTATION Application Applicable, in the event that Company has entered into a Transportation Agreement, to a customer directly connected to the Atmos Energy Corp., Mid -Tex Division Distribution System (Customer) for the transportation of all natural gas supplied by Customer or Customer's agent at one Point of Delivery for use in Customer's facility. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customer's bill will be calculated by adding the following Customer and MMBtu charges to the amounts and quantities due under the riders listed below: Charge Amount Customer Charge per Meter $ 344.75 per month First 0 MMBtu to 1,500 NIMBtu $ 0.2200 per MMBtu Next 3,500 MMBtu $ 0.1600 per MMBtu All NIMBtu over 5,000 MMBtu $ 0.0493 per MMBtu Upstream Transportation Cost Recovery: Plus an amount for upstream transportation costs in accordance with Part (b) of Rider GCR. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Retention Adjustment: Plus a quantity of gas as calculated in accordance with Rider RA. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Imbalance Fees All fees charged to Customer under this Rate Schedule will be charged based on the quantities determined under the applicable Transportation Agreement and quantities will not be aggregated for any Customer with multiple Transportation Agreements for the purposes of such fees. Monthly Imbalance Fees Customer shall pay Company the greater of (i) $0.10 per MMBtu, or (ii) 150% of the difference per MMBtu between the highest and lowest "midpoint" price for the Katy point listed in Platts Gas Daily in the table entitled "Daily Price Survey" during such month, for the MMBtu of Customer's monthly Cumulative 15 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: Rate T - Transportation APPLICABLE TO: Entire System REVISION: DATE: EFFECTIVE DATE: PAGE: 2 OF 2 February 1, 2008 Imbalance, as defined in the applicable Transportation Agreement, at the end of each month that exceeds 10% of Customer's receipt quantities for the month. Curtailment Overpull Fee Upon notification by Company of an event of curtailment or interruption of Customer's deliveries, Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay Company 200% of the midpoint price for the Katy point listed in Platts Gas Daily published for the applicable Gas Day in the table entitled "Daily Price Survey." Replacement Index In the event the "midpoint" or "common" price for the Katy point listed in Platts Gas Daily in the table entitled "Daily Price Survey" is no longer published, Company will calculate the applicable imbalance fees utilizing a daily price index recognized as authoritative by the natural gas industry and most closely approximating the applicable index. Agreement A transportation agreement is required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. Special Conditions In order to receive service under Rate T, customer must have the type of meter required by Company. Customer must pay Company all costs associated with the acquisition and installation of the meter. 16 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider GCR - Gas Cost Recovery APPLICABLE TO: Entire System REVISION: DATE: EFFECTIVE DATE: PAGE: 1 OF 3 October 1, 2008 Rider GCR - Gas Cost Recovery Applicable to Rate R, Rate C, and Rate I for all gas sales made by Company, and applicable to Rate R, Rate C, Rate 1, and Rate T for recovery of Pipeline System costs. The total gas cost recovery amount due is determined by adding the gas cost calculated in Section (a) below and the pipeline cost calculated in Section (b) below. The amount due for gas cost (Section (a)) is determined by multiplying the Gas Cost Recovery Factor (GCRF) by the Customer's monthly volume. For Customers receiving service under Rate R and Rate C, monthly volume will be calculated on an Mcf basis. For Customers receiving service under Rate I, monthly volume will be calculated on an MMBtu basis and the quantities will be adjusted as necessary to recover actual costs. The amount due for pipeline cost (Section (b)) is determined by multiplying the Pipeline Cost Factor (PCF) by the Customer's monthly volume. For Customers receiving service under Rate R and Rate C, monthly volume will be calculated on an Mcf basis. For Customers receiving service under Rate I and Rate T, monthly volume will be calculated on an MMBtu basis and the quantities will be adjusted as necessary to recover actual costs. (a) Gas Cost Method of Calculation The monthly gas cost adjustment is calculated by the application of a Gas Cost Recovery Factor (GCRF), as determined with the following formula: GCRF = Estimated Gas Cost Factor (EGCF) + Reconciliation Factor (RF) + Taxes (TXS) + Adjustments (ADJ) EGCF = Estimated cost of gas, including lost and unaccounted for gas attributed to residential, commercial, and industrial sales, and any reconciliation balance of unrecovered gas costs, divided by the estimated total residential, commercial, and industrial sales. RF = Calculated by dividing the difference between the Actual Gas Cost Incurred, inclusive of interest, over the preceding twelve -month period ended June 30 and the Actual Gas Cost Billed over that same twelve -month period by the estimated total residential, commercial, and industrial sales for the succeeding October through June billing months. Actual Gas Cost Incurred = The sum of the costs booked in Atmos Energy Corp., Mid -Tex Division account numbers 800 through 813 and 858 of the NARUC Uniform System of Accounts, including the net impact of injecting and withdrawing gas from storage. Also includes a credit or debit for any out -of- period adjustments or unusual or nonrecurring costs typically considered gas costs and a credit for amounts received as Imbalance Fees or Curtailment Overpull Fees. Actual Gas Cost Billed = EGCF multiplied by the monthly volumes billed to Residential, Commercial and Industrial Sales customers, less the total amount of gas cost determined to have been uncollectible and written off which remain unpaid for each month of the reconciliation period. 17 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID�TEX DIVISION RIDER: Rider GCR - Gas Cost Recovery APPLICABLE TO: Entire System REVISION: .302805 Rate I - Industrial Service and Rate T - Transportation Service DATE: EFFECTIVE DATE: PAGE: 2 OF 3 October 1, 2008 Any amount remaining in the reconciliation balance after the conclusion of the period of amortization will be maintained in the reconciliation balance and included in the collection of the next RF. Atmos Energy shall file annual reports with the Commission, providing by month the following amounts: Gas Cost Written Off. Margin Written Off, Tax and Other Written Off, Total Written Off, Gas Cost Collected and Margin Collected. TXS = Any statutorily imposed assessments or taxes applicable to the purchase of gas divided by the estimated total residential, commercial, and industrial sales. ADJ = Any surcharge or refund ordered by a regulatory authority, inclusive of interest, divided by the estimated total residential, commercial, and industrial sales. (b) Pipeline Cost Method of Calculation Each month, a Pipeline Cost Factor (PCF) is calculated separately for each Pipeline Cost Rate Class listed below. The formula for the PCF is: PCF = PP / S, where: PP = (P -A) x D, where: P = Estimated monthly cost of pipeline service calculated pursuant to Rate CGS D = Pipeline service allocation factor for the rate class as approved in the Company's most recent rate case, as follows: :)Pipeline Cost Rate Class Allocation Factor D Rate R - Residential Service .634783 Rate C - Commercial Service .302805 Rate I - Industrial Service and Rate T - Transportation Service .062412 A = Adjustment applied in the current month to correct for the difference between the actual and estimated pipeline cost revenue of the second preceding month, calculated by the formula: A = R - (C _ A2), where: R = Actual revenue received from the application of the PP component in the second preceding month. C = Actual pipeline costs for the second preceding month. A2 = The adjustment (A) applied to the PP component in the second preceding month. S = Estimated Mcf or MMBtu for the rate class for the current billing month. The PCF is calculated to the nearest 0.0001 cent. 18 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider GCR - Gas Cost Recovery APPLICABLE TO: Entire System REVISION: DATE: EFFECTIVE DATE: PAGE: 3 OF 3 October 1, 2008 The Pipeline Cost to be billed is determined by multiplying the Mcf or MMBtu used by the appropriate PCF. The Pipeline Cost is determined to the nearest whole cent. 19 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider WNA — Weather Normalization Adjustment APPLICABLE TO: Entire System REVISION: DATE: EFFECTIVE DATE: PAGE: 1 OF 3 November 1, 2005 RIDER WNA — Weather Normalization Adiustment Provisions for Adjustment The base rate per Mcf (1,000,000 Btu) for gas service set forth in any Rate Schedules utilized by the cities of the Mid -Tex Division service area for determining normalized winter period revenues shall be adjusted by an amount hereinafter described, which amount, is referred to as the "Weather Normalization Adjustment." The Weather Normalization Adjustment shall apply to all temperature sensitive residential, and commercial bills based on meters read during the revenue months of November through April. Computation of Weather Normalization Adiustment The Weather Normalization Adjustment Factor shall be computed to the nearest one - hundredth cent per Mcf by the following formula: WNAFi = Ri Where (HSFi x (NDD -ADD) ) (BLi + (HSFi x ADD) ) — any particular Rate Schedule or billing classification within any such particular Rate Schedule that contains more than one billing classification WNAFi = Weather Normalization Adjustment Factor for the ith rate schedule or classification expressed in cents per Mcf Ri = base rate of temperature sensitive sales for the ith schedule or classification approved by the entity exercising original jurisdiction. HSFi = heat sensitive factor for the ith schedule or classification calculated as the slope of the linear regression of average sales per bill (Mcf) and actual heating degree days by month for the test year by schedule or classification and weather station as part of the RRM filing. NDD = billing cycle normal heating degree days calculated as the simple ten -year average of actual heating degree days. ADD = billing cycle actual heating degree days. Bli = base load sales for the ith schedule or classification calculated as the y- intercept of the linear regression of average sales per bill (Mcf) and actual heating degree days by month for the test year by schedule or classification 20 TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider WNA —Weather Normalization Adjustment APPLICABLE TO: Entire System REVISION: Austin 1.31 DATE: EFFECTIVE DATE: .0669 PAGE: 2 OF 3 November 1, 2008 .0185 18.08 and weather station as part of the RRM filing. The Weather Normalization Adjustment for the jth customer in ith rate schedule is computed as: WNAi = WNAFi x q;, Where q;j is the relevant sales quantity for the jth customer in ith rate schedule. Filings with Entities Exercising Original Jurisdiction As part of its annual RRM filing the Company will file (a) a copy of each computation of the Weather Normalization Adjustment Factor, (b) a schedule showing the effective date of each such Weather Normalization Adjustment, (c) a schedule showing the factors of values used in calculating such Weather Normalization Adjustment and (d) a random sample and audit of thirty (30) actual customer bills, with customer information deleted, for each rate schedule or classification to which the WNA was applied in the preceding 12 month period. To the extent that source data is needed to audit the WNA application, such data will be provided by the Company as part of the annual RRM filing. If the RRM is discontinued, as provided in the Rider RRM tariff, the information required herein to be filed with the entities exercising original jurisdiction shall be filed on March 1 of each year. Base Use /Heat Sensitivity (HSF) Factors Residential Commercial Base use HSF Base use HSF Weather Station Mcf Mcf/HDD Mcf Mcf/HDD Abilene 1.14 .0131 8.11 .0631 Austin 1.31 .0136 18.05 .0669 Dallas 1.57 .0185 18.08 .0925 Waco 1.20 .0138 10.97 .0606 Wichita Falls 1.27 .0147 11.58 .0581 21 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider WNA — Weather Normalization Adjustment APPLICABLE TO: Entire System REVISION: DATE: EFFECTIVE DATE: PAGE: 3 OF 3 November 1, 2008 Sample WNAFl Calculation: (.0131 x (30-17) ) 1533 per Mcf = 1.2267 x (1.14 + (.0131 x 17) ) Where i = Ri = HSFi = NDD = ADD = Bli = Residential Single Block Rate Schedule 1.2267 per MCF (Rate R - Final Order GUD No. 9670) .0131 (Residential -Abilene Area) 30 HDD (Simple ten -year average of Actual HDD for Abilene Area — 9/15/06 —10/14/06) 17 HDD (Actual HDD for Abilene Area — 9/15/06 — 10/14/06) 1.14 Mcf (Residential - Abilene Area) 22 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider RRM — Rate Review Mechanists APPLICABLE TO: Entire Mid -Tex Division REVISION DATE: EFFECTIVE DATE: PAGE: 1 of 5 February 1, 2008 RIDER RRM — RATE REVIEW MECHANISM Purpose: This mechanism is designed to provide annual earnings transparency. If, through the implementation of the provisions of this mechanism, it is determined that rates should be decreased or increased, then rates will be adjusted accordingly in the manner set forth herein. The rate adjustments implemented under this mechanism will reflect annual changes in the Company's cost of service and rate base. This adjustment will be authorized for an Initial Implementation Period. With the conclusion of the final rate adjustment, if any, for the Initial Implementation Period, each entity having original jurisdiction may revoke, amend, or approve Subsequent Implementation Period(s) for, the mechanism. Definitions a) The Annual Evaluation Date shall be the date the Company will make its annual filing under this mechanism. The Annual Evaluation Date shall be no later than March 1, of each year. This filing shall be effective in electronic form where practicable. The initial filing shall be made March 31, 2008. b) Audited Financial Data shall mean the Company's books and records related to the Company's Mid - Tex operating area and shared services operations. Audited Financial Data shall not require the schedules and information provided under this tariff to undergo a separate financial audit by an outside auditing firm similar to the Company's annual financial audit. c) The Evaluation Period is defined as the twelve month period ending December 31, of each calendar year. The initial Evaluation Period shall be calendar year 2007. d) The Rate Effective Period is defined as the earlier of the twelve month period for which rates determined under this mechanism will be in effect or subsequent rates are implemented. e) Per Connection Basis is defined as the average number of connections during the Evaluation Period. f) Initial Implementation Period is defined as the three (3) year period commencing with the Company's filing under this mechanism for the calendar year 2007, effective October 1, 2008, and shall conclude with the implementation of rate adjustments, if any, for the third Rate Effective Period. g) Subsequent Implementation Period is defined as any three (3) year period after the conclusion of the Initial Implementation Period. h) Final Order is defined as the most recent order establishing the Company's latest effective rates for the area in which the mechanism is implemented, and shall include municipal rate ordinances and resolutions. Rate Review Mechanism The Company shall file with each regulatory authority having original jurisdiction over the Company's rates the schedules specified below for the Evaluation Period, with the filing to be made by the Annual 23 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider RRM — Rate Review Mechanism APPLICABLE TO: Entire Mid -Tex Division REVISION DATE: EFFECTIVE DATE: PAGE: 2 of 5 February 1, 2008 Evaluation Date following the end of the Evaluation Period. The schedules, which will be based upon the Company's Audited Financial Data, as adjusted, and provided in the same format as Atmos' rate filing with municipalities on September 20, 2007, will include the following: a) Company's actual gross plant in service, accumulated depreciation, accumulated deferred income taxes, inventory, working capital, and other rate base components. The ratemaking treatments, principles, findings and adjustments included in the Final Order will apply. Regulatory adjustments due to prior regulatory rate base adjustment disallowances will be maintained where applicable. Cash working capital will be calculated using the lead/lag days approved in the Final Order. b) The Company's depreciation expense, operating and maintenance expense, income taxes, and taxes other than income taxes. Depreciation rates will be those approved in the Final Order, or the rate most recently approved. All calculation methodologies will be those approved in the Final Order, or in the most recent order addressing the methodology. In addition, the Company shall exclude from operating and maintenance expense the type of expenses related to employee expense accounts disallowed in the GUD No. 9670 Final Order. c) Return on Equity (ROE) shall be maintained at 9.6 %. d) Cost of debt will reflect actual cost. Capital structure will be the actual Evaluation Period ending ratio of long -term debt and equity, with percentage equity not to exceed the percentage established in the Final Order in G.U.D. No. 9670 (48.1% equity). e) All applicable accounting and pro forma adjustments along with all supporting workpapers. f) Pro -forma adjustments to update and annualize costs and revenue billing determinants for the Rate Effective Period. g) Pro -forma or other adjustments required to properly account for atypical, unusual, or nonrecurring events. h) Shared Services allocation factors may be recalculated each year based on the latest component factors, but the methodology used will be that approved in the Final Order. Calculation of Rate Adjustment a) The Company shall provide additional schedules indicating the following revenue deficiency /sufficiency calculations using the methodology accepted in the Final Order. These schedules shall identify the rate adjustments necessary for both a true -up of revenue for the Evaluation Period and the setting of prospective rates for the Rate Effective Period. The net result of these rate adjustments shall be reflected in the proposed new rates to be established for the Rate Effective Period. In calculating the required rate adjustments, such adjustments will be made pro - ratably to the customer charge and usage charge based upon actual revenue generated, as adjusted under the Company's approved Weather Normalization Adjustment (WNA) Rider. Provided, 24 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider RRM — Rate Review Mechanism APPLICABLE TO: Entire Mid -Tex Division REVISION DATE: EFFECTIVE DATE: PAGE: 3 of 5 February 1, 2008 however, that neither the Residential nor the Commercial customer charges may increase more than 20% per year. b) If Company's earnings during the Evaluation Period exceed 9.6% return on common equity, the Company shall calculate an adjustment to rates to refund the revenue required to achieve a return on equity of 9.6% for the Evaluation Period. If Company's earnings during the Evaluation Period are below 9.6% return on common equity, the Company shall calculate an adjustment in rates to collect the additional revenue required to increase its return on equity for the Evaluation Period to 9.6 %. The Company will calculate an adjustment for the Rate Effective Period to refund or collect this difference. c) The Company will adjust rates for the Rate Effective Period to include recovery of any known and measurable changes to operating and maintenance costs including, but not limited to, all payroll and compensation expense, all benefit expense, all pension expense, insurance costs, materials and supplies, bad debt costs, all medical expense, transportation and building and lease costs for the Rate Effective Period. Additionally, utility plant for the Rate Effective Period will be established by using the Evaluation Period ending balances, including associated changes in depreciation and amortization expense and taxes. In calculating the Company's known and measurable changes for prospective RRM adjustment purposes, the following limitations will apply, on a Per Connection Basis. 1. Operating and Maintenance expenses for the Rate Effective Period, cannot increase more than 5% per connection per year without specific identification and justification. The beginning Operation and Maintenance expense for the 2007 RRM filing (the initial filing) will be $161 million. 2. Net plant investment for the Rate Effective Period cannot increase more than 5% per connection per year without specific identification. However, in performing a cap test to verify compliance, Company shall exclude any changes in net plant investment associated with federal, state, or local mandates related to safety, compliance, or road moves. d) The Company also shall provide a schedule demonstrating the "proof of revenues" relied upon to calculate the proposed rate for the Rate Effective Period. The proposed rates shall conform as closely as is practicable to the revenue allocation principles approved in the Final Order. Attestation A sworn statement shall be filed by the Company's Chief Officer in Charge of Mid -Tex Operations affirming that the filed schedules are in compliance with the provisions of this mechanism and are true and correct to the best of his/her knowledge, information and belief. No testimony shall be filed. 25 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider RRM — Rate Review Mechanism APPLICABLE TO: Entire Mid -Tex Division REVISION DATE: EFFECTIVE DATE: PAGE: 4 of 5 February 1, 2008 Evaluation Procedures The regulatory authority having original jurisdiction over the Company's rates shall have ninety (90) days to review the Company's filed schedules. The Company will be prepared to provide supplemental information as may be requested to ensure adequate review by the relevant regulatory authority. The Company shall not unilaterally impose any limits upon the provision of supplemental information and such information shall be provided within ten (10) working days of the original request. The regulatory authority may propose any adjustments it determines to be required to bring the schedules into compliance with the above provisions. During and following the ninety (90) day review period and a thirty (30) day response period, the Company and the regulatory authority will work collaboratively and come to agreement on, the proposed adjustments to the Company's schedule and proposed rates. Once agreement has been reached by the Company and the regulatory authority, the regulatory authority shall authorize an increase or decrease to the Company's rates so as to achieve the revenue levels indicated for both the Evaluation Period and Rate Effective Period. If, at the end of the thirty (30) day response period, the Company and the regulatory authority have not reached agreement on the proposed adjustments, the Company shall have the right to appeal the regulatory authority's action or inaction to the Railroad Commission of Texas. Upon the filing of any appeal, the Company shall have the right to implement the proposed RRM rate adjustment, subject to refund. If approved by the entity exercising original jurisdiction, the rates established pursuant to the Rate Review Mechanism for the first Rate Effective Period shall be effective on October 1, 2008. Thereafter, rates established pursuant to the Rate Review Mechanism for subsequent Rate Effective Periods, if approved as provided herein, shall be effective on July 15 of each year. Reconsideration and Anneal Orders issued pursuant to this mechanism are ratemaking orders and shall be subject to appeal under Sections 102.00l(b) and 103.021, et seq., of the Texas Utilities Code (Vernon 2007). Notice Notice of the annual Rate Review Mechanism filing shall be provided to all affected customers of the Atmos Mid -Tex Division in accordance with the provisions of this section no later than forty-five (45) days after the Company makes its annual filing pursuant to this tariff. Company may provide notice either by mailing or otherwise delivering the notice with its billing statements. Notice by mail shall be presumed to be complete three days after the date of deposit of the paper upon which such notice is written, enclosed in a post -paid, properly addressed wrapper, in a post office or official depository under the care of the United States Postal Service. The notice to customers shall include the following information: a) a description of the proposed revision of rates and schedules; b) the effect the proposed revision of rates is expected to have on the rates applicable to each customer class and on an average bill for each affected customer; 26 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider RRM — Rate Review Mechanism APPLICABLE TO: Entire Mid -Tex Division REVISION DATE: EFFECTIVE DATE: PAGE: 5 of 5 February 1, 2008 c) the service area or areas in which the proposed rate adjustment would apply; d) the date the proposed rate adjustment was filed with the regulatory authority; and e) the Company's address, telephone number and website where information concerning the proposed rate adjustment may be obtained. 27 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider CEE — Conservation & Energy Efficiency APPLICABLE TO: Entire System REVISION: DATE: EFFECTIVE DATE: PAGE: 1 OF 1 February 1, 2008 RIDER CEE — Conservation & Energy Efficiency Purpose Atmos Energy Mid -Tex is proposing to institute a complete Conservation & Energy Efficiency program which will offer assistance to qualified customer segments in reducing energy consumption and lowering energy utility bills. The proposal is one where Atmos Energy shareholders will fund a percentage of the allowable expenses incurred annually, with a customer rate component providing the remainder of the funding. Following is a high - level, concept summary of the proposal. Atmos Energy Mid -Tex Division proposes to work with the communities it serves to develop the details of a new tariff and programs addressing conservation and energy efficiency. Synopsis: Voucher system to provide free energy savings materials and supplies to qualifying customers of Atmos Mid -Tex, Qualified Customers will receive up to two hundred dollars ($200.00) worth of caulking, weather- stripping, sheathing, sealing, water heater blankets, and like materials, other energy saving devices such as clock- thermostats, set -back devices ( "covered items ") from approved suppliers / retailers. Company will undertake efforts to enlist support from community groups, including its own Employee Action Program, to assist customers with installation. If it is determined that professional installation capabilities are necessary, the parties will agree on labor assistance amounts. Eligibility Low Income — Low - income rate - payers that qualify for heating bill assistance through LIHEAP agencies and all agencies that distribute Atmos "Share the Warmth" funds. Agencies that allocate assistance funds denote customer as Low Income, a status that lasts for one year. Senior Citizen — Primary account holder can request eligibility through ATM call center or web -site. Customer provides primary SSN which is verified through Social Security Administration. And account holder that is or turns 65 years old in that year becomes eligible. Funding Initial program funding will be at two million dollars ($2,000,000). Atmos Energy shareholders will contribute one million dollars ($1,000,000.00) to this initiative annually with ratepayers providing one million dollars ($1,000,000.00) per year. It is proposed that the program operate on an October 1 through September 30 year, with benefits being capped at the two million dollar level for the initial program period. Administration: A third -party administrator will coordinate qualification of customers, voucher distribution, subsequent verification and reimbursement of eligible expenditures and general program administration. Program administration expenses will be funded from the annual approved budget. Program audits will be conducted and the results provided to any interested party within 120 days of the end of each program year to determine effectiveness. 28 N Schedule A Page 1 of 2 ATMOS ENERGY CORP., MID -TEX DIVISION REVENUE REQUIREMENTS BY SERVICE CLASS TEST YEAR ENDING JUNE 30, 2007 EXHIBIT B TO SETTLEMENT AGREEMENT BETWEEN ATMOS ENERGY AND THE ACSC CITIES Line No. Description Current Revenues Proposed Revenues' Proposed Change Percent Change (a) (b) (c) (d) (e) 1 2 Residential (Base Revenue) $ 277,485,494 $ 280,887,686 $ 3,402,192 1.23% 3 Residential (Rider GCR) 625,991,761 625,991,761 - 0.00% 4 Residential (Rider FF & Rider TAX) 52,488,696 52,686,332 197,637 0.38% 5 Total Residential $ 955,965,951 $ 959,565,779 $ 3,599,828 0.38% 6 7 Commercial (Base Revenue) $ 59,666,416 $ 65,119,647 $ 5,453,231 9.14% 8 Commercial (Rider GCR) 399,910,917 399,910,917 - 0.00% 9 Commercial (Rider FF & Rider TAX) 26,699,748 27,016,551 316,803 1.19% 10 Total Commercial $ 486,277,080 $ 492,047,115 $ 5,770,035 1.19% 11 12 Industrialrf-ransportation (Base Revenue) $ 8,461,218 $ 9,057,219 $ 596,001 7.04% 13 IndustrialfTransportation (Rider GCR) 33,616,178 33,616,178 - 0.00% 14 Industrial/Transportation (Rider FF & Rider TAX) 2,444,541 2,479,166 34,625 1.42% 15 Total Industrial/Transportation $ 44,521,937 $ 45,152,563 $ 630,625 1.42% 16 17 Other Revenue (Base Revenue) $ 17,418,758 $ 17,418,758 $ - 0.00% 18 Other Revenue (Rider GCR) - - - 0.00% 19 Other Revenue (Rider FF & Rider TAX) 1,011,966 1,011,966 - 0.00% 20 Total Other Revenue $ 18,430,724 $ 18,430,724 $ - 0.00% 21 22 Base Revenue $ 363,031,887 $ 372,483,310 $ 9,451,423 2.60% 23 Rider GCR 1,059,518,856 1,059,518,856 - 0.00% 24 Rider FF & Rider TAX 82,644,951 83,194,015 549,064 0.66% 25 Total Operating Revenues $ 1,505,195,693 $ 1,515,196,181 $ 10,000,488 0.66% 26 27 Note: 28 1 Proposed Revenues are the result of the application of the proposed rates to billing determinants w 0 Schedule A Page 2 of 2 ATMOS ENERGY CORP., MID -TEX DIVISION REVENUE REQUIREMENTS TEST YEAR ENDING JUNE 30, 2007 Settlement Proposal Rider FF & Rider Line No. Description Ref Base Revenue Rider GCR TAX Total (a) (b) (c) (d) (e) (f) (g) 1 2 Rider GCR Part A Schedule H $ - $ 976,143,417 $ - $ 976,143,417 3 Rider GCR Part B Schedule 1 83,375,439 83,375,439 4 Total Rider GCR $ 1,059,518,856 $ 1,059,518,856 5 6 Operation and Maintenance Expenses Schedule F -1 $ 150,891,394 $ 150,891,394 7 8 Taxes Other than Income Taxes Schedule F -5 20,756,918 $ 83,194,015 103,950,933 9 10 Depreciation and Amortization Expense Schedule F -3 79,148,614 79,148,614 11 12 Interest on Customer Deposits Schedule F -7 1,593,388 1,593,388 13 14 Rate Base Schedule B $ 1,123,773,895 15 Rate of Return Schedule G 7.79% 16 87,535,806 87,535,806 17 . 18 Income Taxes Schedule F -6 32,556,703 32,556,703 19 20 Revenue Requirements $ 372,482,822 $ 1,059,518,856 $ 83,194,015 $ 1,515,195,693 21 22 Current Revenues Schedule $ 1,505,195,693 23 24 Proposed Change $ 10,000,000 ATMOS ENERGY CORP., MID -TEX DIVISION SUMMARY PROOF OF REVENUE AT PROPOSED RATES TEST YEAR ENDING JUNE 30, 2007 Line Description Total (a) (b) Rate R 1 Rate Characteristics 2 Customer Charge $10.69 3 4 Consumption Charge ($ /Mcf) $1.2710 5 6 Rider GCR Part A $7.5520 7 Rider GCR Part B $0.5990 8 9 Billing Units (1): 10 Bills 17,144,647 11 Total MCF 76,798,906 12 13 Present Revenue: 14 Customer Charge $ 183,276,276 15 Consumption Charge 97,611,410 16 Base Revenue $ 280,887,686 17 Rider GCR Part A 579,988,302 18 Rider GCR Part B 46,003,459 19 Subtotal $ 906,879,447 20 Revenue Related Taxes 52,686,332 21 22 Total Proposed Revenue- Rate R $ 959,565,779 23 24 Note 1: See Billing Determinants Study for details. 31 WP J -4 Page 1 of 3 Reference CcS ccS Schedule H Schedule I WP_J -1.1 WP_J -1.1 TARIFF FOR GAS SERVICE ATTACHMENT B ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: TABLE OF CONTENTS APPLICABLE TO: Entire System REVISION DATE: February 1, 2008 EFFECTIVE DATE: PAGE: 1 OF 1 February 1, 2008 UTILITY OPERATIONS 11. CITIES AND COUNTIES SERVED 111. DEFINITIONS IV. GAS SERVICE RATES & RIDERS Rate R - Residential Sales Rate C - Commercial Sales Rate I - Industrial Sales Rate T - Transportation Rider CT — Competitive Transport Rider GCR - Gas Cost Recovery Rider FF - Franchise Fee Adjustment Rider SUR — Surcharges Rate LEP — Line Extension Policy Rate M - Miscellaneous Charges Rider RA - Retention Adjustment Rider TAX - Tax Adjustment Rider WNA —Weather Normalization Adjustment Rider RRM — Rate Review Mechanism Rider CEE — Conservation and Energy Efficiency V. SERVICE RULES AND REGULATIONS TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: Rate R - Residential Sales APPLICABLE TO: Entire System REVISION: DATE: EFFECTIVE DATE: PAGE: 1 OF 1 February 1, 2008 RATE R - RESIDENTIAL SALES Application Applicable to Residential Customers for all natural gas provided at one Point of Delivery and measured through one meter. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and Mcf charges to the amounts due under the riders listed below: Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Weather Normalization Adjustment: Plus or Minus an amount for weather normalization calculated in accordance with Rider WNA. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Agreement An Agreement for Gas Service may be required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: Rate C - Commercial Sales APPLICABLE TO: Entire System REVISION: $ 0.7104 per Mcf DATE: EFFECTIVE DATE: PAGE: 1 OF 1 February 1, 2008 RATE C - COMMERCIAL SALES Application Applicable to Commercial Customers for all natural gas provided at one Point of Delivery and measured through one meter and to Industrial Customers with an average annual usage of less than 3,000 Mcf. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and Mcf charges to the amounts due under the riders listed below: Charge I Amount Customer Charge per Bill $ 20.28 per month Commodity Charge - All Mcf $ 0.7104 per Mcf Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Weather Normalization Adjustment: Plus or Minus an amount for weather normalization calculated in accordance with Rider WNA. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Agreement An Agreement for Gas Service may be required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: Rate I - Industrial Sales APPLICABLE TO: Entire System REVISION: $ 0.2200 per MMBtu Next 3,500 MMBtu DATE: EFFECTIVE DATE: $ 0.0493 per MMBtu PAGE: 1 OF 2 February 1, 2008 RATE I - INDUSTRIAL SALES Application Applicable to Industrial Customers with a maximum daily usage (MDU) of less than 3,500 MMBtu per day for all natural gas provided at one Point of Delivery and measured through one meter. Service for Industrial Customers with an MDU equal to or greater than 3,500 MMBtu per day will be provided at Company's sole option and will require special contract arrangements between Company and Customer. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and MMBtu charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Meter $ 344.75 per month First 0 MMBtu to 1,500 NIMBtu $ 0.2200 per MMBtu Next 3,500 MMBtu $ 0.1600 per MMBtu All MMBtu over 5,000 MMBtu $ 0.0493 per MMBtu Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Curtailment Overpull Fee Upon notification by Company of an event of curtailment or interruption of Customer's deliveries, Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay Company 200% of the midpoint price for the Katy point listed in Plaits Gas Daily published for the applicable Gas Day in the table entitled "Daily Price Survey." TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: Rate I - Industrial Sales APPLICABLE TO: Entire System REVISION: DATE: EFFECTIVE DATE: PAGE: 2 OF 2 February 1, 2008 Replacement Index In the event the "midpoint" or "common" price for the Katy point listed in Platts Gas Daily in the table entitled "Daily Price Survey" is no longer published, Company will calculate the applicable imbalance fees utilizing a daily price index recognized as authoritative by the natural gas industry and most closely approximating the applicable index. Agreement An Agreement for Gas Service may be required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. Special Conditions In order to receive service under Rate I, Customer must have the type of meter required by Company. Customer must pay Company all costs associated with the acquisition and installation of the meter. TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: Rate T — Transportation APPLICABLE TO: Entire System REVISION: $ 0.2200 per MMBtu Next 3,500 MMBtu DATE: EFFECTIVE DATE: $ 0.0493 per MMBtu PAGE: 1 OF 2 February 1, 2008 RATE T - TRANSPORTATION Application Applicable, in the event that Company has entered into a Transportation Agreement, to a customer directly connected to the Atmos Energy Corp., Mid -Tex Division Distribution System (Customer) for the transportation of all natural gas supplied by Customer or Customer's agent at one Point of Delivery for use in Customer's facility. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customer's bill will be calculated by adding the following Customer and MMBtu charges to the amounts and quantities due under the riders listed below: Charge Amount Customer Charge per Meter $ 344.75 per month First 0 MMBtu to 1,500 MMBtu $ 0.2200 per MMBtu Next 3,500 MMBtu $ 0.1600 per MMBtu All MMBtu over 5,000 MMBtu $ 0.0493 per MMBtu Upstream Transportation Cost Recovery: Plus an amount for upstream transportation costs in accordance with Part (b) of Rider GCR. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Retention Adjustment: Plus a quantity of gas as calculated in accordance with Rider RA. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider F F. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Imbalance Fees All fees charged to Customer under this Rate Schedule will be charged based on the quantities determined under the applicable Transportation Agreement and quantities will not be aggregated for any Customer with multiple Transportation Agreements for the purposes of such fees. Monthly Imbalance Fees Customer shall pay Company the greater of (i) $0.10 per MMBtu, or (ii) 150% of the difference per MMBtu between the highest and lowest "midpoint" price for the Katy point listed in Platts Gas Daily in the table entitled "Daily Price Survey" during such month, for the MIVIBtu of Customer's monthly Cumulative TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RATE SCHEDULE: Rate T - Transportation APPLICABLE TO: Entire System REVISION: DATE: EFFECTIVE DATE: PAGE: 2 OF 2 February 1, 2008 Imbalance, as defined in the applicable Transportation Agreement, at the end of each month that exceeds 10% of Customer's receipt quantities for the month. Curtailment Overpull Fee Upon notification by Company of an event of curtailment or interruption of Customer's deliveries, Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay Company 200% of the midpoint price for the Katy point listed in Platts Gas Daily published for the applicable Gas Day in the table entitled "Daily Price Survey." Replacement Index In the event the "midpoint" or "common" price for the Katy point listed in Platts Gas Daily in the table entitled "Daily Price Survey" is no longer published, Company will calculate the applicable imbalance fees utilizing a daily price index recognized as authoritative by the natural gas industry and most closely approximating the applicable index. Agreement A transportation agreement is required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. Special Conditions In order to receive service under Rate T, customer must have the type of meter required by Company. Customer must pay Company all costs associated with the acquisition and installation of the meter. TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider GCR - Gas Cost Recovery APPLICABLE TO: Entire System REVISION: DATE: EFFECTIVE DATE: PAGE: 1 OF 3 October 1, 2008 Rider GCR - Gas Cost Recovery Applicable to Rate R, Rate C, and Rate I for all gas sales made by Company, and applicable to Rate R, Rate C, Rate I, and Rate T for recovery of Pipeline System costs. The total gas cost recovery amount due is determined by adding the gas cost calculated in Section (a) below and the pipeline cost calculated in Section (b) below. The amount due for gas cost (Section (a)) is determined by multiplying the Gas Cost Recovery Factor (GCRF) by the Customer's monthly volume. For Customers receiving service under Rate R and Rate C, monthly volume will be calculated on an Mcf basis. For Customers receiving service under Rate I, monthly volume will be calculated on an MMBtu basis and the quantities will be adjusted as necessary to recover actual costs. The amount due for pipeline cost (Section (b)) is determined by multiplying the Pipeline Cost Factor (PCF) by the Customer's monthly volume. For Customers receiving service under Rate R and Rate C, monthly volume will be calculated on an Mcf basis. For Customers receiving service under Rate I and Rate T, monthly volume will be calculated on an MMBtu basis and the quantities will be adjusted as necessary to recover actual costs. (a) Gas Cost Method of Calculation The monthly gas cost adjustment is calculated by the application of a Gas Cost Recovery Factor (GCRF), as determined with the following formula: GCRF = Estimated Gas Cost Factor (EGCF) + Reconciliation Factor (RF) + Taxes (TXS) + Adjustments (ADJ ) EGCF = Estimated cost of gas, including lost and unaccounted for gas attributed to residential, commercial, and industrial sales, and any reconciliation balance of unrecovered gas costs, divided by the estimated total residential, commercial, and industrial sales. RF = Calculated by dividing the difference between the Actual Gas Cost Incurred, inclusive of interest, over the preceding twelve -month period ended June 30 and the Actual Gas Cost Billed over that same twelve -month period by the estimated total residential, commercial, and industrial sales for the succeeding October through June billing months. Actual Gas Cost Incurred = The sum of the costs booked in Atmos Energy Corp., Mid -Tex Division account numbers 800 through 813 and 858 of the NARUC Uniform System of Accounts, including the net impact of injecting and withdrawing gas from storage. Also includes a credit or debit for any out -of- period adjustments or unusual or nonrecurring costs typically considered gas costs and a credit for amounts received as Imbalance Fees or Curtailment Overpull Fees. Actual Gas Cost Billed = EGCF multiplied by the monthly volumes billed to Residential, Commercial and Industrial Sales customers, less the total amount of gas cost determined to have been uncollectible and written off which remain unpaid for each month of the reconciliation period. TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider GCR - Gas Cost Recovery APPLICABLE TO: Entire System REVISION: .302805 Rate I - Industrial Service and Rate T - Transportation Service DATE: EFFECTIVE DATE: PAGE: 2 OF 3 October 1, 2008 Any amount remaining in the reconciliation balance after the conclusion of the period of amortization will be maintained in the reconciliation balance and included in the collection of the next RF. Atmos Energy shall file annual reports with the Commission, providing by month the following amounts: Gas Cost Written Off, Margin Written Off, Tax and Other Written Off, Total Written Off, Gas Cost Collected and Margin Collected. TXS = Any statutorily imposed assessments or taxes applicable to the purchase of gas divided by the estimated total residential, commercial, and industrial sales. ADJ = Any surcharge or refund ordered by a regulatory authority, inclusive of interest, divided by the estimated total residential, commercial, and industrial sales. (b) Pipeline Cost Method of Calculation Each month, a Pipeline Cost Factor (PCF) is calculated separately for each Pipeline Cost Rate Class listed below. The formula for the PCF is: PCF = PP / S, where: PP = (P - A) x D, where: P = Estimated monthly cost of pipeline service calculated pursuant to Rate CGS D = Pipeline service allocation factor for the rate class as approved in the Company's most recent rate case, as follows: Pi eline Cost Rate Class Allocation Factor D Rate R - Residential Service .634783 Rate C - Commercial Service .302805 Rate I - Industrial Service and Rate T - Transportation Service .062412 A = Adjustment applied in the current month to correct for the difference between the actual and estimated pipeline cost revenue of the second preceding month, calculated by the formula: A = R - (C - A2), where: R = Actual revenue received from the application of the PP component in the second preceding month. C = Actual pipeline costs for the second preceding month. A2 = The adjustment (A) applied to the PP component in the second preceding month. S = Estimated Mcf or MMBtu for the rate class for the current billing month. The PCF is calculated to the nearest 0.0001 cent. TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider GCR - Gas Cost Recovery APPLICABLE TO: Entire System REVISION: DATE: EFFECTIVE DATE: PAGE: 3 OF 3 October 1, 2008 The Pipeline Cost to be billed is determined by multiplying the Mcf or MMBtu used by the appropriate PCF. The Pipeline Cost is determined to the nearest whole cent. TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider WNA — Weather Normalization Adjustment APPLICABLE TO: Entire System REVISION: heat sensitive factor for the ith schedule or classification calculated as the DATE: EFFECTIVE DATE: heating degree days by month for the test year by schedule or classification PAGE: 1 OF 3 November 1, 2008 NDD = billing cycle normal heating degree days calculated as the simple ten -year RIDER WNA — Weather Normalization Adjustment Provisions for Adjustment The base rate per Mcf (1,000,000 Btu) for gas service set forth in any Rate Schedules utilized by the cities of the Mid -Tex Division service area for determining normalized winter period revenues shall be adjusted by an amount hereinafter described, which amount is referred to as the "Weather Normalization Adjustment." The Weather Normalization Adjustment shall apply to all temperature sensitive residential, and commercial bills based on meters read during the revenue months of November through April. Computation of Weather Normalization Adjustment The Weather Normalization Adjustment Factor shall be computed to the nearest one- hundredth cent per Mcf by the following formula: WNAFi = Ri Where (HSFi x (NDD -ADD) ) (BLi + (HSFi x ADD) ) any particular Rate Schedule or billing classification within any such particular Rate Schedule that contains more than one billing classification V,NAFi = Weather Normalization Adjustment Factor for the ith rate schedule or classification expressed in cents per Mcf Ri = base rate of temperature sensitive sales for the ith schedule or classification approved by the entity exercising original jurisdiction. HSFi = heat sensitive factor for the ith schedule or classification calculated as the slope of the linear regression of average sales per bill (Mcf) and actual heating degree days by month for the test year by schedule or classification and weather station as part of the RRM filing. NDD = billing cycle normal heating degree days calculated as the simple ten -year average of actual heating degree days. ADD = billing cycle actual heating degree days. Bli = base load sales for the ith schedule or classification calculated as the y- intercept of the linear regression of average sales per bill (Mcf) and actual heating degree days by month for the test year by schedule or classification TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider WNA — Weather Normalization Adjustment APPLICABLE TO: Entire System REVISION: Austin 1.31 DATE: EFFECTIVE DATE: .0669 PAGE: 2 OF 3 November 1, 2008 .0185 18.08 and weather station as part of the RRM filing. The Weather Normalization Adjustment for the jth customer in ith rate schedule is computed as: WNA; = WNAF; x qij Where qi; is the relevant sales quantity for the jth customer in ith rate schedule. Filings with Entities Exercising Original Jurisdiction As part of its annual RRM filing the Company will file (a) a copy of each computation of the Weather Normalization Adjustment Factor, (b) a schedule showing the effective date of each such Weather Normalization Adjustment, (c) a schedule showing the factors of values used in calculating such Weather Normalization Adjustment and (d) a random sample and audit of thirty (30) actual customer bills, with customer information deleted, for each rate schedule or classification to which the WNA was applied in the preceding 12 month period. To the extent that source data is needed to audit the WNA application, such data will be provided by the Company as part of the annual RRM filing. If the RRM is discontinued, as provided in the Rider RRM tariff, the information required herein to be filed with the entities exercising original jurisdiction shall be filed on March 1 of each year. Base Use/Heat Sensitivity (HSF) Factors Residential Commercial Base use HSF Base use HSF Weather Station Mcf Mcf/HDD Mcf Mcf /HDD Abilene 1.14 .0131 8.11 .0631 Austin 1.31 .0136 18.05 .0669 Dallas 1.57 .0185 18.08 .0925 Waco 1.20 .0138 10.97 .0606 Wichita Falls 1.27 .0147 11.58 .0581 TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider WNA — Weather Normalization Adjustment APPLICABLE TO: Entire System REVISION: (1,14 + (.0131 x 17) ) DATE: EFFECTIVE DATE: i = PAGE: 3 OF 3 November 1, 2008 1.2267 per MCF (Rate R - Final Order GUD No. 9670) HSFi = Sample WNAF1 Calculation: (.0131 x (30 -17) ) .1533 per Mcf = 1.2267 x (1,14 + (.0131 x 17) ) Where i = Residential Single Block Rate Schedule Ri = 1.2267 per MCF (Rate R - Final Order GUD No. 9670) HSFi = .0131 (Residential -Abilene Area) NDD — 30 HDD (Simple ten -year average of Actual HDD for Abilene Area — 9/15/06 —10/14/06) ADD = 17 HDD (Actual HDD for Abilene Area — 9/15/06 — 10/14/06) Bli = 1.14 Mcf (Residential - Abilene Area) TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider RRM — Rate Review Mechanism APPLICABLE TO: Entire Mid -Tex Division REVISION DATE: EFFECTIVE DATE: PAGE: 1 of 5 February 1, 2008 RIDER RRM — RATE REVIEW MECHANISM Purpose: This mechanism is designed to provide annual earnings transparency. If, through the implementation of the provisions of this mechanism, it is determined that rates should be decreased or increased, then rates will be adjusted accordingly in the manner set forth herein. The rate adjustments implemented under this mechanism will reflect annual changes in the Company's cost of service and rate base. This adjustment will be authorized for an Initial Implementation Period. With the conclusion of the final rate adjustment, if any, for the Initial Implementation Period, each entity having original jurisdiction may revoke, amend, or approve Subsequent Implementation Period(s) for, the mechanism. Definitions a) The Annual Evaluation Date shall be the date the Company will make its annual filing under this mechanism. The Annual Evaluation Date shall be no later than March 1, of each year. This filing shall be effective in electronic form where practicable. The initial filing shall be made March 31, 2008. b) Audited Financial Data shall mean the Company's books and records related to the Company's Mid - Tex operating area and shared services operations. Audited Financial Data shall not require the schedules and information provided under this tariff to undergo a separate financial audit by an outside auditing firm similar to the Company's annual financial audit. c) The Evaluation Period is defined as the twelve month period ending December 31, of each calendar year. The initial Evaluation Period shall be calendar year 2007. d) The Rate Effective Period is defined as the earlier of the twelve month period for which rates determined under this mechanism will be in effect or subsequent rates are implemented. e) Per Connection Basis is defined as the average number of connections during the Evaluation Period. f) Initial Implementation Period is defined as the three (3) year period commencing with the Company's filing under this mechanism for the calendar year 2007, effective October 1, 2008, and shall conclude with the implementation of rate adjustments, if any, for the third Rate Effective Period. g) Subsequent Implementation Period is defined as any three (3) year period after the conclusion of the Initial Implementation Period. h) Final Order is defined as the most recent order establishing the Company's latest effective rates for the area in which the mechanism is implemented, and shall include municipal rate ordinances and resolutions. Rate Review Mechanism The Company shall file with each regulatory authority having original jurisdiction over the Company's rates the schedules specified below for the Evaluation Period, with the filing to be made by the Annual TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider RRM — Rate Review Mechanism APPLICABLE TO: Entire Mid -Tex Division REVISION DATE: EFFECTIVE DATE: PAGE: 2 of 5 February 1, 2008 Evaluation Date following the end of the Evaluation Period. The schedules, which will be based upon the Company's Audited Financial Data, as adjusted, and provided in the same format as Atmos' rate filing with municipalities on September 20, 2007, will include the following: a) Company's actual gross plant in service, accumulated depreciation, accumulated deferred income taxes, inventory, working capital, and other rate base components. The ratemaking treatments, principles, findings and adjustments included in the Final Order will apply. Regulatory adjustments due to prior regulatory rate base adjustment disallowances will be maintained where applicable. Cash working capital will be calculated using the lead/lag days approved in the Final Order. b) The Company's depreciation expense, operating and maintenance expense, income taxes, and taxes other than income taxes. Depreciation rates will be those approved in the Final Order, or the rate most recently approved. All calculation methodologies will be those approved in the Final Order, or in the most recent order addressing the methodology. In addition, the Company shall exclude from operating and maintenance expense the type of expenses related to employee expense accounts disallowed in the GUD No. 9670 Final Order. c) Return on Equity (ROE) shall be maintained at 9.6 %. d) Cost of debt will reflect actual cost. Capital structure will be the actual Evaluation Period ending ratio of long -term debt and equity, with percentage equity not to exceed the percentage established in the Final Order in G.U.D. No. 9670 (48.1% equity). e) All applicable accounting and pro forma adjustments along with all supporting workpapers. f) Pro -forma adjustments to update and annualize costs and revenue billing determinants for the Rate Effective Period. g) Pro -forma or other adjustments required to properly account for atypical, unusual, or nonrecurring events. h) Shared Services allocation factors may be recalculated each year based on the latest component factors, but the methodology used will be that approved in the Final Order. Calculation of Rate Adjustment a) The Company . shall provide additional schedules indicating the following revenue deficiency /sufficiency calculations using the methodology accepted in the Final Order. These schedules shall identify the rate adjustments necessary for both a true -up of revenue for the Evaluation Period and the setting of prospective rates for the Rate Effective Period. The net result of these rate adjustments shall be reflected in the proposed new rates to be established for the Rate Effective Period. In calculating the required rate adjustments, such adjustments will be made pro - ratably to the customer charge and usage charge based upon actual revenue generated, as adjusted under the Company's approved Weather Normalization Adjustment (WNA) Rider. Provided, TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider RRM — Rate Review Mechanism APPLICABLE TO: Entire Mid -Tex Division REVISION DATE: EFFECTIVE DATE: PAGE: 3 of 5 February 1, 2008 however, that neither the Residential nor the Commercial customer charges may increase more than 20% per year. b) If Company's earnings during the Evaluation Period exceed 9.6% return on common equity, the Company shall calculate an adjustment to rates to refund the revenue required to achieve a return on equity of 9.6% for the Evaluation Period. If Company's earnings during the Evaluation Period are below 9.6% return on common equity, the Company shall calculate an adjustment in rates to collect the additional revenue required to increase its return on equity for the Evaluation Period to 9.6 %. The Company will calculate an adjustment for the Rate Effective Period to refund or collect this difference. c) The Company will adjust rates for the Rate Effective Period to include recovery of any known and measurable changes to operating and maintenance costs including, but not limited to, all payroll and compensation expense, all benefit expense, all pension expense, insurance costs, materials and supplies, bad debt costs, all medical expense, transportation and building and lease costs for the Rate Effective Period. Additionally, utility plant for the Rate Effective Period will be established by using the Evaluation Period ending balances, including associated changes in depreciation and amortization expense and taxes. In calculating the Company's known and measurable changes for prospective RRM adjustment purposes, the following limitations will apply, on a Per Connection Basis. I . Operating and Maintenance expenses for the Rate Effective Period, cannot increase more than 5% per connection per year without specific identification and justification. The beginning Operation and Maintenance expense for the' 007 RRM filing (the initial filing) will be $161 million. 2. Net plant investment for the Rate Effective Period cannot increase more than 5% per connection per year without specific identification. However, in performing a cap test to verify compliance, Company shall exclude any changes in net plant investment associated with federal, state, or local mandates related to safety, compliance, or road moves. d) The Company also shall provide a schedule demonstrating the "proof of revenues" relied upon to calculate the proposed rate for the Rate Effective Period. The proposed rates shall conform as closely as is practicable to the revenue allocation principles approved in the Final Order. Attestation A sworn statement shall be filed by the Company's Chief Officer in Charge of Mid -Tex Operations affirming that the filed schedules are in compliance with the provisions of this mechanism and are true and correct to the best of his/her knowledge, information and belief. No testimony shall be filed. TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider RRM — Rate Review Mechanism APPLICABLE TO: Entire Mid -Tex Division REVISION DATE: EFFECTIVE DATE: PAGE: 4 of 5 February 1, 2008 Evaluation Procedures The regulatory authority having original jurisdiction over the Company's rates shall have ninety (90) days to review the Company's filed schedules. The Company will be prepared to provide supplemental information as may be requested to ensure adequate review by the relevant regulatory authority. The Company shall not unilaterally impose any limits upon the provision of supplemental information and such information shall be provided within ten (10) working days of the original request. The regulatory authority may propose any adjustments it determines to be required to bring the schedules into compliance with the above provisions. During and following the ninety (90) day review period and a thirty (30) day response period, the Company and the regulatory authority will work collaboratively and come to agreement on, the proposed adjustments to the Company's schedule and proposed rates. Once agreement has been reached by the Company and the regulatory authority, the regulatory authority shall authorize an increase or decrease to the Company's rates so as to achieve the revenue levels indicated for both the Evaluation Period and Rate Effective Period. 1f, at the end of the thirty (30) day response period, the Company and the regulatory authority have not reached agreement on the proposed adjustments, the Company shall have the right to appeal the regulatory authority's action or inaction to the Railroad Commission of Texas. Upon the filing of any appeal, the Company shall have the right to implement the proposed RRM rate adjustment, subject to refund. If approved by the entity exercising original jurisdiction, the rates established pursuant to the Rate Review Mechanism for the first Rate Effective Period shall be effective on October 1, 2008. Thereafter, rates established pursuant to the Rate Review Mechanism for subsequent Rate Effective Periods, if approved as provided herein, shall be effective on July 15 of each year. Reconsideration and Appeal Orders issued pursuant to this mechanism are ratemaking orders and shall be subject to appeal under Sections 102.001(b) and 103.021, et seq., of the Texas Utilities Code (Vernon 2007). Notice Notice of the annual Rate Review Mechanism filing shall be provided to all affected customers of the Atmos Mid -Tex Division in accordance with the provisions of this section no later than forty-five (45) days after the Company makes its annual filing pursuant to this tariff. Company may provide notice either by mailing or otherwise delivering the notice with its billing statements. Notice by mail shall be presumed to be complete three days after the date of deposit of the paper upon which such notice is written, enclosed in a post -paid, properly addressed wrapper, in a post office or official depository under the care of the United States Postal Service. The notice to customers shall include the following information: a) a description of the proposed revision of rates and schedules; b) the effect the proposed revision of rates is expected to have on the rates applicable to each customer class and on an average bill for each affected customer; TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider RRM — Rate Review Mechanism APPLICABLE TO: Entire Mid -Tex Division REVISION DATE: EFFECTIVE DATE: PAGE: 5 of 5 February 1, 2008 c) the service area or areas in which the proposed rate adjustment would apply; d) the date the proposed rate adjustment was filed with the regulatory authority; and e) the Company's address, telephone number and website where information concerning the proposed rate adjustment may be obtained. TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID -TEX DIVISION RIDER: Rider CEE — Conservation & Energy Efficiency APPLICABLE TO: Entire System REVISION: DATE: EFFECTIVE DATE: PAGE: 1 OF 1 February 1, 2008 RIDER CEE — Conservation & Energy Efficiency Purpose Atmos Energy Mid -Tex is proposing to institute a complete Conservation & Energy Efficiency program which will offer assistance to qualified customer segments in reducing energy consumption and lowering energy utility bills. The proposal is one where Atmos Energy shareholders will fund a percentage of the allowable expenses incurred annually, with a customer rate component providing the remainder of the funding. Following is a high - level, concept summary of the proposal. Atmos Energy Mid -Tex Division proposes to work with the communities it serves to develop the details of a new tariff and programs addressing conservation and energy efficiency. Synopsis: Voucher system to provide free energy savings materials and supplies to qualifying customers of Atmos Mid -Tex. Qualified Customers will receive up to two hundred dollars ($200.00) worth of caulking, weather - stripping, sheathing, sealing, water heater blankets, and like materials, other energy saving devices such as clock- thermostats, set -back devices ( "covered items ") from approved suppliers / retailers. Company will undertake efforts to enlist support from community groups, including its own Employee Action Program, to assist customers with installation. If it is determined that professional installation capabilities are necessary, the parties will agree on labor assistance amounts. Eligibility Low Income — Low - income rate - payers that qualify for heating bill assistance through LIHEAP agencies and all agencies that distribute Atmos "Share the Warmth" funds. Agencies that allocate assistance funds denote customer as Low Income, a status that lasts for one year. Senior Citizen — Primary account holder can request eligibility through ATM call center or web -site. Customer provides primary SSN which is verified through Social Security Administration. And account holder that is or turns 65 years old in that year becomes eligible. Funding Initial program funding will be at two million dollars ($2,000,000). Atmos Energy shareholders will contribute one million dollars ($1,000,000.00) to this initiative annually with ratepayers providing one million dollars ($1,000,000.00) per year. It is proposed that the program operate on an October 1 through September 30 year, with benefits being capped at the two million dollar level for the initial program period. Administration: A third -party administrator will coordinate qualification of customers, voucher distribution, subsequent verification and reimbursement of eligible expenditures and general program administration. Program administration expenses will be funded from the annual approved budget. Program audits will be conducted and the results provided to any interested party within 120 days of the end of each program year to determine effectiveness. TOWN OF WESTLAKE, TEXAS MINUTES OF THE TOWN OF WESTLAKE, TEXAS BOARD OF ALDERMEN PRE -BOARD MEETING January 14, 2008 PRESENT: Mayor Scott Bradley and Aldermen Larry Corson, April Gallagher, Don Redding, Pete Steger, and Bob Timmerman (arrived at 5:15 p.m.) ABSENT: None. STAFF PRESENT: Town Manager Joe Hennig, and Town Secretary Kim Sutter 1. CALL TO ORDER. Mayor Bradley called the pre -board meeting to order at 5:04 p.m. 2. EXECUTIVE SESSION. Mayor Bradley recessed the pre -board meeting of the Town of Westlake Board of Aldermen meeting at 5:04 p.m., as he read the following item to be discussed in executive session: A. The Board will conduct a closed session under Texas Government Code section 551.074 to discuss personnel matters. 1. . Strategic Government Resources B. The Board will conduct a closed session under Texas Government Code section 557.087 to discuss economic development negotiations. Mayor Bradley convened the executive session at 5:05 p.m. The executive session adjourned at 5:44 p.m. The Board reconvened into regular session at 5:45 p.m. Town of Westlake Board of Aldermen Page 2 of 2 Pre -Board Meeting January 14, 2008 4. REVIEW OF REGULAR AGENDA ITEMS. Interim Town Manager Hennig reviewed the regular agenda with the Board. Discussion ensued with regard to the proposed change to the transfer boundaries for Westlake Academy and the reasons behind the proposed change. Interim Town Manager Hennig addressed the Board regarding the First Southwest report regarding debt service coverage. Mr. Hennig advised the Board that the report would be presented at the regular Board meeting. 5. TOWN MANAGER'S REPORT. No report was given. 6. ADJOURNMENT. There being no further business to come before the Board, Mayor Bradley declared the pre - board meeting adjourned at 6:00 p.m. APPROVED BY THE BOARD OF ALDERMEN ON JANUARY 28, 2008. Scott Bradley, Mayor ATTEST: Kim Sutter, TRMC, Town Secretary MINUTES OF THE TOWN OF WESTLAKE, TEXAS BOARD OF ALDERMEN REGULAR MEETING January 14, 2008 PRESENT: Mayor Scott Bradley and Aldermen Larry Corson, Kevin Maynard, Don Redding, Pete Steger, and Bob Timmerman. ABSENT: None. OTHERS PRESENT: Interim Town Manager Joe Hennig, Town Attorney Stan Lowry, Town Secretary Kim Sutter, DPS Director Don Wilson, Facilities and Recreation Director Troy Meyer, and Finance Director Debbie Piper. 1. CALL TO ORDER. Mayor Bradley called the meeting to order at 7:01 p.m. 2. CITIZENS' PRESENTATIONS. Ms. Barbara Brizuela, 2600 J.T. Ottinger Road, Westlake, addressed the Board regarding the editorial published in the Star- Telegram on January 14, 2008, and responded to statements made in the article. Mr. Jim Billington, 1823 Broken Bend, Westlake, addressed the Board regarding the fundraising efforts of the Westlake Academy Foundation and financing options for the construction of the Arts and Sciences Center building. Mr. Billington expressed his disappointment with the efforts and the current consideration for financing the construction of the building. Mr. Tim Brittan, 1925 N. Pearson Lane, Westlake, requested clarification on the purpose of Texas Student Housing Authority and its ability to provide $500,000 for the construction of the Arts and Sciences Center building. Town of Westlake Board of Aldermen Regular Meeting January 14, 2008 Page 2 of 6 Mayor Bradley explained the Texas Student Housing Authority's operations and recalled that he had previously met with Mr. Brittan to discuss the matter, and offered to meet again with Mr. Brittan at Mr. Brittan's convenience to further discuss the Texas Student Housing Authority. 3. ADMINISTER OATH OF OFFICE AND PRESENT CERTIFICATE OF APPOINTMENT TO NEWLY APPOINTED ALDERMAN KEVIN MAYNARD. Town Secretary Sutter administered the Oath of Office to newly- appointed Alderman Kevin Maynard and presented the certificate of appointment issued by Mayor Bradley. 4. HEAR REPORT FROM FIRST SOUTHWEST COMPANY REGARDING TOWN'S DEBT SERVICE COVERAGE. Interim Town Manager Hennig provided a brief background and advised that this item is a follow -up to Board discussion held on December 15, 2007, concerning possible funding options for the construction of the Arts and Sciences Center building. Mr. Hennig introduced Mr. Jason Hughes of First Southwest Company to present his findings concerning the Town's overall debt coverage and the possibility of monetizing pledges received by the Westlake Academy Foundation for the construction of the building. Mr. Jason Hughes of First Southwest Company and Leroy Grawunder of McCall, Parkhurst and Horton were present for the presentation and to address questions from the Board. Mr. Hughes advised the Board he has reviewed the Town's last three years of audited financial statements, the budget, and the 10 year capital plan to compile a report summarizing the Town's outstanding debt, the revenues intended for debt service repayment, and the estimated debt coverage if the Board should decide to issue Certificates of Obligation (CO). Mr. Hughes presented debt service coverage scenarios for the amounts of $1.0 mm and $1.5 mm, insured and uninsured, and advised that the shortfall to cover the debt associated with the potential CO issuance does not take into consideration the pledges received by the Westlake Academy Foundation. In closing, Mr. Hughes stated that he felt the Town could sell and provide debt service coverage for the issuance of CO's in the amount of $1 mm without incurring the risk of a property tax, even assuming that no pledges are ever collected. Mr. Hughes addressed questions from the Board regarding the presentation. 5. CONSIDER A RESOLUTION APPROVING A BUDGET AMENDMENT FOR PAYMENT OF AN ADDITIONAL AMOUNT DUE TO TXDOT REGARDING THE FM 1938 BRIDGE ENHANCEMENTS. Mayor Bradley introduced the item and provided a brief background summary concerning the item. Town of Westlake Board of Aldermen Regular Meeting January 14, 2008 Page 3 of 6 MOTION: Alderman Steger made a motion to approve Resolution No. 08 -01, approving a budget amendment for payment of an additional amount due to TxDOT regarding the FM 1938 Bridge enhancements. Alderman Corson seconded the motion. The motion carried by a vote of 5 -0. 6. CONSIDER APPROVAL OF THE 2008 BOARD OF ALDERMEN MEETING SCHEDULE. Mayor Bradley introduced the item and asked for a motion. MOTION: Mayor Pro Tern Redding made a motion to approve the 2008 Board of Aldermen meeting schedule as presented. Alderman Steger seconded the motion. The motion carried by a vote of 5 -0. 7. CONSIDER A RESOLUTION AUTHORIZING AN AGREEMENT WITH NIGHT LINE JANITORIAL SERVICES INC. FOR JANITORIAL SERVICES AT THE WESTLAKE CIVIC CAMPUS. Facilities and Recreation Director Meyer addressed the Board regarding the item. Mr. Meyer advised the Board that a day porter service has been added to the agreement. Alderman Corson expressed his concern with regard to the low number of bids received and the overall bidding process. Interim Town Manager Hennig stated that the remote location of the campus may have been a consideration. There being no further discussion, Mayor Bradley requested a motion. MOTION: Alderman Corson made a motion to approve Resolution No. 08 -02, authorizing an agreement and related change order with Night Line Janitorial Services, Inc. Alderman Maynard seconded the motion. The motion carried by a vote of 5 -0. 8. HEAR STATUS REPORT ON CONSTRUCTION OF PERFORMING ARTS AND SCIENCES CENTER BUILDING. Interim Town Manager Hennig stated that following the December 15, 2007, meeting, he met with Mr. Michael Bennett of Gideon Toal to evaluate options aimed at reducing the cost of the construction of the building. Mr. Hennig advised that he hopes to have a revised cost estimate by the next meeting to present to the Board. If acceptable cost estimates and construction techniques are received, the Town would anticipate the following timeline: Date Description Mid - February 2008 Request for Qualifications (RFQ) Mid -March 2008 Value engineering Town of Westlake Board of Aldermen Regular Meeting January 14, 2008 Page 4 of 6 Early May 2008 Final numbers and decide on financing plan Award contracts and sign construction documents Mid June 2008 Construction to begin June 2009 Complete project 9. CONSENT AGENDA. Mayor Bradley introduced the item and asked for a motion. A. Review and approve minutes of the Board of Aldermen pre -board and regular meetings held on December 10, 2007. B. Review and approve minutes of the Board of Aldermen workshop held on December 15, 2007. C. Review and approve any outstanding bills. MOTION: Alderman Steger made a motion to approve the consent agenda as presented. Alderman Timmerman seconded the motion. The motion carried by a vote of 5 -0. 10. EXECUTIVE SESSION No executive session was held. 11. RECONVENE MEETING. 12. EXECUTIVE SESSION ACTION. 13. STAFF REPORTS. Facilities and Recreation Director Meyer addressed the Board regarding the following items: - Tree Farm Project: 40 trees will be planted in 20 gallon containers on Saturday, January 26, 2008, and placed on the far west side of the civic campus with the expectation to plant the trees around the Town in open spaces. Mr. Meyer recognized Westlake resident and Boy Scout Hayden Anderson for his efforts associated with the Tree Farm project. Additionally, Maguire Partners has agreed to donate the irrigation system needed for the trees. - Tree Mitigation: As a result of the recently approved Terra Bella project, a total of four evergreen trees will be planted on the town campus green area and the playground. - Arbor Days: Addressed the Board regarding the need for volunteers to serve on the committee and assist with the planning of the annual event. There was also Town of Westlake Board of Aldermen Regular Meeting January 14, 2008 Page 5 of 6 discussion regarding the possibility of changing the date of the event from October to April. 14. TOWN MANAGER'S REPORT. Interim Town Manager Hennig addressed the Board regarding the following items: - Town Staff: Expressed his appreciation to the Town staff for their efforts and quality work. - FM 1938: Under the current schedule, the construction contract will be let in September 2008, with construction to begin January 2009. - Oil and Gas Drilling Ordinance: Tentatively scheduled for the January 28, 2008, Board of Aldermen pre -board meeting. 15. MAYOR AND ALDERMEN REPORTS / COMMENTS. Alderman Corson inquired as to the status of the discussion regarding the secondary water source. He also expressed his concern with the appearance of the SH 114 corridor, specifically the appearance, height, and visibility of the new hotel in Trophy Club. Mr. Corson asked that the Town consider working together with Trophy Club staff or officials to discuss the idea of land use applications and coordinating decisions that affect the SH 114 corridor. Furthermore, Mr. Corson advised that the he would like to move forward with consideration of prohibiting the use of handheld cell phones in school zones. Alderman Steger inquired as to the status of the red light camera installation. Mr. Steger also stated that he feels the Board has exercised due diligence in the process of the construction of the proposed Arts and Sciences Center building as it relates to avoiding the need for a property tax. Interim Town Manager Hennig responded that staff recently met with Traffipax, the red light camera vendor, and the vendor is conducting an initial evaluation of intersections along the SH 114 corridor to determine the need for cameras. Equipment is expected to be installed by the late spring /early summer at the selected intersections. Alderman Timmerman reminded the Board of its desire to discuss the complaint /arbitration policy and conducting exit interviews with staff and families who have chosen to leave the Academy. Mr. Timmerman also expressed his desire to move forward with discussions regarding a temporary trails system. Alderman Maynard expressed his appreciation for the comments and overwhelming encouragement with regard to his appointment to serve on the Board. Mr. Maynard read his acceptance speech, a copy of which is attached to these minutes. Town of Westlake Board of Aldermen Regular Meeting January 14, 2008 Page 6 of 6 Mayor Bradley reminded all residents of the upcoming spring cleanup, and advised that a dumpster will be located on the campus sometime in the spring so that residents may discard unwanted items. Mayor Bradley announced that the transfer of the I.O.O.F. cemetery to the Town has now been completed. He stated that the transfer was facilitated by the friendship between the former town manager, Trent Petty, and Mr. Dick Fanning. 16. ADJOURNMENT. There being no further business, Mayor Bradley adjourned the meeting at 8:37 p.m. APPROVED BY THE BOARD OF ALDERMEN ON JANUARY 28, 2008. Scott Bradley, Mayor ATTEST: Kim Sutter, TRMC, Town Secretary Town of Westlake Maynard Alderman Acceptance January 14, 2008 First of all, I would like to thank everyone for all of the gracious comments and overwhelming encouragement. I feel honored to be appointed to this position. It is a tremendous responsibility, and an opportunity to contribute to the future of this Town and to this incredible academic institution. It is my pleasure to be able to strike a balance between the Town, the School, the Foundation, and the Board. The next five months are critical. In fact, that is an understatement. We face several daunting tasks and it is crucial ... imperative, that we work together. We have the responsibility to hire a Town Manager, replace the Head of School, issue bonds, break ground on the Arts and Sciences building, and expand Precinct Line Road. I hope we'll be able to take all the greatness that this town has already created, and build on it. We have one of the highest median home prices in the nation. We have one of only five PYP and MYP International Baccalaureate World Schools. Clearly, we enjoy one of the finest family- oriented neighborhoods in the country. We are home to one of the top -rated country clubs in the nation. Beneath this town lie some of the richest natural resources in the world. We need to use it all to Westlake's unique advantage. There will be no such thing as over - communication. In fact, over - communication and respectful decisiveness is the only way we will be able to accomplish our objectives. Moreover and simply, we must communicate openly with each other, with all the same passion, integrity, courage, and willingness to share our best intelligence that every one of us demonstrates daily as individuals standing up for our families, friends and faith. Where we need compromise, we must come to gutsy solutions; adapt our common goals grounded in our community's best interest, and move on promptly. Sometimes that is very difficult to do, but we must be willing to "Adopt and Go" in order to move forward. How we utilize all of our assets in harmony within the next few years to make this Town the best of the best is key. While that may be obvious, if not trite, it will demonstrate how Westlake, Texas is a model for doing the right thing right in perfect harmony ... and getting the right results. In this community, we have smart, dedicated, and talented individuals whose expertise and attention we should proactively command. As a Board member, I wish to respond apolitically as a servant - leader to the needs and concerns of the constituents of Westlake. You all have a right to know what each one of us wants for this Town and how we intend to achieve it. I believe in Town -Hall -style events where we can openly communicate with each other. I look forward to being challenged with the tough questions and vow to all you stakeholders to become full of your wisdom and ideas. To take this community into the distinct future it so rightfully deserves takes something rather simple. It's well -known as teamwork. We'll need to adopt a common playbook so that we can show up with all the players on the line of scrimmage executing the same play as flawlessly as possible. We need to score by executing first down after first down and not be penalized by the "Hail Mary" that gets called back for holding on the home team. And speaking of a world -class team working from the same world - renowned playbook, I am proud that my children can attend the Shining School on the Hill and have the privilege of living in a beautiful setting where it is as clear as an autumn sky. I pledge to be open, fair and honest, and to represent this town to the best of my ability. Thank you ALL for your trust and confidence. TOWN OF WESTLAKE Invoices Received: 01/07/08 thru 01/20/08 For Review by Board on 01/28/08 !VENDOR Tarrant County Criminal Courts • ICE Bonilla AMOUNT 1,000.00 FUND 100 ACCT 22500 DEPT 0 DESCRIPTION County Cash Bond Refund Tarrant County Criminal Courts Gromer 1,000.00 100 22500 0 County Cash Bond Refund Tarrant County Criminal Courts Koehler 500.00 100 22500 0 County Cash Bond Refund Tarrant County Criminal Courts Matthews 500.00 100 22500 0 County Cash Bond Refund Tarrant County Criminal Courts Pourfakhrai 2,500.00 100 225001 0 County Cash Bond Refund Tarrant County Criminal Courts Vendel 1,500.00 100 22500 0 County Cash Bond Refund Cash Bond Totals 7,000.00 A -1 Copier Tec Inc. 43931 247.50 100 44300 11 100% Quarterly Copy Charge DP3520 - Admin AT &T 817 - 163 -1736 01012008 175.56 100 45315 11 T1 Internet Line for Town Offices (01/01/08 thru 01/31/08) AT &T 817- 430 - 0941 -2 12292007 584.34 100 45305 11 Town Telephone Service 70% of Town's 50% allocation Boyle & Lowry 1 12272 4,093.51 100 43310 11 Legal Fees - Town Cad & Graphic Supply 3570 79.65 100 46105 11 4/20# Ink jet bond for plotter (Big Tex) Graham Associates 8014 4,081.00 100 43215 11 Town Engineering Fees - Stanton plat, Terra Bella, Fidelity & Solana Joe C. Hennig ER011608 23.13 100 458201 11 Lunch w /Michelle Corson re: Public Arts Committee plans Joe C. Hennig ER011608 26.00 100 45820 11 Lunch w /Chief Hafner & Chief Wilson re: public safety policies Kim Sutter CRO11408 28.97 100 46106 11 Hospitality items for January 14, 2008 board meeting Marriott International 337H103439 807.00 100 43520 11 April Gallagher's going away reception Office Depot 413710213 -001 8.99 100 46105 11 Ativa line cord 25' Office Depot 414393387 -001 60.16 100 46105 11 2 cases /copy paper Office Depot 414684140 -001 119.69 100 46105 11 Laser jet cartridge Office Depot 415181121 -001 20.32 100 46105 11 4 cases of water Office Depot 415416660 -001 51.50 100 46105 11 Ativa Shredder & lubricant Office Depot 415667658 -001 14.02 100 46105 11 2 sets of plastic keytag /rack Office Depot 415898809 -001 119.69 100 46105 11 Laserjet cartiridge for printer Purchase Power 1 12212007 332.95 100 46120 11 Town Postage Todd Wood ER011608 5.05 100 45825 11 Mileage to /from Academy (pool car unavailable) Todd Wood ER011608 231.13 100 46106 11 Hospitality Items from Sam's Total Administration 11,110.16 Strategic Government Resources 2331 47.20 100 45830 12 Registration for Eddie Edwards for November 7 class on sexual harrassment Valero 06 01152008 40.81 100 46215 12 Building Official Vehicle Fuel Total Building 88.01 A -1 Copier Tec Inc. 43932 105.20 100 44300 13 40% Quarterly Copy Charge - Sharp 275 - Secretary Total Town Secretary 105.20 AT &T 825.147.526 01072008 66.20 100 45310 14 Mobile Phone (Ambulance & Fire Truck) CLIA Laboratory Program 12222077 150.00 100 46150 14 CLIA Lab & Certificate fee (06120/08 thru 06/19/2010) Cummins Southern Plains 007 -36782 100.00 100 46215 14 Fuel Filters, Oil Filters, Air Cleaner for firetruck DFW Communications 01172008 (17.52) 100 44221 14 Credit for invoice #30701899 Flower Mound Fire Dept. 01132008 97.20 100 46130 14 20 /Protocol Field Guide Books Grainger 9531419472 69.95 46215 14 Rivet Nut & Rivet Nut Tool Home Depot 1573712 24.78 M1O 44212 14 Gas grill regulator, paint brush & contact cement Home Depot 6573954 48.94 44210 14 Garden hose & nozzle Keller (City of) 001 - 2008200 -002 182,475.00 43255 14 Police Contract- 1st QTR FY2008 Billing Page 1 of 4 1/23/2008 12:33 PM TOWN OF WESTLAKE Invoices Received: 01/07/08 thru 01/20/08 For Review by Board on 01/28/08 :VENDOR NAME Matheson Tri -Gas INVOICE 498805 • 81.80 s 100 ACCT 46615 DEPT 14 DESCRIPTION Medical Supplies MES - South Texas 00010445 SNV 120.00 100 44211 14 Air fill /Leak test Metro Fire 19978 -1 190.00 100 44211 14 T3 rechargeable battery North East Fire Dept Assoc 13 -022 548.38 100 43135 14 Pre - Employment Testing - Reimburse for 10 -06 -07 NFACT Fees North East Fire Dept Assoc 13 -023 550.00 100 433361 14 Reimbursement for TCC Live Fire Training Office Depot 414802073 -001 77.71 100 46105 14 Black toner, paper clips & correction tape Recept Pharmacy 221273 239.55 100 46615 14 Medical Supplies Roanoke Auto Supply 586292 45.01 100 46215 14 Vehicle Maintenance Southeastern Emergency Eqpmt 226122 1,011.70 100 46615 14 Medical Supplies T- Mobile 12272007 103.70 100 45310 14 Wireless Internet Cards for EMS vehicles Valero 01 01152008 411.32 100 1462151 14 EMS Vehicle Fuel - M481 Valero 03 01152008 361.13 100 46215 14 EMS Vehicle Fuel - E481 Valero 04 01152008 33.26 100 46215 14 EMS Vehicle Fuel - Tahoe Verizon 8173374722 01042008 118.11 100 45305 14 Fire Station Telephone Total Fire Dept. 186,906.22 A -1 Copier Tec Inc. 43932 131.50 100 44300 15 50% Quarterly Copy Charge - Sharp 275 - Court Accurint 1081941 - 20071231 1,178.59 100 46165 15 Background Searches AT &T 817 - 163 -2194 01022008 231.12 100 45315 15 T1 Internet Line for Court Offices (01/01/08 thru 01/31/08) AT &T 817- 491 -8623 12292007 38.04 100 45305 15 Court -Alarm Line (12/29/07 thru 01/28/08) Boyle & Lowry 2 12272 2,475.00 100 43310 15 Legal Fees - Court Brad Bradley ER122607 152.00 100 45830 15 Annual Judicial training & registration fee Bradley L. Bradley 01012008 2,541.66 100 43330 15 Judge Services for the month of January 2008 Cardinal Tracking 940307891 808.25 100 46165 15 Annual software license renewal & Multi User renewal Office Depot 414366684 -001 42.94 100 46105 15 Water, mini key, paper towels, refill desk calendar Office Depot 414565357 -001 10.92 100 46105 15 3 cases /copy paper Purchase Power 2 12212007 73.43 100 46120 15 Court Postage Valero 07 01152008 96.93 100 46215 15 1 Marshall Vehicle Fuel Total Court 7,780.38 Brock Paving 08 -00 -01 800.00 100 44303 16 Road Repair & Maintenance (Dove Road) NTB 16898738 -RI 79.94 100 46215 16 Oil Change & tire rotation for Public Works truck Office Depot 414007764 -001 16.38 100 46105 16 Daily business diary, assorted highlighters & engineer scales Panda Embroidery 51220 47.00 100 46605 16 Work shirts for Joseph - Split 25% Red Wing 12282007 35.06 100 46605 16 Split 25% - Joseph Lopez USA Blue Book 485287A 8.57 100 441221 16 Freight charges for DPD Chlorine test Valero 05 01152008 113.34 100 46215 16 Public Works Vehicle Fuel @ 50% Total Public Works 1,100.29 Access Lift & Service 1030841 100.00 100 45903 17 j Elevator Maintenance for the month of December Dallas Door & Supply 161193 312.50 100 45906 17 Adjust exit device & door closers on POD G & E ECI Video 0000035240 -1 261.00 100 45901 17 Court Room setup Hadden Landscaping 24958 67.50 100 43344 17 Mow & Weedeat at the Ottinger /Dove intersection Hadden Landscaping 24958 440.00 100 43348 17 Spread mulch - Soccer Field Home Depot 0013503 102.67 100 44216 17 Drain pipe repair & supplies Home Depot 0033321 17.17 r 100 44216 17 I Drainpipe repairs Page 2 of 4 1/23/2008 12:33 PM TOWN OF WESTLAKE Invoices Received, 01/07/08 thru 01/20/08 For Review by Board on 01/28/08 VENDOR Home Depot 1026619 32.68 100 ACCT 44212 DEPT 17 DESCRIPTION Building supplies Logical Solutions 100886 1,725.00 100 43338 17 Web control contract for lighting HVAC system Nextel 392123723 -039 114.39 100 45310 17 Mobile Phone charges for Troy Meyer Office Depot 414007764 -001 16.39 100 46105 17 Daily business diary, assorted highlighters & engineer scales Office Depot 414582785 -001 26.99 100 46105 17 Refill weekly /monthly year calendar Panda Embroidery 51220 47.00 100 46605 17 Work shirts for Joseph - Split 25% Panda Embroidery 51221 58.00 100 46605 17 Embroidery for Uniforms - Jacket Red Wing 6.52E +12 35.06 100 46605 17 Split 25% - Joseph Lopez SimplexGrinnell 71960764 927.00 100 43350 17 Fire /Door alarm system (24 hour monitoring) Triple R Locksmith 30743 3.50 100 44210 17 2 duplicate keys Triple R Locksmith 30788 103.50 100 44212 17 2 Keys to Town car Valero 10 01152008 41.00 100 46215 17 Facilities Vehicle Fuel @ 50% Total Facilities /Grounds 4,431.35 Intec Business Systems 6217 795.00 100 46130 18 10 /Budget books w /index tabs, cover, punch & bind for submission to GFOA for award Office Depot 413710213 -001 41.01 100 46105 18 Erasable calendar, letter opener & AA battery pack Total Finance 836.01 Office Depot 414007764 -001 16.39 100 46105 19 Daily business diary, assorted highlighters & engineer scales Panda Embroidery 51220 47.00 100 46605 19 Work shirts for Joseph - Split 25% Red Wing 12282007 35.06 100 46605 19 Split 25% - Joseph Lopez Valero 10 01152008 41.01 100 46215 19 Park & Recs Vehicle Fuel @ 50% Total Parks /Recreation 139.46 AT &T 817 - 430 - 0941 -1 12292007 83477 199 13020 0 Due from WA - Telephone 50% Boyle & Lowry 4 12272 2,306.25 199 13020 0 Legal Fees - Academy Purchase Power 3 12212007 21.32 199 13020 0 Academy Postage Total Academy Fund 3,162.34 Allen Heath CR011708 108.96 220 43510 11 Historical Museum Set -up (Phone cable, router, power strip, USB cable & wireless card) ARTSNET 12182007 3,750.00 220 43526 11 Masterworks Sponsorship 08 AT &T 817 - 430 - 0941 -4 12292007 125.21 220 45305 11 Visitor Fund Telephone 15% of Town's 50% allocation AT &T 817- 491 -3450 12292007 79.33 220 43505 11 Internet line for Historical Board Museum (12/29/07 thru 01/28/08) Office Depot 415416660 -001 51.48 220 46105 11 Ativa Shredder & lubricant Purchase Power 7 12212007 71.35 220 46120 11 Visitor Fund Postage Westlake Academy Foundation 01042008 7,500.00 220 43531 11 Gallery Night Gallery Sponsorship Due from Visitor Fund 11,686.33 Purchase Power 5 12212007 0.41 240 46120 0 Foundation Postage Due from W.A. Foundation 0.41 Boyle & Lowry 8 12272 2,186.25 410 16600 13 Capital Projects - Arts & Sciences Building Due from Capital Projects 2,186.25 AT &T 817 - 430 - 0941 -3 12292007 125.21 500 45305 16 Utility Fund Telephone 15% of Town's 50% allocation Page 3 of 4 1/23/2008 12:33 PM TOWN OF WESTLAKE Invoices Received: 01/07/08 thru 01/20/08 For Review by Board on 01/28/08 VENDOR Data Prose • ICE 46422 AMOUNT 215.47 FUND 500 ACCT 44135 DEPT 16 DESCRIPTION Utility Billing Processing for December 2007 cycle Dept of State Health Services 12212007 570.00 500 44122 16 Lab testing - lead & copper /drinking water Jarrod Greenwood ER010708 64.99 500 45310 16 Cell phone (11/26/07 thru 12/25/07) Jarrod Greenwood ER010708 87.65 500 46215 16 Fuel purchased for utility truck on personal credit card Kwik Kar Lube & Tune 00001 - 01381854 39.75 500 46215 16 Oil Change for OF Vehicle North Central Texas COG 57321 200.00 500 45830 16 Basic Water Works training & book fee (Joseph Lopez) Office Depot 414007764 -001 57.03 500 46105 16 Assorted pen colors & markers, scissor & dry eraser markers Office Depot 415416660 -001 51.50 500 46105 11 Ativa Shredder & lubricant Panda Embroidery 51220 47.00 500 46605 16 Work shirts for Joseph - Split 25% Purchase Power 6 12212007 71.35 500 146120 16 Utility Fund Postage Red Wing 12282007 35.06 500 46605 16 Split 25% - Joseph Lopez Texas Excavation Safety 07 -6945 22.80 500 44220 16 Message fee for December 2007 Tri- County Electric 150 -501 1072008 4,686.46 500 46221 16 OF Electric Service - Pump Station (includes $1773.61 previous balance due to billing error) Trinity River Authority BB 754 13,563.00 500 44115 16 TRA Wastewater Treatment Valero 05 01152008 113.34 500 46215 16 Utility Fund Vehicle Fuel @ 50% Due from Utility 19,950.61 A -1 Copier Tec Inc. 43932 26.30 100 13100 0 10% Quarterly Copy Charge - Sharp 275 - TSH Purchase Power 4 12212007 2.05 100 13100 0 TSH Postage Due from TSH 28.35 Grand Total i 256,511.37 Page 4 of 4 1/23/2008 12:33 PM Town of Westlake Meeting Schedule January 28, 2008 5:00 p.m. Board of Aldermen Pre -Board Meeting Civic Campus- Dining Hall; J. T. Ottin er Road location 7:00 p.m. Board of Aldermen Regular Meeting Civic Campus- Board Room; J. T. Ottinger Road location In keeping with existing Academy buildings, the design for the building calls for flexible, modular space, creating new classroom space that can be used by all disciplines and taking a step closer to completing our master campus expansion plan. The total square footage is 13,000 sq. ft., and the cost is estimated at $4 million. There would be one large laboratory of more than 1,300 sq. ft., large enough for a complete class, studying any science. The two smaller labs, 500 sq. ft. and 850 sq. ft. would be ample for the smaller elective science courses and can be opened up to create one large space of 1,350 sq. ft. for full sized classes. All space would provide hard wire and wireless network connections to accommodate a complete range of information technologies. The modular design of the center could be built at different times and completed to different finish levels depending upon the amount of funds collected in the campaign. The science area would be built first, together with the contiguous restrooms. The two divisible labs would be the first to be finished. The large open lab could remain as open space with a movable wall so that it could be used as an additional classroom for any discipline — math, foreign language, history or science. In order to continue directing as much of our state money as possible directly to the classroom, the Town of Westlake will design, construct and maintain the building and carry the asset liability on the Town books just as we do the current campus buildings. As a result, the Academy will remain debt free. gapes --, low stone walls Daylit interiors Outdoor terrace _ 1 fi CS1' Nu+2N� Slopes and(or lnw 0— walla Ft— ibla porlormanco and rehearsal space, 0 f T7 Adjustable risers and seating Exposed grid with lighting i o Low stone wails F. —. — Vwk MIFWWqr � - - Outdoor sloped seating WESTL.AKE ACADEMY GideonToal' Arts The arts area will provide much needed space for visual arts and music. The `black box theatre' creates a multi - purpose area, suitable for dramatic arts as well as music. An outdoor amphitheater and art studios will enhance the original Academy design. The addition of these art facilities will have a direct effect on International Baccalaureate course selection and allow students hours for advanced study. Sciences Science is the hallmark of a great society. The United States has long been the leader in scientific research; research that eventually makes its way into the operating room, medical advances, better safety measures and innumerable patents for everything from machinery to a better can opener. Our long undisputed leadership in science is today slipping. The President of the United States has recently called for great improvement in science education to prevent that decline. Westlake Academy intends to uphold its mission to provide high quality science education and to inspire students to pursue scientific fields at the university level. In order to meet our students' needs, facilities that will provide them with the tools, space and equipment that will match their ingenuity are required. Our present facility, designedto accommodate the laboratory needs of elementary students, accommodates those experiments that require only basic equipment. The addition of state -of -the -art science laboratories will allow the Academy to offer more chemistry and physics as well as improved facilities for biology. Without new labs, biology is the only advanced science the current buildings adequately support. El r � C Lab Zo .i �f 14D Al Mice 600! <,l[,CiAAftIYUl2 � — s.,.. Buck Box .S Break Out - $ P.3 C e 6 OfC Art In OW " Outdoor Terracr. WE-SH_•iK6_:VLAUG.53r . GideonToal The International Baccalaureate Diploma is the most prestigious high school diploma in the world. For over 50 years, the International Baccalaureate Organization (IBO), a not - for -profit foundation, has developed inquiring, knowledgeable and caring young people who help to create a better world through education, intercultural understanding and respect. Three separate programs span a student's entire educational career from 3 to 18 years of age. The Primary Years Program (PYP) for students 3 to 11 spans the elementary years; the Middle Years Program (MYP) is for students 11 to 15, and the prized Diploma is for students in the last two years of high school. The Academy has pledged to offer a well- rounded curriculum that allows students to explore knowledge through different lenses: those of the historian, the writer, the scientist, the mathematician, the musician and the artist. Having different perspectives and seeing the connections between disciplines, the student is able to appreciate the wider conceptual base that forms the foundation for problem solving. This richer curriculum also gives students more areas to explore and appreciate in order to find unknown interests and talents. Academic demands of students concluding the Primary Years Program grow quickly as they enter the Middle Years and Diploma Program. Providing facilities to accommodate advanced curriculum options in math, science and the arts is crucial if our students are to realize their true potential. -J PPW%II a.� The Westlake Academy Foundation is pleased to announce its first Capital Campaign to benefit Westlake Academy. The campaign's goal is to fund 100 percent of the construction costs of an Arts and Sciences Centre which will not only add classroom space, but also will dramatically improve Westlake Academy's capacity to serve the needs of specialty disciplines central to both the International Baccalaureate curriculum and the Academy's mission. Our mission to provide a rigorous, international curriculum is needed now more than ever. The responsibility for realizing our mission is shared by teachers, parents, students and the entire community. The Academy has successfully provided learning opportunities over the past three years which have resulted in significant growth and excellence. Building an outstanding Arts and Sciences Centre will maximize the unique educational experience of Westlake Academy students now and in the future; preparing them to be the leaders of tomorrow. We encourage you to_join with your neig(i6ors and friends in making t(iis first CapitaCCampaign a success. Westlake Academy Arts & Sciences Building Capital Campaign Preliminary Naming Opportunities as of January 2007 Main Donor Wall All donors to the Westlake Academy Capital & Endowment Campaign will be recognized on the Main Donor Wall to be erected at the School. Capital Gifts Leadership contributors to the new Arts & Sciences facility will receive site specific naming opportunities as well as recognition on the donor wall: Arts & Sciences Complex Naming Right Black Box Theater Art Classroom Science Laboratory ( #1) Science Laboratory Breakout Space Science Laboratory #2 Outdoor Terrace $1.5million Science Laboratory #3 $100,000 $750,000 Science Workroom $100,000 $750,000 Conference Room $100,000 $500,000 Offices (4) for Academic Staff $50,000 each $250,000 Art Office $50,000 $250,000 Theater Office $50,000 $250,000 MOM& Contributors of $25,000 gifts will be recognized by placing the donors name on the Front Row of the Sloped Seating Area of the Theater (available for the first 20 donors at this level). Contributors of $10,000 gifts will be recognized by placing the donors name on a seat in the Sloped Seating Area of the Theater, or donors may choose to be recognized on seating on the Terrace. Garden Terrace Brick Pavers • Contributors of $5,000 to $9,999 will be recognized on large brick pavers on the Garden Terrace. • Contributors of $2,500 to $4,999 will be recognized on medium size brick pavers on the Garden Terrace. • Contributors of $1,000 to $2,499 will be recognized on small brick pavers on the Garden Terrace Endowment Gifts The Westlake Academy Foundation has set an immediate fundraising goal of $1 million to be placed in an Endowment Fund to help the Westlake Academy provide for its annual shortfall in program and operating budget. Currently, this annual shortfall amounts to approximately $2,000 per student. A gift of $40,000 to the Endowment Fund will fill the gap in this annual shortfall for one student with interest income generated each year. Donors who give to the Endowment fund at this level or above will be recognized in the Anvil Society, a distinguished group of dedicated donors. Anvil Society donors will be recognized on the Main Donor Wall in the Academy as well as on special Society recognition. Gifts of cash, assets, stock, annuities, life insurance, and an array of planned giving vehicles are welcomed as contributions to the Endowment. Please contact the WLA Foundation at 817 - 490 -5722 to discuss the many ways you can contribute. The Westlake Academy Foundation wishes to gratefully acknowledge all donors to the Capital & Endowment Campaign. No goods or services are provided in exchange for gifts to the campaign, and all gifts are tax deductible to full extent of the law. Westlake Academy Foundation Board of Aldermen Presentation January 28, 2008 WESTLAKE IACADEMY'FOUNDATIOON Mission Statement Westlake Academy Foundation exists to raise funds for the operating shortfall, capital requirements, and endowment needs of the Westlake Academy. M UNDATION Board Members Board Members: Chris Noonan, President Laura Wheat, Vice President David Lee, Secretary Bill Greenwood Margo Hundley George Ledak Rick Rennhack Leigh Sander Julie Timmerman Liaisons: Barbara Brizuela, Head of School Mike Garabedian, President of WRAC Joe Hennig, Town Manager Dave Lieber, Liaison to the Black Cow Janet Noonan, Speaker of the House of Commons Angie Gofredo, Executive Director NVESTLAKE Top 5 Strategic objectives 1. Operating Shortfall 2. Capital Campaign Requirements 3. Endowment Needs 4. Communications Strategy 5. Additional Board Members ACADEMY M- MON 2007 -08 Top Goals (Measurable) ■ Blacksmith Gallery Night ■ Endowment ■ Capital Campaign ■ Board Members $420,325 $90,000 (net) $200,000 $2,500,000 8 to 15 members JACADEMYFOUNDATION November 1 - 15, 2007 February 22, 2008 December 31, 2008 December 31, 2008 Initiative - Operating Shortfall Annual Plan ■ Blacksmith Apprentice Program (BAP) ■ Raise at least $420,325 to meet school operating budget (ideal is $675,000) ■ 100% parent participation ■ Historical Comparison * Pledges extend until the end of the school year. '0 WESTLAKE c rn •M i�+ Qi ai r N rr Q. CO E O E -0 U) fl-•E LL V- > > p > •E > •E O O d O O U U `i'LL U tea. a w a 0 a a E-a. 2004 -2005 267 233 175 148 $896.80 $1,027.67 $1,368.26 $1,617.88 $253,085.00 $239,446.00 2005 -2006 322 296 205 182 $1,042.63 $1,134.21 $1,637.69 $1,844.65 $352,889.70 $335,727.09 2006 -2007 347 300 186 152 $1,119.24 $1,294.59 $2,088.05 $2,555.11 $397,030.00 $388,377.00 2007-20081 379 288 221 166 $1,078.94 $1,419.86 $1,850.32 $2,463.37 1 $408,920.00 1 $309,017.72* * Pledges extend until the end of the school year. '0 WESTLAKE Initiative - Annual Plan ■ Gallery Night Operating Shortfall • Raise at least $90,000 (net) • Increase the number of sponsorship dollars • Increase amount raised in the auctions - enhance the value of the live auction items • Mike Garabedian is the 2008 chair, committee members are parents and community members ■ Historical proceeds FY 2005 $56, $6,022 $62, 718 FY 2006 $90, 4 $4,119 $K!596 FY 2007 $87,46 $0 $87,462 * Ga I I ery Dray was stopped i n 2006 ■ Grants Program ■ Raise additional operating dollars from foundations and corporations ■ 3 Year Plan ■ Legislative initiatives — assist the school and the Town with lobbying efforts (increased dollars given to Charter Schools) m UNDATION Initiative - Capital Requirements 1 Year Plan • Raise $2.5 million of the required $5.5 million for the Arts & Sciences Centre • Support Capital Campaign Steering Committee & Capital Campaign Plan • To date the campaign has raised $911,988. • Phases of the Capital Campaign Plan • "Leadership Phase" — Dec. 1, 2007 — March 15, 2008 • "Parent, Family, and Community Phase" — March 16, 2008 — December 31, 2008+ • Communication Plan • Solicitation packets • Web site — developing a web site similar to Palma High School in California • Committee Members: • Laura Wheat, co -chair • Bill Greenwood, co -chair • Kelly Bradley • George Ledak • Rick Rennhack • Julie Timmerman • Leah Rennhack IAW WESTLAKE Sample Web site FIE Edit Oev Favorites Tools Help —, 'y u- Search Favorites .11 littp:�;'palmahs.ora.;bs,IA fcampaigntcamoaign , htrn ' ! ! I :Go - v 4t., v Co s_ini:s Bookmarks- gh 104 blocked 'a%`' Check - ,�, .AutoLink Settings- delkjo.us - ;AC UP I t+ fin, ANY11[LL PALMA HIGH SCHOOL'S DIVERSE STUDENT BODY HAS MANY TALENTS, INTERESTS, AND ABILITIES r To keep pace with our growing needs and uphold our commitment to our students and the communities in ,which they live, Palma plans to construct dynamic new venues on its campus that integrate science. athletics. music, and alt- A S4.7 million capital campaign has been launched to raise funds needed to address critical physical space needs and expand the success of our scientific.. athletic. and performingffine alts programs- This project reinforces our commitment to creating an updated and efficient campus environment that provides our students with enhanced opportunities to learn, express their creativity, and interact',with the Community. The excellence in Tradition capital campaign will take Palma's facilities into the 21st century. creating the following benefits., 0 Internet A Initiative - Endowment 1 Year Plan ■ Identify board members who could help with legal issues of an endowment ■ Research and propose an endowment board policy ■ Consider adding "Anvil Society" to the annual Blacksmith Program. Annual gift of $40,000 or more to the endowment ■ Phase 3 (Capital Campaign) - start endowment; Anvil Society, host 2nd Grandparents Day, target corporate sponsors 3 Year Plan ■ Increase the Endowment to over $1,000,000 ■ Begin to utilize interest dollars for Operating Shortfall ACADEMV FOUNDATION! Initiative - Communication Annual Plan "it is better to over communicate and bore than to under communicate and cripple" • Black Cow (advertise articles) that speak to Foundation, fundraising, and legislative efforts • Web site - keep the web site current with information about the foundation • Host "Grandparents Day" at Westlake Academy • Newsletter - develop a newsletter to reach out to donors • Press Releases - send out more information about the school and foundation to various media sources • Bring the community stakeholders together through communication • Assist with a customer service strategy for both the school and foundation • Include the various liaison opportunities when talking to potential volunteers • Foundation involvement in school tours and welcoming new members to the community ACADEMY FOUNDATION Initiative - Additional Board Members 1 Year Plan Recruit board members based on time, talent, and treasures ■ Implement a Board Expectations Policy ■ Develop a "New Board" orientation ■ Continue active committee driven programs 3 Year Plan ■ Continue to recruit and retain board members ACADEMYFOUNDATION Top 10 Crucial Results (Projects to Meet the Goals) 1. Blacksmith Apprentice program 2. Research potential foundation /corporation donors to help with the operating shortfall 3. Grant writing 4. Complete the Capital Campaign Plan as outlined by Lawson & Associates 5. Complete the Leadership Phase of the Capital Campaign by March 15, 2008 6. Stay focused on "Bringing the Community Stakeholders Together" 7. Identify partners to assist in securing legislative change 8. Identify additional parents and community partners to join the board through time, talent, and treasures 9. Build an Endowment program 10. Update and maintain donor software program WESTLAKE ACADEMY' FOUND A?ION Jon and Monica Grant 998 Post Oak Road Keller, Tx. 76248 January 28,2008 Subject: Incident during lunch detention on 1/25/08 Dear Westlake Academy School Board Members We are writing to inform you of our decision to withdraw our children from the Westlake Academy and the incident that was for us, the final blow in an already fragile school relationship. In particular, I would ask the school board to investigate this incident and respond to us in writing what their findings were. This incident involved our daughter Katherine during her lunch detention this past Friday, January 25. Katherine's narrative is as follows: "Stefanie and I were in Mrs. Lira's classroom on Friday, January 25, around 1:20 because we had detention and the teachers were having lunch in there. The teachers were Mr. LaSerf, Mr. Jenkins, Mr. Herrera, Mrs. Lira, Mrs. Tech, Mrs. James and the guidance counselor. The teachers were sitting at the table eating and talking with each other casually and Stefanie and I could hear their conversations clearly. Mrs. James started talking aloud but to no one in particular about the ninth graders and how they were the better grade and really good about everything. Mr. Jenkins agreed and said how only about three people in the tenth grade will pass with the IB diploma and all the teachers seemed to agree with him. Mr. Jenkins was standing in the front of the class room and said this aloud to everyone. Then the subject changed and the casual conversations went on. After that Mr. Herrera started talking to Stefanie and by then there was only a few minutes left then we left." The comments of both Mrs. James and Mr. Jenkins in front of the students are troubling on many levels. First of all, these types of conversations should not be taking place at earshot of students. Secondly, these comments send the message to the students who hear them that their teachers have already written them off. Finally, if in fact the teachers truly feel this about the 10th grade students, then they are being disingenuous with these students and parents as to their ability to pursue and achieve the IB diploma. My daughter entered Westlake Academy in the fall of 9th grade. After about a month or so in the school, we met with Mr. Jenkins and were told by him that Katherine probably did not have what it takes to get an IB diploma. We expected that the transition to this new and rigorous academic environment would be difficult and would take time so we were surprised to learn that Mr. Jenkins had arrived to this conclusion after just one month. We had hoped that the teachers would have encouraged her by telling her that the transition at first would be hard, but that they would work with her to help her learn in this new environment. Instead, after only one month she was written off. We expected better from this program. This is not what we had heard while our children were on the waiting list. Her first year at Westlake was difficult, but we encouraged her not to give up and to try her best. This year, we were excited when we received the news that our son Joshua had been accepted to Westlake. Joshua was happy to be joining his sister at Westlake. He is a student that has always been upbeat and enjoyed going to school. As with Katherine, we began to see similar adjustment issues with our son. Suddenly the boy who was always happy to go to school was waking up not wanting to go to school. After a year and a half at Westlake, we have made the difficult decision to withdraw our children from the school. We see many serious issues that need to be addressed, unfortunately the necessary mechanism for fixing the problems are not in place and we don't have the time to wait around until the school can resolve these issue. For our children it is already too late. bight now, we must concentrate on repairing their self esteem and getting them the appropriate academic support, so they can once again be on sure footing with their grade peers. We are sad in so many ways because we feel that a small school environment as this school should have been the place where our children felt safe, supported, and nurtured. Although it is already too late for them, we would urge the school board to examine some of the things we have raised in this letter. Additionally, we would encourage the school board to take a closer look at helping students make the transition to Westlake Academy. I felt unsupported in helping my children adapt. Some of the issues these young adolescents face, when they arrive to Westlake Academy are not only academic, but also deal with their social /emotional well being and they include but are not limited to: • Trying to fit into the Westlake environment • Students who have been in the school for a while have their formed groups and it is difficult for new students to join in • General emotional adolescent issues that are not being addressed • Feeling intimidated by teacher's teaching /class management style • Not having anyone to go to with these kinds of issues. Just looking at the 6 new students admitted this school year in tenth grade alone, half have already withdrawn from the school. The simple answer to why, would be to say they couldn't handle the work. However, that may not be the correct conclusion. Until this school board and administration has the courage to fully examine what is at play here, this school will be a revolving door of students. We look forward to your investigation and receiving the timely written response of your findings. Though we are deeply disappointed with our experience at Westlake as discussed in this letter, it is our sincere hope that the board and school will learn from this situation and that other students will benefit from the lessons learned. Sincerely, Jon and Monica Grant cc: Mr. David Jenkins, Head of Secondary Westlake Academy Mrs. Brizuela, Head of School Westlake Academy Mr. Arnold Alaniz, Assistant Director Charter School Division TEA Rebecca Rollins 13239 Roanoke Road Westlake Texas January 28, 2008 Dear School Board Members: This past weekend I was made aware of how our students have been receiving Spanish instruction this past school year. As you all know I have been an educator for the past 24 year in private, public and charter schools that are located in both urban and suburban school district and I must admit to you, that even for a veteran like myself this is a new one. We have at Westlake Academy a situation whereby a teacher is currently teaching two sections of Spanish simultaneously at the same exact time. Where any of you aware of this? Apparently the students in the middle school receive two 90 minute periods of Spanish a week. One day Mrs. Lira teaches on section of a grade alone and another day she teacher the other section of that grade alone. But one time a week she teaches both sections at the same time. When I questioned my children how she could do this, they explained that she will go to one class assign the work and break the students into groups, once they get going she runs across the hall to the other class and does the same. The entire 90 minutes are spent by her going back and forth between two classes. This means she is required to be in two places at one time, but because she can't physically do that, this means she must spend some time in one class, while the other class is left unattended and visa versa. It is unfair to ask any person to be in two places at one time let alone be responsible for the education of two groups of students housed in different rooms at the same job and expect that she can do a good job under these circumstances. Similarly as parents, we cannot expect that our students are going to perform optimally under these conditions or that this is quality education. Frankly I don't see how this is legal and I would like this matter resolved immediately or I will bring this to the attention of the TEA. Again this is yet another example of lack of communication, transparency and complete failure of the school to have in place a system of checks and balances. I am requesting that the board investigate this matter, resolve it and respond to me in writing as to how this issue will be resolved. Additionally I am requesting that all parents who have been receiving instruction in this manner be notified. Thank you. Rebecca P Rollins