HomeMy WebLinkAboutO-2529-6-06ORDINANCE NO. 2529-6-06
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, DENYING THE REQUEST OF ATMOS ENERGY CORP., MID-
TEX DIVISION, FOR AN ANNUAL GAS RELIABILITY INFRASTRUCTURE
PROGRAM (GRIP) RATE INCREASE IN THIS MUNICIPALITY, AS A PART OF
THE COMPANY'S STATEWIDE GAS UTILITY DISTRIBUTION SYSTEM;
APPROVING COOPERATION WITH OTHER CITIES WITHIN THE ATMOS
ENERGY CORP., MID-TEX DMSION DISTRIBUTION SYSTEM AS PART OF
THE ATMOS CITIES STEERING COMMITTEE (ACSC); AUTHORIZING ACSC
TO B[IR LEGAL AND CONSULTING SERVICES AND TO NEGOTIATE WITH
THE COMPANY AND DIRECT ANY NECESSARY LITIGATION; AUTHORIZING
INTERVENTION AS PART OF ACSC IN ANY APPEAL OF THE CITY'S ACTION
TO THE RAILROAD COMMISSION; PROVIDING A REQUIREMENT FOR A
PROMPT REIMBURSEMENT OF COSTS INCURRED BY THE CITY; FINDING
THAT THE MEETING AT WHICH THIS ORDINANCE IS PASSED IS OPEN TO
THE PUBLIC AS REQUIRED BY LAW; AND PROVIDING FOR NOTICE OF THIS
ORDINANCE TO ATMOS ENERGY CORP., MID-TEX DMSION.
WHEREAS, on or about March 30, 2006, Atmos Energy Corp., Mid -Tex Division, (the "Company") filed
with the City a request for an annual gas reliability infrastructure program ("GRIP") rate increase for
' customers on the Company's statewide gas utility system to be effective May 30, 2006; and,
WHEREAS, the City has exclusive original jurisdiction to evaluate the Company's request as it pertains to
the distribution facilities located within the City, pursuant to Texas Utilities Code §§ 102.001(b) and 103.001;
and,
WHEREAS, it is reasonable for the City to cooperate with other cities in a coalition of cities in opposition to
the Company's filing at the Railroad Commission ("Commission"), said coalition being known as Atmos
Cities Steering Committee ("ACSC"), in any appeal of the cities' actions to the Commission; and,
WHEREAS, the Gas Utility Regulatory Act ("GURA") grants local regulatory authorities the right to
intervene in rate proceedings filed at the Railroad Commission; and,
WHEREAS, the Texas Utilities Code § 103.022 provides that costs incurred by the City in ratemaking
activities are to be reimbursed by the regulated utility; and,
WHEREAS, counsel for ACSC, upon review of the Company's filing and upon consultation with various
consultants, recommends finding that the Company's proposal is unjustified and unreasonable; and,
WHEREAS, the Company has publicly stated that it will receive substantial profit in 2005 and that its
expenses are substantially below those on which the GUD No. 9400 rates it is charging were based; and,
WHEREAS, the Company's GRIP request fails to account for growth in numbers of customers, thereby
undercounting the revenues it will receive from its proposed GRIP rate increase; and,
' WHEREAS, the Company's GRIP request fails to recognize that GUD No. 9400 rates included profit based
on TXU Corporation's capital structure rather than Atmos Energy Corp.'s current capital structure, which
justifies a lower rate of return; and,
WHEREAS, under the provisions of § 104.301 of GURA, the interim rate adjustment is subject to true -up in
a general rate case filed within five years of the effective date of the interim rate surcharge; and,
' WHEREAS, the Company has, on May 31, 2006, filed a Statement of Intent to increase its distribution rates
on a system -wide basis, using calendar year ending December 31, 2005, as its test year, and,
WHEREAS, the capital investment made by Atmos during 2005 will be reviewed in the Statement of Intent
filing, making the 2005 GRIP filing superfluous, duplicative, and unnecessary.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ALLEN,
COLLIN COUNTY, TEXAS, THAT:
SECTION 1. The Company's GRIP rate increase request is found to be unreasonable, superfluous,
duplicative, and unnecessary, and is therefore denied in all respects.
SECTION 2. The City is authorized to cooperate with other Cities within the Company's Distribution
System that have formed ACSC 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 litigation
associated with = appeal of a rate ordinance and the rate case filed at the Commission.
SECTION 3. The costs incurred by the City in reviewing the Company's GRIP request shall be promptly
reimbursed by the Company.
SECTION 4. The City is authorized to intervene in any appeal of the City's action filed at the Commission
and any related litigation, and to participate in any such appeal or litigation as a member of ACSC.
' SECTION 5. That it is hereby officially found and determined that the meeting at which this Ordinance is
passed is open to the public as required by law and that public notice of the time, place and purpose of said
meeting was given as required.
SECTION 6. A copy of this ordinance, constituting final action on the Company's application, be
forwarded to the following:
Richard T. Reis
Atmos Energy Corporation
5420 LBJ Freeway, Suite 1800
Dallas, Texas 75240
Lloyd Gosselink Blevins Rochelle & Townsend
c/o Geoffrey Gay
P.O. Box 1725
Austin, Texas 78767-1725.
SECTION 7. This ordinance shall take effect immediately from and after its passage in accordance with its
provisions of the Charter of the City of Allen, and it is accordingly so ordained.
Ordinance No. 2529-6-06 , Page 2
F
DULY PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, ON THIS THE 27" DAY OF JUNE, 2006.
APPROVED AS TO FORM:
a �2L-�e
Peter G. Smith, CITY ATTORNEY
APPROVED:
StephenYO 7
ATTEST:
Shelley B. Geo , TRMC, CITY SEMETARY
Ordinance No. 2529-6-06 , Page 3