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HomeMy WebLinkAboutRES 022608-R2 - ATMOS Settlement AgmtRESOLUTION NO. 02WOt A RESOLUTION OF THE OF THE CITY OF GEORGETOWN APPROVING A SETTLEMENT AGREEMENT BETWEEN ATMOS ENF+'RGY CORPORATION, MID-TEX DIVISION AND ATMOS TEXAS MUNICIPALITIES; DECLARING EXISTING RATES TO BE UNREASONABLE, ADOPTING RATE ADJUSTMENTS CONSISTENST WITH THE SETTLEMENT AGREEEMENT; FINDING THE RATES TO BE SET BY THE ATTACHED TARIFFS TO BE JUST AND REASONABLE, FINDING THAT THE MEETING COMPLIED WITH THE OPEN MEETINGS ACT; DECLARING AN EFFECTIVE DATE; AND REQUIRING DELIVERY OF THIS RESOLUTION TO THE COMPANY AND LEGAL COUNSEL WHEREAS, the City of Geogretown ("City") is a regulatory authority under the Gas L tility Regulatory Act ("GURA") and under § 103.001 of GURA has exclusive original jurisdiction over Atmos Energy Corporation — Mid -Tex Division ("Atmos") rates, operations, and services of a gas utility within the municipality; and WHEREAS, the City has participated in prior cases regarding Atmos as a part of a coalition of cities known as the Atmos Texas Municipalities ("ATM"), including Railroad Commission Gas Utilities ("GUD") Docket No. 9400, numerous filings by Atmos pursuant to Section 104.301 of GURA, and GUD Docket No. 9670; and WHEREAS, ("Atmos") filed a Statement of Intent with the City on or about September 20, 2007 to increase its system -wide, annual revenue requirement, by approximately $51.9 million; and WHEREAS, the City has, by previous ordinance or resolution, denied the requested rate increase, authorized participation in ATM and authorized the hiring of lawyers and rate experts; and WHEREAS, Atmos has appealed the previous ordinance or resolution to the Railroad Commission of Texas, which has docketed the appeal along with other appeals as GUD 1\ o. 9762; and 3, ©Z 24 0842. e1 of 5 WHEREAS, ATM has conducted extensive discovery upon Atmos and has engaged in extensive negotiations regarding the appropriate rates and rate structure for Atmos; and WHEREAS, Atmos and ATM have entered into a Settlement Agreement resolving all disputes regarding the appropriate rates, teinis and conditions for Atmos; and WHEREAS, Atmos and ATM have determined that the best method to implement such settlement agreement is to have it approved by each ATM city; and WHEREAS, in order for City to examine the Settlement Agreement, it has reestablished its original jurisdiction over the rates of Atmos by issuing a Show Cause against Alnios; and WHEREAS, the City has given reasonable notice to Atmos regarding the consideration of the Settlement Agreement and WHEREAS, the Settlement Agreement will resolve several previously -litigated cases and will resolve all issues currently pending before the Railroad Commission in GUD No. 9762, as well as issues relating to franchise agreements with Atmos; and WHEREAS, the Settlement Agreement will result in Atmos receiving a S 10 million system -wide rate increase, which is significantly smaller than the $51.9 million sought by Atmos, and WHEREAS, the Settlement Agreement creates an experimental and expedited rate review process , called the Rate Review Mechanism ("RRM") in lieu of the Section 104.301 filings, which will allow for a consideration of both increases and decreases in expenses and investments and will allow for increased participation by City regulators in future rate cases, and WHEREAS, the RRM will also allow Atmos a greater opportunity to earn its authorized rate of return, but no more, by use of a "true -up" calculation contained within the RRM tariff; and WHEREAS, the Settlement Agreement calls for a reduction in customer charges for residential and commercial customers and WHEREAS, the Settlement Agreement excludes specified expenses from recovery by Atmos; and Res, oaat,os'-R 2 p e 02. ©f 5 WHEREAS, the Settlement Agreement contains a "most -favored -nations" clause that provides City with the benefit of any other RRM settlement or any other settlement of the issues related.to the September 20, 2007 Statement of Intent or GUD No. 9672, under certain conditions; WHEREAS, the Settlement Agreement authorizes other changes inrates and tariffs that should enable Atmos to provide efficient service at reasonable rates and provides for the reimbursement of ATM expenses; and WHEREAS, the Settlement Agreement provides for quarterly meetings between Atmos and City representatives in order to improve communication and cooperation; and WHEREAS, the Settlement Agreement provides a mechanism for the City to amend or renew its franchise agreement with Atmos at 5% of Gross Revenues; and WHEREAS, the Settlement Agreement resolves numerous cases currently pending on appeal and provides for payment to ATM associated with such cases; and WHEREAS, the City desires to avoid the cost and uncertainty of litigating the cases at the Railroad Commission and the courts; and WHEREAS, the ATM lawyers as well as numerous representatives from the ATM Cities have negotiated with Atmos onseveral occasions; and WHEREAS, the ATM lawyers have recommended the approval of the Settlement Agreement: and WHEREAS, the City has examined the Settlement Agreement and its attached tariffs, rates, terms and conditions; and WHEREAS, the Settlement Agreement as a whole is consistent with the public interest; and WHEREAS, the tariffs, rates, tei,.ns and conditions attached to the Settlement Agreement should be found to be just, reasonable and in the public interest. Res. oz t©s-R2 pit 3 of 5 NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GEORGETOWN THAT: Section 1. The statements set out in the preamble to this Resolution are hereby in all things approved and adopted. The City Council hereby finds that this Resolution implements the utility Policy Statement 11.0 of the Century Plan — Policy Plan Flement, which states: "City owned, sponsored or managed utilities are competitively priced and provide safe, adequate and reliable services to all customers. ", and further finds that the adoption of this Resolution is not inconsistent or in conflict with any other Century Plan Policies, as required by Section 2.03 of the Administrative Chapter of the Policy Plan.. Section 2. Pursuant to Utilities Code Section 104.151, the City finds that the existing rates, teinis and conditions of Atmos are unreasonable and deter Ines that such rates, terms and conditions should be changed. Section 3. The City Council finds that the Settlement Agreement, which is attached hereto and incorporated herein as Attachment A, is in the public interest and is hereby endorsed in all respects. Section 4. The City Council finds that the new tariffs, which are attached hereto and incorporated herein as Attachment B, are just and reasonable and are hereby adopted. Section 5. To the extent any resolution or ordinance previously adopted by the Council is inconsistent with this Resolution, it is hereby repealed. Section 6. 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. 0221190 trir Section 7. A copy of this Resolution shall be sent to Atmos Mid -Tex, care of Joe T. Christian, Director of Rates, at Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1800, Dallas, Texas 75204, and to Jim Boyle, Counsel to ATM, Herrera and Boyle, PLLC, 860 Congress Avenue, Suite 1120, Austin, TX 78701. Section 8 The Mayor is hereby authorized to sign this Resolution and the City Secretary to attest thereto on behalf of the City of Georgetown Section 9 This resolution shall be effective immediately upon adoption. RESOLVED this ATTEST: Sandra D. Lee, City Secretary APPROVED AS TO FORM: By: day of 2008. THE CITY OF GEORGETOWN: Gary'Nelon, Mayor Patricia E. Carls, Carls, McDonald & Dalrymple LLP City Attorney Res. ©z �� � . pets z