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HomeMy WebLinkAboutOrd 929 Settlement between ACSC and Atmos enrgy Mid-Tex ORDINANCE NO. 929 AN ORDINANCE OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE,TEXAS, APPROVING A NEGOTIATED SETTLEMENT BETWEEN THE ATMOS CITIES STEERING COMMITTEE ("ACSC") AND ATMOS ENERGY CORP., MID-TEX DIVISION REGARDING THE COMPANY'S 2021 RATE REVIEW MECIiANISM FILING; DECLARING EXISTING RATES TO BE UNREASONABLE; ADOPTING TARIFFS THAT REFLECT RATE ADNSTMENTS CONSISTENT WITH THE NEGOTIATED SETTLEMENT; FINDING THE RATES TO BE SET BY THE ATTACHED SETTLEMENT TARIFFS TO BE JUS'T AND REASONABLE AND IN THE PUBLIC INTEREST; APPROVING AN ATTACHED EXHIBIT ESTABLISHING A BENCHMARK FOR PENSIONS AND RETIREE MEDICAL BENEFTTS; APPROVING AN ATTACHED EXHIBIT REGARDING AMORTIZATION OF REGULATORY LIABILITY; REQUIRING THE COMPANY TO REIMBURSE ACSC'S REASONABLE RATEMAHING EXPENSES; DETERMINING THAT THIS ORDINANCE WAS PASSED IN ACCORDANCE WITH THE REQUIREMENTS OF THE TEXAS OPEN MEETINGS ACT; ADOPTING A SAVINGS CLAUSE; DECLARING AN EFFECTIVE DATE; AND REQUIRING DELIVERY OF TffiS ORDINANCE TO THE COMPANY AND THE ACSC'S 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 "Company"), and a regulatory authority with an interest in the rates, charges, and services of Atmos Mid-Tex; and WHEREAS, the Town is a member of the Atmos Cities Steering Committee ("ACSC"), a coalition of similarly-situated cities served by Atmos Mid-Tex ("ACSC Cities")that have joined together to facilitate the review of, and response to, natural gas issues affecting rates charged i❑ the Atmos Mid-Tex service area; and WHEREAS, ACSC and the Company worked collaboratively to develop a Rate Review Mechanism ("RRM") tariff that allows for an expedited rate review process by ACSC Cities as a substitute to the Gas Reliability Infrastructure Program ("GRIP") process instituted by the Legislature, and that will establish rates for the ACSC Cities based on the system-wide cost of serving the Atmos Mid-Tex Division; and WHEREAS, the cunent RRM tariff was adopted by the Town in a rate ordinance in 2018; and WHEREAS,on about April 1,2021,Atmos Mid-Tex filed its 2021 RRM rate request with ACSC Cities based on a test year ending December 31, 2020; and WHEREAS, ACSC coordinated its review of the Atmos Mid-Tex 2021 RRM filing through its Executive Committee, assisted by ACSC's attorneys and consultants,to resolve issues identified in the Company's RRM filing; and Ordinance 929 Page 1 of 4 WHEREAS, the Executive Committee, as well as ACSC's counsel and consultants, recommend that ACSC Cities approve an increase in base rates for Ahnos Mid-Tex of $22.78 million applicable to ACSC Cities with an Effective Date of December 1, 2021; and WHEREAS, ACSC agrees that Atmos plant-in-service is reasonable; and WHEREAS, with the exception of approved plant-in-service, ACSC is not foreclosed from future reasonableness evaluation of costs associated with incidents related to gas leaks; and WAEREAS, the two month delayed Effective Date from October 1 to December 1 will save ACSC ratepayers approximately $3.8 million off new rates imposed by the attached tariffs (Exhibit A), WHEREAS, the attached tariffs (E�ibit A) implementing new rates are consistent with the recommendation of the ACSC Executive Committee, are agreed to by the Company, and are just, reasonable, and in the public interest; and WHEREAS, the settlement agreement sets a new benchmark for pensions and retiree medical benefits (Exhibit B); and WHEREAS,the settlement agreement establishes an amortization schedule for regulatory liability prepared by Atmos Mid-Tex (Exhibit C); and WIIEREAS, the RRM Tariff contemplates reimbursement of ACSC's reasonable expenses associated with RRM applications; NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL 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, without prejudice to future litigation of any issue identified by ACSC, the Town Council finds that the settled amount of an increase in revenues of$22.78 million for ACSC Cities represents a comprehensive settlement of gas uti]ity rate issues affecting the rates, operations, and services offered by Atmos Mid-Tex within the municipal limits arising from Atmos Mid-Tex's 2021 RRM filing, is in the public interest, and is consisYent with the Town's auThority under Section ]03.001 of the Texas Utilities Code. Section 3. That despite finding Atmos Mid-Tex's plant-in-service to be reasonable,ACSC is not foreclosed in future cases from evaluating the reasonableness of costs associated with incidents involving leaks of natural gas. Ordi�ance 929 Page 2 of 4 Section 4. That the existing rates for natural gas service provided by Atmos Mid-Tex are unreasonable. The new tariffs attached hereto and incorporated herein as Exhibit A, are just and reasonable, and are designed to allow Atmos Mid-Tex to recover annually an additional $22.78 million from customers in ACSC Cities, over the amount allowed under currently approved rates. Such tariffs are hereby adopted. Section 5. That the ratemaking treatment for pensions and retiree medical benefits in Atmos Mid-Tex's next RRM filing shall be as set forth on Exhibit B, attached hereto and incotporated herein. Section 6. That subject to any future settlement or decision regarding the balance of Excess Deferred Income TaY to be refunded to ratepayers,the amortizatio� of regulatory liability shall be consistent with the schedule found in Exhibit C, attached hereto and incorporated herein. Section 7. That Atmos Mid-Tex shall reimburse the reasonable ratemaking expenses of the ACSC in processing the Company's 2021 RRM filing. Section 8. That to the extent any resolution or ordinance previously adopted by the Council is inconsistent with t6is Ordinance, it is hereby repealed. Section 9. 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 10. That if any one or more sections or clauses of this Ordinance is adjudged to be unconstitutional or imalid, 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 11. That consistent with the Town Ordinance that established the RRM process, this Ordinance shall become effective from and after its passage with rates authorized by attached tariffs to be effective for bills rendered on or after December 1, 2021. Section 12. That a copy of this Ordinance shall be sent to Atmos Mid-Tex, care of Chris Felan, Vice President of Rates and Regulatory Affairs Mid-Tex Division, Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1862, Dallas, Texas 75240, and to Thomas Brocato, General Counsel to ACSC,at Lloyd Gosselink Rochelle&Townsend,P.C.,816 Congress Avenue, Suite 1900, Austin, Texas 78701. Ordinance 929 Page 3 of 4 PASSED AND APPROVED ON THIS 23�DAY OF AUGUST 2021. �?,�tf,�1� ���-!�/�'i ATTEST: Laura Wheat, Mayor �w� ���Z�'LE� � /�1 d-�\ Todd ood, Town Secretary Amanda DeGan, Town Manager APPROVF;� AS TO FORM: �� �� �: r L. to , Town Attorney Ordinance 929 Page 4 of 4 July 21, 2021 MODEL STAFF REPORT FOR RESOLUTION OR ORDINANCE BACKGROUND AND SUMMARY The City, along with 171 other Mid-Texas cities served by Atmos Energy Corporation, Mid- Tex Division ("Atmos Mid-Tex" or "Company"), is a member of the Atmos Cities Steering Committee ("ACSC"). In 2007, ACSC and Atmos Mid-Tex settled a rate application filed by the Company pursuant to Section 104.301 of the Texas Utilities Code for an interim rate adjustment commonly referred to as a GRIP filing (arising out of the Gas Reliability Infrastructure Program legislation). That settlement created a substitute rate review process, referred to as Rate Review Mechanism("RRM"), as a substitute for future filings under the GRIP statute. Since 2007, there have been several modifications to the original RRM Tarif£ The most recent iteration of an RRM Tariff was reflected in an ordinance adopted by ACSC members in 2018. On or about April 1, 2021, the Company filed a rate request pursuant to the RRM Tariff adopted by ACSC members. The Company claimed that its cost-of-service in a test year ending December 31, 2020, entitled it to additional system-wide revenues of$43.4 million. Application of the standards set forth in ACSC's RRM Tariff reduces the Company's request to$40.5 million, $29.3 million of which would be applicable to ACSC members. ACSC's consultants concluded that the system-wide deficiency under the RRM regime should be $22.34 million instead of the claimed $40.5 million. The amount of the $22.34 million deficiency applicable to ACSC members would be $16.8 million. After the Company reviewed ACSC's consultants' report, ACSC's Executive Committee and the Company negotiated a settlement whereby the Company would receive an increase of $22.78 million from ACSC Cities,but with a two-month delay in the Effective Date until December 1, 2021. This should save ACSC cities approximately $3.8 million. 2557/33/8275500 1 The Executive Committee recommends a settlement at $22.78 million. The Effective Date for new rates is December 1, 2021. ACSC members should take action approving the Resolution before October 1, 2021. PROOF OF REVENUES Atmos generated proof that the rate tariffs attached to the Resolution will generate $22.78 million in additional revenues from ACSC Cities. That proof is attached as Attachment 1 to this Staff Report. ACSC consultants have agreed that Atmos' Proof of Revenues is accurate. BILL IMPACT The impact of the settlement on average residential rates is an increase of$1.28 on a monthly basis, or 2.2 percent. The increase for average commercial usage will be $4.03 or 1.61 percent. A bill impact comparison is attached as Attachment 2. SUMMARY OF ACSC'S OBJECTION TO THE UTILITIES CODE SECTION 104.301 GRIP PROCESS ACSC strongly opposed the GRIP process because it constitutes piecemeal ratemaking by ignoring declining expenses and increasing revenues while rewarding the Company for increasing capital investment on an annual basis. The GRIP process does not allow any review of the reasonableness of capital investment and does not allow cities to participate in the Railroad Commission's review of annual GRIP filings or allow recovery of Cities' rate case expenses. The Railroad Commission undertakes a mere administrative review of GRIP filings (instead of a full hearing) and rate increases go into effect without any material adjustments. In ACSC's view, the GRIP process unfairly raises customers' rates without any regulatory oversight. In contrast,the RRM process has allowed for a more comprehensive rate review and annual evaluation of expenses and revenues, as well as capital investment. RRM SAVINGS OVER GRIP 2557/33/8275500 2 While residents outside municipal limits must pay rates governed by GRIP, there are some cities served by Atmos Mid-Tex that chose to remain under GRIP rather than adopt RRM. Additionally, the City of Dallas adopted a variation of RRM which is referred to as DARR. When new rates become effective on December 1, 2021, ACSC residents will maintain an economic monthly advantage over GRIP and DARR rates. See Attachment 3. EXPLANATION OF `BE IT RESOLVED" PARAGRAPHS: 1. This section approves all findings in the Resolution. 2. This section adopts the RRM rate tariffs and finds the adoption of the new rates to be just, reasonable, and in the public interest. 3. This section makes it clear that Cities may challenge future costs associated with gas leaks like the explosion in North Dallas or the evacuation in Georgetown. 4. This section finds that existing rates are unreasonable. Such finding is a necessary predicate to establishment of new rates. The new tariffs will permit Atmos Mid-Tex to recover an additional $22.78 million from ACSC Cities. 5. This section approves an exhibit that establishes a benchmark for pensions and retiree medical benefits to be used in future rate cases or RRM filings. 6. This section approves an exhibit to be used in future rate cases or RRM filings regarding recovery of regulatory liabilities, such as excess deferred income taXes. 7. This section requires the Company to reimburse the City for expenses associated with review of the RRM filing, settlement discussions, and adoption of the Resolution approving new rate tariffs. 8. This section repeals any resolution or ordinance that is inconsistent with the Resolution. 9. This section finds that the meeting was conducted in compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. 2557/33/8275500 3 10. This section is a savings clause, which provides that if any section is later found to be unconstitutional or invalid, that finding shall not affect, impair, or invalidate the remaining provisions of this Resolution. This section further directs that the remaining provisions of the Resolution are to be interpreted as if the offending section or clause never existed. 1 L This section provides for an effective date upon passage. December 1, 2021 represents a two month delay in the Effective Date established by the RRM tariff. 12. This section directs that a copy of the signed Resolution be sent to a representative of the Company and legal counsel for ACSC. CONCLUSION The Legislature's GRIP process allowed gas utilities to receive annual rate increases associated with capital investments. The RRM process has proven to result in a more efficient and less costly (both from a consumer rate impact perspective and from a ratemaking perspective) than the GRIP process. Given Atmos Mid-Tex's claim that its historic cost of service should entitle it to recover $43.4 million in additional system-wide revenues, the RRM settlement at $22.78 million for ACSC Cities reflects substantial savings to ACSC Cities. Settlement at $22.78 million (plus $3.8 of additional savings due to the two-month delay) is fair and reasonable. The ACSC Executive Committee consisting of city employees of 18 ACSC members urges all ACSC members to pass the Resolution before October 1, 2021. New rates become effective December 1, 2021. 2557/33/8275500 4 Attachment 1 to Model Staff Report 2021 RRM Proof of Revenues ATMOS ENERGY CORP.,MID-TEX DIVISION RRM CITIES RATE REVIEW MECHANISM PROOF OF REVENUES-RRM CITIES TEST YEAR ENDING DECEMBER 31,2020 Current Proposed Line No. Customer Class Current Proposed Bills Ccf/MmBtu Revenues Revenues Increase (a) (b) (c) (d) (e) (f) (g) (h) 1 Residential 2 Customer Charge $ 20.25 $ 20.85 13,861,632 $ 280,698,048 $ 289,015,027 $ 8,316,979 3 Consumption Charge 0.26651 0.27979 627,298,034 167,181,199 175,511,717 $ 8,330,518 4 Revenue Related Taxes 30,398,805 31,528,717 5 Total Class Revenue $ 478,278,052 $ 496,055,461 $ 17,777,409 6 7 Commercial 8 Customer Charge $ 54.50 $ 56.50 1,094,352 $ 59,642,184 $ 61,830,888 $ 2,188,704 9 Consumption Charge 0.11728 0.12263 363,850,875 42,672,431 44,619,033 $ 1,946,602 10 Revenue Related Taxes 6,944,376 7,225,051 11 Total Class Revenue $ 109,258,991 $ 113,674,972 $ 4,415,981 12 13 Industrial&Transportation 14 Customer Charge $ 1,014.50 $ 1,054.75 7,056 $ 7,158,312 $ 7,442,316 $ 284,004 15 Consumption Charge Tier 1 $ 0.4157 $ 0.4330 7,479,741 3,109,328 3,238,728 $ 129,400 16 Consumption Charge Tier 2 $ 0.3044 $ 0.3171 8,282,846 2,521,298 2,626,490 $ 105,192 17 Consumption Charge Tier 3 $ 0.0653 $ 0.0680 13,018,926 850,136 885,287 $ 35,151 18 Revenue Related Taxes 925,722 963,306 19 Total Class Revenue $ 14,564,796 $ 15,156,127 $ 591,331 20 21 Total Excluding Other Revenue $ 602,101,840 $ 624,886,561 $ 22,784,721 $21,336,550 22 23 24 Revenue Related Tax Factor 6.7873% Attachment 2 to 2021 RRM Staff Report Bill Impact ATMOS ENERGY CORP., MID-TEX DIVISION AVERAGE BILL COMPARISON -BASE RATES TEST YEAR ENDING DECEMBER 31, 2020 Line No. 1 Rate R Ca�45.2 Ccf Current Proposed Change 2 Customer charge $ 20.25 3 Consumption charge 45.2 CCF X $ 0.26651 = 12.05 4 Rider GCR Part A 45.2 CCF X $ 0.16000 = 7.23 5 Rider GCR Part B 45.2 CCF X $ 0.33320 = 15.06 6 Subtotal $ 54.59 7 Rider FF& Rider TAX $ 54.59 X 0.06787 = 3.71 8 Total $ 58.30 9 10 Customer charge $ 20.85 11 Consumption charge 45.2 CCF X $ 0.27979 = 12.65 12 Rider GCR Part A 45.2 CCF X $ 0.16000 = 7.23 13 Rider GCR Part B 45.2 CCF X $ 0.33320 = 15.06 14 Subtotal $ 55.79 15 Rider FF& Rider TAX $ 55.79 X 0.06787 = 3.79 16 Total $ 59.58 $ 1.28 17 2.20% 18 19 Rate C Ca�332.5 Ccf Current Proposed Change 20 Customer charge $ 54.50 21 Consumption charge 332.5 CCF X $ 0.11728 = 38.99 22 Rider GCR Part A 332.5 CCF X $ 0.16000 = 53.20 23 Rider GCR Part B 332.5 CCF X $ 0.26321 = 87.51 24 Subtotal $ 234.20 25 Rider FF& Rider TAX $ 234.20 X 0.06787 = 15.90 26 Total $ 250.10 27 28 Customer charge $ 56.50 29 Consumption charge 332.5 CCF X $ 0.12263 = 40.77 30 Rider GCR Part A 332.5 CCF X $ 0.16000 = 53.20 31 Rider GCR Part B 332.5 CCF X $ 0.26321 = 87.51 32 Subtotal $ 237.98 33 Rider FF& Rider TAX $ 237.98 X 0.06787 = 16.15 34 Total $ 254.13 $ 4.03 35 1.61% 36 Rate I (c�4079 MMBTU Current Proposed Change 37 Customercharge $ 1,014.50 38 Consumption charge 1,500 MMBTU X $ 0.4157 = 623.55 39 Consumption charge 2,579 MMBTU X $ 0.3044 = 785.05 40 Consumption charge 0 MMBTU X $ 0.0653 = - 41 Rider GCR Part A 4,079 MMBTU X $ 1.5625 = 6,373.46 42 Rider GCR Part B 4,079 MMBTU X $ 0.5380 = 2,194.58 43 Subtotal $ 10,991.14 44 Rider FF& Rider TAX $ 10,991.14 X 0.06787 = 746.00 45 Total $ 11,737.14 46 47 Customercharge $ 1,054.75 48 Consumption charge 1,500 MMBTU X $ 0.4330 = 649.50 49 Consumption charge 2,579 MMBTU X $ 0.3171 = 817.80 50 Consumption charge 0 MMBTU X $ 0.0680 = - 51 Rider GCR Part A 4,079 MMBTU X $ 1.5625 = 6,373.46 52 Rider GCR Part B 4,079 MMBTU X $ 0.5380 = 2,194.58 53 Subtotal $ 11,090.09 54 Rider FF& Rider TAX $ 11,090.09 X 0.06787 = 752.72 55 Total $ 11,842.81 $ 105.67 56 0.90°/a 57 Rate T Ca�4079 MMBTU Current Proposed Change 58 Customercharge $ 1,014.50 59 Consumption charge 1,500 MMBTU X $ 0.4157 = 623.55 60 Consumption charge 2,579 MMBTU X $ 0.3044 = 785.05 61 Consumption charge 0 MMBTU X $ 0.0653 = - 62 Rider GCR Part B 4,079 MMBTU X $ 0.5380 = 2,194.58 63 Subtotal $ 4,617.68 64 Rider FF& Rider TAX $ 4,617.68 X 0.06787 = 313.41 65 Total $ 4,931.09 66 67 Customercharge $ 1,054.75 68 Consumption charge 1,500 MMBTU X $ 0.4330 = 649.50 69 Consumption charge 2,579 MMBTU X $ 0.3171 = 817.80 70 Consumption charge 0 MMBTU X $ 0.0680 = - 71 Rider GCR Part B 4,079 MMBTU X $ 0.5380 = 2,194.58 72 Subtotal $ 4,716.63 73 Rider FF& Rider TAX $ 4,716.63 X 0.06787 = 320.13 74 Total $ 5,036.76 $ 105.67 75 2.14% Attachment 3 to 2021 RRM Staff Report RRM Monthly Savings Over GRIP and DARR Rates ATMOS ENERGY CORP., MID-TEX DIVISION RESIDENTIAL AVERAGE BILL COMPARISON (EXCLUDING GAS COSTS) ACSC DARR ATM ENVIRONS Settled Settled Filing Filing Customer Charge $20.85 $23.80 $27.68 $25.90 Monthly Ccf[1] 45.2 52.7 45.2 45.2 Consumption Charge $0.27979 $0.19526 $0.14846 $0.18653 Average Monthly Bill $33.50 $34.09 $34.39 $34.33 -$0.60 -$0.89 -$0.83 [1] Recognizes that average normal usage for Dallas residential customers is greater than Mid-Tex average. ORDINANCE XXX Exhibit A to 2021 RRM Resolution or Ordinance Mid-Tex Tariffs Effective December 1, 2021 MID-TEX DIVISION RRC Tariff No: ATMOS ENERGY CORPORATION RATE SCHEDULE: R— RESIDENTIAL SALES APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 12/01/2021 PAGE: 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 Ccf charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Bill $ 20.85 per month Rider CEE Surcharge $ 0.05 per month' Total Customer Charge $ 20.90 per month Commodity Charge—All Ccf $0.27979 per Ccf 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. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. 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. 'Reference Rider CEE-Conservation and Energy Efficiency as approved in GUD 10170. Surcharge billing effective July 1,2021. MID-TEX DIVISION RRC Tariff No: ATMOS ENERGY CORPORATION RATE SCHEDULE: C—COMMERCIAL SALES APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 12/01/2021 PAGE: Page 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 30,000 Ccf. 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 Ccf charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Bill $ 56.50 per month Rider CEE Surcharge $ 0.01 per month' Total Customer Charge $ 56.51 per month Commodity Charge—All Ccf $ 0.12263 per Ccf 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. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. 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. ' Reference Rider CEE-Conservation and Energy Efficiency as approved in GUD 10170. Surcharge billing effective July 1, 2021. MID-TEX DIVISION RRC Tariff No: ATMOS ENERGY CORPORATION RATE SCHEDULE: I— INDUSTRIAL SALES APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 12/01/2021 PAGE: 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 $ 1,054.75 per month First 0 MMBtu to 1,500 MMBtu $ 0.4330 per MMBtu Next 3,500 MMBtu $ 0.3171 per MMBtu All MMBtu over 5,000 MMBtu $ 0.0680 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. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. 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." 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. MID-TEX DIVISION RRC Tariff No: ATMOS ENERGY CORPORATION RATE SCHEDULE: I— INDUSTRIAL SALES APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 12/01/2021 PAGE: 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 ineter required by Company. Customer must pay Company all costs associated with the acquisition and installation of the meter. MID-TEX DIVISION RRC Tariff No: ATMOS ENERGY CORPORATION RATE SCHEDULE: T—TRANSPORTATION APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 12/01/2021 PAGE: 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 $ 1,054.75 per month First 0 MMBtu to 1,500 MMBtu $ 0.4330 per MMBtu Next 3,500 MMBtu $ 0.3171 per MMBtu All MMBtu over 5,000 MMBtu $ 0.0680 per MMBtu Upstream Transportation Cost Recovery: Plus an amount for upstream transportation costs in accordance with Part (b) of Rider GCR. 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. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. 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 "midpoinY' 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 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. MID-TEX DIVISION RRC Tariff No: ATMOS ENERGY CORPORATION RATE SCHEDULE: T—TRANSPORTATION APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 12/01/2021 PAGE: 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 "midpoinY' 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 ineter required by Company. Customer must pay Company all costs associated with the acquisition and installation of the meter. MID-TEX DIVISION ATMOS ENERGY CORPORATION RIDER: WNA—WEATHER NORMALIZATION ADJUSTMENT APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 12/01/2021 PAGE: Provisions for Adiustment The Commodity Charge per Ccf (100 cubic feet) 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. The five regional weather stations are Abilene, Austin, Dallas, Waco, and Wichita Falls. Computation of Weather Normalization Adiustment The Weather Normalization Adjustment Factor shall be computed to the nearest one-hundredth cent per Ccf by the following formula: (HSFi x (NDD-ADD) ) WNAFi = Ri (BLi + (HSFi x ADD) ) Where i = 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 Ccf Ri = Commodity Charge rate of temperature sensitive sales for the ith schedule or classification. HSFi = heat sensitive factor for the ith schedule or classification divided by the average bill count in that class 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 divided by the average bill count in that class The Weather Normalization Adjustment for the jth customer in ith rate schedule is computed as: WNA; = WNAF; x q;� Where q�; is the relevant sales quantity for the jth customer in ith rate schedule. MID-TEX DIVISION ATMOS ENERGY CORPORATION RIDER: WNA—WEATHER NORMALIZATION ADJUSTMENT APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 12/01/2021 PAGE: Base Use/Heat Use Factors Residential Commercial Base use Heat use Base use Heat use Weather Station Ccf Ccf/HDD Ccf Ccf/HDD Abilene 11.88 0.1459 85.39 0.6996 Austin 10.34 0.1452 194.82 0.9398 Dallas 15.21 0.1915 148.19 1.0986 Waco 10.63 0.1373 130.39 0.7436 Wichita 12.63 0.1398 109.17 0.5803 Falls Weather Normalization Adiustment (WNA) Report On or before June 1 of each year, the company posts on its website at atmosenergy.com/mtx-wna, in Excel format, a Weather Normalization Adjustment (WNA) Report to show how the company calculated its WNAs factor during the preceding winter season. Additionally, on or before June 1 of each year, the company files one hard copy and an Excel version of the WNA Report with the Railroad Commission of Texas' Gas Services Division, addressed to the Director of that Division. ORDINANCE XXX Exhibit B to 2021 RRM Resolution or Ordinance Mid-Tex 2021 Benchmark for Pensions and Retiree Benefits ATMOS ENERGY CORP.,MID-TEX DIVISION PENSIONS AND RETIREE MEDICAL BENEFITS FOR CITIES APPROVAL TEST YEAR ENDING DECEMBER 31,2020 Shared Services Mid-Tex Direct Post- Supplemental Post- Line Pension Employment Pension Executive Benefit Employment Adjustment No. Description Account Plan Benefit Plan Account Plan Plan Benefit Plan Total (a) (b) (c) (d) (e) (f) (g) Proposed Benefits Benchmark-Fiscal Year 2021 Willis Towers Watson 1 Report as adjusted(1)(2)(3) $ 2,917,949 $ 4,908,358 $ 5,447,063 $ 293,818 $ 6,600,073 2 Allocation to Mid-Tex 43.68% 43.68% 76.11% 100.00% 76.11% Proposed Benefits Benchmark Costs Allocated to Mid-Tex(Ln 1 x Ln 2) 3 $ 1,274,655 $ 2,144,130 $ 4,145,546 $ 293,818 $ 5,023,057 4 O&M and Capital Allocation Factor 100.00% 100.00% 100.00% 100.00% 100.00% 5 Proposed Benefits Benchmark Costs to Approve(Ln 3 x Ln 4)(3) $ 1,274,655 $ 2,144,130 $ 4,145,546 $ 293,818 $ 5,023,057 $ 12,881,205 6 7 8 Summary of Costs to Approve(1): 9 10 O&M Expense Factor(WP_F-2.3,Ln 2) 75.07% 75.07% 38.66% 11.00% 38.66% 11 12 13 Total Pension Account Plan $ 956,873 $ 1,602,484 $ 2,559,357 14 Total Post-Employment Benefit Plan $ 1,609,582 $ 1,941,691 3,551,272 15 Total Supplemental Executive Benefit Plan $ 32,322 32,322 16 Total(Ln 13+Ln 14+Ln 15) $ 956,873 $ 1,609,582 $ 1,602,484 $ 32,322 $ 1,941,691 $ 6,142,952 17 18 Notes: 19 1.Studies not applicable to Mid-Tex or Shared Services are omitted. 20 2.Mid-Tex is proposing that the Fiscal Year 2021 Willis Towers Watson actuarial amounts shown on WP F-2.3 and WP_F-2.3.1,be approved by the RRM Cities as the 21 benchmark amounts to be used to calculate the regulatory asset or liability for future periods. The benchmark amount approved by the RRM Cities for future periods 22 includes only the expense amount. The amount attributable to capital is recorded to utility plant through the overhead process as described in the CAM. 23 3.SSU amounts exclude cost centers which do not allocate to Mid-Tex for rate making purposes. ORDINANCE XXX Exhibit C to 2021 RRM Resolution or Ordinance Mid-Tex 2021 Schedule for Amortization for Regulatory Liability ATMOS ENERGY CORP.,MID-TEX DIVISION RATE BASE ADJUSTMENTS TEST YEAR ENDING DECEMBER 31,2020 AMORTIZATION OF REGULATORY LIABILITY Total Total Beginning Protected& Protected& Line Year Ended Beginning Protected Ending Protected Unprotected Unprotected Ending Unprotected Unprotected Unprotected No. Dec.31 Protected Balance Amortization Balance Balance Amortization Balance Amortization Balance (a) (b) (c) (d) (e) (f) (g) (h) (i) 1 2017(3) $ - $ - $ (51,477,654) $ - $ - $ 343,746,535 $ - $ 292,268,881 2 2018 (51,477,654) 494,977 (50,982,677) 343,746,535 (3,513,868) 340,232,667 (3,018,891) 289,249,991 3 2019 (50,982,677) 1,979,910 (49,002,767) 340,232,667 (14,057,872) 326,174,795 (12,077,963) 277,172,028 4 2020 (49,002,767) 1,979,910 (47,022,857) 326,174,795 (13,988,908) 312,185,886 (12,008,999) 265,163,029 5 2021 (47,022,857) 3,464,842 (43,558,015) 312,185,886 (26,390,127) 285,795,760 (22,925,284) 242,237,745 6 2022 (43,558,015) 1,979,910 (41,57$105) 285,795,760 (60,167,528) 225,628,231 (58,187,619) 184,050,126 7 2023 (41,578,105) 1,979,910 (39,598,195) 225,628,231 (6Q167,528) 165,46Q703 (58,187,619) 125,862,508 8 2024 (39,598,195) 1,979,910 (37,618,286) 165,460,703 (60,167,528) 105,293,175 (58,187,619) 67,674,889 9 2025 (37,618,286) 1,979,910 (35,638,376) 105,293,175 (60,167,528) 45,125,646 (58,187,619) 9,487,270 10 2026 (35,638,376) 1,979,910 (33,658,466) 45,125,646 (45,125,646) (0) (43,145,737) (33,658,466) 11 2027 (33,658,466) 1,979,910 (31,678,556) (0) 0 1,979,910 (31,678,556) 12 2028 (31,678,556) 1,979,910 (29,698,647) - - 1,979,910 (29,698,647) 13 2029 (29,698,647) 1,979.910 (27,718.737) - - 1,979.910 (27,718.737) 14 2030 (27,718,737) 1,979,910 (25,738,827) - - 1,979,910 (25,738,827) 15 2031 (25,738,827) 1,979,910 (23,758,917) - - 1,979,910 (23,758,917) 16 2032 (23,758,917) 1,979,910 (21,779,007) - - 1,979,910 (21,779,007) 17 2033 (21,779,007) 1,979.910 (19,799.098) - - 1,979,910 (19,799.098) 18 2034 (19,799,098) 1,979,910 (17,819,188) - - 1,979,910 (17,819,188) 19 2035 (17,819,'I88) 1,979,910 (15,839,278) - - 1,979,910 (15,839,278) 20 2036 (15,839,278) 1,979,910 (13,859,368) - - 1,979,910 (13,859,368) 21 2037 (13,859,368) �,979,910 (11,879,459) - - 1,979,910 (11,879,459) 22 2038 (11,879,459) 1,979,910 (9,899,549) - - 1,979,910 (9,899,549) 23 2039 (9,899,549) 1,979,910 (7,919,639) - - 1,979,910 (7,919,639) 24 2040 (7,919,639) 1,979,910 (5,939,729) - - 1,979,910 (5,939,729) 25 2041 (5,939,729) 1,979,910 (3,959,820) - - 1,979,910 (3,959,820) 26 2042 (3,959,820) 1,979,910 (1,979,910) - - 1,979,910 (1,979,910) 27 2043 (1,979,910) 1,979,910 0 - - 1,979,910 0 28 29 Revenue Related Tax Factor See WP F-5.1 679% 30 Revenue Related Taxes on Annual Amortization Amortization*Tax Factor $ 3,949,355 31 Amortization Including Revenue Related Taxes Amortization+Taxes $ 62,136,973 32 33 Notes: 34 1.The annual amortization of the protected balance is a 26 year recovery period based on the Reverse South Georgia Method. The annual amortization of the unprotected balance is 5 years. 35 2.The Regulatory Liability is recorded to FERC Accounts 253 and 242,Sub Account 27909. 36 3.This is the final Mid-Tex liability balance filing the Fiscal Year 2018 tax return.