HomeMy WebLinkAboutRES 091024-5.I - Atmos Energy Rates Review 2024RESOLUTION NO. D 0 ;2,- Jam. I
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GEORGETOWN, TEXAS, APPROVING A NEGOTIATED
SETTLEMENT BETWEEN THE ATMOS CITIES STEERING
COMMITTEE ("ACSC") AND ATMOS ENERGY CORP., MID-TEX
DIVISION REGARDING THE COMPANY'S 2024 RATE REVIEW
MECHANISM FILING; DECLARING EXISTING RATES TO BE
UNREASONABLE; ADOPTING TARIFFS THAT REFLECT RATE
ADJUSTMENTS CONSISTENT WITH THE NEGOTIATED
SETTLEMENT; FINDING THE RATES TO BE SET BY THE
ATTACHED SETTLEMENT TARIFFS TO BE JUST AND
REASONABLE AND IN THE PUBLIC INTEREST; APPROVING
AN ATTACHMENT ESTABLISHING A BENCHMARK FOR
PENSIONS AND RETIREE MEDICAL BENEFITS; REQUIRING
THE COMPANY TO REIMBURSE ACSC'S REASONABLE
RATEMAKING EXPENSES; DETERMINING THAT THIS
RESOLUTION WAS PASSED IN ACCORDANCE WITH THE
REQUIREMENTS OF THE TEXAS OPEN MEETINGS ACT;
ADOPTING A SAVINGS CLAUSE; DECLARING AN EFFECTIVE
DATE; AND REQUIRING DELIVERY OF THIS RESOLUTION TO
THE COMPANY AND THE ACSC'S LEGAL COUNSEL.
WHEREAS, the City of Georgetown, Texas ("City") 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, charges, and services of Atmos Mid -Tex; and
WHEREAS, the City is a member of the Atmos Cities Steering Committee ("ACSC"), a
coalition of similarly -situated cities served by Atmos Mid -Tex ("ACSC Cities") 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, ACSC and the Company worked collaboratively to develop a Rate Review
Mechanism ("RRM") tariff that allows for an expedited rate review process by ACSC Cities as a
substitute to the Gas Reliability Infrastructure Program ("GRIP") process instituted by the
Og1o2`i-5•'L
Legislature, and that will establish rates for the ACSC Cities based on the system -wide cost of
serving the Atmos Mid -Tex Division; and
WHEREAS, the current RRM tariff was adopted by the City in a rate ordinance in
2018; and
WHEREAS, on about April 1, 2024, Atmos Mid -Tex filed its 2024 RRM rate request with
ACSC Cities based on a test year ending December 31, 2023; and
WHEREAS, ACSC coordinated its review of the Atmos Mid -Tex 2024 RRM filing
through its Executive Committee, assisted by ACSC's attorneys and consultants, to resolve issues
identified in the Company's RRM filing; and
WHEREAS, the Executive Committee, as well as ACSC's counsel and consultants,
recommend that ACSC Cities approve an increase in base rates for Atmos Mid -Tex of $164.7
million on a system -wide basis with an Effective Date of October 1, 2024; and
WHEREAS, ACSC agrees that Atmos' plant -in-service is reasonable; and
WHEREAS, with the exception of approved plant -in-service, ACSC is not foreclosed from
future reasonableness evaluation of costs associated with incidents related to gas leaks; and
WHEREAS, the attached tariffs (Attachment 1) implementing new rates are consistent
with the recommendation of the ACSC Executive Committee, are agreed to by the Company, and
are just, reasonable, and in the public interest; and
WHEREAS, the settlement agreement sets a new benchmark for pensions and retiree
medical benefits (Attachment 2); and
WHEREAS, the RRM Tariff contemplates reimbursement of ACSC's reasonable expenses
associated with RRM applications.
Resolution No. M%n q-S.I
Description: Atmos Mid Tex RRM Settlement for 2024
Date Approved: September 10, 2024
2
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
GEORGETOWN, TEXAS:
Section 1. That the findings set forth in this Resolution are hereby in all things approved.
Section 2. That, without prejudice to future litigation of any issue identified by ACSC,
the City Council finds that the settled amount of an increase in revenues of $164.7 million on a
system -wide basis represents a comprehensive settlement of gas utility rate issues affecting the
rates, operations, and services offered by Atmos Mid -Tex within the municipal limits arising from
Atmos Mid-Tex's 2024 RRM filing, is in the public interest, and is consistent with the City's
authority under Section 103.001 of the Texas Utilities Code.
Section 3. That despite finding Atmos Mid-Tex's plant -in-service to be reasonable, ACSC
is not foreclosed in future cases from evaluating the reasonableness of costs associated with
incidents involving leaks of natural gas.
Section 4. That the existing rates for natural gas service provided by Atmos Mid -Tex are
unreasonable. The new tariffs attached hereto and incorporated herein as Attachment 1, are just
and reasonable, and are designed to allow Atmos Mid -Tex to recover annually an additional $164.7
million on a system -wide basis, over the amount allowed under currently approved rates. Such
tariffs are hereby adopted.
Section 5. That the ratemaking treatment for pensions and retiree medical benefits in
Atmos Mid-Tex's next RRM filing shall be as set forth on Attachment 2, attached hereto and
incorporated herein.
Section 6. That Atmos Mid -Tex shall reimburse the reasonable ratemaking expenses of
the ACSC in processing the Company's 2024 RRM filing.
Resolution No. 09 l0 2Lt'5. T
Description: Atmos Mid Tex RRM Settlement for 2024
Date Approved: September 10. 2024
3
Section 7. That to the extent any resolution or ordinance previously adopted by the Council
is inconsistent with this Resolution, it is hereby repealed.
Section 8. 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 9. 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 10. That consistent with the City Ordinance that established the RRM process,
this Resolution shall become effective from and after its passage with rates authorized by attached
tariffs to be effective for bills rendered on or after October 1, 2024.
Section 11. That a copy of this Resolution shall be sent to Atmos Mid -Tex, care of Chris
Felan, Vice President of Rates and Regulatory Affairs Mid -Tex Division, Atmos Energy
Corporation, 5420 LBJ Freeway, Suite 1862, Dallas, Texas 75240, and to Thomas Brocato,
General Counsel to ACSC, at Lloyd Gosselink Rochelle & Townsend, P.C., 816 Congress Avenue,
Suite 1900, Austin, Texas 78701.
Resolution No. M 60 2 - S."r
Description: Atmos Mid Tex RRM Settlement for 2024
Date Approved: September 10, 2024
11
DULY PASSED AND APPROVED BY THE
GEORGEOTWN, TEXAS, BY A VOTE OF
OF ` .2024.
ATTEST:
912"A-2S)AA M I -
Robyn Den more. City Secretary
APPROVED AS TO FORM:
Skye Nfassol, NY Attorney
Resolution No. CR ti)A-5. "f
Description: Atmos Mid Tex RRM Settlement for 2024
Date Approved: September 10, 2024
COUNCIL OF l]ll: CITY OF
ON THIS THE 10 '^, DAY
Attachment 1
MID-TEX DIVISION
ATMOS ENERGY CORPORATION
RATE SCHEDULE:
i
APPLICABLE TO
EFFECTIVE DATE
R — RESIDENTIAL SALES
ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF
Bills Rendered on or after 10/01/2024
Application
Applicable to Residential Customers for all natural gas provided at one Point of Delivery and measured
through one meter.
Type of Service
Where service of the type desired by Customer is not already available at the Point of Delivery, additional
charges and special contract arrangements between Company and Customer may be required prior to
service being furnished.
Monthly Rate
Customer's monthly bill will be calculated by adding the following Customer and Ccf charges to the
amounts due under the riders listed below:
Charge
Amount
Customer Charge per Bill
$ 22.95 per month
Rider CEE Surcharge
$ 0.05 per month'
Total Customer Charge
$ 23.00 per month
Commodity Charge — All Ccf
$0.58974 per Ccf
Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated
in accordance with Part (a) and Part (b), respectively, of Rider GCR.
Weather Normalization Adjustment: Plus or Minus an amount for weather normalization
calculated in accordance with Rider WNA.
Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider
FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated
municipality.
Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX.
Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s).
Agreement
An Agreement for Gas Service may be required.
Notice
Service hereunder and the rates for services provided are subject to the orders of regulatory bodies
having jurisdiction and to the Company's Tariff for Gas Service.
'Reference Rider CEE - Conservation and Energy Efficiency as approved in GUD 10170. Surcharge billing effective July 1, 2024.
Attachment 1
MID-TEX DIVISION
ATMOS ENERGY CORPORATION
RATE SCHEDULE:
C — COMMERCIAL SALES
APPLICABLE TO:
ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF
EFFECTIVE DATE:
Bills Rendered on or after 10/01/2024
Application
Applicable to Commercial Customers for all natural gas provided at one Point of Delivery and measured
through one meter and to Industrial Customers with an average annual usage of less than 30,000 Ccf.
Type of Service
Where service of the type desired by Customer is not already available at the Point of Delivery, additional
charges and special contract arrangements between Company and Customer may be required prior to
service being furnished.
Monthly Rate
Customer's monthly bill will be calculated by adding the following Customer and Ccf charges to the
amounts due under the riders listed below:
Charge
Amount
Customer Charge per Bill
$ 81.75 per month
Rider CEE Surcharge
$ 0.00 per month'
Total Customer Charge
$ 81.75 per month
Commodity Charge — All Ccf
$ 0.19033 per Ccf
Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated
in accordance with Part (a) and Part (b), respectively, of Rider GCR.
Weather Normalization Adjustment: Plus or Minus an amount for weather normalization
calculated in accordance with Rider WNA.
Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider
FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated
municipality.
Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX.
Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s).
Agreement
An Agreement for Gas Service may be required.
Notice
Service hereunder and the rates for services provided are subject to the orders of regulatory bodies
having jurisdiction and to the Company's Tariff for Gas Service.
Presumption of Plant Protection Level
For service under this Rate Schedule, plant protection volumes are presumed to be 10% of normal,
regular, historical usage as reasonably calculated by the Company in its sole discretion. If a customer
believes it needs to be modeled at an alternative plant protection volume, it should contact the company
at Indtx-divy)lantprotection(a;atUnoscnerjl.com.
Reference Rider CEE - Conservation and Energy Efficiency as approved in GUD 10170. Surcharge billing effective July 1, 2024.
Attachment 1
MID-TEX DIVISION
ATMOS ENERGY CORPORATION
RATE SCHEDULE: I I — INDUSTRIAL SALES
APPLICABLE TO: I ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF
EFFECTIVE DATE: Bills Rendered on or after 10/01/2024
Application
Applicable to Industrial Customers with a maximum daily usage (MDU) of less than 200 MMBtu per day
for all natural gas provided at one Point of Delivery and measured through one meter. Service for
Industrial Customers with an MDU equal to or greater than 200 MMBtu per day will be provided at
Company's sole option and will require special contract arrangements between Company and Customer.
Type of Service
Where service of the type desired by Customer is not already available at the Point of Delivery, additional
charges and special contract arrangements between Company and Customer may be required prior to
service being furnished.
Monthly Rate
Customer's monthly bill will be calculated by adding the following Customer and MMBtu charges to the
amounts due under the riders listed below:
Charge
Amount
Customer Charge per Meter
$ 1,587.75 per month
First 0 MMBtu to 1,500 MMBtu
$ 0.6553 per MMBtu
Next 3,500 MMBtu
$ 0.4799 per MMBtu
All MMBtu over 5,000 MMBtu
$ 0.1029 per MMBtu
Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated
in accordance with Part (a) and Part (b), respectively, of Rider GCR.
Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider
FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated
municipality.
Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX.
Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s).
Curtailment Overpull Fee
Upon notification by Company of an event of curtailment or interruption of Customer's deliveries,
Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay
Company 200% of the midpoint price for the Katy point listed in Platts Gas Daily published for the
applicable Gas Day in the table entitled "Daily Price Survey."
Replacement Index
In the event the "midpoint" or "common" price for the Katy point listed in Platts Gas Daily in the table
entitled "Daily Price Survey" is no longer published, Company will calculate the applicable imbalance fees
utilizing a daily price index recognized as authoritative by the natural gas industry and most closely
approximating the applicable index.
Attachment 1
MID-TEX DIVISION
ATMOS ENERGY CORPORATION
RATE SCHEDULE: I — INDUSTRIAL SALES
APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF
EFFECTIVE DATE: I Bills Rendered on or after 10/01/2024
Agreement
An Agreement for Gas Service may be required
Notice
Service hereunder and the rates for services provided are subject to the orders of regulatory bodies
having jurisdiction and to the Company's Tariff for Gas Service.
Special Conditions
In order to receive service under Rate I, Customer must have the type of meter required by Company.
Customer must pay Company all costs associated with the acquisition and installation of the meter.
Presumption of Plant Protection Level
For service under this Rate Schedule, plant protection volumes are presumed to be 10% of normal,
regular, historical usage as reasonably calculated by the Company in its sole discretion. If a customer
believes it needs to be modeled at an alternative plant protection volume, it should contact the company
at indix-div-plautprotectiouL,aiinosenerf y.ewu.
Attachment 1
MID-TEX DIVISION
ATMOS ENERGY CORPORATION
RATE SCHEDULE: T — TRANSPORTATION
APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF
EFFECTIVE DATE: I Bills Rendered on or after 10/01/2024
Application
Applicable, in the event that Company has entered into a Transportation Agreement, to a customer
directly connected to the Atmos Energy Corp., Mid -Tex Division Distribution System (Customer) for the
transportation of all natural gas supplied by Customer or Customer's agent at one Point of Delivery for
use in Customer's facility.
Type of Service
Where service of the type desired by Customer is not already available at the Point of Delivery, additional
charges and special contract arrangements between Company and Customer may be required prior to
service being furnished.
Monthly Rate
Customer's bill will be calculated by adding the following Customer and MMBtu charges to the amounts
and quantities due under the riders listed below:
Charge
Amount
Customer Charge per Meter
$ 1,587.75 per month
First 0 MMBtu to 1,500 MMBtu
$ 0.6553 per MMBtu
Next 3,500 MMBtu
$ 0.4799 per MMBtu
All MMBtu over 5,000 MMBtu
$ 0.1029 per MMBtu
Upstream Transportation Cost Recovery: Plus an amount for upstream transportation costs in
accordance with Part (b) of Rider GCR.
Retention Adjustment: Plus a quantity of gas as calculated in accordance with Rider RA.
Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider
FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated
municipality.
Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX.
Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s).
Imbalance Fees
All fees charged to Customer under this Rate Schedule will be charged based on the quantities
determined under the applicable Transportation Agreement and quantities will not be aggregated for any
Customer with multiple Transportation Agreements for the purposes of such fees.
Monthly Imbalance Fees
Customer shall pay Company the greater of (i) $0.10 per MMBtu, or (ii) 150% of the difference per MMBtu
between the highest and lowest "midpoint" price for the Katy point listed in Platts Gas Daily in the table
entitled "Daily Price Survey" during such month, for the MMBtu of Customer's monthly Cumulative
Imbalance, as defined in the applicable Transportation Agreement, at the end of each month that exceeds
10% of Customer's receipt quantities for the month.
Attachment 1
MID-TEX DIVISION
ATMOS ENERGY CORPORATION
RATE SCHEDULE: I T — TRANSPORTATION
APPLICABLE TO: I ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF
EFFECTIVE DATE: Bills Rendered on or after 10/01/2024
Curtailment Overpull Fee
Upon notification by Company of an event of curtailment or interruption of Customer's deliveries,
Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay
Company 200% of the midpoint price for the Katy point listed in Platts Gas Daily published for the
applicable Gas Day in the table entitled "Daily Price Survey."
Replacement Index
In the event the "midpoint" or "common" price for the Katy point listed in Platts Gas Daily in the table
entitled "Daily Price Survey" is no longer published, Company will calculate the applicable imbalance fees
utilizing a daily price index recognized as authoritative by the natural gas industry and most closely
approximating the applicable index.
Agreement
A transportation agreement is required.
Notice
Service hereunder and the rates for services provided are subject to the orders of regulatory bodies
having jurisdiction and to the Company's Tariff for Gas Service.
Special Conditions
In order to receive service under Rate T, customer must have the type of meter required by Company.
Customer must pay Company all costs associated with the acquisition and installation of the meter.
Attachment 1
MID-TEX DIVISION
ATMOS ENERGY CORPORATION
RIDER: WNA — WEATHER NORMALIZATION ADJUSTMENT
APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF
EFFECTIVE DATE: [Bills Rendered on or after 10/01/2024
Provisions for Adiustment
The Commodity Charge per Ccf (100 cubic feet) for gas service set forth in any Rate Schedules utilized
by the cities of the Mid -Tex Division service area for determining normalized winter period revenues shall
be adjusted by an amount hereinafter described, which amount is referred to as the "Weather
Normalization Adjustment." The Weather Normalization Adjustment shall apply to all temperature
sensitive residential and commercial bills based on meters read during the revenue months of November
through April. The five regional weather stations are Abilene, Austin, Dallas, Waco, and Wichita Falls.
Computation of Weather Normalization Adiustment
The Weather Normalization Adjustment Factor shall be computed to the nearest one -hundredth cent
per Ccf by the following formula:
(HSFi x (NDD-ADD) )
WNAFi = Ri
(BLi + (HSFi x ADD) )
Where
= any particular Rate Schedule or billing classification within any such
particular Rate Schedule that contains more than one billing classification
WNAFi = Weather Normalization Adjustment Factor for the ith rate schedule or
classification expressed in cents per Ccf
Ri == Commodity Charge rate of temperature sensitive sales for the ith schedule or
classification.
HSFi = heat sensitive factor for the ith schedule or classification divided by the
average bill count in that class
NDD = billing cycle normal heating degree days calculated as the simple ten-year
average of actual heating degree days.
ADD = billing cycle actual heating degree days.
Bli = base load sales for the ith schedule or classification divided by the average
bill count in that class
The Weather Normalization Adjustment for the jth customer in ith rate schedule is computed as.
WNAi = WNAFi x q;l
Where qq is the relevant sales quantity for the jth customer in ith rate schedule.
Attachment 1
MID-TEX DIVISION
ATMOS ENERGY CORPORATION
RIDER: WNA —WEATHER NORMALIZATION ADJUSTMENT
APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF
j EFFECTIVE DATE:
Bills Rendered on or after 10/01/2024
Base Use/Heat Use Factors
Residential
Commercial
Base use Heat use
Base use
Heat use
Weather Station
Ccf Ccf/HDD
Ccf
Ccf/HDD
Abilene
9.52 0.1526
88.98
0.7485
Austin
8.87 0.1343
213.30
0.9142
Dallas
12.38 0.2024
185.59
1.0974
Waco
8.71 0.1219
130.62
0.7190
Wichita
10.20 0.1394
117.78
0.6435
Falls
Weather Normalization Adiustment (WNA) Report
On or before June 1 of each year, the company posts on its website at atmosenergy.com/mtx-wna, in
Excel format, a Weather Normalization Adjustment (WNA) Report to show how the company calculated
its WNAs factor during the preceding winter season. Additionally, on or before June 1 of each year, the
company files one hard copy and an Excel version of the WNA Report with the Railroad Commission of
Texas' Gas Services Division, addressed to the Director of that Division.
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August 6, 2024
MODEL STAFF REPORT FOR RESOLUTION OR ORDINANCE
BACKGROUND AND SUMMARY
The City, along with 181 other Mid -Texas cities served by Atmos Energy Corporation, Mid -
Tex Division ("Atmos Mid -Tex" or "Company"), is a member of the Atmos Cities Steering
Committee ("ACSC"). In 2007, ACSC and Atmos Mid -Tex settled a rate application filed by the
Company pursuant to Section 104.301 of the Texas Utilities Code for an interim rate adjustment
commonly referred to as a GRIP filing (arising out of the Gas Reliability Infrastructure Program
legislation). That settlement created a substitute rate review process, referred to as Rate Review
Mechanism ("RRM"), as a substitute for future filings under the GRIP statute.
Since 2007, there have been several modifications to the original RRM Tariff. The most
recent iteration of an RRM Tariff was reflected in an ordinance adopted by ACSC members in 2018.
On or about April 1, 2024, the Company filed a rate request pursuant to the RRM Tariff adopted by
ACSC members. The Company claimed that its cost -of -service in a test year ending
December 31, 2023, entitled it to additional system -wide revenues of $196.8 million.
Application of the standards set forth in ACSC's RRM Tariff reduces the Company's request
to $182.5 million, $132.6 million of which would be applicable to ACSC members. After reviewing
the filing and conducting discovery, ACSC's consultants concluded that the system -wide deficiency
under the RRM regime should be $149.6 million instead of the claimed $182.5 million.
After several settlement meetings, the parties have agreed to settle the case for $164.7 million.
This is a reduction of $32.1 million to the Company's initial request. This includes payment of
ACSC's expenses. The Effective Date for new rates is October 1, 2024. ACSC members should take
action approving the Resolution/Ordinance before September 30, 2024.
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RATE TARIFFS
Atmos generated rate tariffs attached to the Resolution/Ordinance that will generate $164.7
million in additional revenues. Atmos also prepared a Proof of Revenues supporting the settlement
figures. ACSC consultants have agreed that Atmos' Proof of Revenues is accurate.
BILL IMPACT
The impact of the settlement on average residential rates is an increase of $5.52 on a monthly
basis, or 6.84%. The increase for average commercial usage will be $13.39 or 3.44%. Atmos
provided bill impact comparisons containing these figures.
SUMMARY OF ACSC'S OBJECTION TO THE UTILITIES CODE SECTION 104.301 GRIP
PROCESS
ACSC strongly opposed the GRIP process because it constitutes piecemeal ratemaking by
ignoring declining expenses and increasing revenues while rewarding the Company for increasing
capital investment on an annual basis. The GRIP process does not allow any review of the
reasonableness of capital investment and does not allow cities to participate in the Railroad
Commission's review of annual GRIP filings or allow recovery of Cities' rate case expenses. The
Railroad Commission undertakes a mere administrative review of GRIP filings (instead of a full
hearing) and rate increases go into effect without any material adjustments. In ACSC's view, the
GRIP process unfairly raises customers' rates without any regulatory oversight. In contrast, the RRM
process has allowed for a more comprehensive rate review and annual evaluation of expenses and
revenues, as well as capital investment.
RRM SAVINGS OVER GRIP
While residents outside municipal limits must pay rates governed by GRIP, there are some
cities served by Atmos Mid -Tex that chose to remain under GRIP rather than adopt RRM.
Additionally, the City of Dallas adopted a variation of RRM which is referred to as DARR. When
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new rates become effective on October 1, 2024, ACSC residents will maintain an economic monthly
advantage over GRIP and DARR rates.
Comparison to Other Mid -Tex Rates (Residential)
Averaec Bill Compared to RRM Cities
RRM Cities: $48.19 -
DARR: $54.30 $6.11
ATM Cities: $49.59 $1.40
Environs: $49.53 $1.34
Note: ATM Cities and Environs rates are as -filed. Also note that DARR uses a test year ending in
September rather than December.
EXPLANATION OF "BE IT RESOLVED" PARAGRAPHS:
1. This section approves all findings in the Resolution/Ordinance.
2. This section adopts the RRM rate tariffs and finds the adoption of the new rates to be just,
reasonable, and in the public interest.
3. This section makes it clear that Cities may challenge future costs associated with gas leaks.
4. This section finds that existing rates are unreasonable. Such finding is a necessary predicate
to establishment of new rates. The new tariffs will permit Atmos Mid -Tex to recover an
additional $164.7 million on a system -wide basis.
5. This section approves an exhibit that establishes a benchmark for pensions and retiree medical
benefits to be used in future rate cases or RRM filings.
6. This section requires the Company to reimburse the City for expenses associated with review
of the RRM filing, settlement discussions, and adoption of the Resolution/Ordinance
approving new rate tariffs.
7. This section repeals any resolution or ordinance that is inconsistent with the
Resolution/Ordinance.
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8. This section finds that the meeting was conducted in compliance with the Texas Open
Meetings Act, Texas Government Code, Chapter 551.
9. This section is a savings clause, which provides that if any section is later found to be
unconstitutional or invalid, that finding shall not affect, impair, or invalidate the remaining
provisions of this Resolution/Ordinance. This section further directs that the remaining
provisions of the Resolution/Ordinance are to be interpreted as if the offending section or
clause never existed.
10. This section provides for an effective date upon passage.
11. This section directs that a copy of the signed Resolution/Ordinance be sent to a representative
of the Company and legal counsel for ACSC.
CONCLUSION
The Legislature's GRIP process allowed gas utilities to receive annual rate increases
associated with capital investments. The RRM process has proven to result in a more efficient and
less costly (both from a consumer rate impact perspective and from a ratemaking perspective) than
the GRIP process. Given Atmos Mid-Tex's claim that its historic cost of service should entitle it to
recover $196.8 million in additional system -wide revenues, the RRM settlement at $164.7 million for
ACSC members reflects substantial savings to ACSC cities. Settlement at $164.7 million is fair and
reasonable. The ACSC Executive Committee consisting of city employees of 18 ACSC members
urges all ACSC members to pass the Resolution/Ordinance before September 30, 2024. New rates
become effective October 1, 2024.
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