HomeMy WebLinkAboutRes 14-19 Denying the Rate Increase Request by Atmos Energymin
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RESOLUTION Ti THE COMPANY1; THE STEERING
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 and charges of Atmos Mid -Tex; and
WHEREAS, the Town is a member of the Atmos Cities Steering Committee ("ACSC"), a
coalition of approximately 164 similarly situated cities served by Atmos Mid -Tex that have joined
together to facilitate the review of and response to natural gas issues affecting rates charged in the Atmos
Mid -Tex service area; and
WHEREAS, pursuant to the terms of the agreement settling the Company's 2007 Statement of
Intent to increase rates, ACSC Cities and the Company worked collaboratively to develop a Rate Review
Mechanism ("RRM") tariff that allows for an expedited rate review process controlled in a three-year
experiment by ACSC Cities as a substitute to the current Gas Reliability Infrastructure Program ("GRIP")
process instituted by the Legislature; and
WHEREAS, the City took action in 2008 to approve a Settlement Agreement with Atmos Mid -
Tex resolving the Company's 2007 rate case and authorizing the RRM tariff, and
WHEREAS, in 2013, ACSC and the Company negotiated a renewal of the RRM tariff process
for an additional five (5) years; and
WHEREAS, the City passed an ordinance renewing the RRM tariff process for the Town for an
additional five (5) years; and
WHEREAS, the RRM renewal tariff contemplates reimbursement of ACSC Cities' reasonable
expenses associated with RRM applications; and
WHEREAS, on or about February 28, 2014, the Company filed with the Town its second annual
RRM filing under the renewed RRM tariff, requesting to increase natural gas base rates by $45.7 million;
and
Resolution 14-19
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WHEREAS, ACSC coordinated its review of Atmos Mid-Tex's RRM filing through its
Executive Committee, assisted by ACSC attorneys and consultants, to investigate issues identified by
ACSC in the Company's RRM filing; and
WHEREAS, ACSC attorneys and consultants have concluded that the Company is unable to
justify a rate increase of the magnitude requested in the RPM filing; and
WHEREAS, ACSC's consultants determined the Company is only entitled to a $19 million
increase, approximately 42% of the Company's request under the 2014 RRM filing; and
WHEREAS, the Company would only be entitled to approximately $31 million if it had a GRIP
case; and
WHEREAS, the Company's levels of operating and maintenance expense have dramatically
risen without sufficient justification; and
WHEREAS, the Company has awarded its executives and upper management increasing and
unreasonable levels of incentives and bonuses, expenses which should be borne by shareholders who
received a 23% total return on investment in 2013; and
WHEREAS, the Company requested a drastically high level of medical expense that is
unreasonable and speculatively based upon estimates; and
WHEREAS, ACSC and the Company were unable to reach a compromise on the amount of
additional revenues that the Company should recover under the 2014 RRM filing; and
WHEREAS, the ACSC Executive Committee, as well as ACSC's counsel and consultants,
recommend that ACSC Cities deny the requested rate increase; and
WHEREAS, the Company's current rates are determined to be just, reasonable, and in the public
interest.
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN
OF
Section 1: That the findings set forth in this Resolution are hereby in all things approved.
Section 2: That the Town Council finds that Atmos Mid -Tex was unable to justify the
appropriateness or the need for the increased revenues requested in the 2014 RRM filing, and that existing
rates for natural gas service provided by Atmos Mid -Tex are just and reasonable.
Section 3: That Atmos Mid -Tex shall reimburse the reasonable ratemaking expenses of the
ACSC Cities in processing the Company's RPM application.
Section 4: That in the event the Company files an appeal of this denial of rate increase to the
Railroad Commission of Texas, the Town is hereby authorized to intervene in such appeal, and shall
participate in such appeal in conjunction with the ACSC membership. Further, in such event Atmos Mid -
Tex shall reimburse the reasonable expenses of the ACSC Cities in participating in the appeal of this and
other ACSC City rate actions resulting from the 2014 RRM filing.
Resolution 14-19
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Section 5: That the meeting at which this Resolution 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 Resolution is adjudged to be
unconstitutional or invalid, such judgment shall not affect, impair, or invalidate the remaining provisions
of this Resolution and the remaining provisions of the Resolution shall be interpreted as if the offending
section or clause never existed.
Section 7: That a copy of this Resolution shall be sent to Atmos Mid -Tex, care of Chris Felan,
Manager of Rates and Regulatory Affairs, at Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1862,
Dallas, Texas 75240, and to Geoffrey Gay, General Counsel to ACSC, at Lloyd Gosselink Rochelle &
Townsend, P.C., P.O. Box 1725, Austin, Texas 78767-1725.
ATTEST:
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Kelly Edws, Town Secretary
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„ -L. St' tinLo A*, Town Attorney
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a4ld�'
/ A,405ez
Laura L. Wheat, Mayor
Nomas E. Brymer�Tanager
Resolution 14-19
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