Title
Resolution - A Resolution Approving a Negotiated Settlement Between the ATMOS Cities Steering Committee ("ACSC") and ATMOS Energy Corp., Mid-Tex Division ("Company") Regarding the Company's 2014 and 2015 Rate Review Mechanism Filings
Requested Action
Staff requests that council adopt the attached resolution, approving the negotiated Settlement Agreement.
Recommendation
The ACSC Executive Committee and its designated legal counsel and consultants recommend that all Cities adopt the Resolution approving the negotiated Settlement Agreement resolving both the 2014 and the 2015 Rate Review Mechanism filings, and implement the rate change.
Description/History
The Rate Review Mechanism ("RRM") is a substitute for the Gas Reliability Infrastructure Program ("GRIP"). GRIP is a statutory provision that allows ATMOS to bypass the City's rate regulatory authority to increase its rates annually to recover capital investments. The RRM was created collaboratively by ACSC and ATMOS Mid-Tex as an alternative to the legislatively-authorized GRIP surcharge process. ACSC has opposed GRIP because it constitutes piecemeal ratemaking, does not allow participation by cities or recovery of cities' rate case expenses. In contrast, the RRM process has allowed for a more comprehensive rate review and annual adjustment as a substitute for GRIP filings. ACSC's consultants have calculated that had ATMOS filed its 2015 case under the GRIP provisions, it would have received additional revenues from ratepayers of approximately $10 million.
Justification
* While the 2015 RRM system-wide filing exceeded $28 million, a comparable GRIP filing would have been in excess of $38 million. ACSC has negotiated a reduction to the 2015 filing of approximately $6 million. Therefore, the 2015 RRM result is approximately $16 million better for ratepayers within municipal limits than ratepayers within Environs.
* ACSC counsel is convinced that the Proposal for Decision ("PFD") by Railroad Commission Examiners in the 2014 RRM appeal will not improve if we file Exceptions and Replies to Exceptions. Counsel recommends action to avoid the PFD becoming a final order that would serve as precendent in future rate proceedings.
* The token benefit to ratepayers authorized in the PFD to the 2014 appeal has been incorporated into the Settlement Agreement.
* ATMOS will file its formal withdrawal of its 2014 appeal only after all ACSC members approve the Settlement Agreement.
* The alternative to approval of the Settlement Agreement would be another contested case hearing on appeal of the 2015 filing, implementation of the interim rates on June 1, 2015 at the full value of the Company's request (or $6 million higher than proposed by the Settlement) and continuation of the 2014 appeal with resulting rate case expenses borne by ratepayers.
Funding Source
n/a
Prepared By
Joe Smolinski
Director of Utilities
817-718-0528
joe.smolinski@mansfield-tx.gov