O-2649-8-07ORDINANCE NO. 2649-5-07
' 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;
SUPPORTING STATUTORY REFORM OF THE TEXAS GRIP STATUTE,
FINDING THAT THE MEETING AT WHICH THIS ORDINANCE IS PASSED IS
OPEN TO THE PUBLIC; AND PROVIDING FOR NOTICE OF THIS ORDINANCE
TO ATMOS ENERGY CORP., MID-TEX DIVISION AND THE CITV'S
LEGISLATIVE DELEGATION; AND PROVIDING 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 "the Company"), and a regulatory authority with an interest in the rates and
charges of Armes Mid -Tex; and,
WHEREAS, Atmos Mid -Tex made filings with the City and the Railroad Commission of Texas ("Railroad
Commission") on or about May 31, 2007, proposing to implement interim rate adjustments ("GRIP rate
increases"), pursuant to Texas Utilities Code § 104.301, on all customers served by Armes Mid -Tex, effective
July 30, 2007; and,
WHEREAS, the Gas Reliability Infrastructure Program (GRIP) statute approved in the 2003 Regular Session
' of the 75'" Legislature changes 100 years of Texas law and allows a natural gas utility to implement annual
surcharges for increases in investment without having to account for the offsetting decreases in costs or
increases in revenue experienced by the utility; and,
WHEREAS, Texas is the only state out of the twelve states served by Atmos that has a GRIP statute that
allows for piecemeal recovery for any change to invested capital; and,
WHEREAS, Armes has implemented four GRIP surcharges and collected more than $20 million in GRIP
surcharges from customers since the utility acquired the TXU Gas system in 2004; and,
WHEREAS, the City supports the statutory reform of the GRIP statute to ensure fairness to ratepayers and to
eliminate piecemeal recovery for any change to invested capital; and,
WHEREAS, Atmos Mid -Tex was recently granted a rate increase as a result of its filing in GUD No. 9670,
in which the Final Order was only signed on March 29, 2007; and,
WHEREAS, in GUT) No. 9670, it was determined that Armes Mid -Tex had inappropriately included certain
expenditures in its prior GRIP rate increases for rate years 2003, 2004, and 2005; and,
WHEREAS, the City, as a regulatory authority, suspended the July 30, 2007, effective date to examine this
latest GRIP filing to determine its compliance with the Texas Utilities Code and Railroad Commission final
order in the most recent Atmos Mid -Tex rate case; and,
WHEREAS, the City has joined with other cities to review the Company's filing, said coalition being known
as Armes Cities Steering Committee ("ACSC"); and,
WHEREAS, the consultant hired by Steering Committee has reviewed the GRIP surcharge application and
has issued a final report finding that the Company has included millions of dollars of expenses in the current
GRIP surcharge that are inconsistent with the Texas Utilities Code and Railroad Commission final order in
the most recent Atmos Mid -Tex rate case and not related to ensuring the safety and reliability of the system;
' and,
WHEREAS, counsel for the Steering Committee, upon review of the Company's filing and the consultant's
report, recommends finding that the Company's proposal is unjustified and unreasonable; and,
WHEREAS, ratepayers of Atmos Mid -Tex, including the City and its residents, will be adversely impacted
by the proposed GRIP rate increases.
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 and inconsistent with
the Texas Utilities Code and Railroad Commission final order in GUD 9670, Atmos Mid -Tex most recent tate
case, and is therefore denied in all respects.
SECTION 2. This Ordinance shall become effective immediately from and after its passage, as the law and
charter in such cases provide.
SECTION 3. The City hereby advocates statutory reform of the Texas GRIP statute to ensure fairness to
ratepayers and to eliminate piecemeal recovery for any change to invested recovery.
SECTION 4. The City calls upon its state representatives and senator to support legislation in the 81"
Regular Session of the Texas Legislature that would reform the Texas GRIP statute to ensure fairness for
' ratepayers and eliminate piecemeal recovery for any changes to invested capital.
SECTION 5. 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:
Charles R. Yarbrough, II
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. A copy of the Ordinance shall be sent to the elected lawmakers representing the City's
interests in the Texas House and Senate.
Ordinance No. 2649-8-07, Page 2
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DULY PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, ON THIS THE 28TH DAY OF AUGUST, 2007.
APPROVED:
Stephenwrerrell, MAYOR
APPROVED AS TO FORM: ATTEST:
Peter G. Smith, C ATTORNEY Shelley B. Geo , TRMC, CITY -SECRETARY
Ordinance No. 2649-8-07, Page 3