Title
Ordinance - Third and Final Reading of an Ordinance of the City Council of the City of Mansfield, Texas, Approving a Negotiated Resolution Between the Atmos Cities Steering Committee and Atmos Energy Corp., Mid-Tex Division Regarding the Company's 2013 Annual Rate Review Mechanism Filing in All Cities Exercising Original Jurisdiction; Declaring Existing Rates to be Unreasonable; Adopting Tariffs That Reflect Rate Adjustments Consistent With the Negotiated Settlement and Finding the Rates to be Set by the Attached Tariffs to be Just and Reasonable; Requiring the Company to Reimburse Cities' Reasonable Ratemaking Expenses; Repealing Conflicting Resolutions or Ordinances; 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; Providing a Most Favored Nations Clause; and Requiring Delivery of This Ordinance to the Company and the Steering Committee's Legal Counsel
Requested Action
Adoption of the ordinance as presented.
Recommendation
Staff recommends that council adopt the ordinance as it is presented.
Description/History
The City, along with approximately 164 other cities served by Atmos Energy Mid-Tex Division ("The Atmos Mid-Tex" or "Company"), is a member of the Atmos Cities Steering Committee ("ACSC"). On or about July 15, 2013, Atmos Mid-Tex filed with the City an application to increase natural gas rates pursuant to the Rate Review Mechanism ("RRM") tariff renewed by the City in 2013 as a continuation and refinement of the previous RRM rate review process. This is the first annual RRM filing under the renewed RRM tariff.
The Atmos Mid-Tex RRM filing sought a $22.7 million rate increase system-wide based on an alleged test-year cost of service revenue deficiency of $25.7 million. The City worked with ACSC to analyze the schedules and evidence offered by Atmos Mid-Tex to support its request to increase rates. The Ordinance and attached rate tariffs are the result of negotiations between ACSC and the Company to resolve issues raised by ACSC during the review and evaluation of Atmos Mid-Tex's RRM filing.
The Ordinance resolves the Company's RRM filing by authorizing additional revenues to the Company of $16.6 million system-wide. For purposes of comparison, this negotiated result is about $11 million less than what ACSC's consultants calculated that Atmos would have been entitled to if Atmos had filed a case under the Gas Reliability Infrastructure Program ("GRIP") rather than an RRM case. The settlement is expected to increase the average residential customer's bill by approximately $0.74 per month. An Average Bill Comparison of base rates has been prepared for residential, commercial, industrial, and transportation customers.
The ACSC Executive Committee and ACSC legal counsel recommend that all ACSC Cities adopt the Ordinance implementing the rate change.
Justification
The alternative to a resolution of the RRM filing would be a GRIP filing by the Company, based upon the Railroad Commission's decision in the 2012 rate case. A GRIP filing would entitle the Company to receive more than $28 million in additional revenues, with ACSC being precluded from reviewing the reasonableness of the GRIP filing. The ACSC Executive Committee recommends that ACSC members take action to approve the Ordinance authorizing new rate tariffs
Funding Source
Not Applicable
Prepared By
Joe Smolinski, Director of Utilities
817-718-0528