R-08-02-28-11E4 - 2/28/2008 RESOLUTION NO. R-08-02-28-11E4
A RESOLUTION OF THE CITY OF ROUND ROCK, TEXAS
APPROVING A SETTLEMENT AGREEMENT BETWEEN ATMOS
ENERGY CORPORATION, MID-TEX DIVISION AND ATMOS
TEXAS MUNICIPALITIES; DECLARING EXISTING RATES TO BE
UNREASONABLE; ADOPTING RATE ADJUSTMENTS
CONSISTENT WITH THE SETTLEMENT AGREEMENT; 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 Round Rock, Texas ( "City") is a regulatory
authority under the Gas Utility 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 No. 9762 ; and
R80228F4
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,
terms 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 Atmos; 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 $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
2
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
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; and
WHEREAS, the Settlement Agreement authorizes other changes in
rates 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 50-o
of Gross Revenues; and
3
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 on several
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, terms and conditions attached to
the Settlement Agreement should be found to be just, reasonable and
in the public interest; Now Therefore
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ROUND ROCK,
TEXAS:
Section 1. That the statements set out in the preamble to
this resolution are hereby in all things approved and adopted.
Section 2. Pursuant to Utilities Code Section 104 . 151, the
City finds that the existing rates, terms and conditions of Atmos
are unreasonable and determines that such rates, terms and
conditions should be changed.
4
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. This resolution shall become effective from and
after its passage with rates authorized by the Attached Tariffs to
be effective in accordance with the terms of the Settlement
Agreement.
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 .
The City Council hereby finds and declares that written notice
of the date, hour, place and subject of the meeting at which this
Resolution was adopted was posted and that such meeting was open to
the public as required by law at all times during which this
Resolution and the subject matter hereof were discussed, considered
and formally acted upon, all as required by the Open Meetings Act,
Chapter 551, Texas Government Code, as amended.
5
RESOLVED this 28th day of February, 2 0
LL, Mayor
ity of Round Rock, Texas
ATTEST:
Ava0'-'h'
SARA L.L. WHITE, City Secretary
6
ATTACHMENT A
SETTLEMENT AGREEMENT BETWEEN ATMOS ENERGY CORP. MID-TEX
DIVISION AND ATMOS TEXAS AA2jCIPALITIES
WHEREAS, this settlement agreement is entered into and by Atmos Energy Corp's
Mid-Tex Division and Atmos Texas Municipalities("ATM')whose members include the Cities
of Austin, Balch Springs, Bandera, Bartlett, Belton, Blooming Grove, Bryan, Cameron, Cedar
Park, Clifton, Commerce, Copperas Cove, Corsicana, Denton, Electra, Fredericksburg,
Gatesville, Georgetown, Goldthwaite, Granbury, Cneenville, Groesbeck, Hamilton, Hemietta,
Hickory Creek, Hico, Hillsboro, Hutto, Kerens, Lampasas, Leander, Lometa, Longview, Mart,
Mexia, Olney, Pflugervillle, Ranger, Rice, Riesel, Rogers, Round Rock, San Angelo, Sanger,
Somerville,Star Harbor,Trinidad,Trophy Club,and Whitney,and
WHEREAS, ATM is an active intervenor in Statement of'Intent Filed by Atmos
Energy Corporation to Increase Utility Rates Within the Unincorporated Areas Served by the
Atmos Energy Corp., Mid-Tex Division, GUD Docket No. 9762 at the Railroad Commission of
Texas("Commission");and
WHEREAS, ATM has hired experts and lawyers to analyze the sates and riders
proposed by Atmos Energy Corp.'s, Mid-Tex Division ("Atmos" or, "Company") in GUD
Docket No, 9762;and
WHEREAS, the Settlement Agreement resolves all issues between Atmos and ATM
("the Signatories") regarding GUD Docket No.. '9762, which is cunently pending before the
Commission, in a manner that the Signatories believe is consistent with the public interest, and
the Signatories represent diverse interests;,and
WHEREAS, the Signatories believe that the resolution of the issues raised in GUD
Docket No.. 9762 can best be accomplished by each ATM City approving this Settlement
Agreement and the rates, terms and conditions reflected in the tariffs attached to this Settlement
Agreement as Exhibit A;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
established herein, the Signatories, through their undersigned representatives, agree to the
following Settlement Terms as a means of fully resolving all issues in the pending appeal
between the ATM Cities and Atmos;
Settlement Terms
1 Upon the execution of this Settlement Agreement, each ATM city will issue a show
cause against Atmos, following appropriate city procedures., After,the issuance of
the show cause,Atmos and the counsel for the ATM cities will recommend that an
ordinance or resolution be adopted to approve this Settlement Agreement and
implement the rates, terms and conditions reflected in the tariffs attached to this
Settlement Agreement as Exhibit A.. Said tariffs should allow Atmos an additional r'
$10 million in annual revenue by implementation of rates shown in the proof of
revenues attached as Exhibit B, The uniform implementation of'gas rates,terms and
conditions established by this Settlement Agreement shall be effective for bills
rendered on or after-March 1,2008,or-as soon thereafter as the ATM city adopts an
1
SETTLEMENT AGREEMENT
GAS UTILITIES DOCKET NO 9762(AND CONSOLIDAIED CASES)
FEBRUARY 11,2008
ordinance or it to implement for the ATM city the rates, terms, and
conditions reflected in the tariffs attached to this Settlement Agreement..
2. The net plant amount of$1,243,607,206 is reasonable for the plant that is used and
useful in providing gas utility service..
3.. In an effort to streamline the regulatory review process, Atmos and ATM have
agreed to undertake a new mechanism for reviewing the Company's cost of service
on an annual basis., The new mechanism is known as the Rate Review Mechanism
("Rider RRM"). Raider RRM provides for an annual rate adjustment to reflect
changes in billing determinants, operating and maintenance expense, depreciation
expense,other,taxes expense,and revenues as well as changes in capital investment
and a§sociated changes-in gross revenue related taxes
4.. Atmos and ATM agree that the Rider RRM shall be implemented annually over a
three-year trial period. On or after-December,31,2010,any ATM City that opposes
the continued use of the Rider- RRM to set rates for- areas within its original
.jurisdiction shall provide written notification to the Company of this fact.. Such
notice shall be provided no later than .January 31, 2011.. Upon receipt of such
written notification,Atmos shall cease making an annual Rider RRM filing with the
notifying ATM City and instead, shall file a general rate case with the notifying
ATM City within eighteen months from the date the notification is received by the
Company.. The last effective rates under the Rider-RRM shall remain in effect for-
the notifying ATM City until such time as new rates are established for that city in a
general rate case.. In the absence of such notification, Rider RRM shall continue
subject to any changes that may be agreed to in writing between the ATM Cities and
Atmos,.
5: Atmos agrees that effective with the implementation of the first RRM rate
adjustment,Atmos shall file with the ATM Cities a revised Rate R-Residential Sales
Tariff to reduce the customer charge per bill from $10,69 per month to $7.00 per
month and to increase the volumetric portion ofthe rate(shown as$1.271 in Exhibit
A)to the appropriate level to reflect the reduction in customer charge from$10.,69 to
$7„00, as well as to reflect any change resulting from the RRM implementation.,
Atmos further agrees that effective with the implementation of the first RRM
adjustment, Atmos shall file with the ATM Cities a revised Rate C- Commercial
Sales Tariff to reduce the customer charge per bill from$20.28 to $13.50 per month
and to increase the volumetric portion of the rate(shown as$,7104 in Exhibit A)to
the appropriate level to reflect the reduction in customer charge from $20.28 to
$13.50, as well as to reflect any change resulting from the RRM implementation.
The fust RRM rate adjustment shall occur, October 1, 2008., Atmos and the ATM
Cities agree that following the initial RRM adjustment any subsequent
implementation of RRM adjustments shall be supported as described in the Rider
t
RRM, and shall limit changes to residential and commercial customer charge to no
more than 20%. Further,the parties agree that any approved adjustment in excess of
the 20% limitation on the residential and commercial customer charge shall be
recovered through the volumetric portion of the rate. .
2
SEriuNmNI AGREEMENT
GAS UTILITIES DOCKET N0.9'762(AND CONSOIIDAIED CASES)
FEBRUARY 11,2008
6.. The following types of expenses shall be removed from all expense and rate base
amounts included within Rider RRM filings for each Evaluation Period and
corresponding Rate Effective Period:
Amounts incurred for travel,meals or entertainment of employee spouses..
Amounts for air travel that exceed published commercial coach air fares,.
Amounts incurred for hotel rooms exceeding$250 per night inclusive of'taxes and
tees assessed on such rooms„
Amounts for alcoholic beverages.,
' Amounts paid for admission to entertainment,sports,art or cultural events,and all
event sponsorship costs
' Amounts for social club dues or fees..
7.• With respect to the RRM, Atmos further agrees to pay all reasonable and necessary
expenses of each entity having original jurisdiction that are incurred to review the
Company's annual RRM filings Atmos further agrees that in calculating the
proposed rate for any Rate Effective Period,the Company shall not include: (1)any
external legal, expert, or consultant costs to prepare and/or provide supportive
information related to its filing; or (2) reimbursements to original juzisdiction
entities..
8.• Notwithstanding paragraph 7 of this Settlement Agreement,Atmos and ATM agree
that in the event of an appeal of an original,jurisdiction entity's decision regarding a
proposed RRM adjustment, recovery of rate case expenses shall be determined
according to Chapters 10.3 and 104,TEx.Um.CODE ANN., Further,in the event of
such appeal(s), Atmos shall recover any reimbursement made to the original
.jurisdiction entity through a surcharge to all customer rates that are subject to the
Commission's.jurisdiction in that proceeding or- proceedings that might be joined
therewith, regardless of whether such reimbursements are made during the initial
review period or appeal period„
9. It is the intention of the Signatories that the ATM Cities receive the benefit of any
agreed upon annual RRM adjustment that Atmos enters into with any other RRM-
implementing city within the Mid-Tex division during the same year-,, Therefore,
Atmos agrees that if,as determined by the ATM Cities,the annual RRM adjustment
agreed to between Atmos and an RRM-implementing city is more beneficial to the
ATM Cities, Atmos will make the more beneficial annual RRM adjustment
available to the ATM Cities for adoption..
10. The ATM Cities agree that they will not challenge the legal basis of the rates,terms,
and conditions reflected in Exhibit A, or any annual RRM adjustment that is
implemented pursuant to Rider RRM..
11, Atmos and the ATM Cities further agree that the express terms of the Rider RRM
are supplemental to the filing, notice, regulatory review, or appellate procedural
process of the ratemaking provisions of Chapter 104 of'the Texas Utilities Code, If'
the statute requires a mandatory action on behalf of the municipal regulatory
authority or Atmos, the parties will follow the provisions of such statute. If,the
statute allows discretion on behalf'of•the municipal regulatory authority, the ATM
3
SETTLEMENT AGREEMENT
GAS UTIIITIES DOCKET N0 9762(AND CONSOLIDATED CASES)
FEBRUARY 11,2008
Cities agree that they shall exercise such discretion in such a way as to implement
the provisions of the RRM tariff. If'Atmos appeals an action or inaction of an ATM
City regarding an RRM filing to the Railroad Commission, the ATM Cities agree
that they will not oppose the implementation of interim rates or advocate the
imposition of a bond by Atmos consistent with the RRM tariff; Atmos agrees that it
will make no filings on behalf of its Mid-Tex division under the provisions of TEx,
U11I., CODE ANN., § 104301 while the Rider RRM is in place, and any such filings
pending at the time the RRM is approved will be trued-up for revenue and rate base
components prior to implementation of the annual RRM„ In the event that a
regulatory authority fails to act or-enters an adverse decision regarding the proposed
annual RRM adjustment, the Railroad Commission of Texas shall, pursuant to the
provisions of the Texas Utilities Code, have exclusive appellate .jurisdiction to
review the action or inaction of the regulatory authority exercising exclusive original
.jurisdiction over the RRM request. In addition, the Signatories agree that this
Settlement Agreement shall not be construed as a waiver of the ATM Cities'right to
initiate a show cause proceeding or the Company's tight to file a Statement of Intent
under the provisions of the Texas Utilities Code.
11 Atmos and ATM commit that during the Initial Implementation Period,as defined in
the RRM tariff, Atmos and the ATM Cities will not devote resources or,efforts to
advocate statutory changes involving rate stabilization mechanisms or the Gas
Reliability Infrastructure Program that is currently codified under TEx,Uric.,CODE
§104.301.
13 Atmos and the ATM Cities agree that the gas cost portion of'uncollectible expense
shall be recovered through the Company's Rider- GCR rather than through base
rates, The change in accounting for the gas cost portion of uncollectible expense
(including both the accrual of expense and write-off'of accounts) shall become
effective with the implementation of the first RRM rate adjustment. The first RRM
rate adjustment is expected to occur October 1, 2008. In calculating the rate for the
first Rate Effective Peiiod,the Company shall utilize the same methodology as used
in the Company's September 20, 2007 Statement of Intent with the only
modification being to exclude the effects of the gas cost portion of uncollectible
expense horn the base rate calculation,.
14 Atmos and the ATM Cities further agree that expense associated with lost and
unaccountable gas shall, based on an annual period, be recoverable through the
Company's Rider GCR up to a maximum of five (5) percent of the quantity of
metered gas,as provided under-Commission Rule 7.5525,Lost and Unaccounted for
Gas. Such change shall be effective with the complete 12 month reporting period
ending.Tune 30,2008.
15.. Included as part of Exhibit A to this Settlement Agreement is a new gas
conservation program tariff (Rider CEE) that will be effective October 1, 2008.
Atmos and the ATM Cities agree that Atmos will fund $1 million of the allowable
expenses incurred annually, with a customer nate cornponent„ All customer- providing
the
remainder $1 million of furiding PP � will,lied funds wil, prion to the
commencement of the program, be used toward program implementation efforts
4
SETTLEMENT AGREEMENT
GAS UTILITIES DOCKET NO.,9762(AND CONSOI MA.TED CASES)
FEBRUARY 11,2008
and,upon implementation,be applied directly to the gas conservation materials and
supplies.
16 Atmos and the ATM Cities agree that the Company's requested revision of its
weather normalization adjustment ("WNA') mechanism is appropriate and should
be approved as set forth in Exhibit A to this Settlement Agreement. Specifically,the
revision excludes non-weather sensitive commercial customers and modifies the
WNA mechanism to calculate the WNA adjustment based on weather stations at a
regional level rather than under the current practice of associating all customers with
a single weather location for purposes of'determining the WNA adjustment
17 Atmos and the ATM Cities agree that the three-year-gas cost review process that is
currently in effect for the Mid-Tex division should be eliminated. Atmos and the
ATM Cities further agree to collaborate to establish an alternate process wherein the
prudence of gas costs recovered through the Rider GCR can be addressed. Until an
agreed upon replacement mechanism has been established, the current gas cost
review process shall remain in effect,unless changed by order,of the Commission.
18 It is the intention ofthe Signatories that the ATM Cities receive the benefit of any
settlement agreement that Atmos enters into with other entities arising out of the
September 20, 2007 Statement of Intent or GUD No 9672 (consolidated cases) or,
any associated appeals of GUD No, 9672.. Therefore,Atmos agrees that if the rates,
revenues, terms and conditions, or benefits accruing to the settling entity would be
more beneficial to the ATM Cities than the terms of this Settlement Agreement, as
determined by the ATM Cities, such more favorable rates, revenues, terms and
conditions, or benefits shall additionally accrue to the ATM Cities. Similarly, if the
Final Order- in GUD No.. 9672 or orders resulting from any associated appeals are
determined by the ATM Cities to result in rates, revenues, terms and conditions, or
benefits that are more beneficial than the terms or this Settlement Agreement, such
more favorable terms,revenues,terms and conditions shall additionally accrue to the
ATM Cities. The ATM Cities' exercise of this right is conditioned upon the ATM
Cities' acceptance of all rates,revenues, terms and conditions of the Final Order in
GUD No., 9672 in toto., If'there is a subsequent settlement agreement arising out of
the September 20, 2007 Statement of Intent or-GUD No. 9672 (consolidated cases)
or any associated appeals of GUD No,.9672 that is deemed by the ATM Cities to be
more beneficial than this Settlement Agreement,the ATM Cities shall be required to
accept all of the rates, revenues, terms and conditions of such settlement agreement
in toto.
19.. Atmos and the ATM Cities agree that all reasonable rate case expenses directly
incurred by Atmos in connection with the September 20, 2007 Statement of Intent
filed on behalf'of its Mid-Tex Division through February 29, 2008, as well as all
expenses reimbursed to the ATM Cities for such cases shall be recoverable through
a surcharge to all customer- rates within the ATM Cities. The amount to be
recovered through the surcharge to customers within the ATM Cities shall be
determined on a pro rata basis, consistent with the ATM Citiespercentage of total
Mid-Tex residential load.. The surcharge shall be recovered over-a thirty-six month
period beginning in April of 2008, or as soon thereafter as approved by the last
5
SETTLEMENT AGREEMENZ
GAS UTILITIES DOCKET NO..9762(AND CONSOLIDATED CASES)
FEBRUARY 11,2008
ATM City.. Atmos further agrees that it will continue to reimburse ATM Cities for
the rate case expenses incurred in connection with the September 20, 2007
Statement of Intent on a monthly basis in accordance with the agreement entered
between the Signatories on October 15,2007.
20 Atmos and the ATM Cities agree that Atmos may make all future filings, including,
but not limited to, the annual RRM adjustment and any Statement of Intent filing
with the ATM Cities on an electronic basis, rather than by paper copy.. Electronic
Filings shall fulfill the requirements of TEx. Uiit....CODE§104103 The appropriate
ATM Cities representative shall provide a list of the ATM Cities to Atmos by March
1, 2008, and agrees to notify Atmos of any change in the ATM Cities Coalition
within 30 days of the effective date of any such change in order for Atmos to
maintain adequate service records., Atmos further agrees to make paper copies of
filings available to any ATM City that requests a copy.
21. In the spirit of improving communication and cooperation,Atmos agrees to initiate
quarterly meetings with the ATM Cities to provide information, answer questions,
and receive input from the ATM Cities regarding capital projects in the Mid-Tex
service territory. As part of the quarterly meetings, Atmos will update the ATM
Cities of its activities in the cities, as well as any service related issues associated
with the prevision of gas utility services to ATM city customers, Atmos and the
ATM Cities will work cooperatively regarding the level of project detail to be
presented at the quarterly meetings.. Until changed by the parties, the level of
project detail supplied by Atmos at such meetings shall he similar to the project
spreadsheets on GRIP projects attached to the prefiled direct testimony of James S..
Powell in GUD No 9762 Atmos shall not be required to obtain the pre-approval of
the ATM Cities to place projects in service,.
22 Atmos and the ATM Cities agree that each ATM city should approve this Settlement
Agreement and adopt an ordinance or resolution to implement for the ATM Cities
the rates, terms, and conditions reflected in the tariffs attached to this Settlement
Agreement as Exhibit A.
23 The Signatories agree that the terms of'the Settlement Agreement are interdependent
and indivisible,and that if any ATM city enters an order that is inconsistent with this
Settlement Agreement, then any Signatory may withdraw without being deemed to
have waived any procedural right or to have taken any substantive position on any
fact or issue by virtue of that Signatory's entry into the Settlement Agreement or its
subsequent withdrawal., Many ATM city rejects this Settlement Agreement, then
this Settlement Agreement shall be void ab initio and counsel for-the ATM Cities
shall thereafter- only take such actions as are in accordance with the Texas
Disciplinary Rules of'Professional Conduct,
24.. Atmos agrees that it will accept and approve a request pursuant to this Agreement by '
any municipality that is currently receiving franchise payment from the Company to
execute or amend that municipality's applicable franchise agreement to increase the
franchise fee payment payable by the Company under- the terms of the
municipality's franchise agreement to not more than 5%of Gross Revenues(as that
6
SETTLEMENI AGREEMENT
GAS UTILITIES DOCKET NO.9762(AND CONSOLIDATED CASES)
FEBRUARY 11,2008
term is defined in the applicable franchise. The terms of this paragraph shall
supersede any and all language currently contained in the applicable franchise, as
amended or extended, granting the right to increase the periodic franchise fee
payment following the passage'and approval of a new, amended, or- renewed
franchise that provides for a higher franchise fee payment with another municipality.
Any municipality that elects to exercise the option granted herein shall notify the
Company of such election by written notice given not less than sixty(60) days prion
to the effective date of the increase, Upon receipt of the written notice fiom the
electing municipality, the Company and the municipality shall enter into a new,
amended or renewed fianchise agreement (hereinafter- referred to as an
'Amendment"). The Company shall calculate the 5% on the gross revenue (as that
term is defined in the applicable franchise) from the prior yeas or the prior quarter,
depending on the franchise terms,based upon the gloss revenue for the prior year or
quarter,respectively.. The payment that is made during the current year or quarter,is
for the privilege of gas operations during that time period. This interpretation
applies to all payments made or to be made under the franchise agreement. Each
city shall adopt the Amendment in a manner that is consistent with their charter or
applicable laws in the case of a general law city.. The effective date of the
Amendment shall be May 1, 2008 or the date the Amendment is adopted ifafter
May 1,2008„ The Company shall be entitled to collect any franchise fees,whether
or not increased under the terms hereof; from customers within each municipality
pursuant to the terms of the Company's Rider FF.
25.. In exchange for ATM's dismissal or'non-suit of the suits specified below, Atmos
agrees to pay the ATM Cities$560,000 for expenses associated with all 2003,2004,
2005, and 2006 GRIP filings and related court appeals within 30 days of the date of
the last ATM city ordinance or resolution approving this'Settlement Agreement is
entered, Such payment shall be recovered through the surcharge to customers
within the ATM Cities at a rate of$,.0053 per Mcf. Atmos and the ATM Cities
further agree that the surcharge shall be recovered over a twelve month period
beginning with the implementation of the first annual Rate Review Mechanism
("RRM'}adjustment,which is expected to occur on October 1,2008.
26. Within 30 days following the date the last ATM city ordinance or resolution
approving this Settlement Agreement is entered,Atmos and the ATM Cities agree to
file a Notice of Non-Suit or Motion to Dismiss, whichever is applicable, in the
following proceedings:
Cause No. D-1-GN-06-000337 (Consolidated),Atmos Cities Steering Committee v.
The Railroad Commission of Texas, In the 345th District Court, Travis County,
Texas„ This case includes the following cases:
a. Cause No,. D-1-GN-502179 —Atmos Texas Municipalities v The Railroad 4
Commission of'Texas,In the 250 District Court,Travis County,Texas„**
b Cause No. D-1-G'V-06-000057--Cities of Caldwell, Celina, Copperas-Cove,
Corsicana, Crowley, Denton, '
FrederYcksburg, Frost, Galesville,
Goldthwaite, Greenville, G'oesback Hamilton, Hickory Creek, Hillsboro,
7
SE IT LEMEN T AGREEMENT
GAS UMrIIES DOCKET NO..9762(AND CONSOLIDATED CASES)
FEBRUARY 11,2008
Lexington, Llano, Longview, Mart, Mexia, Somerville, Thorndale, and
Whitney ("Cities') v. The Railroad Commission of Texas, In the 353rd
District Court,Travis County,Texas.
C. Cause No D-1-GV-06-000061 — City of'Ranger ("City') v. The Railroad
Commission of'Texas,In the 200t"District Court,Travis County,Texas,
d, Cause No. D-1-GV-06-000076—City ofMcGregor ("City')v The Railroad
Commission of'Texas,In the 126th District Court,Travis County,Texas.
e. Cause No,. D-1-GV-06-000077 — City of West ("City') v The Railroad
Commission of'Texas,In the 200t`District Court,Travis County,Texas.
f. Cause No. D-1-GV-06-000078 — Cities of Balch Springs, Belton, Clifton,
Commerce, Dublin, .Electra, Lampasas, Lometa, Pflugerville, San Saba and
Seymour ("Cities') v. The Railroad Commission of Texas, In the 2.01"
District Court,Travis County,Texas..
g. Cause No. D-1-GV-06-000079—Cities of'Burnet, Coleman and Round Rock
("Cities')v, The Railroad Commission of'Texas,In the 250 'District Court,
Travis County,Texas..
h. Cause No.. D-1-GV-06-000106 — City of'Kemp ("City') v, The Railroad
Commission of Texas,In the 98"'District Court,Travis County,Texas.,
L Cause No,D-1-GV-06-001095—The Cities of'Balch Springs,Belton,Burnet,
Cron, Coleman, Copperas Cove, Corsicana, Denton, Dublin,
Fredericksburg, Frost, Gatesville, Goldthwaite, Granbury, Grandview,
Greenville, Groesbeck, Hillsboro, Lampasas, Leander, Llano, Lometa,
Longview, Mexia, Pflugerville, Ranger; Riesel, .,hound Rock San Saha, i
Somerville, Trinidad and Whitney ("Atmos Texas Municipalities" or
'ATM') v. The Railroad Commission of'Texas, In the 126th District Court,
Travis County..
j. Cause No. D-1-GV-06-000578 -Atmos- Texas Municipalities v. The Texas
Railroad Commission of'Texas, In the 201 st District Court, Travis County,
Texas„**
k. Cause Number: 03-06-00580-CV; Atmos Energy Cozpmution, as successor by
merger to TXU Gas Company, Allied Coalition of Cities, and City of Dallas v.
Railroad Commission of Texas; In the Third District Court of Appeals at Austin,
Texas,.
r
"Non-suit or Dismissal will occur only with respect to the defendant, Atmos Energy,
Corp..,Mid-Tex division,
i
8
SETTLEMENI AGREEMENI
GAS UTILITIES DOCKET NO.9762(AND CONSOLIDAIED CASES)
FEBRUARY 11,2008
2T The Signatories agree that all negotiations, discussions and conferences related to
the Settlement Agreement are privileged,inadmissible,and not relevant to prove any
issues associated with GUD Docket No. 9762.
28 The Signatories agree that neither this Settlement Agreement nor any oral or written
statements made during the course of settlement negotiations may be used for any
purpose .other, than as necessary to support the entry by the ATM Cities of an
ordinance or resolution implementing this Settlement Agreement,
29.. The Signatories agree that this Settlement Agreement is binding on each Signatory
only for the pinpose of settling the issues set forth herein and for no other purposes,
and, except to the extent the Settlement Agreement governs a Signatory's rights and
obligations for future periods, this Settlement Agreement shall not be binding or' ;
precedential upon a Signatory outside this proceeding,.
30. The Signatories agree that this Settlement Agreement may be executed in multiple
counterparts and may be filed with facsimile signatures.
r
i
9
SE TI L EMEN T AGREEMENT
GAS UtTIL IT IES DOCKET NO.,9 762(AND CONSOLTDA I ED CASES)
FEBRUARY 11,20flO
Agreed to this day of February,2008
ATMOS ENERGY CORP..,MIDw TEX DIVISION
By:
To A.Paris
p sident,Mid-Tex Division
i
i
s
10
SE IZ LEMEN I AGREEMENT
GAS UTILITIES DOCKET NO 9162(AND CONSOLIDAIED CASES)
FEBRUARY 11,
Agreed to this t } day of'Februaiy 2008
ATTORNEY FOR ATMOS IEXAS MUNICIPALITIES,
WHOSE MEMBERS INCLUDE THE CITIES OF
AUSTIN, BALCH SPRINGS, BANDERA, BARTLETT,
BELTON$ BLOOMING GROVE, BRYAN, CAMERON,
CEDAR PARK, CLIFTON, COMMERCE, COPPERAS
COVE, CORSICANA, DENTON, ELECTRA)
FREDERICKSBURG, GATESVILLE, GEORGETOWN,
GOLDTHWAITE, GRANBURY, GREENVILLE,
GROESBECK, HAMILTON, HENRIETTA, HICKORY
CREEK, NICO, HILLSBORO, HUTTO, KERENS,
LAMPASAS, LEANDER, LOMETA, LONGVIEW,
MART, MEXIA, OLNEY, PFLUGERVILLLE, RANGER,
RICE, RIESEL, ROGERS, ROUND ROCK, SAN
ANGELO, SANGER, SOMERVILLE, STAR HARBOR,
TRINIDAD,TROPHY?�UB,AND WHITNEY
By:
Bo
* Subject to approval by ATM City C oils
i
i
f
11
ATTACHMENT B
EXHIBIT A
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
MID-TEX DIVISION
RATE SCHEDULE: TABLE OF CONTENTS
APPLICABLE TO: Entire System REVISION DATE:
EFFECTIVE DATE: PAGE: 1 OF'f
L, UTILITY OPERATIONS
II. CITIES AND COUNTIES SERVED
III,. DEFINITIONS
IV. GAS SERVICE RATES&RIDERS
Rate R-Residential Sales
Rate C-Commercial Sales
Rate I-Industrial Sales
Rate T-Transportation
Rider CT—Competitive Transport
Rider GCR-Gas Cost Recovery
Rider FF-Franchise Fee Adjustment
Rider S U R—Surcharges
Rate LEP—Line Extension Policy
Rate M-Miscellaneous Charges
Rider RA-Retention Adjustment
Rider TAX-Tax Adjustment
Rider WNA—Weather Normalization Adjustment
Rider RRM—Rate Review Mechanism
Rider CEE--Conservation and Energy Efficiency
V., SERVICE RULES AND REGULATIONS
TARIFF FOR GAS SERVICE EXHIBIT A ATMOS ENERGY CORP.,
MID-TEX DIVISION
RATE SCHEDULE: Rate R-Residential Sales
APPLICABLE TO: Entire System REVISION:
DATE:
EFFECTIVE DATE: PAGE:1 OF 1
RATE R-RESIDENTIAL SALES
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 Md charges to the amounts
due under the riders listed below:
Y
Customer Charge per Bill $10.69 per month
Commodity Charge—All Mcf $1.2710 per Mcf
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..
Rate Review Mechanism:Plus or Minus an amount for rates as calculated In accordance with Rider
RRM
Franchise Fee Adjustment:Plus an amount forfranchise fees calculated in accordance with bider FF,
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.
i
r.
E
TARIFF FOR GAS SERVICE EXHIBIT a ATMOS ENERGY CORP,.,
MID-TEX DIVISION
RATE SCHEDULE: Rate C-Commercial Sales
APPLICABLE TO: Entire System REVISION:
DATE:
EFFECTIVE DATE: PAGE:1 OF 1
RATE C -COMMERCIAL SALES
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 3,000 Mcf
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 Mcf charges to the amounts
due under the riders listed below:
Customer Charge per Bill $20,28 per month
Commodity Charge-All Mcf $ 0.7104 per Mcf
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,
Rate Review Mechanism:Plus or Minus an amount for rates as calculated In accordance with Rider
RRM„
Franchise Fee Adjustment:Pius an amount for franchise fees calculated in accordance with Rider FF.,
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
judsdlction and to the Company's Tariff for Gas Service.
TARIFF FOR GAS SERVICE EXHIBIT A ATMOS ENERGY CORP.,
MID-TEX DIVISION
RATE SCHEDULE: Rate I-Industrial Sales
APPLICABLE TO: Entire System REVISION:
DATE:
EFFECTIVE DATE: PAGE:�OF2
RATE I-INDUSTRIAL SALES
Application
Applicable to Industrial Customers with a maximum daily usage(MDU)of less than 3,500 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 3,500 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 fumished..
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:
Customer Charge per Meter $344.75 per month
First 0 MMBtu to 1,500 MMBtu $0.2200 per MMBtu
Next 3,500 MMBtu $0.1600 per MMBtu
All MMBtu over 5,000 MMBtu $0.0493 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.
Rate Review Mechanism:Plus or Minus an amount for rates as calculated in accordance with Rider
RRM.
Franchise Fee Adjustment:Plus an amount for franchise fees calculated in accordance with Rider FF.,
Tax Adjustment:Plus an amount for.tax calculated in accordance with Rider 7AX,
F
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 Plaits Gas Daily published for the applicable Gas Day In the
table entitled"Daily Price Survey."
TARIFF FOR GAS SERVICE EXHIBIT A ATMOS ENERGY CORP..,
MID-TEX DIVISION
RATE SCHEDULE: Rate I-Industrial Sales
APPLICABLE TO: Entire System REVISION:
DATE:
EFFECTIVE DATE: PAGE:2 OF 2
February 9,2008
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
dally price index recognized as authoritative by the natural gas industry and most closely approximating the
applicable index,
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 acquisltion and installation of the meter.
TARIFF FOR GAS SERVICE EXHIBIT A ATMOS ENERGY CORP,,,
MID-TEX.DIVISION
RATE SCHEDULE: Rate T—Transportation
APPLICABLE TO: Entire System REVISION:
DATE:
EFFECTIVE DATE: PAGE:1 OF 2
RATE T-TRANSPORTATION
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:
N
Customer Charge per Meter $344.75 per month
First 0 MMBtu to 1,500 MMBtu $0.2200 per MMBtu
Next 3,500 MMBtu $0.4600 per MMBtu
17AJ17MM13tu over 5,000 MMBtu $0.0493 per MMBtu
Upstream Transportation Cost Recovery. Plus an amount for upstream transportation costs In
accordance with Part(b)of Rider GCR,
Rate Review Mechanism:Plus or Mlnus an amount for rates as calculated in accordance with Rider
RRM.
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„
Tax Adjustment:Plus an amount for tax calculated in accordance with Rider TAX.
i.
Surcharges:Plus an amount for surcharges calculated In accordance with the applicable rider(s).
i
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 Plaits Gas Daily in the table entitled
"Daily Price Survey"during such month, for the MMBtu of Customer's monthly Cumulative Imbalance,as
EXHIBIT A
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,,
MID-TEX DIVISION
RATE SCHEDULE: Rate T-Transportation
APPLICABLE TO: Entire System REVISION:
DATE:
EFFECTIVE DATE: PAGE:2 OF 2
February 9,2008
defined In the applicable Transportation Agreement, at the end of each month that exceeds 10% of
Customer's receipt quantities for the month,.
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 Company200%
of the midpoint price for the Katy point listed in Platts Gas Dally 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.
i
EXHIBIT A
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
MID TEX DIVISION
RIDER: Rider GCR-Gas Cost Recovery i
APPLICABLE TO: Entire System REVISION:
DATE.-
EFFECTIVE
ATE:EFFECTIVE DATE: PAGE:1 OF 3
October 1,2008
Rider GCR-Gas Cost Recovery
Applicable to Rate R,Rate C,and Rate i for all gas sales made by Company,and applicable to Rate R,
Rate C,Rate I,and Rate T for recovery of Pipeline System costs, The total gas cost recovery amount
due is determined by adding the gas cost calculated in Section(a)below and the pipeline cost calculated
in Section(b)below
The amount due for gas cost(Section(a))is determined by multiplying the Gas Cost Recovery Factor
(GCRF)by the Customer's monthly volume. For Customers receiving service under Rate R and Rate C,
monthly volume will be calculated on an Mcf basis. For Customers receiving service under Rate I,
monthly volume will be calculated on an MMBtu basis and the quantities will be adjusted as necessary to
recover actual costs
The amount due for pipeline cost(Section(b))is determined by multiplying the Pipeline Cost Factor
(PCF)by the Customer's monthly volume. For Customers receiving service under Rate R and Rate C,
monthly volume will be calculated on an Mcf basis. For Customers receiving service under Rate I and
Rate T,monthly volume will be calculated on an MMStu basis and the quantities will be adjusted as
necessary to recover actual costs
(a)Gas Cost
Method of Calculation
The monthly gas cost adjustment is calculated by the application of a Gas Cost Recovery Factor(GCRF),
as determined with the following formula:
i
GCRF=Estimated Gas Cost Factor(EGCF)+Reconciliation Factor(RF)+Taxes(TXS)+Adjustments
(ADJ)
EGCF=Estimated cost of gas,including lost and unaccounted for gas attributed to residential,
commercial,and industrial sales,and any reconciliation balance of unrecovered gas costs,divided
by the estimated total residential,commercial,and industrial sales,
RF=Calculated by dividing the difference between the Actual Gas Cost Incurred,inclusive of
Interest, over the preceding twelve-month period ended June 30 and the Actual Gas Cost Billed
over that same twelve-month period by the estimated total residential,commercial,and industrial
sales for the succeeding October through June billing months
Actual Gas Cost Incurred = The sum of the costs booked in Atmos Energy Corp.., Mid-Tex
Division account numbers 800 through 813 and 858 of the NARUC Uniform System of Accounts,
including the net impact of injecting and withdrawing gas from storage Also includes a credit or
debit for any out-of-period adjustments or unusual or nonrecurring costs typically considered gas
costs and a credit for amounts received as Imbalance Fees or Curtailment Overpull Fees,
Actual Gas Cost Billed=EGCF multiplied by the monthly volumes billed to Residential,
Commercial and Industrial Sales customers,less the total amount of gas cost determined to have
been uncollectible and written off which remain unpaid for each month of the reconciliation period. {
TARIFF FOR GAS SERVICE EXHIBIT A ATMOS ENERGY CORP,,
MID TEX DIVISION
RIDER: Rider GCR-Gas Cost Recovery
APPLICABLE TO: Entire System REVISION:
DATE:
EFFECTIVE DATE: PAGE:2 OF 3
October 1,2008
Any amount remaining in the reconciliation balance after the conclusion of the period of
amortization will be maintained in the reconciliation balance and included in the collection of the
next RF.
Atmos Energy shall file annual reports with the Commission,providing by month the following
amounts: Gas Cost Written Off [Margin Written Off,Tax and Other Written Off,Total Written Off,
Gas Cost Collected and Margin Collected
TXS=Any statutorily imposed assessments or taxes applicable to the purchase of gas divided by
the estimated total residential,commercial,and industrial sales
ADJ=Any surcharge or refund ordered by a
estimated total residential,commercial,and Industrial sales..authority,inclusive of interest,divided by the
(b)Pipeline Cost
Method of Calculation
Each month,a Pipeline Cost Factor(PCF)is calculated separately for each Pipeline Cost Rate Class
listed below. The formula for the PCF is:
PCF=PP 1 S,where:
PP=(P-A)x D,where:
P=Estimated monthly cost of pipeline service calculated pursuant to Rate CGS
D=Pipeline service allocation factor for,the rate class as approved In the Company's most recent
rate case,as follows:
PI ellne Cost Rate Class
Allocation Factor D
Rate R-Residential Service .634783
Rate C-Commercial Service .302805
Rate I-Industrial Service and Rate T-Trans ortation Service .082112
A=Adjustment applied in the current month to correct for the difference between the actual and
estimated pipeline cost revenue of the second preceding month,calculated by the formula:
A=R-(C-A2),where:
i
R=Actual revenue received from the application of the PP component In the second preceding
month.,
C=Actual pipeline costs for the second preceding month,.
A2=The adjustment(A)applied to the PP component in the second preceding month,.
S=Estimated Mcf or MMBtu for the rate class for the current billing month.,
The PCF is calculated to the nearest 0.0001 cent
EXHIBIT A
TARIFF FOR GAS SERVICE ATMOS.ENERGY CORP.,
MID TEX DIVISION
RIDER: Rider GCR-Gas Cost Recovery
APPLICABLE TO: Entire System REVISION:
DATE:
EFFECTIVE DATE: PAGE:3 OF 3
October 1,2008
The Pipeline Cost to be billed is determined by multiplying the Mcf or MMBtu used by the
appropriate PCF. The Pipeline Cost is determined to the nearest whole cent
i
TARIFF FOR GAS SERVICE EXHIBIT A
ATMOS ENERGY CORP..,
MID TEX DIVISION
RIDER: Rider CEE—Conservation&Energy Efficiency
APPLICABLE TO: Entire System REVISION:
DATE:
EFFECTIVE DATE: PAGE:'I OF 1
RIDER CEE—Conservation& Enerav Ef lclencv
Pu ose
Atmos Energy Mid-Tex is proposing to institute a complete Conservation & Energy Efficiency program
which will offer assistance to qualified customer segments in reducing energy consumption and lowering
energy utility bills., The proposal is one where Atmos Energy shareholders will fund a percentage of the
allowable expenses incurred annually, with a customer rate component providing the remainder of the
funding. Following is a high-level, concept summary of the propos9l. Atmos Energy Mid-Tex Division
proposes to work with the communities it serves to develop the details of"a new tariff and programs
addressing conservation and energy efficiency.
Synopsis:
Voucher system to provide free energy savings materials and supplies to qualifying customers of Atmos
Mid-Tex., Qualified Customers will receive up to two hundred dollars ($200.00) worth of caulking,
weather-stripping, sheathing, sealing, water heater blankets, and like materials, other energy saving
devices such as dock-thermostats,set-back devices(."covered items")from approved suppliers/retailers.
Company will undertake efforts to enlist support from community groups, including its own Employee
Action Program, to assist customers with Installation. If it Is determined that professional Installation
capabilities are necessary,the parties will agree on labor assistance amounts.,
.Eli-gibilitv
Low Income — Low-income rate-payers that qualify for heating bill assistance through LiHEAP
agencies and all agencies that distribute Atmos "Share the Warmth" funds Agencies that allocate
assistance funds denote customer as Low income,a status that lasts for one year.
Senior Citizen--Primary account holder can request eligibility through ATM call center or web-site.
Customer provides primary SSN which Is verified through Social Security Administration. And account
holder that Is or turns 65 years old in that year becomes eligible,
Funding
Initial program funding will be at two million dollars ($2,000,000). Atmos Energy shareholders will
contribute one million dollars ($1,000,000..00) to this initiative annually with ratepayers providing one
million dollars($1,000,000,.00).per year. it Is proposed that the program operate on an October 1 through
September 30 year,with benefits being capped at the two million dollar level for the initial program period.
Administration:
A third-party administrator will coordinate qualification of customers, voucher distribution, subsequent
verification and reimbursement of eligible expenditures and general program administration,. Program
administration expenses will be funded from the annual approved budget.
Program audits will be conducted and the results provided to any interested party within 120 days of the
end of each program year to determine effectiveness,
TARIFF FOR GAS SERVICE EXHIBIT A ATMOS ENERGY CORP.,
MID-TEX DIVISION
RIDER: Rider WNA--Weather Normalization Adjustment
APPLICABLE TO: Entire System REVISION:
DATE:
EFFECTIVE DATE: PAGE: 1 OF 3
November 9,2008
RIDER WNA--Weather Normalization Adiustment
Provisions for Ad
austrnent
the base rate per Mcf'(1,000,000 Btu) for gas service set forth in any Rate Schedules utilized by the
cities of the Mid-Iex Division service area for determining normalized winter period revenues shall be
adjusted by an amount hcirinafler described,which amount is referred to as the"Weather Normalization
Adjustment" The Weather Normalization Adjustment shall apply to all temperature sensitive r-esidential,
and commercial bilis based on meters read during the revenue months of'Novembei through April
Computation of Weather Normalization Ad'ustment
The Weather Normalization Adjustment Factor shall be computed to the nearest one-hundredth cent
per Mcf by the following formula:
WNAFi = Ri (HSFi x (NDD-ADD))
(Bii + (HSFi x ADD) )
Where
i -- 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,Mcf
Ri = base rate of temperature sensitive sales for the ith schedule or
classification approved by the entity exercising original jurisdiction.
HSFi = heat sensitive factor for the ith schedule or classification calculated as the
slope of the linear regression of average sales per bill(Mcf)and actual
heating degree days by month for the test year-by schedule or,classification
and weather station as part of"the RRM filing..
D = billing cycle normal heating degree days calculated as the simple ten-year
average of actual heating degree days..
1
ADD = billing cycle actual heating degree days„
Bli = base load sales for the ith schedule or-classification calculated as the y-
intemept of the linear regression of average sales per bill(Mcf)and actual
heating degree days by month for the test year by schedule or classification
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
MID•TEX DIVISION
RIDER: Rider WNA--Weather Normalization Adjustment
APPLICABLE TO: Entire System REVISION:
DATE:
EFFECTIVE DATE: PAGE:2 OF 3
November 1,2008
and weather station as pact of the RRM filing
the Weather Nozznalization Adjustment fbi the jth customer in ith rate schedule is computed as:
WNA;= WNAF; x q,j
Whete qu is the relevant sales quantity for the jth customer in ith rate schedule.
Filings with Entities Exercising Original Jurisdiction
As part of'its annual RRM filing the Company will file (a)a copy of-each computation of•the
Weather Normalization Adjustment Factor,(b)a schedule showing the effective date ofeach such
Weather Normalization Adjustment,(c)a schedule showing the factors of values used in calculating
such Weather Normalization Adjustment and(d)a random sample and audit of thirty(30)actual
customer bills,with customer information deleted,for each rate schedule or,classification to which the
WNA was applied in the preceding 12 month peiiod,. To the extent that source data is needed to audit
the WNA application,such data will be provided by the Company as part of the annual RRM filing„
If the RRM is discontinued,as provided in the Rider RRM tariff;the infbrmation required herein to be
filed with the entities exercising original jurisdiction shall be filed on March 1 of each year.,
Base Use/Heat Sensitivity(HSF Factors
Residential Commercial
Base use HSF Base use HSF
Weather Station Mcf M&EDD 1Vlcf McflliDD
Abilene 1.14 .0131 8.11 .0631
Austin 1.31 .0136 18.05 .09
Dallas 1.57 .0185 18.08 .0925
Waco 1.20 .0138 10.97 .0606
Wichita 1.27 .0147 1158 .0581
Falls
EXHIBIT A
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
MID-TEX DIVISION
RIDER: Rider WNA—Weather Normalization Adjustment
APPLICABLE TO: Entire System REVISION:
DATE:
EFFECTIVE DATE: PAGE:3 OF 3
November 1,2008
Sample WNAFi Calculation:
)
.1533 per Mcf' = 1.2267 x {.0131 x (30-1-7)
(1.,14 + (..0131 x 17) )
Where
i — Residential Single Block Rate Schedule
Ri = 1.2267 per MCF(Rate R-Final Order GUD No.96 70)
HSFi = .0 13 1(Residential-Abilene Area)
NDD = 30 HDD(Simple ten-'yeas average of Actual HDD for Abilene Area—9/15/06
—10114/06)
ADD — 17 HDD(Actual HDD for Abilene Area—9/15/06—10/14/06)
Bli — 1.14 Mcf(Residential-Abilene Area)
i
EXHIBIT A
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP..,
MID-TEX DIVISION
RIDER: Rider RRM—Rate Review Mechanism
APPLICABLE TO: Entire Mid-Tex Division REVISION
DATE:
EFFECTIVE DATE: PAGE: 1 of 10
RIDER RRM—RATE REVIEW MECHAN7[SM
P ose:
This mechanism is designed to provide annual earnings transparency All rate calculations under this tariff'
shall be made on a system wide basis. If;through the implementation of the provisions of this mechanism,
it is determined that rates should be decreased or increased,then rates will be adjusted accordingly in the
manner set forth herein. The rate adjustments implemented under this mechanism will reflect annual
changes in the Company's cost of service and rate base. This adjustment will be authorized for an Initial
Implementation Period. With the conclusion of the final rate a(%ustment; if any, for the Initial
Implementation Period,each entity having original jurisdiction may revoke,amend,or approve Subsequent
Implementation Period(s)for,the mechanism,
Definitions
a) The Annual Evaluation Date shall be the date the Company will make its annual filing under this
mechanism. The Annual Evaluation Date shall be no later than March 1,of each year. This filing shall be
effective in electronic form where practicable. The initial filing shall be made the later of March 31,2008
or upon approval of this tariff:
b)Audited Financial Data shall mean the Company's books and records related to the Company's Mid-
Tex operating area and shared services operations Audited Financial Data shall not require the schedules
and information provided under this tariff to undergo a separate financial audit by an outside auditing firm
similar to the Company's annual financialaudit,
c) the Evaluation Period is defined as thetwelve month period ending December 31,of each calendar
year The initial Evaluation Period shall be calendar year 2007
d) the Rate Effective Period is defined as the earlier of the twelve month period for which rates
determined under this mechanism will be in effect or subsequent rates are implemented
e)Per Connection Basis is defined as the existing average number of'Mid-Tex active meters to customers
during the Evaluation Period..
f)Initial Implementation Per lod is defined as the three(3)year period commencing with the Company's
filing under this mechanism for the calendar year 2007,effective October 1,2008,and shall conclude with
the implementation of rate adjustments,if any,for the third Rate Effective Period.
g) Subsequent Implementation Period is defined as any three(3)year period after the conclusion of'
the
Initial Implementation Period
h) Final Order is defined as the most recent order establishing the Company's latest effective rates for the
area in which the mechanism is implemented,and shall include municipal rate ordinances and resolutions,
i
r
EXHIBIT A
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
MID-TEX DIVISION
RIDER: Rider RRM—Rate Review Mechanism
APPLICABLE TO: Entire Mid-Tex Division REVISION
DATE:
EFFECTIVE DATE: PAGE:2 of 10
Rate Review Mechanism
The Company shall file with each regulatory authority having original jurisdiction over.the Company's
rates the schedules specified below for the Evaluation Period, with the filing to be made by the Annual
Evaluation Date following the end of the Evaluation Period. The schedules,which will be based upon the
Company's Audited Financial Data,as adjusted,and provided in the same format as Atmos'rate filing with
municipalities on September 20,2007,will include the following:
a) Company's 13 month average actual gross plant in service, accumulated depreciation,
accumulated deferred income taxes,inventory, working capital,and other-rate base components
for the Evaluation Period, A 13 month average will be used for these items for the true up
calculation;Evaluation Period ending balances for these items will be used for the calculation of
rates for the Rate Effective Pexiod. The ratemaking treatments, principles, findings and
adjustments included in the Final Order will apply Regulatory adjustments due to prior
regulatory rate base adjustment disallowances will be maintained, Cash working capital will be
calculated using the lead/lag days approved in the Final Order Accumulated deferred income
taxes (ADIZ") will be calculated using the methodology used in the Final Order.. The RRM
Schedules&Information section of this tariff identifies those ADIT components to be included in
the calculation of rate base for both the Evaluation Period and Rate Effective Petiod calculations..
b) The Company's depreciation expense, operating and maintenance expense, and taxes other than
income taxes booked in the period will be used for the true-up calculation purposes Depreciation
rates booked in the period will be those approved in the Final Order, or the rate most recently
approved, All calculation methodologies will be those approved in the Final Order except where
noted or included in this tariff or in the most recent order addressing the methodology.. In
addition,the Company shall exclude from operating and maintenance expense the discretionary
costs to be disallowed from Rider RPM filings listed in the RRM Schedules and Information
section of this tariff.
c) Return on Equity(ROE)shall be maintained at 9 61/o
d) Cost of debt will reflect actual cost fnr the Evaluation Period., A 13 month average cost of debt
and capital structure will be used for the true up calculation;Evaluation Period ending balances for
cost of debt and capital structure will be used for the calculation of rates for the Rate Effective
Period. Capital structure will be the actual Evaluation Period ratio of long-term debt and equity,
with percentage equity not to exceed the percentage established in the Final Order in G.U.D.No.
9670(48 1%equity),based on the calculation methodology outcomes used above,
e) All applicable accounting adjustments along with all supporting
may include: work papers. Such adjustments
EXHIBIT A
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP,
MID-TEX DIVISION
RIDER: Rider RRM—Rate Review Mechanism
APPLICABLE TO: Entire Mid-Tex Division REVISION
DATE:
EFFECTIVE DATE: PAGE:3 of 10
1) Pro-forma adjustments to update and annualize costs and revenue billing determinants for
the Rate Effective Period,
2) Pro-forma or other adjustments required to properly account for atypical, unusual, or
nonrecurring events recorded during the Evaluation Period,
f) Shared Services allocation factors shall be recalculated each year based on the latest component
factors used during the Evaluation Period,but the methodology used will be that approved in the
Final Order..
Calculation of'Rate Adj j=W
a) The Company shall -provide additional schedules indicating the following revenue
deficiency/sufficiency calculations using the methodology accepted in the Final Order,a 13 month
average will be used for the specified items for the true up calculation,Evaluation Period ending
balances will be used for the calculation of rates for the Rate Effective Period. These schedules
shall identify the rate adjustments necessary for both a true-up of revenue for the Evaluation
Period and the setting of prospective rates for the Rate Effective Period., The net result of these
rate adjustments shall be reflected in the proposed new rates to be established for the Rate
Effective Period.. In calculating the required rate adjustments,such adjustments will be made pro-
ratably to the customer charge and usage charge based upon actual revenue generated,as adjusted
under the Company's approved Weather Normalization Adjustment (WNA) Rider. Provided,
however, that neither the Residential nor the Commercial customer charges may increase more
tlian 20%per year
b) If'Company's earnings during the Evaluation Period exceed 9..6%return on common equity,the
Company shall calculate a decrease to rates to reduce the revenue required to achieve a return on
equity of 9.6%for the Evaluation Period. If Company's earnings during the Evaluation Period are
below 9.6%return on common equity,the Company shall calculate an increase in rates to collect
the additional revenue requirrd to increase its return on equity for the Evaluation Period to 9 6%.
In order to avoid double-counting of true-up revenues, any true-up revenue booked during the
Evaluation Period that is related to prior periods will be removed in determining both the
prospective rates for the Rate Effective Period and the true-up increase or decrease related to the
current Evaluation Period The RRM Schedule&Information section of this tariff provides an
example calculation. After the prospective rates fbr the Rate Effective Period are calculated,the
true-up element shall be added to or deducted fiom those rates in order to determine the rates that
shall thereafter be recovered
c) The Company may also adjust rates for the Rate Effective Period to include recovery of any
known and measurable changes to operating and maintenance costs including,but not limited to,
all payroll and compensation expense, all benefit expense,all pension expense,insurance costs,
materials and supplies,bad debt costs,all medical expense,transportation and budding and lease
costs for the Rate Effective Period Provided,however,that adjustments may only be made for
costs that are reasonable and necessary. Additionally, utility plant and rate base for the Rate
TARIFF FOR GAS SERVICE EXHIBIT A ATMOS ENERGY CORP.,
MID-TEX DIVISION
RIDER: Rider RRM—Rate Review Mechanism
APPLICABLE TO: Entire Mid-Tex Division REVISION
DATE:
EFFECTIVE DATE: PAGE:4 of 10
Effective Period will be established by using the Evaluation Period ending balances, including
associated changes in depreciation and amortization expense and taxes. In calculating the
Company's known and measurable changes for prospective RRM adjustment purposes, the
following limitations will apply,on a Pet Connection Basis,
I. Operating and Maintenance expenses per connection for the Rate Effective Period cannot
increase more than 5% per year without specific identification and justification. Any
proposed adjustment above 5%per year, is subject to the provisions of the Evaluation
Procedures of this tariff.. Such procedures provide that the regulatory authority will
review the proposed adjustment and that the Company and regulatory authority will work
collaboratively to seek agreement on the proposed adjustments to the Company's
schedules and proposed rates. Justification for such expenditures over the cap shall
include an event or combination of events beyond the control of the Company. The
beginning adjusted Operation and Maintenance expense per connection for the 200.7
RRM Evaluation Period will be limited to not exceed $151 mibon divided by the
connections for the period The increase in adjusted Operation and Maintenance
expenses per connection for the 200$ Rate Effective Period and subsequent Rate
Effective periods cannot exceed 5% per yeaz, without specific identification and
justification The RRM Schedule & Information section of this tariff provides an
example calculation of the 5%limit
2. Net plant investment per connection for the Rate Effective Period cannot increase more
than 5% per year without specific identification and justification. Any proposed
adjustment above 5%per year,is subject to the provisions of the Evaluation Procedures
of this tariff. Such procedures provide that the regulatory authority will review the
proposed adjustment and that the Company and regulatory authority will work
cDUaboratively seek agreement on the proposed adjustments to the Company's schedules
and proposed rates. however, in performing a cap test to verify compliance,Company
shall exclude any changes in net plant investment associated with federal,state,or local
mandates related to safety, compliance, or road moves. The 2007 true up calculation
shall be made using the net plant investment of $1,243,607,206. The initial 2008
prospective rate will be set using net plant limited to not exceed[$1,243,60'7,206 divided
by average active meters for the 12 months ended June 30 2007)times 1025 times the
average active meters for calendar year 2007.. Subsequent filing calculations of net plant
investment will be made using the same method used in the Company's September 20,
2007 Statement of Intent with the following exceptions: 1)A 13 month average will be
used for net plant in the true up calculation and 2)Evaluation Period ending balances will
be used for net plant in the calculation of rates for the Rate Effective Period
the rate increase limitations set forth in this tariff'shall not preclude the Company from
recovering any excluded net plant costs during a subsequent Evaluation Period in which
the 5%limitation for net plant investment is not reached or in a subsequent Statement of
Intent case To the extent that the Company seeks to recover any excluded net plant costs
during a subsequent Evaluation Period in which the 5% limitation for net plant
investment is not reached or in a subsequent Statement of Intent case,the Company shall
EXHIBIT A
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP..,
MID-TEX DIVISION
RIDER: Rider RRM—Rate Review Mechanism
APPLICABLE TO: Entire Mid-Tex Division REVISION
DATE:
EFFECTIVE DATE: PAGE: 5 of 10
identify these costs as a specific line item in the schedule accompanying the RRM rate
adjustment filing
the regulatory authority may disallow any net plant investment that is not shown to be
prudently incurred. Approval by the regulatory authority of net plant investment
pursuant to the provisions of this tariff shall constitute a finding that such net plant
investment was prudently incurred.. Such finding of prudence shall not be subject to
further review in a subsequent Evaluation Period or Statement of Intent filing.,
d) The Company also shall provide a schedule demonstrating the"proof'of revenues"relied upon to
calculate the proposed rate for the Rate Effective Period.. The proposed rates shall conform as
closely as is practicable to the revenue allocation principles approved in the Final Order.
Attestation
A sworn statement shall be filed by the Company's Chief Officer in Charge of Mid-Iex Operations
af£uming that the filed schedules are in compliance with the provisions of this mechanism and are true and
correct to the best of his/her knowledge,information and belie£ No testimony shall be filed.
Evaluation Procedures
The regulatory authority having original jurisdiction over the Company's rates shall have no less than
ninety(90)days to review the Company's filed schedules and work papers The Company will be prepared
to provide all supplemental information as may be requested to ensure adequate review by the relevant
regulatory authority. The Company shall not unilaterally impose any limits upon the provision of
supplemental information and such information shall be provided within ten (10) working days of the
original request. The regulatory authority may propose any adjustments it determines to be required to
bring the schedules into compliance with the above provisions.
During and following the ninety(90)day review period and a thirty(30)day response period,the Company
and the regulatory authority will work collaboratively and seek agreement on,the proposed adjustments to
the Company's schedule and proposed rates.. If agreement has been reached by the Company and the
regulatory authority,the regulatory authority shall authorize an increase or decrease to the Company's rates
so as to achieve the revenue levels indicated for the Rate Effective Period. If,at the end of the thirty(30)
day response period, the Company and the regulatory authority have not reached agreement on the
proposed adjustments, the Company shall have the right to appeal the regulatory authority's action or
inaction to the Railroad Commission of Texas Upon the filing of any appeal,the Company shall have the
right to implement the proposed RRM rate adjustment,subject to refund,
If approved by the entity exercising original jurisdiction,the rates established pursuant to the Rate Review
Mechanism for the first Rate Effective Period shall be effective on October 1, 2008, Thereafter, rates
established pursuant to the Rate Review Mechanism for subsequent Rate Effective Periods,if approved as
provided herein,shall be effective on July 15 of each year
Reconsideration and App
EXHIBIT A
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
MID-TEX DIVISION
RIDER: Rider RRM—Rate Review Mechanism
APPLICABLE TO: Entire Mid-Tex Division REVISION
DATE:
EFFECTIVE DATE: PAGE: 6 of 10
Orders issued pursuant to this mechanism are ratemaking orders and shall be subject to appeal under
Sections 102.001(b)and 103 021,et seq;of the Texas Utilities Code(Vernon 2007).
Notice
Notice of'the annual Rate Review Mechanism filing shall be provided pursuant to Section 104 103, TF-x,
UTTL,CODE ANN no later than forty-five(45)days after the Company makes its annual filing pursuant to
this tariff:. The notice to customers shall include the following information:
a) a description of'the proposed revision of'rates and schedules; '
i
b) the effect the proposed revision of rates is expected to have on the rates applicable to each
customer class and on an average bill for each affected customer;
c) the service area or areas in which the proposed rate adjustment would apply,
d) the date the proposed rate adjustment was filed with the regulatory authority;and
e) the Company's address, telephone number and website where information concerning the
proposed rate adjustment may be obtained..
RRM Schedules and Information
Accumulated Deferred Income Tax("ADII")Items Io Be Reco Rate
ni A h $ase
the following list identifies those ADIT components to be included in the calculation of rate base for both
the Evaluation Period and Rate Effective Period calculations:
Mid-lex.,
Gas Plant in Service
Insurance Accruals
Benefit Accruals
Deferred Expense Projects
Allowance for Doubtful Accounts
Customer Advances
UNICAI?Section 263A Costs(which shall be removed from Atmos Mid-Tex when these costs are
transferred to Atmos Pipeline Iexas)
Regulatory Asset-Mid Tex
Regulatory liability-Mid-Tex
Other Plant
EXHIBIT A
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP,
MID-TEX DIVISION
RIDER: Rider RRM--Rate Review Mechanism
APPLICABLE TO: Entire Mid-Tex Division i REVISION
--4 DATE:
EFFECTIVE DATE: PAGE:7 of 10 `
Accumulated Deferred Income Iax�"ADII' Items I BQ Reco ' ed in Rate Base
SSU-Customer-Support:
Gas Plant in Service
SSU-General of5ce:
Gas Plant in Service
Insurance Accruals
Benefits Accruals
Deferred Expense Projects
Prepaid Expenses
Regulatory Liability-Atmos 109
FAS 115 Adjustment
Treasury Lock Adjustment
Revenue Agent Report Carryforward Adjustments 1990-1985
Tax Net Operating Loss Credit Carryforwards
State Bonus Depreciation
R&D Credit Valuation Allowance
Other Plant
Discreti Costs to Be Disallowed 'der RRM filings
The following types of employee reimbursed expenses and directly incurred costs are to be removed from
all expense and rate base amounts included within Rider-RRM filings for the Evaluation Period and for the
Rate Effective Period:
Amounts incurred for travel,meals or entertainment of'employee spouses
Amounts for air travel that exceed published commercial coach air fares
Amounts incurred for hotel rooms exceeding$250 per night inclusive of'taxes and fees assessed
on such rooms.
Amounts for alcoholic beverages
Amounts paid for, admission to entertainment, sports, art or cultural events, and all event
sponsorship costs
Amounts for social club dues or fees.
i
i
E)GMIT-A
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,,
MID-TEX DIVISION
RIDER: Rider RRM—Rate Review Mechanism
APPLICABLE TO: Entire Mid-Tex Division REVISION
DATE:
EFFECTIVE DATE: PAGE:S of 10
Example Calculation A-Revenue for RRM Prue-Up Portion of'Rate
"FOR IL L US IRA TION PURPOSES ONLY,
AMOUNTS ARE HYPOTHETICAL,AND DO NOI CORRESPOND
WITH OTHER EXAMPLE SCHEDULES**
Calendar Calendar Calendar Calendar Calendar
2007 2008 2009 2010 2011
Per Books Revenue,excluding Irue-Up Revenue
from prior Evaluation Periods $150,000 $156,000 $157,700 $158,200 S158300
Per-Books Iiue-Up Revenue based on 2007
Evaluation Peziod[1] 800 1,200
Per-Books True-Up Revenue based on 2008
Evaluation Period[]] (364) (546)
Per-Books True-Up Revenue based on 2009
Evaluation Period[1] 234 351
Iota]Per-Books Revenue $150,000 $156,800 $158,536 $157,888 $159,051
Add/(Subtract):
Revenue from Riders GCR,FF,&?AX (110,000) (111,000) (112,000)
Surcharges for Rate Case Cost Recovery (200) (200) (200)
True-Up Revenue for 2007 Evaluation Period[1] (800) (1,200)
Tree-Up Revenue for 2008 Evaluation Period[1] 364
Remove out-of-period and unusual items
Realized Revenue for Irue-Up Calculation 39,800 44,800 45,500
i
Revenue Requirement at 9 6%ROE[2] 41,800 43,890 46,085
True-Up Increase(Decrease),subject to Revenue-
Related Iax Gross-up $ 2,000 $ (910) $ 585
[1] For illustration purposes,example assumes 409 of the total calculated true-up is collected in the
following calendar year,. Each true-up is subject to a proof of collection or refund after the
collection/refund period,and any residual amount will be refunded or collected in the
subsequent period,
[2] Since realized revenue for the true-up calculation excludes Riders GCR,FF,and IAX,as well as
surcharges for rate case cost recovery,the revenue requirement for purposes of the true-up calculation
also excludes all corresponding expenses for the Evaluation Period.
i
EXH 03IT A.
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
MID-TEX DIVISION
RIDER: Rider RRM—Rate Review Mechanism
APPLICABLE TO: Entire Mid-Tex Division REVISION
DATE:
EFFECTIVE DATE: PAGE: 9 of 10
Example Calculation B-Revenue for RPM Prospective Portion of'Rate
**FOR 11LUSIRAT ION PURPOSES ONLY.
AMOUNTS ARE HYPOTHETICAL,AND DO NO'I CORRESPOND
WITH OTHER EXAMPLE SCHEDULES**
Oct 2008-Sept July 15,2009- July 15,2010-
2009 July 14,2010 July 14,2011
Rate Effective Period Revenue Price-Out at Current Rates
[l] $ 60,000 $ 65,000 $ 68,000
Remove Irue-Up Portion of Revenue[2] (2,500) 1,100
Revenue at Current Rates for Rate Effective Period
Deficiency Calculation 60,000 62,500 69,100
Revenue Requirement for Rate Effective Period 65,000 68,250 '71,663
Rate Effective Period Revenue Increase/(Decrease)before
?rue-Up,subject to Revenue Tax Gross-Up[3] $ 5,000 $ 5,750 $ 2,563
[1] Io be calculated using proforma annualized billing determinants,as provided for in this tariff',priced
out at the current rates at the time of the deficiency calculation,
[2] To be calculated using pro-forma annualized billing determinants,as provided for in this tariff;priced
out at the portion of current rates at the time of the deficiency calculation intended to true up prior
Evaluation Period(s)
[3] This represents the prospective deficiency portion of the RRM adjustment I he true-up adjustrnrent,
demonstrated in Example Calculation A,will be combined with this adjustment to determine the
total adjustment for the Rate Effective Period.
I
EXHIBIT A
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP..,
MID-TEX DIVISION
RIDER: Rider RRM—Rate Review Mechanism
APPLICABLE TO: Entine Mid-Tex Division REVISION
EFFECTIVE DATE: DATE: .PAGE: 10 of 10
Example Calculation C-Operation&Maintenance Expense Cap rest
"All Amounts are Hypothetical,and do not correspond with other example calculations**
Evaluiation Period(Calendar Year) 2007
Benchmark OAM Per Connection{increased 5%annually) $ 97.23 $ 102.09 $ 107.19
Gas Service Connections 11] 1,553,000 1560.000 1,567,000
Maximum O&M Allowed $ 151,000,000 $ 159,260,400 S 167,966,730
[1 J For illustration purposes only,Gas Service Connections are estimated for 2007 and are assumed to
increase 7,000 connections per year Therefore,`Maximum O&M Allowed'is estimated for 2008 and
2009. Actual Gas Service Connections for 2007 will he used to calculate the 2007 O&M per Connection,
F or each subsequent Evaluation Period,the prior period O&M pet Connection will be increased by 5%,and
thea multiplied by the actual Gas Service Connections for the same period to derive the`Maximum O&M
Allowed'
Errata
Schedule A
Pagel of 2
ATMOS ENERGY CORP.,MIQ TEX DIVISION
REVENUE REQUIREMENTS BY SERVICE CLASS
TEST YEAR ENDING JUNE 30,2007
EXHIBIT B TO SETTLEMENT AGREEMENT BETWEEN ATMOS ENERGY AND THE ATM CITIES
Line Current Proposed
No. Description Proposed Percent
Revenues Revenues' Chan Change
(a) (b) (c) (d) (e)
1
2 Residential(Base Revenue) $ 277,485,494 $ 280,887,686 $ 3,402,192 1.23%
3 Residential(Rider GCR) 625,991,764 625,991,761 0.00%
4 Residential(Rider FF&Rider TAX) 52 488,696 52,686,332 197,637 0.38%5 Total Residential $ 955,965,951 $ 959 565 779 $ 3,599,828
0.38%
6
7 Commercial(Base Revenue) $ 59,666,416 $ 85,119,647 $ 5,453,231 9.14%
8 Commemal(Rider GCR) 399,910,917 399,910,9.17 0.0096
9 Commercial(Rider FF 8 Rider TAX) 26,699,748 27,016,551 316,803 1.19°7°
10 Total Commeraal. $ 4861277,080 $ 492 047115 $ 5,770,035 1.19%
11
12 Industrial/Transportation(Base Revenue) $ 8,464,218 $ 9,057,219 $ 596,001 7.04%
13 IndustriallTransportation(Rider GCR) 33,616,178 33,616,178 _ °
14 industrial/Transportatlon(Rider FF 8 Rider TAX) 2.444,541 2,479,166 34,625 142%
15. Total Industrial/Transportation $ 44,521,937 $ 45152 563 $ 630,625 1.42%16
17 Other Revenue(Base Revenue) $. 17,418,758 $ 17,418,758 S - 0.000/018 Other Revenue(Rider GCR) 0.00%
19 Other Revenue(Rider FF&Rider TAX) 1,011,966 11011,966 0.00°7°%
20 Total Other Revenue $ 18,430,724 $ 18,430,724 $ 0.00
21
22 Base Revenue $ 363,031,887 $ 372,483,310 $ 9,451,423 2,6
23 Rider GCR 1,059,518,856 1,059,518,856 2.60°
24 Rider FF S Rider TAX 82.644.951 83,194,015 ,064 %
549 0.66%
26
25 Total Operating Revenues $ 1,505,195,693 $ 1,515,196,181 $ 10,D00,488 0.66%
-
27 Note:
28 'Proposed Revenues are the result of the application of the proposed rates to billing determinants.
i
t
i
i
Errata
Schedu[e A
Page 2 of 2
ATMOS ENERGY CORP.,MID-TEX DIVISION
REVENUE REQUIREMENTS
TEST YEAR ENDING JUNE 30,2007
Settlement Proposal
Line No.. Description Ref Base Revenue Rider GCR Rlder FF S Rider TAX Total
(a) (b) (c) (d) (e) (fl (9)
1
2 Rider GCR Part A Schedule H $ - $ 976,143,417 $ $ 976,143,417
3 Rider GCR Part B Schedule 1 83,375,439 83,375.439
4 Total Rider GCR $ 1,059,518,856
5 $ 1.059,518.856
6 Operation and Maintenance Expenses Schedule F-1
7 $ 150,891,394 $ 150,891,394
8 Taxes Other than Income Taxes Schedule•F-5 20,756,918
9 $ 83,194,015 103,950,933
10 Depreaatlon and Amortization Expense Schedule F-3 79,148,614
11 79,148,614
12 Interest on Customer Deposits Schedule F-7 1,593,388
13 1,593,388
14 Rate Base Schedule B $ 1,123,773,895
15 Rate of Return Schedule G 7.79%
16 87,535,806
17 87,535,806
18 Inoome Taxes Schedule F-8 32,556,703
19 32.556,703
20 Revenue Requirements $ 372,482,822 $ 1,059,518,856 $. 83,194,015 $ 1,515,195,693
21
22 Current Revenues Schedule
23 $ 1,505,195,693
24 Proposed Change $ 10,000,000
Errata WP J-4
Page 1 of 3
ATMOS ENERGY CORP, MID-TEX DIVISION
SUMMARY PROOF OF REVENUE AT PROPOSED RATES
TEST YEAR ENDING JUNE 30,2007
Line Descriptlon Total Reference
(a) (b) (c)
Rate R
1 Rate Characteristics:
2 Customer Charge $10..69 ccs
3
4 Consumption Charge($/Mcf) $1.2710 ccs
5
6 Rider GCR Part A $7..5520 Schedule H
7 Rider GCR Part B $0..5990 Schedule I
8
9 Billing Units(1):
10 Bills 17,144,647 wP j-1 4
11 Total MCF 76,798,906 WP-j-1 1
12
13 Present Revenue:
14 Customer Charge $ 183,276,276
15 Consumption Charge 97,611,410
16 Base Revenue $ 280,887,686
17 Rider GCR Part A 579,988,302
18 Rider GCR Part B 46,003,459
19 Subtotal $ 906,879,447
20 Revenue Related Taxes 52,686,332
21
22 Total Proposed Revenue-Rate R $ 959,565,779
23
24 Note 1: See Billing Determinants Study for details,
i
i
Errata WP J-4
Page 2 of 3
ATMOS ENERGY CORP., MID-TEX DIVISION
SUMMARY PROOF OF REVENUE AT PROPOSED RATES
TEST YEAR ENDING JUNE 30,2007
Line Description Total Reference
(a) (b) (c)
Rate C
1 Rate Characteristics:
2 Customer Charge $20,.28 ccs
3
4 Consumption Charge($/Mcf) $0,7104 ccs
5
6 Rider GCR Part A $7.5520 Schedule H
7 Rider GCR Part B $0.5001 schedule 1
8
9 Billing Units(1):
10 Bills 1,471,279 WP J-1 2
11 Total MCF 49,665,131 WPI-J-1 2
12
13 Present Revenue:
14 Customer Charge $ 29,837,538
15 Consumption Charge 35,282,109
16 Base Revenue $ 65,119,647
17 Rider GCR Part A 375,072,987
18 Rider GCR Part B 24,837,930
19 Subtotal $ 465,030,564
20 Revenue Related Taxes 27,016,551
21
22 Total Proposed Revenue- Rate C 492,047,115
23 _-.
24 Note 1: See Billing Determinants Study for details,
Errata WP J-4
Page 3 of 3
ATMOS ENERGY CORP,,, MID-TEX DIVISION
SUMMARY PROOF OF REVENUE AT PROPOSED RATES
TEST YEAR ENDING JUNE 3012007
Line Description Total Reference
(a) (b) (c)
Rate I &T
1 Rate Characteristics:
2 Customer Charge $344.75 ccs
3
4 Block 1 ($/MMBTU) $0.2200 ccs
5 Block 2($/MMBTU) $0.1600 ccs
6 Block 3($/MMBTU) $0.0493 ccs
7
8 Rider GCR Part A $7„5520 schedule H
9 Rider GCR Part B $0.,2804 Schedule i
10
11 Consumption Characteristics:
12 Block 1 (First 9,500 MMBTU) 021691 (1)
13 Block 2(Next 3,500 MMBTU) 0..24651
14 Block 3(Over 5,000 MMBTU) 0.,53657 f1�
15
16 Billing Units(1):
17 Bills 11,542 WP J-1 3
18 Block 1 9,694,939 WP—J-1319 Block 2 11,018,084 WPI-J-1.3
20 Block 3 23,982,442 WP J-1.3
21 Total MMBTU 44,695,465
22
23 Sales Volumes 2,858,579 WP J-1 3
24
25 Present, Revenue:
26 Customer Charge $ 3,979 105
27 Block 1 '
28 Block 2 2,132,8871,762,893
29 Block 3 1,182,334
30 Base Revenue $ 9,057,219
31 Rider GCR Part A 21,082,128
32 Rider GCR Part B 12,534,050
33 Subtotal $ 42,673,397
34 Revenue Related Taxes 2,479,166
35
36 Total Proposed Revenue-Rate I&T $ 45152 563
37
38 Note 1: See Billing Determinants Study for details,
1
AGENDA INFORMATION SHEET
ITEM NO.
FA
KGROUND ON SETTLEMENT
GREEMENT RESOLUTION
REDUCTION IN RATE REQUEST BY 80%
Atmos requested a $52 million rate increase. The settlement provides for a $10
million increase, this is more than an 80% reduction in the requested increase in
rates. Under the settlement, residential rates will increase by 20 cents per
month.
Atmos Reciuested Rates Settlement Aizreement
Current Atmos Req Change Settlement Chan e
Monthly Bill Monthly Bill $ % Monthly Bill $ %
Residential(using $54.99 $57.07 $2.08 3.77% $55.19 $0.20 0.37%-
4.4 Mcf per month)
Commercial(using $296.15 $305.36 $9.21 3.11% $299.60 $3.48 1.18%
30 Mcf per month)
GRIP IS ELIMINATED
Atmos has been making filings annually under its Gas Reliability Infrastructure
Program ("GRIP"). The agreement calls for the end of GRIP filings. It will be
replaced by a Rate Review Mechanism ("RRM"). The RRM will permit
participation by ATM to review each expenditure. This was not possible under
the GRIP filings. Under GRIP, cities did not get to review expenditures for
reasonableness or prudence.
INCREASE IN FRANCHISE COMPENSATION
The Settlement also provides that as a member of ATM, the city council may
increase franchise compensation up to 5% of gross revenue. ATM will provide
the forms for making the request to increase franchise compensation.
1
ATMOS TO DISCUSS PIPELINE PROJECTS QUARTERLY
Atmos will meet quarterly with representatives of ATM to discuss pipeline projects
and other capital expenditures so that ATM Cities can have dialogue about such
investments.
CONSERVATION PROJECT INITIATED
The Settlement calls for a conservation program to be initiated which is aimed at
modest income customers. ATM will have input in developing the program. To
start with, ratepayers and shareholders will contribute $1 million to the program.
FUNDS ARE PROVIDED FOR RATE REVIEWS
The Settlement provides funds for consultants to review the changes in rates
sought by Atmos. Such finding was not available to review the annual GRIP
filings.
CUSTOMER CHARGE REDUCTIONS
On October 1, 2008, the residential customer charge is to be reduced from $10.69
to $7.00 and the commercial customer charge is to be reduced from $20.28 to
$13.50. These changes promote conservation. They provide an incentive to use
less gas. In general, low-income customers and low use small businesses will
benefit from the customer charge reductions.
IMPROVEMENTS IN RATE REVIEW MECHANISM ("RRM")
ATM began its negotiations with Atmos by focusing upon the RRM Rider, which
had been agreed to by another group of cities. Over 60% of the RRM Rider was
redrafted. The changes, which were made to the Rider by ATM Cities, should
result in significantly reduced rate requests from what Atmos could have requested
under the prior version of the RRM.
2
EXPENSES REMOVED FROM RATE FILINGS
Atmos has agreed to remove all of the following types of expenses from any RRM
filing.
• Amounts incurred for travel, meals or entertainment of employee
spouses.
• Amounts for air travel that exceed published commercial coach
airfares.
• Amounts incurred for hotel rooms exceeding $250 per night inclusive
of taxes and fees assessed on such rooms.
• Amounts for alcoholic beverages.
• Amounts paid for admission to entertainment, sports, art or cultural
events, and all event sponsorship costs.
• Amounts for social club dues or fees.
RECOMMENDATION
ATM recommends that the Settlement Agreement be adopted. There was a serious
risk that the ultimate increase to be awarded by the Railroad Commission would be
considerably higher than $10 million. Taking into consideration the benefits set
forth above, the Settlement Agreement with the attached tariffs and riders is in the
public interest.
3
DATE: February 21, 2008
SUBJECT: City Council Meeting - February 28, 2008
ITEM: 11E4. Consider a resolution approving a settlement agreement between
Atmos Energy Corporation, MID-TEX Division and Atmos Texas
Municipalities.
Department: Administration
Staff Person: David Kautz, Assistant City Manager/CFO
Steve Sheets, City Attorney
Justification:
Funding:
Cost: N/A
Source of funds: N/A
Outside Resources: Jim Boyle, Attorney
Background Information:
Atmos requested a $52 million rate increase. The settlement provides for a $10 million
increase, less than 20% of the requested amount. Under the settlement, residential rates
will increase by 20 cents per month.
Atmos has been making annual Gas Reliability Infrastructure (GRIP) rate increase filings.
The settlement agreement calls for the end of GRIP filings. It will be replaced by a Rate
Review Mechanism which will permit participation by the Alliance of Texas Municipalities
(ATM) to review expenditures for reasonableness or prudence. This feature was not
possible under the GRIP filings.
The Settlement also provides that as a member of ATM, the City Council may increase the
franchise compensation up to 5% (currently 4%) of gross revenue.
Other elements of the settlement will be presented at the meeting. Staff recommends
acceptance of the Settlement.
Public Comment: N/A