HomeMy WebLinkAboutOrd 507 Denying the request of ATMOS Energy Corporation for an annual gas reliability infrastructure program rate increaseTOWN OF WESTLAKE
ORDINANCE NO. 507
AN ORDINANCE OF THE TOWN OF WESTLAKE, TEXAS, DENYING THE
REQUEST OF ATMOS ENERGY CORP., MID-TEX DIVISION, FOR AN ANNUAL
GAS RELIABILITY INFRASTRUCTURE PROGRAM (GRIP) RATE INCREASE IN
THIS MUNICIPALITY, AS A PART OF THE COMPANY'S STATEWIDE GAS
UTILITY DISTRIBUTION SYSTEM; APPROVING COOPERATION WITH OTHER
CITIES WITHIN THE ATMOS ENERGY CORP., MID-TEX DIVISION
DISTRIBUTION SYSTEM AS PART OF THE ATMOS CITIES STEERING
COMMITTEE (ACSC); AUTHORIZING ACSC TO HIRE LEGAL AND CONSULTING
SERVICES AND TO NEGOTIATE WITH THE COMPANY AND DIRECT ANY
NECESSARY LITIGATION; AUTHORIZING INTERVENTION AS PART OF ACSC IN
ANY APPEAL OF THE TOWN'S ACTION TO THE RAILROAD COMMISSION;
PROVIDING A REQUIREMENT FOR A PROMPT REIMBURSEMENT OF COSTS
INCURRED BY THE TOWN; FINDING THAT THE MEETING AT WHICH THIS
ORDINANCE IS PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW; AND
PROVIDING FOR NOTICE OF THIS ORDINANCE TO ATMOS ENERGY CORP.,
MID-TEX DIVISION.
WHEREAS, on or about March 30, 2006, Atmos Energy Corp., Mid -Tex Division, (the
"Company") filed with the Town a request for an annual gas reliability infrastructure program
("GRIP") rate increase for customers on the Company's statewide gas utility system to be
effective May 30, 2006; and
WHEREAS, the Town has exclusive original jurisdiction to evaluate the Company's
request as it pertains to the distribution facilities located within the Town, pursuant to Texas
Utilities Code §§ 102.001(b) and 103.001; and
WHEREAS, it is reasonable for the Town to cooperate with other cities in a coalition of
cities in opposition to the Company's filing at the Railroad Commission ("Commission"), said
coalition being known as Atmos Cities Steering Committee ("ACSC"), in any appeal of the
cities' actions to the Commission; and
WHEREAS, the Gas Utility Regulatory Act ("GURA") grants local regulatory
authorities the right to intervene in rate proceedings filed at the Railroad Commission; and
WHEREAS, the Texas Utilities Code § 103.022 provides that costs incurred by the
Town in ratemaking activities are to be reimbursed by the regulated utility; and
WHEREAS, counsel for ACSC, upon review of the Company's filing and upon
consultation with various consultants, recommends finding that the Company's proposal is
unjustified and unreasonable; and
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WHEREAS, the Company has publicly stated that it will receive substantial profit in
2005 and that its expenses are substantially below those on which the GUD No. 9400 rates it is
charging were based; and
WHEREAS, the Company's GRIP request fails to account for growth in numbers of
customers, thereby undercounting the revenues it will receive from its proposed GRIP rate
increase; and
WHEREAS, the Company's GRIP request fails to recognize that GUD No. 9400 rates
included profit based on TXU Corporation's capital structure rather than Atmos Energy Corp.'s
current capital structure, which justifies a lower rate of return; and
WHEREAS, under the provisions of § 104.301 of LURA, the interim rate adjustment is
subject to true -up in a general rate case filed within five years of the effective date of the interim
rate surcharge; and
WHEREAS, the Company has, on May 31, 2006, filed a Statement of Intent to increase
its distribution rates on a system -wide basis, using calendar year ending December 31, 2005, as
its test year; and
WHEREAS, the capital investment made by Atmos during 2005 will be reviewed in the
Statement of Intent filing, making the 2005 GRIP filing superfluous, duplicative, and
unnecessary;
NOW, THEREFORE, BE IT ORDAINED BY THE BOARD OF ALDERMEN OF THE
TOWN OF WESTLAKE, TEXAS:
SECTION 1. That the Company's GRIP rate increase request is found to be
unreasonable, superfluous, duplicative, and unnecessary, and is therefore denied in all respects.
SECTION 2. That the Town is authorized to cooperate with other Cities within the
Company's Distribution System that have formed ACSC to hire and direct legal counsel and
consultants, negotiate with the Company, make recommendations to the Town regarding
reasonable rates, and to direct any necessary litigation associated with an appeal of a rate
ordinance and the rate case filed at the Commission.
SECTION 3. That the costs incurred by the Town in reviewing the Company's GRIP
request shall be promptly reimbursed by the Company.
SECTION 4. That the Town is authorized to intervene in any appeal of the Town's
action filed at the Commission and any related litigation, and to participate in any such appeal or
litigation as a member of ACSC.
SECTION 5. This Ordinance shall become effective immediately from and after its
passage, as the law and charter in such cases provide.
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SECTION 6. That it is hereby officially found and determined that the meeting at which
this Ordinance is passed is open to the public as required by law and that public notice of the
time, place and purpose of said meeting was given as required.
SECTION 7. A copy of this ordinance, constituting fmal action on the Company's
application, be forwarded to the following:
Richard T. Reis
Atmos Energy Corporation
5420 LBJ Freeway, Suite 1800
Dallas, Texas 75240
Lloyd Gosselink Blevins Rochelle & Townsend
c/o Geoffrey Gay
P.O. Box 1725
Austin, Texas 78767-1725.
PASSED AND APPROVED ON THIS 26TH DAY OF JUNE, 2006.
ATTEST:
v` an Dwinnell, Town Secretary
APPROVED AS TO FORM:
z:;
L. Stanto T n Attorney
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Scott Bradle , Mayor
Trent O. Petty, To pager