Agenda

Back to Calendar Return

Item # 7.

Work Session and Regular Meeting

Meeting Date:	09/10/2019
Department:	City Manager

AGENDA CAPTION:

Consider Action to Approve an Ordinance of the Town of Addison, Texas, Approving a Negotiated Settlement Between the Atmos Cities Steering Committee (ACSC) and Atmos Energy Corp., Mid-Tex Division Regarding the Company's 2019 Rate Review Mechanism Filing.

BACKGROUND:

The Town, along with about 170 other 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.

Since 2007, there have been several modifications to the original RRM Tariff. The most recent iteration of an RRM Tariff was reflected in an ordinance adopted by ACSC members in 2018. On or about April 1, 2019, 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, 2018, entitled it to additional system-wide revenues of $70 million. Application of the standards set forth in ACSC’s RRM Tariff required Atmos to reduce its request to $54 million, $39.3 million of which would be applicable to ACSC members. ACSC’s consultants concluded that the system-wide deficiency under the RRM regime should be $38.7 million instead of the claimed $54 million. The amount of the $38.7 million deficiency applicable to ACSC members would be $28.2 million.

After the Company reviewed ACSC’s consultants’ report, ACSC’s Executive Committee and the Company negotiated a settlement whereby the Company would receive an increase of $35.4 million from ACSC Cities.

The Effective Date for new rates is October 1, 2019. ACSC members should take action approving the Ordinance before the end of September.

The average residential bill will increase by approximately $2.05 per month, or 3.7%.

RECOMMENDATION:

Administration recommends approval.

Attachments
Ordinance - Settlement Between Atmos Cities Steering Committee and Atmos Energy Mid-Tex
Frequently Asked Question - Rate Review Mechanism and Atmos Cities Steering Committee History