10-088 - O PITOWN OF
SPE ,R
ORDINANCE NO. 10-088
AN ORDINANCE OF THE TOWN COUNCIL OF THE TOWN OF
PROSPER, TEXAS, ("TOWN") APPROVING A NEGOTIATED
RESOLUTION BETWEEN THE ATMOS CITIES STEERING
COMMITTEE ("ACSC" OR "STEERING COMMITTEE") AND ATMOS
ENERGY CORP., MID-TEX DIVISION ("ATMOS MID-TEX" OR
"COMPANY") REGARDING THE COMPANY'S THIRD RATE REVIEW
MECHANISM ("RRM") FILING IN ALL CITIES EXERCISING
ORIGINAL JURISDICTION; DECLARING EXISTING RATES TO BE
UNREASONABLE; REQUIRING THE COMPANY TO REIMBURSE
CITIES' REASONABLE RATEMAKING EXPENSES; ADOPTING
TARIFFS THAT REFLECT RATE ADJUSTMENTS CONSISTENT WITH
THE NEGOTIATED SETTLEMENT AND FINDING THE RATES TO BE
SET BY THE ATTACHED TARIFFS TO BE JUST AND REASONABLE;
APPROVING ATMOS MID-TEX'S PROOF OF REVENUES;
EXTENDING THE RRM PROCESS FOR TWO CYCLES AND
ADOPTING A NEW RRM TARIFF; RATIFYING THE SETTLEMENT
AGREEMENT, INCLUDING COST RECOVERY FOR A STEEL
SERVICE LINE REPLACEMENT PROGRAM; 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 THE STEERING COMMITTEE'S LEGAL COUNSEL.
WHEREAS, the Town of Prosper, Texas ("Town") is a gas utility customer of Atmos
Energy Corp., Mid-Tex Division ("Atmos Mid-Tex" or " Company"), and a regulatory authority
with an interest in the rates and charges of Atmos Mid-Tex; and
WHEREAS, the Town is a member of the Atmos Cities Steering Committee ("ACSC" or
"Steering Committee"), a coalition of approximately 148 similarly situated cities served by
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Atmos Mid-Tex that have joined together to facilitate the review of and response to natural gas
issues affecting rates charged in the Atmos Mid-Tex service area (such participating cities are
referred to herein as "ACSC Cities"); and
WHEREAS, pursuant to the terms of the agreement settling the Company's 2007
Statement of Intent to increase rates, ACSC Cities and the Company worked collaboratively to
develop a Rate Review Mechanism ("RRM") tariff that allows for an expedited rate review
process controlled in a three year experiment by ACSC Cities as a substitute to the current GRIP
process instituted by the Legislature; and
WHEREAS, the Town took action in 2008 to approve a Settlement Agreement with
Atmos Mid-Tex resolving the Company's 2007 rate case and authorizing the RRM Tariff, and
WHEREAS, the 2008 Settlement Agreement contemplates reimbursement of ACSC
Cities' reasonable expenses associated with RRM applications; and
WHEREAS, on or about March 15, 2010, Atmos Mid-Tex filed with the Town its third
application pursuant to the RRM tariff to increase natural gas base rates by approximately $70.2
million, such increase to be effective in every municipality that has adopted the RRM tariff
within its Mid-Tex Division; and
WHEREAS, ACSC Cities coordinated its review of Atmos Mid-Tex's RRM filing by
designating a Settlement Committee made up of ACSC representatives, assisted by ACSC
attorneys and consultants, to resolve issues identified by ACSC in the Company's RRM filing;
and
WHEREAS, the Company has filed evidence that existing rates are unreasonable and
should be changed; and
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WHEREAS, independent analysis by ACSC's rate expert concluded that Atmos Mid-Tex
is able to justify an increase over current rates of$21 million; and
WHEREAS, Atmos Mid-Tex has commenced a program to replace steel service lines
based on a relative leak repair risk analysis; and
WHEREAS, the Steering Committee has entered a Settlement Agreement ("Attachment
C"to this Ordinance) with Atmos Mid-Tex to: (1) increase base rate revenues by $27 million; (2)
extend the RRM process, with modifications for an additional two cycles and to thereafter
require the filing of a system-wide Statement of Intent rate case on or before June 1, 2013; and
(3) in the interim to allow current recovery of incremental direct costs of the steel service line
replacement program in rates set via this ordinance and in future RRMs; and
WHEREAS, the ACSC Executive Committee, as well as ACSC lawyers and consultants,
recommend that ACSC members approve the attached rate tariffs ("Attachment A" to this
Ordinance), which will increase the Company's revenue requirement by $27 million; and
WHEREAS, the attached tariffs implementing new rates and Atmos Mid-Tex's Proof of
Revenues ("Attachment B" to this Ordinance) are consistent with the negotiated resolution
reached by ACSC Cities and are just, reasonable, and in the public interest; and
WHEREAS, it is the intention of the parties that if the Town determines any rates,
revenues, terms and conditions, or benefits resulting from a Final Order or subsequent negotiated
settlement approved in any proceeding addressing the issues raised in the Company's Third
RRM filing would be more beneficial to the Town than the terms of the attached tariff, then the
more favorable rates, revenues, terms and conditions, or benefits shall additionally accrue to the
Town; and
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WHEREAS, the negotiated resolution of the Company's RRM filing and the resulting
rates are, as a whole, in the public interest.
NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN
OF PROSPER, TEXAS:
Section 1. That the findings set forth in this Ordinance are hereby in all things approved.
Section 2. That the Town Council finds the existing rates for natural gas service provided
by Atmos Mid-Tex are unreasonable and new tariffs and Atmos Mid-Tex's Proof of Revenues,
which are attached hereto and incorporated herein as Attachments A and B, are just and
reasonable and are hereby adopted.
Section 3. That Atmos Mid-Tex shall reimburse the reasonable ratemaking expenses of
the ACSC Cities in processing the Company's rate application.
Section 4. That the Settlement Agreement, attached as Attachment C, which includes in
addition to resolution of the Third RRM: (1) extension of a modified RRM process; (2)
requirement that Atmos Mid-Tex file a system-wide Statement of Intent rate case on or before
June 1, 2013; and (3) current recovery of incremental direct costs for a steel service line
replacement program, is hereby ratified.
Section 5. That to the extent any resolution or ordinance previously adopted by the
Council is inconsistent with this Ordinance, it is hereby repealed.
Section 6. That 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 7. That 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
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provisions of this Ordinance and the remaining provisions of the Ordinance shall be interpreted
as if the offending section or clause never existed.
Section 8. That if the Town determines any rates, revenues, terms and conditions, or
benefits resulting from a Final Order or subsequent negotiated settlement approved in any
proceeding addressing the issues raised in the Company's Third RRM filing would be more
beneficial to the Town than the terms of the attached tariff, then the more favorable rates,
revenues, terms and conditions, or benefits shall additionally accrue to the Town.
Section 9. That this Ordinance shall become effective from and after its passage with
rates authorized by attached Tariffs to be effective for bills rendered on or after October 1, 2010.
Section 10. That a copy of this Ordinance shall be sent to Atmos Mid-Tex, care of David
Park, Vice President Rates and Regulatory Affairs, at Atmos Energy Corporation, 5420 LBJ
Freeway, Suite 1862, Dallas, Texas 75240, and to Geoffrey Gay, General Counsel to ACSC, at
Lloyd Gosselink Rochelle & Townsend, P.C., P.O. Box 1725, Austin, Texas 78767-1725.
DULY PASSED AND APPROVED BY THE TOWN COUNCIL OF THE TOWN OF
PROSPER, TEXAS ON THIS 28th DAY OF SEPTEMBER, 2010 AT A MEETING WHICH
WAS HELD IN STRICT ACCORDANCE WITH THE TEXAS OPEN MEETING ACT.
RAY SM H' , Mayor
AVI'ES"
Al,
[ W DNTESaO C,
Town Secretary t
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