Loading...
Item 4BCity 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. 07-058, Suspending the October 25, 2007, effective date of Atmos Energy Corp., Mid-Tex Division requested rate change to permit the City time to study the request and to establish reasonable rates; approving cooperation with Atmos Cities Steering Committee and other cities in the Atmos Energy Corp., Mid-Tex Division service area to hire legal and consulting services and to negotiate with the Company and direct any necessary litigation and appeals; requiring reimbursement of Cities' rate case expenses; finding that the meeting at which this resolution is passed is open to the public as required by law; requiring notice of this resolution to the Company and legal counsel. __________________________________________________________________________ Action Requested: Approval of Resolution No. 07-058. Background Information: The Railroad Commission issued a Final Order approving new system-wide rates for customers of Atmos Energy's Mid-Tex Division in May. Residential rates were increased by $10 million annually. Also in May, Atmos Mid-Tex filed its application for its fourth GRIP surcharge in four years, seeking to increase the rates of all customers by $12 million annually. Despite both of these recent actions to increase customers' rates, Atmos Mid-Tex has filed an application with cities retaining original jurisdiction over rates and services to increase system-wide rates by another $52 million. The Company's application was filed with the City on September 20, 2007. Atmos asks the City to approve an 8.27% increase in residential rates, a 22.72% increases in commercial rates, and a 38.95% increase in industrial and transportation rates. The resolution suspends the effective date of the Company's rate increase for the maximum period permitted by law to allow the City time to evaluate the filing, determine whether the filing complies with law, and if lawful, to determine what further strategy, including settlement, to pursue. The law provides that a rate request made by a natural gas utility cannot become effective until 35 days following the filing of the application to change If rates. The law permits the City to suspend the effective date for 90 days. the City does not take action to suspend the filing, Atmos Mid-Tex may begin charging increased rates after October 25, 2007. According to Atmos, annual rates would increase by approximately $20 for residential customers. The City has participated in prior Atmos Gas rate matters with a coalition of cities now known as Atmos Cities Steering Committee (ACSC). ACSC is a permanent standing committee with 99 members who have passed resolutions Shana Yelverton, City Manager October 10, 2007 Page 2 authorizing ACSC to intervene on behalf of the city in natural gas matters pending before the Railroad Commission, the Courts or the Legislature. There are currently 141 cities participating with ACSC, including cities that are participating with ACSC on an ad hoc basis. Financial Considerations: Cities, by statute are entitled to recover their reasonable rate case expenses from the utility. Legal counsel and consultants approved by the ACSC Executive Committee will submit monthly invoices to the City of Arlington that will be forwarded to Atmos for reimbursement. No individual city incurs liability for payment of rate case expenses by adopting a suspension resolution. Citizen Input/ Board Review: None required Legal Review: Legal counsel (Lloyd Gosselink) for ACSC Alternatives: Approve or deny Supporting Documents: Resolution No. 07-058 Staff Recommendation: Approval of Resolution No. 07-058 RESOLUTION NO. 07-058 RESOLUTION OF THE CITY OF SOUTHLAKE, TEXAS SUSPENDING THE OCTOBER 25, 2007, EFFECTIVE DATE OF ATMOS ENERGY CORP., MID-TEX DIVISION REQUESTED RATE CHANGE TO PERMIT THE CITY TIME TO STUDY THE REQUEST AND TO ESTABLISH REASONABLE RATES; APPROVING COOPERATION WITH ATMOS CITIES STEERING COMMITTEE AND OTHER CITIES IN THE ATMOS ENERGY CORP., MID- TEX DIVISION SERVICE AREA TO HIRE LEGAL AND CONSULTING SERVICES AND TO NEGOTIATE WITH THE COMPANY AND DIRECT ANY NECESSARY LITIGATION AND APPEALS; REQUIRING REIMBURSEMENT OF CITIES’ RATE CASE EXPENSES; FINDING THAT THE MEETING AT WHICH THIS RESOLUTION IS PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW; REQUIRING NOTICE OF THIS RESOLUTION TO THE COMPANY AND LEGAL COUNSEL WHEREAS, on or about September 20, 2007, Atmos Energy Corp., Mid-Tex Division (Atmos), pursuant to Gas Utility Regulatory Act § 104.102 filed with the City of Southlake, Texas a Statement of Intent to change gas rates in all municipalities exercising original jurisdiction within its Mid-Tex Division service area effective October 25, 2007; and WHEREAS, it is reasonable for the City of Southlake, Texas to maintain its involvement in the Atmos Cities Steering Committee (ACSC) and to cooperate with the 141 similarly situated city members and other city participants of ACSC in conducting a review of the Company’s application and to hire and direct legal counsel and consultants and to prepare a common response and to negotiate with the Company and direct any necessary litigation; and WHEREAS, the Gas Utility Regulatory Act § 104.107 grants local regulatory authorities the right to suspend the effective date of proposed rate changes for ninety (90) days; and WHEREAS, the Gas Utility Regulatory Act § 103.022 provides that costs incurred by Cities in ratemaking activities are to be reimbursed by the regulated utility. THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS: 1. That the October 25, 2007, effective date of the rate request submitted by Atmos on or about September 20, 2007, be suspended for the maximum period allowed by law to permit adequate time to review the proposed changes and to establish reasonable rates. 1 2. That the City is authorized to cooperate with ACSC and its member cities in the Mid-Tex service area to hire and direct legal counsel and consultants, negotiate with the Company, make recommendations to the City regarding reasonable rates and to direct any necessary administrative proceedings or court litigation associated with an appeal of a rate ordinance and the rate case filed with the City or Railroad Commission. 3. That the City’s reasonable rate case expenses shall be reimbursed by Atmos. 4. That it is hereby officially found and determined that the meeting at which this Resolution is passed is open to the public as required by law and the public notice of the time, place, and purpose of said meeting was given as required. 5. A copy of this Resolution shall be sent to Atmos, care of Joe T. Christian, Director of Rates, at Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1800, Dallas, Texas 75240, and to Geoffrey Gay, General Counsel to ACSC, at Lloyd Gosselink Blevins Rochelle & Townsend, P.C., P.O. Box 1725, Austin, Texas 78767-1725. ____________________________________ Mayor, City of Southlake, Texas ATTEST: _____________________________ _____________________________ 2