R-3220-5-14RESOLUTION NO. 3220-5-14
' A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, DENYING THE RATE INCREASE REQUESTED BY ATMOS
ENERGY CORP., MID-TEX DIVISION UNDER THE COMPANY'S 2014 ANNUAL
RATE REVIEW MECHANISM FILING IN ALL CITIES EXERCISING ORIGINAL
JURISDICTION; REQUIRING THE COMPANY TO REIMBURSE CITIES'
REASONABLE RATEMAKING EXPENSES PERTAINING TO REVIEW OF THE
RRM; AUTHORIZING THE CITY'S PARTICIPATION WITH ATMOS CITIES
STEERING COMMITTEE IN ANY APPEAL FILED AT THE RAILROAD
COMMISSION OF TEXAS BY THE COMPANY; REQUIRING THE COMPANY TO
REIMBURSE CITIES' REASONABLE RATEMAKING EXPENSES IN ANY SUCH
APPEAL TO THE RAILROAD COMMISSION; DETERMINING THAT THIS
RESOLUTION WAS PASSED IN ACCORDANCE WITH THE REQUIREMENTS
OF THE TEXAS OPEN MEETINGS ACT; ADOPTING A SAVINGS CLAUSE;
REQUIRING DELIVERY OF THIS RESOLUTION TO THE COMPANY AND THE
STEERING COMMITTEE'S LEGAL COUNSEL; AND PROVIDING FOR AN
EFFECTIVE DATE.
WHEREAS, the City of Allen, Texas ("City") is a gas utility customer of Atmos Energy Corp., Mid -Tex
Division ("Atmos Mid -Tex" or "Company"), and a regulatory authority with an interest in the rates and
charges of Atmos Mid -Tex; and,
WHEREAS, the City is a member of the Atmos Cities Steering Committee ("ACSC"), a coalition of
approximately 164 similarly situated cities served by Atmos Mid -Tex that have joined together to facilitate
the review of and response to natural gas issues affecting rates charged in the Atmos Mid -Tex service area;
and,
WHEREAS, pursuant to the terms of the agreement settling the Company's 2007 Statement of Intent to
increase rates, ACSC Cities and the Company worked collaboratively to develop a Rate Review Mechanism
("RRM") tariff that allows for an expedited rate review process controlled in a three-year experiment by
ACSC Cities as a substitute to the current Gas Reliability Infrastructure Program ("GRIP") process instituted
by the Legislature; and,
WHEREAS, the City took action in 2008 to approve a Settlement Agreement with Atmos Mid -Tex resolving
the Company's 2007 rate case and authorizing the RRM tariff; and,
WHEREAS, in 2013, ACSC and the Company negotiated a renewal of the RRM tariff process for an
additional five years; and,
WHEREAS, the City passed an ordinance renewing the RRM tariff process for the City for an additional five
years; and,
WHEREAS, the RRM renewal tariff contemplates reimbursement of ACSC Cities' reasonable expenses
associated with RRM applications; and,
' WHEREAS, on or about February 28, 2014, the Company filed with the City its second annual RRM filing
under the renewed RRM tariff, requesting to increase natual gas base rates by $45.7 million; and,
WHEREAS, ACSC coordinated its review of Atmos Mid-Tex's RRM filing through its Executive
Committee, assisted by ACSC attorneys and consultants, to investigate issues identified by ACSC in the
' Company's RRM filing; and,
WHEREAS, ACSC attorneys and consultants have concluded that the Company is unable to justify a rate
increase of the magnitude requested in the RRM filing; and,
WHEREAS, ACSC's consultants determined the Company is only entitled to a $19 million increase,
approximately 42% of the Company's request under the 2014 RRM filing; and,
WHEREAS, the Company would only be entitled to approximately $31 million if it had a GRIP case; and,
WHEREAS, the Company's levels of operating and maintenance expense have dramatically risen without
sufficientjusfification; and,
WHEREAS, the Company has awarded its executives and upper management increasing and unreasonable
levels of incentives and bonuses, expenses which should be borne by shareholders who received a 23% total
return on investment in 2013; and,
WHEREAS, the Company requested a drastically high level of medical expense that is unreasonable and
speculatively based upon estimates; and,
WHEREAS, ACSC and the Company were unable to reach a compromise on the amount of additional
revenues that the Company should recover under the 2014 RRM filing; and,
WHEREAS, the ACSC Executive Committee, as well as ACSC's counsel and consultants, recommend that
' ACSC Cities deny the requested rate increase; and,
WHEREAS, the Company's current razes are determined to be just, reasonable, and in the public interest.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ALLEN,
COLLIN COUNTY, TEXAS, THAT:
SECTION 1. The findings set forth in this Resolution are hereby in all things approved
SECTION 2. The City Council finds that Atmos Mid -Tex was unable to justify the appropriateness or the
need for the increased revenues requested in the 2014 RRM filing, and that existing rates for natural gas
service provided by Atmos Mid -Tex are just and reasonable.
SECTION 3. Atmos Mid -Tex shall reimburse the reasonable ratemaking expenses of the ACSC Cities in
processing the Company's RRM application.
SECTION 4. In the event the Company files an appeal of this denial of rate increase to the Railroad
Commission of Texas, the City is hereby authorized to intervene in such appeal, and shall participate in such
appeal in conjunction with the ACSC membership. Further, in such event Atmos Mid -Tex shall reimburse
the reasonable expenses of the ACSC Cities in participating in the appeal of this and other ACSC City rate
actions resulting from the 2014 RRM filing.
SECTION 5. 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.
SECTION & If any one or more sections or clauses of this Resolution is adjudged to be unconstitutional or
invalid, such judgment shall not affect, impair, or invalidate the remaining provisions of this Resolution and
Resolution No. 3220-5-14(R), Page 2
the remaining provisions of the Resolution shall he interpreted as if the offending section or clause never
existed.
SECTION 7. A copy of this Resolution shall be sent to Atmos Mid -Tex, care of Chris Felan, Manager of
Rates and Regulatory Affairs, at Atmos Energy Corporation, 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.
DULY PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, ON THIS THE 13srr DAY OF MAY, 2014.
APPROVED:
el
Stephen Terrell, MAYOR
ATTEST:
C �
Shelley B. George, YR C, CITY— C�E RET�ARY
4400408 1
Resolution No. 3220-514(R), Page 3