R-12-02-23-8D2 - 2/23/2012 RESOLUTION NO. R-12-02-23-8D2
RESOLUTION BY THE CITY OF ROUND ROCK, TEXAS
("CITY") SUSPENDING THE EFFECTIVE DATE FOR NINETY
DAYS IN CONNECTION WITH THE RATE INCREASE FILING
OF ATMOS ENERGY CORPORATION ON OR ABOUT
JANUARY 31, 2012; REQUIRING THE REIMBURSEMENT OF
MUNICIPAL RATE CASE EXPENSES; AUTHORIZING
PARTICIPATION IN RELATED RATE PROCEEDINGS;
AUTHORIZING THE RETENTION OF SPECIAL COUNSEL;
FINDING THAT THE MEETING COMPLIES WITH THE OPEN
MEETINGS ACT; MAKING OTHER FINDINGS AND
PROVISIONS RELATED TO THE SUBJECT; AND DECLARING
AN EFFECTIVE DATE
WHEREAS, Atmos Energy Corporation ("Atmos" or "Company") filed a
Statement of Intent with the City on or about January 31, 2012 to change its rate
schedules within the corporate limits of this municipality, specifically to increase its
system-wide, annual revenue requirement by approximately $49.0 million which is an
increase in base-rate revenue exclusive of cost of gas of approximately 12%; and
WHEREAS, the City is a regulatory authority under the Gas Utility Regulatory
Act ("GURA") and under Chapter 104, §103.001 et seq. of GURA has exclusive original
jurisdiction over Atmos' rates, operations, and services within the municipality; and
WHEREAS, in order to maximize the efficient use of resources and expertise in
reviewing, analyzing and investigating Atmos' rate request and its changes in tariffs it is
prudent to coordinate the City's efforts with a coalition of similarly situated
municipalities; and
WHEREAS, the City, in matters regarding applications by Atmos to change
rates, has in the past joined with other local regulatory authorities to form the Atmos
Texas Municipalities ("ATM"), and hereby continues its participation in ATM; and
WHEREAS, Atmos' rate request consists of a voluminous amount of information
including Atmos' rate-filing package, pre-filed direct testimony, exhibits, schedules, and
workpapers; and
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WHEREAS, Atmos proposed March 6, 2012 as the effective date for its
requested increase in rates; and
WHEREAS, it is not possible for the City to complete its review of Atmos' filing
by March 6, 2012; and
WHEREAS, the City will need an adequate amount of time to review and
evaluate Atmos' rate application to enable the City to adopt a final decision as a local
regulatory authority with regard to Atmos' requested rate increase; and
WHEREAS, the City will require the assistance of specialized legal counsel and
rate experts to review the merits of Atmos' application to increase rates; and
WHEREAS, to the extent Atmos seeks review at the Railroad Commission of
Texas of the City's final decision regarding Atmos' statement of intent to change rates, or
should Atmos submit a statement of intent to the Railroad Commission to increase rates
in the environs of the City, the decision of the Railroad Commission of Texas could have
an impact on the rates paid by the City and its citizens who are customers of Atmos and
in order for the City's participation to be meaningful it is important that the City
promptly intervene in such proceeding at the Railroad Commission of Texas.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF ROUND ROCK,TEXAS THAT:
Section 1. The findings set out in the preamble are in all things approved and
incorporated herein as if fully set forth.
Section 2. Atmos' proposed effective date for its proposed increase in rates is hereby
SUSPENDED for ninety days beyond March 6, 2012.
Section 3. The statutory suspension period may be further extended if Atmos does
not provide timely, meaningful, and proper public notice of its request to increase rates,
or if its rate-filing package is materially deficient.
PAGE 2 of 4
Section 4. The City shall participate in a coalition of cities known as the Atmos
Texas Municipalities or as "ATM" and authorizes intervention in proceedings related to
Atmos' Statement of Intent before the Railroad Commission of Texas and related
proceedings in courts of law; and
Section 5. The City hereby orders Atmos to pay the City's rate case expenses as
provided in the Gas Utility Regulatory Act and that Atmos shall do so on a monthly basis
and within 30 days after submission of the City's invoices for the City's reasonable costs
associated with the City's activities related to this rate review or to related proceedings
involving Atmos before the City, the Railroad Commission of Texas, or any court of law.
Section 6. Subject to the right to terminate employment at any time, the City retains
and authorizes the law firm of Herrera & Boyle, PLLC to act as Special Counsel with
regard to rate proceedings involving Atmos before the City, the Railroad Commission of
Texas, or any court of law and to retain such experts as may be reasonably necessary for
review of Atmos' rate application subject to approval by the steering committee of the
ATM.
Section 7. The City, in coordination with the Steering Committee, shall review the
invoices of the lawyers and rate experts for reasonableness before submitting the invoices
to Atmos for reimbursement.
Section 8. A copy of this resolution shall be sent to Atmos Energy Mid-Tex, care of
Mr. David Park, Vice President Rates and Regulatory Affairs, Atmos Energy
Corporation, 5420 LBJ Freeway, Suite 1862, Dallas, Texas 75240; and to Mr. Alfred R.
Herrera, Herrera& Boyle, PLLC, 816 Congress Ave., Suite 1250, Austin, Texas 78701.
Section 9. The meeting at which this resolution was approved was in all things
conducted in strict compliance with the Texas Open Meetings Act, Texas Government
Code, Chapter 551.
PAGE 3 of 4
Section 10. This resolution shall become effective from and after its passage.
RESOLVED this 23rd day of February, 2012.
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ALAN MCGRAW, Mayor
City of Round Rock, Texas
ATTEST:
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SARA L. WHITE, City Clerk
PAGE 4 of 4
ROUNDROCK,TEXAS Ci Council Agenda Summar Sheet
PURPOSE.PASSION.PROSPERITY.
Agenda Item No. 8D2.
Consider a resolution suspending for 90 days the effective date of Atmos Energy's
Agenda Caption: proposed rate increase.
Meeting Date: February 23,2012
Department: Finance
Staff Person making presentation: Cheryl Delaney
Finance Director
Item Summary:
On or about January 31, 2012, Atmos Energy Corporation ("Atmos" or "Company") filed a Statement of Intent to
increase rates by approximately $49.0 million, which equates to an increase of approximately 4.36%, including gas
costs, or 11.94% excluding gas costs, measured on a system-wide basis The proposed changes will increase rates
for residential and commercial customers and decrease rates for industrial and transportation customers within all
incorporated areas served by Atmos' Mid-Tex Division. Atmos is also proposing to implement a Rate Review
Mechanism ("RRM") and a new conservation and energy efficiency tariff("Rider CEE") in place of the current Rider
CEE. Atmos further proposes to change its billing rate basis from Mcf to Ccf,and to revise its gas cost recovery tariff
("Rider GCR") to remove a reference to a 2009 interest rate and clarify that the Pipeline Cost calculation does not
include interest. As part of its application,Atmos proposes an effective date of March 6,2012.
As proposed by Atmos, the fixed customer charges would increase for each customer class, while charges based on
consumption would be reduced. Atmos estimates that the average monthly bill for each class of customer will be
affected as follows: Residential customers will see a 13.6% increase; commercial customers will see a 6.69%
increase; industrial customers will see a 14.22% decrease; and Rate T-Transportation customers will see a 14.22%
decrease. Because the changes increase base charges, residential customers that use less gas than the average
customer will see a steeper percentage increase in their monthly bill.
The City must take action on Atmos' Statement of Intent before March 6, 2012. Absent such action, Atmos' rates
are deemed approved by operation of law.
ATMOS TEXAS MUNICIPALITIES
The Atmos Texas Municipalities ("ATM") group was organized by a number of municipalities, served by Atmos. The
law firm of Herrera & Boyle, PLLC (through Mr. Alfred R. Herrera and Mr.Jim Boyle) has previously represented the
ATM in rate cases involving Atmos, including the recent RRM filings and Atmos' imposition of a steel-pipe
replacement program. In each case, Herrera & Boyle played a key role in minimizing the increase in rates proposed
by Atmos.
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ROUND ROCK, Ci Council Agenda Summar Sheet
PURPOSE.PASSION.PROSPERITY.
INTERVENTION AT THE RAILROAD COMMISSION OF TEXAS
Atmos filed its Statement of Intent to raise rates with the City but has not yet filed its rate case with the Railroad
Commission of Texas ("RRC"). The goal is to attempt to resolve Atmos' rate application without the need for
proceedings at the Railroad Commission for rates within the cities. But should Atmos initiate either an appeal at the
Railroad Commission or submit an application to change rates in the environs(that is,areas outside the city limits), it
is important to participate in those proceedings because the Commission's decisions could impact rates within the
city.
RATE CASE EXPENSES
Cities, by statute, are entitled to recover their reasonable rate case expenses from the utility. Legal counsel and
consultants approved by ATM will submit monthly invoices to the coalition-designated city that will be forwarded to
Atmos for reimbursement. No individual city's budget is negatively affected.
SUSPENSION
Atmos' rate-filing package is voluminous containing thousands of pages of data. In order to have time to review the
rate-filing package, the Council is requested to suspend Atmos' proposed effective date for ninety (90) days as
provided by GURA. It is a virtual impossibility for the City to set just and reasonable rates without suspending the
rate request for ninety days; suspension of Atmos' proposed effective date will permit its special regulatory counsel
and experts an opportunity to perform a better review of Atmos'application.
RECOMMENDATION
It is recommended that the City continue its participation in the Atmos Texas Municipalities and retain the law firm
of Herrera & Boyle, PLLC to represent the City's interest in matters related to Atmos' rate case and to advise the City
with regard to Atmos' application, and that the City intervene in the proceeding before the Railroad Commission of
Texas,should such proceedings develop.
The recommendation is also to suspend Atmos' proposed effective date for its proposed increase in rates as set
forth in Atmos'Statement of Intent for 90 days(from March 6th until June 4th).
The City must take action no later than March 6, 2012. If the City does not take action by March 6, 2012, Atmos'
proposed rates will be deemed approved by operation of law, subject to the City's right to hold a hearing to address
Atmos' rate application.
Cost: N/A
Source of Funds: N/A
Date of Public Hearing(if required): N/A
Recommended Action: Approval