Item 4LM E M O R A N D U M
February 14, 2012
To:
Shana Yelverton, City Manager
From:
Sharen Jackson, Director of Finance
Subject: Resolution No. 12-015, Suspending the March 6, 2012, effective
date of Atmos Energy Corp., Mid-Tex Division requested rate
change
Action
Requested:
Approval of Resolution No. 12-015, Suspending the March 6,
2012, effective date of Atmos Energy Corp., Mid-Tex
Division (“Atmos”) requested rate change.
Background
Information:
Atmos filed a Statement of Intent on January 31, 2012,
seeking to increase system-wide base rates (which exclude
the cost of gas) by approximately $49 million or 11.94%.
However, the Company is requesting an increase of 13.6%,
excluding gas costs, for its residential customers.
Additionally, the application would change the way that rates
are collected, by increasing the residential fixed-monthly (or
customer) charge from $7.50 to $18.00 and decreasing the
consumption charge from $0.25 per 100 cubic feet (“ccf”) to
$0.07 per ccf.
The law provides that a rate request made by a gas utility
cannot become effective until at least 35 days following the
filing of the application to change rates. Atmos has
proposed an effective date of March 6, 2012. The law
permits the City to suspend the rate change for 90 days after
If the
the date the rate change would otherwise be effective.
City fails to take some action regarding the filing before
the effective date, Atmos’ rate request is deemed
administratively approved.
The purpose of the resolution is to extend the effective date
of Atmos proposed rate increase to give the City time to
review the rate-filing package. The resolution suspends the
March 6, 2012 effective date for the maximum period
permitted by law (90 days) to allow the City, working in
conjunction with the other Atmos Cities Steering Committee
(“ACSC”) cities, to evaluate the filing, determine whether the
filing complies with law, and if lawful, to determine what
further strategy to pursue, including settlement and
ultimately to approve reasonable rates.
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Financial
Considerations:
Atmos will reimburse the cities for their reasonable rate case
expenses. Legal counsel and consultants approved by
ACSC will submit monthly invoices 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:
Lloyd Gosselink Rochelle & Townsend, P.C. prepared the
resolution.
Alternatives:
Approve or deny resolution
Supporting
Documents:
Resolution No. 12-015
Staff
Recommendation:
Approval of Resolution No. 12-015
RESOLUTION NO. 12-015
RESOLUTION OF THE CITY OF SOUTHLAKE,
SUSPENDING THE MARCH 6, 2012, EFFECTIVE DATE
OF ATMOS ENERGY CORP., MID-TEX DIVISION
(“ATMOS MID-TEX”) REQUESTED RATE CHANGE TO
PERMIT THE CITY TIME TO STUDY THE REQUEST
AND TO ESTABLISH REASONABLE RATES;
APPROVING COOPERATION WITH ATMOS CITIES
STEERING COMMITTEE (“ACSC”) AND OTHER CITIES
IN THE ATMOS MID-TEX 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 ACSC’S LEGAL
COUNSEL
WHEREAS, on or about January 31, 2012, Atmos Energy Corp., Mid-Tex Division
(“Atmos Mid-Tex” or “Company”), pursuant to Gas Utility Regulatory Act § 104.102 filed with
the City of Southlake (“City”) a Statement of Intent to change gas rates in all municipalities
exercising original jurisdiction within its Mid-Tex Division service area, effective March 6,
2012; and
WHEREAS, the City is a regulatory authority under the Gas Utility Regulatory Act
(“GURA”) and under Chapter 104, §104.001 et seq. of GURA has exclusive original jurisdiction
over Atmos Mid-Tex’s rates, operations, and services within the City; and
WHEREAS, in order to maximize the efficient use of resources and expertise, it is
reasonable for the City to maintain its involvement in the Atmos Cities Steering Committee
(“ACSC”) and to cooperate with the more than 150 similarly situated city members of ACSC
and other city participants 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, Atmos Mid-Tex 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 Mid-Tex’s
filing by March 6, 2012; and
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WHEREAS, the City will need an adequate amount of time to review and evaluate
Atmos Mid-Tex’s rate application to enable the City to adopt a final decision as a local
regulatory authority with regard to Atmos Mid-Tex’s requested rate increase; 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 March 6, 2012, effective date of the rate request submitted by Atmos
Mid-Tex on January 31, 2012, be suspended for the maximum period allowed by law to permit
adequate time to review the proposed changes and to establish reasonable rates.
2. That the City is authorized to cooperate with ACSC and its member cities in the
Mid-Tex service area and under the direction of the ACSC Executive Committee 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 David Park, Vice
President Rates & Regulatory Affairs, at Atmos Energy Corporation, Mid-Tex Division, 5420
LBJ Freeway, Suite 1862, Dallas, Texas 75240, and to Geoffrey Gay, General Counsel to ACSC,
at Lloyd Gosselink Rochelle & Townsend, P.C., P.O. Box 1725, Austin, Texas 78767-1725.
PASSED AND APPROVED this __________ day of ___________________, 2012.
_________________________________
Mayor
ATTEST:
__________________________________
City Secretary
APPROVED AS TO FORM:
___________________________________
City Attorney
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