Item 4DCity of Southlake, Texas
M E M O R A N D U M
TO: Shana Yelverton, City Manager
FROM: Sharen Jackson, Director of Finance
SUBJECT:RESOLUTION NO. 07-043, SUSPENDING THE JULY 30, 2007
EFFECTIVE DATE OF THE PROPOSAL BY ATMOS ENERGY
CORP., MID-TEX DIVISION TO IMPLEMENT INTERIM GRIP
RATE ADJUSTMENTS FOR GAS UTILITY INVESTMENT IN
2006; AUTHORIZING PARTICIPATION WITH THE ATMOS
CITIES STEERING COMMITTEE (“ACSC”) IN A REVIEW AND
INQUIRY INTO THE SUFFICIENCY OF THE FILING AND THE
BASIS OF THE PROPOSED RATE ADJUSTMENTS;
AUTHORIZING INTERVENTION IN ADMINISTRATIVE AND
COURT PROCEEDINGS INVOLVING THE PROPOSED GRIP
RATE ADJUSTMENTS; REQUIRING REIMBURSEMENT OF
REASONABLE LEGAL AND CONSULTANT RATEMAKING
COSTS; AND REQUIRING DELIVERY OF THIS RESOLUTION
TO THE COMPANY AND LEGAL COUNSEL.
__________________________________________________________________________
Action Requested:
Approval of Resolution No. 07-043.
Background
Information:
The law mandates that a Gas Reliability Infrastructure Program (GRIP)
surcharge request cannot become effective until sixty days following the filing.
The effective date may be suspended by a city for 45 days. If the City does not
take action to suspend the filing, the Company may begin implementing a
monthly surcharge ($0.59 on all residential customers, $1.47 for commercial
customers, and $28.74 for industrial customers) after July 30, 2007. The
resolution suspends the effective date to the maximum extent permitted by law
to allow the cities time to evaluate the filing, determine whether the filing
complies with law, and if lawful, to determine what further strategy to pursue.
This is particularly important given that the Atmos Cities Steering Committee
(ACSC) initiated a rate case (GUD No. 9670) in which it was determined that
Atmos had included inappropriate expenditures in its previous GRIP
surcharges for rate years 2003, 2004, and 2005. If Cities, through ACSC, and
other interveners, not investigated the filings to determine the impropriety of
these expenditures and of their inclusion in the GRIP surcharges, this would
not have been exposed, and the refund of $2.5 million would not have been
ordered.
Financial
Considerations:
No immediate financial consideration. Historically, the Steering Committee
which is funded with membership dues will cover the cost of legal and
consultant fees then reimbursed pending final determination. Resolution No.
07-043 request reimbursement of any reasonable legal and consultant
ratemaking costs from Atmos.
Shana Yelverton, City Manager
July 9, 2007
Page 2
Citizen Input/
Board Review:
None required
Legal Review:
Legal counsel (Lloyd Gosselink) for ACSC
Alternatives:
Approve or deny
Supporting
Documents:
Resolution No. 07-043
Staff
Recommendation:
Approval of Resolution No. 07-043
RESOLUTION NO. 07-043
A RESOLUTION BY THE CITY OF SOUTHLAKE, TEXAS SUSPENDING
THE JULY 30, 2007 EFFECTIVE DATE OF THE PROPOSAL BY ATMOS
ENERGY CORP., MID-TEX DIVISION TO IMPLEMENT INTERIM GRIP
RATE ADJUSTMENTS FOR GAS UTILITY INVESTMENT IN 2006;
AUTHORIZING PARTICIPATION WITH THE ATMOS CITIES STEERING
COMMITTEE (“ACSC”) IN A REVIEW AND INQUIRY INTO THE
SUFFICIENCY OF THE FILING AND THE BASIS OF THE PROPOSED
RATE ADJUSTMENTS; AUTHORIZING INTERVENTION IN
ADMINISTRATIVE AND COURT PROCEEDINGS INVOLVING THE
PROPOSED GRIP RATE ADJUSTMENTS; REQUIRING REIMBURSEMENT
OF REASONABLE LEGAL AND CONSULTANT RATEMAKING COSTS;
AND REQUIRING DELIVERY OF THIS RESOLUTION TO THE COMPANY
AND LEGAL COUNSEL.
WHEREAS, the City of Southlake, Texas (“City”) is a gas utility customer of Atmos
Energy Corp., Mid-Tex Division (“Atmos Mid-Tex” or “the Company”), and a regulatory
authority with an interest in the rates and charges of Atmos Mid-Tex; and
WHEREAS, Atmos Mid-Tex made filings with the City and the Railroad Commission of
Texas (“Railroad Commission”) on or about May 31, 2007, proposing to implement interim rate
adjustments (“GRIP rate increases”), pursuant to Texas Utilities Code § 104.301, on all
customers served by Atmos Mid-Tex, effective July 30, 2007; and
WHEREAS, Atmos Mid-Tex was recently granted a rate increase as a result of its filing
in GUD No. 9670, in which the Final Order was only signed on March 29, 2007; and
WHEREAS, in GUD No. 9670, it was determined that Atmos Mid-Tex had
inappropriately included certain expenditures in its prior GRIP rate increases for rate years 2003,
2004, and 2005; and
WHEREAS, it is incumbent upon the City, as a regulatory authority, to examine this
latest GRIP filing to determine its compliance with the Texas Utilities Code; and
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WHEREAS, ratepayers of Atmos Mid-Tex, including the City and its residents, will be
adversely impacted by the proposed GRIP rate increases; and
WHEREAS, it is advantageous for the City and its citizens to coordinate the City's
response to Atmos' filing with similarly situated municipalities; and
WHEREAS, the City has benefited from prior participation with the Atmos Cities
Steering Committee ("ACSC"); and
WHEREAS, it is efficient and cost beneficial for the City to again coordinate review of
the reasonableness of the proposed GRIP rate increases and joint participation in any
proceedings at the Railroad Commission related to the proposed GRIP rate increases; and
WHEREAS, the Executive Committee of ACSC has recommended suspension and
established a budget for evaluation of the Atmos filing; and
WHEREAS, a GRIP proceeding involves rate making, entitling cities to reimbursement
of reasonable rate case expenses;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SOUTHLAKE, TEXAS, THAT:
1. The July 30, 2007 effective date of the GRIP rate increases proposed by Atmos
Mid-Tex is hereby suspended for the maximum period allowed by law to permit adequate time to
investigate the sufficiency of the GRIP Rate Increase filing, review the proposed increases,
analyze all necessary information, and take appropriate action related to the proposed increases.
2. The City is authorized to cooperate with ACSC to hire and direct legal counsel
and consultants, to negotiate with the Company, to make recommendations to the City regarding
the proposed GRIP rate increases, and to direct any administrative proceedings or litigation
associated with the proposed GRIP rate increases.
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3. The City is authorized to intervene in any administrative proceedings or litigation
associated with the proposed GRIP rate increases.
4. Atmos Mid-Tex shall promptly reimburse the City’s reasonable costs associated
with the City’s ratemaking activities related to the proposed GRIP rate increases.
5. A copy of this Resolution shall be sent to Atmos Mid-Tex, care of Charles R.
Yarbrough, II, at Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1800, Dallas, Texas
75240, and to Geoffrey Gay, legal counsel to ACSC, at Lloyd Gosselink, 816 Congress Avenue,
Suite 1900, Austin, Texas 78701.
Signed this ____ day of __________________, 2007.
____________________________________
ATTEST:
__________________________
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