R-2461-11-05RESOLUTION NO. 2461-11-05(R)
A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, ORDERING ATMOS ENERGY, MID-TEX DIVISION, TO
SHOW CAUSE REGARDING THE REASONABLENESS OF ITS EXISTING
NATURAL GAS DISTRIBUTION RATES WITHIN THE CITY; REQUIRING
ATMOS ENERGY, MID-TEX DIVISION, TO SUBMIT A RATE PACKAGE BASED
ON A RATE YEAR ENDING JUNE 30, 2005; DIRECTING THAT SUCH FILING
SHALL BE MADE BY DECEMBER 31,2005; REQUIRING REIMBURSEMENT OF
REASONABLE LEGAL AND CONSULTANT EXPENSES; REQUIRING
DELIVERY OF THIS RESOLUTION TO THE COMPANY AND LEGAL COUNSEL;
AND PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the City is a regulatory authority under the Gas Utility Regulatory Act ("DURA") and has
original jurisdiction over the gas utility rates of Atmos Mid -Tex; and,
WHEREAS, the City has the authority under §§ 103.001 and 104.151, GURA, to initiate a proceeding to
determine whether the existing rates of a gas utility are unreasonable or in any way in violation of any
provision of law; and,
WHEREAS, upon making a finding of unreasonableness, the City may determine the just and reasonable
rates to be charged by Atmos Mid -Tex; and,
' WHEREAS, Atmos Energy Corporation, the parent company of Atmos Mid -Tex, has recently experienced
system -wide cost reductions due to the doubling of its nationwide customer base with the acquisition of the
assets of TXU Gas, and has reported to its investors that it has experienced a significant increase in profits
related to its Texas divisions; and
WHEREAS, Atmos Mid -Tex is charging rates approved based on the higher expenses and equity -to -debt
ratio of TXU Gas, rather than rates that would be justified based on Atmos' lower expenses and equity -to -
debt ratio; and,
WHEREAS, ratepayers of Atmos Mid -Tex, including the City and its residents, will suffer further
unreasonable adverse impact from the GRIP rate increases approved by the Texas Railroad Commission and
the second GRIP filing recently made by Atmos Mid -Tex; and,
WHEREAS, the Commission's failure to consider testimony and argument offered by Cities during its
consideration of the Company's piecemeal GRIP rate applications leaves Cities no functional choice but to
exercise its statutory right to exercise original jurisdiction over Atmos' base rates and compel a
comprehensive rate review; and,
WHEREAS, the City has reason to believe that Atmos Mid -Tex is over-eaming and that its rates are
excessive; and,
WHEREAS, Cities and their residents are about to experience unprecedented increases in the cost of natural
gas during the heating season and protection of the public interest requires a comprehensive review of Atmos'
cost of service to determine whether rates and services are just and reasonable; and,
WHEREAS, Atmos Mid -Tex should be required to justify its rates on a system -wide basis; and,
WHEREAS, the coalition of cities formed to review Atmos' GRIP filings (the Atmos Cities Steering
Committee or "ACSC") can most efficiently review the Atmos filing on behalf of the City; and,
WHEREAS, the reasonable costs associated with the City's review of the Company's rates are reimbursable
from Atmos Mid -Tex.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ALLEN,
COLLIN COUNTY, TEXAS, THAT:
SECTION 1. Atmos Mid -Tex is hereby directed to show cause regarding the reasonableness of its existing
natural gas distribution rates within the City. Atmos shall file with the City information sufficient to
determine the Company's rate base, expenses, investment, and rate of return. Such filing shall be on a system-
wide basis and shall be based upon a rate year ending June 30, 2005. Atmos Mid -Tex is directed to file its
rate filing package to comply, at a minimum, with the regulations and requirements of the Railroad
Commission. The filing shall be made with the City on or before December 31, 2005. An electronic copy of
the filing shall be made with the City simultaneously with the written filing on December 31, 2005. This
filing shall be the same filing as made with the first coalition city to pass the same or similar Show Cause
Resolution.
SECTION 2. City's designated representatives shall have the right to obtain additional information from
Arms through the filing of written requests for information, to each of which Atmos shall respond in writing
within fourteen (14) calendar days from the receipt of each such request for information.
SECTION 3. A public hearing shall be conducted by the City. Based upon such hearing, the briefing of
staff, and the consultants' findings, a determination of the reasonableness of the existing rates of Atmos shall
' be made by the City and, if necessary, just and reasonable rates shall be determined to be thereafter observed
and enforced for all services of Atmos within the City.
SECTION 4. The City may, from time to time, amend this procedural schedule and the filing requirements,
and enter additional orders as may be necessary in the public interest and to enforce the provisions hereof.
SECTION 5. Arnica Mid -Tex shall promptly reimburse the City's reasonable monthly costs associated
with the City's activities related to the rate review.
SECTION 6. A copy of this Resolution shall be sent to Atmos Mid -Tex, care of Richard T. Reis, at Atmos
Energy Corporation, 5420 LBJ Freeway, Suite 1800, Dallas, Texas 75240, and to Geoffrey Gay, legal counsel
to the coalition of cities, at Lloyd Gosselin k, P.O. Box 1725, Austin, Texas 78767-1725.
SECTION 7. This Resolution shall take effect immediately from and after its passage and it is so duly
resolved.
DULY PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, ON THIS THE 22nd DAY OF NOVEMBER, 2005.
APPROVED:
Stephen�MAYOR
' ATTEST:
Shelley B. Geo e,RM� C, CITY SECRETARY
Resolution No. 2461-11-05(R), Page 2