R-12-05-24-F6 - 5/24/2012 x
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RESOLUTION NO. 12-05-24-F6
A RESOLUTION BY THE CITY OF ROUND ROCK, TEXAS, ("CITY")
DENYING A RATE INCREASE REQUESTED BY ATMOS ENERGY
CORPORATION ON OR ABOUT JANUARY 31, 2012; DETERMINING
THAT THE MEETING COMPLIED WITH THE TEXAS OPEN
MEETINGS ACT; AND MAKING OTHER FINDINGS AND
PROVISIONS RELATED TO THE SUBJECT.
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WHEREAS, Atmos Energy Corporation ("Atmos" or "Company") filed a Statement of Intent
with the City on or about January 31, 2012 to change increase its revenue and change its rate schedules
within the corporate limits of the City, specifically to increase its system-wide, annual revenue
requirement by approximately $49.0 million which is an increase in base-rate exclusive of cost of gas
of approximately 12%; and '.
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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, the City approved a Resolution suspending Atmos' proposed effective date for its
rate increase ninety days beyond Atmos' proposed effective date; and
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WHEREAS, on or about April 25, 2012, Atmos extended its proposed effective date from
March 6 2012 to March 13 2012 which has the effect of extending the statutory deadline from June
4, 2012 to June 11, 2012, subject to the City's right to continue a hearing in progress; and
WHEREAS, the City has concluded that the rate increase proposed by Atmos is unreasonable
and Atmos has not consented to appropriate adjustments to its proposed rate increase and that Atmos
has failed to prove that is request is reasonable;Now Therefore g
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BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ROUND ROCK,
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TEXAS THAT:
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Section 1. The findings set out in the preamble are in all things approved and incorporated
herein as if fully set forth. 1.
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Section 2. The City denies the rate increase Atmos filed on or about January 31, 2012.
Section 3. 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 Avenue, Suite 1250, Austin, Texas 78701.
Section 4. This meeting at which this Resolution was approved was in all things conducted
in strict compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551.
Section 5. This Resolution shall become effective from and after its passage.
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The City Council hereby finds and declares that written notice of the date, hour, place and
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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.
RESOLVED this 24th day of May, 2012.
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ALAN MCGRAW, Mayor
City of Round Rock, Texas
ATTEST:
SARA L. WHITE, City Clerk
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ROUNDROCK,TEXAS City Council Agenda Summary Sheet
PURPOSE.PASSION.PROSPERITY.
Agenda Item No. F6.—CONSENT AGENDA
Consider a resolution denying the rate increase proposed by the Atmos Energy
Agenda Caption: Corporation.
Meeting Date: May 24, 2012
Department: Finance
Staff Person making presentation: Cheryl Delaney
Finance Director
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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 11.94% in base rates.
The proposed changes would increase rates for residential and commercial customers and decrease rates for y
industrial and transportation customers within all incorporated areas served by Atmos' Mid-Tex Division. Atmos
also proposed implementing a Rate Review Mechanism ("RRM") and, among other new tariffs, a new conservation
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and energy efficiency tariff ("Rider CEE") in place of the current Rider CEE. Atmos further proposed to change its
billing rate basis from Mcf to Ccf, and to revise its gas cost recovery tariff ("Rider GCR"). As part of its application,
Atmos proposed an effective date of March 6, 2012, and later extended its proposed effective date to March 13,
2012. The City in earlier action suspended Atmos' proposed effective date for 90 days. Based on Atmos' amended
proposed effective date the City must take action by June 11, 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 would be
affected as follows: Residential customers would see a 13.6% increase; commercial customers would see a 6.69%
increase; industrial customers would see a 14.22% decrease; and Rate T-Transportation customers would see a
14.22%decrease. Because of the proposed change in the fixed customer charge, residential customers that use less
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gas than the average customer would see a steeper percentage increase in their monthly bill.
ATM's Special Counsel and the consultants engaged by ATM recommend that the City deny Atmos' proposed
increase in rates. ATM's counsel and consulting experts have reviewed Atmos' application and conducted discovery
and identified a number of reasons why Atmos' proposal is not appropriate:
• Atmos' proposed rates are based on operation and maintenance expenses that ATM's consulting experts
have determined should be reduced by over$5 million dollars;
• Atmos' proposed rates are based on taxes other than income taxes that ATM's consulting experts have
concluded should be reduced by over$200,000;
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• Atmos' proposed rates assume depreciation and amortization expenses that ATM's consulting experts have
determined should be reduced by over$6 million dollars;
• Atmos' proposed rates are based on a rate base that ATM's consulting experts have determined should be
reduced by over$190 million dollars;
• Atmos' proposed rates assume a rate of return that ATM's consulting experts advise should be reduced by
more than a full point;
• Atmos' proposed rates are based on income taxes that ATM's consulting experts advise should be reduced Y
by more than $13 million;
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IrROUNDROCK,TExAs City Council Agenda Summary Sheet
PURPOSE.PASSION.PROSPERITY.
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• While Atmos' proposed rates are based on an increase in Atmos' revenue requirements of more than $50
million, the above adjustments recommended by ATM's consulting experts together result in a decrease in
Atmos' revenue requirement of more than $10 million dollars; and
• ATM has attempted to negotiate with Atmos, but Atmos has been unwilling to adjust its proposed rates
sufficiently in light of the adjustments recommended by ATM's consulting experts.
ATM's Special Counsel and its consultants will continue settlement efforts to attempt to resolve Atmos' application
to increase rates through negotiations. In the interim, once the City denies Atmos' request, Atmos will submit an
appeal to the Railroad Commission of Texas and will do so within 30 days from the date of the City's action. ATM
will continue its participation in the proceedings at the Railroad Commission of Texas
Cost: N/A
Source of Funds: N/A
Date of Public Hearing(if required): N/A
Recommended Action: Approval