HomeMy WebLinkAboutRES 082625-5.C - Atmos Energy Rate Adoption and SettlementMESOLUTION No.
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together to facilitate the review of, and response to, natural gas issues affecting rates charged in
WHEREAS, ACSC and the Company worked collaboratively to develop a Rate Review
substitute to the Gas Reliability Infrastructure Program ("GRIP") process instituted by the
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Legislature, and that will establish rates for the ACSC Cities based on the system -wide cost of
WHEREAS, the current RRM tariff was adopted by the City in a rate ordinance in
WHEREAS, ACSC coordinated its review of the Atmos Mid -Tex 2025 RRM filing
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WHEREAS, the settlement agreement sets a new benchmark for pensions and retiree
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Section 1. That the findings set forth in this Resolution are hereby in all things approved-
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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 -Texas 2025 RRM filing, is in the public interest, and is consistent with the City's
authority under Section 103.001 of the Texas Utilities Code.
is not foreclosed in future cases from evaluating the reasonableness of costs associated with
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 $205.6
million on a system -wide basis, over the amount allowed under currently approved rates. Such
tariffs are hereby adopted.
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w)ection 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
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is inconsistent with this Resolution., it is hereb): repeale•
Section 8. That the meeting at which this Resolution was approved was in all things
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unconstitutional or invalid, such judgment shall not affect, impair, or invalidate the remaining
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this Resolution shall become effective from and after its nassq'.�-M.I. r2tes au6wiwi bv:?.ttq.ed
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,
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THE 7 COUNCIL OF THE CITY
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Mayor
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2557/39/9074965 5
August 14, 2025
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, 2025, 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, 2024, entitled it to additional system -wide revenues of $245.2 million.
Application of the standards set forth in ACSC's RRM Tariff reduces the Company's request
to $225.6 million, $163.5 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 $185.6 million instead of the claimed $245.2 million.
After several settlement meetings, the parties have agreed to settle the case for $205.6 million.
This is a reduction of $20 million to the Company's initial request. This includes payment of ACSC's
expenses. The Effective Date for new rates is October 1, 2025. ACSC members should take action
approving the Resolution/Ordinance before October 1, 2025.
RATE TARIFFS
Atmos generated rate tariffs attached to the Resolution/Ordinance that will generate $205.6
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 $7.83 on a monthly
basis, or 9.27%. The increase for average commercial usage will be $25.73 or 6.56%. 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 toparticipate 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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RRM Cities: $54.68 -
DARR: $58.57 $3.89
AT Cities: $57.39 $2.71
Environs: $55.96 $1.28
Note: ATM Cities and Environs rates are as -filed. Also note that DARR uses a test year ending
September rather than December. i
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5. This section approves an exhibit that establishes a benchmark for pensions and retiree medical
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ffjj&13��Iing, settlement discussions, and adoption of the Resolution/Ordinance
7. This section repeals any resolution or ordinance that is inconsistent with the
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8. This section finds that the meeting was conducted in compliance with the Texas Open
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 passagQ-
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 $245.2 million in additional system -wide revenues, the RRM settlement at $205.6 million for
ACSC members reflects substantial savings to ACSC cities. Settlement at $205.6 million is fair and
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