Agenda

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Item # 3.d.

City Council

Meeting Date:	08/22/2023
Department:	City Manager
Pillars:	Gold Standard in Financial Health
Milestones:	Promote and protect the Addison Way

AGENDA CAPTION:

Consider action on a Resolution approving a negotiated settlement between the Atmos Cities Steering Committee (ACSC) and Atmos Energy Corp., Mid-Tex Division, regarding its 2023 Rate Review Mechanism Filing.

BACKGROUND:

The Town, along with 181 other Mid-Texas cities served by Atmos Energy Corporation, Mid-Tex Division ("Atmos Mid-Tex") or ("Company"), is a member of the Atmos Cities Steering Committee ("ACSC"). In 2007, ACSC and Atmos Mid-Tex settled a rate application filed by the Company pursuant to Section 104.301 of the Texas Utilities Code for an interim rate adjustment, commonly referred to as a GRIP filing (arising out of the Gas Reliability Infrastructure Program legislation). That settlement created a substitute rate review process, referred to as Rate Review Mechanism (RRM), as a substitute for future filings under the GRIP statute.

On or about March 1, 2023, the Company filed a rate request pursuant to the RRM Tariff adopted by ACSC members. The Company claimed that its cost-of-service in a test year ending December 31, 2022, entitled it to additional system-wide revenues of $165.9 million. Application of the standards set forth in ACSC's RRM Tariff reduces the Company's request to $156.1 million, $113.8 million of which would be applicable to ACSC members. ACSC's consultants concluded that the system-wide deficiency under the RRM regime should be $130.9 million instead of the claimed $156.1 million.

The ACSC Executive Committee recommends settling at $142 million. The effective date for new rates is October 1, 2023. ACSC members should take action approving the Resolution/Ordinance before September 30, 2023. The impact of the settlement on average residential rates is an increase of $6.47 on a monthly basis, or 7.31 percent. The increase for average commercial usage will be $24.72 or 5.19 percent. Atmos provided bill impact comparisons containing these figures.

RECOMMENDATION:

Admininstration recommends approval.

Attachments
Resolution - Atmos Rate Filing