O-2697-2-08ORDINANCE NO. 2697-2-08
' AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, ("CITY") APPROVING A SETTLEMENT AGREEMENT
BETWEEN THE ATMOS CITIES STEERING COMMITTEE AND ATMOS
ENERGY CORP., Mm-TEX DIVISION ("ATMOS MID-TEX" OR "THE
COMPANY") REGARDING THE COMPANY'S STATEMENT OF INTENT TO
CHANGE GAS RATES IN ALL CITIES EXERCISING ORIGINAL JURISDICTION;
DECLARING EXISTING RATES TO BE UNREASONABLE; ADOPTING TARIFFS
THAT REFLECT RATE ADJUSTMENTS CONSISTENT WITH THE
SETTLEMENT AGREEMENT AND FINDING THE RATES TO BE SET BY THE
ATTACHED TARIFFS TO BE JUST AND REASONABLE; ADOPTING A SAVINGS
CLAUSE; DETERMINING THAT THIS ORDINANCE WAS PASSED IN
ACCORDANCE WITH THE REQUIREMENTS OF THE TEXAS OPEN MEETINGS
ACT; DECLARING AN EFFECTIVE DATE; AND REQUIRING DELIVERY OF
THIS ORDINANCE TO THE COMPANY AND LEGAL COUNSEL.
WHEREAS, the City of Allen, 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, on or about September 20, 2007, Atmos Mid -Tex, pursuant to Gas Utility Regulatory Act
§ 104.102, filed with the City a Statement of Intent to increase system -wide gas rates by approximately $52
million, such increase to be effective in all municipalities exercising original jurisdiction within its Mid -Tex
Division service area effective on October 25, 2007; and,
WHEREAS, the City took action to suspend the October 25, 2007, effective date and to coordinate a
response to Atmos' filing with more than 150 other similarly situated municipalities through the Atmos Cities
Steering Committee ("ACSC") (such participating cities are referred to herein as "ACSC Cities"); and,
WHEREAS, Atmos has agreed to extend the October 25, 2007, effective date such that the City's jurisdiction
over this matter ends March 1, 2008; and,
WHEREAS, the Railroad Commission of Texas ("RRC" or the "Commission") in GUD No. 9670, issued an
Order approving new system -wide rates for customers of Atmos Energy's Mid -Tex Division in March 2007,
which increased residential base rates by approximately $10 million annually; and,
WHEREAS, ACSC and Atmos have each appealed the RRC's decision in Atmos' most recent system -wide
rate increase as well as the decision rendered in GUD No. 9400 to the Travis County District Court; and,
WHEREAS, Atmos and ACSC have been in continuing disagreement, dispute, and litigation over the
application of Section 104.301 of the Texas Utilities Code and the resulting rate increases ("GRIP
surcharges") established by the RRC; and,
WHEREAS, Atmos filed its application for its fourth GRIP surcharge in four years on May 31, 2007, seeking
' to increase the rates of all customers by approximately $12 million annually; and,
WHEREAS, the ACSC Cities desire to avoid the litigation expense that would result from another lengthy
contested rate case proceeding before the RRC as well as the prosecution of the appeals in various courts of
the GRIP surcharges and the two previous system -wide rate decisions; and,
WHEREAS, ACSC desires to recoup certain costs it previously incurred in connection with GRIP -related
proceedings (costs which Atmos contends are not reimbursable rate case expenses under the Texas Utilities
' Code), as well as costs incurred in connection with this proceeding; and,
WHEREAS, on October 18, 2007, more than 60 ACSC members met in Arlington with officers and
executives of Atmos to discuss various issues, including rate making, resulting in a mutual pledge to work
toward settlement; and,
WHEREAS, ACSC members designated a Settlement Committee made up of ACSC representatives to work
with ACSC attorneys and consultants to formulate and review reasonable settlement positions to resolve
outstanding matters with Atmos, including the pending rate increase request; and,
WHEREAS, the Settlement Committee and lawyers representing ACSC met several times with the Company
to negotiate a Settlement Agreement resolving the issues raised in the Company's Statement of Intent filing as
well as all outstanding appeals of the two prior rate cases and various GRIP filings; and,
WHEREAS, the Settlement Committee, as well as ACSC lawyers and consultants, believe existing rates are
unreasonable and should be changed; and,
WHEREAS, the ACSC Executive Committee recommends ACSC members approve the negotiated
Settlement Agreement and attached tariffs; and,
WHEREAS, the attached tariffs provide for an expedited rate reviFw.pr cess ac a substitute to the current
GRIP process instituted by the Legislature; and, - -
' WHEREAS, the expedited rate review process as provided by the Rate Review Mechanism Tariff eliminates
piecemeal ratemaking, the ACSC's major objection to the current GRIP process; and,
WHEREAS, the attached tariffs implementing new rates are consistent with the Settlement Agreement and
are just, reasonable, and in the public interest; and,
WHEREAS, it is the intention of the parties that ACSC Cities receive the benefit of any Settlement
Agreement that Atmos enters into with other entities arising out of its Statement of Intent or any associated
appeals of a decision entered by the Railroad Commission regarding the Company's request to increase rates;
and,
WHEREAS, the Settlement Agreement as a whole is in the public interest.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ALLEN,
COLLIN COUNTY, TEXAS, THAT:
SECTION I. The findings set forth in this Ordinance are hereby in all things approved.
SECTION2. The City Council finds that the Settlement Agreement, which is attached hereto and
incorporated herein as Attachment "A," is in the public interest and is hereby endorsed in all respects.
SECTION 3. Existing rates for natural gas service provided by Atmos Mid -Tex are unreasonable, and new
tariffs, which are attached hereto and incorporated herein as Attachment "B," arejust and reasonable and are
hereby adopted.
' SECTION 4. To the extent any Resolution or Ordinance previously adopted by the Council is inconsistent
with this Ordinance, it is hereby repealed.
Ordinance No. 2697-2-08, Page 2
SECTION 5. The meeting at which this Ordinance was approved was in all things conducted in strict
compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551.
' SECTION 6. If any one or more sections or clauses of this Ordinance is adjudged to be unconstitutional or
invalid, such judgment shall not affect, impair or invalidate the remaining provisions of this Ordinance and
the remaining provisions of the Ordinance shall be interpreted as if the offending section or clause never
existed.
SECTION 7. If ACSC Cities determine any rates, revenues, terms and conditions, or benefits resulting
from a Final Order or subsequent Settlement Agreement approved in any proceeding addressing the issues
raised in Atmos' Statement of Intent would be more beneficial to the ACSC Cities than the terns of the
attached Settlement Agreement, then the more favorable rates, revenues, terms and conditions, or benefits
shall additionally accrue to the ACSC Cities; however, approval of the attached Rider RRM, Rider CEE,
Rider GCR and the Rider WNA shall not be affected by the application of the provisions contained in this
section, it being the understanding and the intent of the parties hereto that such tariffs shall continue according
to thein terms.
SECTION 8. A copy of this Ordinance shall be sent to Atmos Mid -Tex, 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.
SECTION 9. This Ordinance shall becom: eff &;ve from and after its passage with rates authorized by
attached tariffs to be effective for customer bills delivered on or after March 1, 2008.
' DULY PASSED AND APPROVED BY THE CITY COUNCIL, OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, ON THIS THE 12TH DAY OF FEBRUARY, 2008.
APPROVED:
Stephen Ter ll, MAYOR
APPROVED AS TO FORM: ATTEST:
C'-Iz-
Peter G. Smith, CITY ATTORNEY Shelley B. GeogQ MC, CITY SE EC�I T�
Ordinance No. 2697-2-08, Page 3