HomeMy Public PortalAboutOrdinance No. 1020-05 07-12-2005
• ORDINANCE NO. 1020-05
AN ORDINANCE OF THE CITY OF RiCHLAND HILLS, 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; APPROVING COOPERATION WITH OTHER CITIES WITHIN
THE ATMOS ENERGY CORP., MID-TEX DIVISION DISTRIBUT{ON
SYSTEM AS PART OF THE ATMOS CITIES STEERING COMMITTEE
(ACSC); AUTHORIZING ACSC TO HIRE LEGAL AND CONSULTING
SERVICES AND TO NEGOTIATE WITH THE COMPANY AND DIRECT
ANY NECESSARY LITIGATIION; AUTHORIZING INTERVENTION AS
PART OF ACSC IN ANY APPEAL OF THE CITY'S ACTION TO THE
RAILROAD COMMISSION; APPROVING COSTS INCURRED AS
REASONABLE AND PROVIDING A REQUIREMENT FOR PROMPT
REIMBURSEMENT OF COSTS; FINDING THAT THE MEETING AT
WHICH THIS ORDINANCE IS PASSED IS OPEN TO THE PUBLIC AS
REQUIRED BY LAW; AND PROVIDING FOR NOTICE OF THIS
ORDINANCE TO ATMOS ENERGY CORP., MID- TEX DIVISION.
WHEREAS, on or about December 17, 2004, Atmos Energy Corp., Mid-Tex
Division, (the "Company") filed with the City of Richland Hills ("City"), a request pursuant
• to Texas Utilities Code § 104.301 for an annual gas reliability infrastructure program
(GRIP) rate increase for customers on the Company's statewide gas utility system to be
effective February 15, 2005, and subsequently extended that effective date until March
4,2005, for some cities on its system; and
WHEREAS, the City has exclusive original jurisdiction to evaluate the Company's
request as it pertains to the distribution facilities located within the City, pursuant to Texas
Utilities Code 102.001(b) and 103.001; and
WHEREAS, the City timely acted to suspend the effective date of Atmos' proposed
rate increase; and
WHEREAS, it is reasonable for the City of Richland Hills to cooperate with other
cities in a coalition of cities in opposition to the Company's filing at the Railroad
Commission ("Commission"), said coalition being known as Atmos Cities Steering
Committee ACSC"), in any appeal of the cities' actions to the Commission; and
WHEREAS, the Gas Utility Regulatory Act grants local regulatory authorities the
right to intervene in rate proceedings filed at the Railroad Commission; and
WHEREAS, the Texas Utilities Code § 103.022 provides that costs incurred by the
• City in ratemaking activities are to be reimbursed by the regulated utility; and
Ordinance denying ATMOS GRIP Request\July 12, 2005
Page 1 of 4
• WHEREAS, ACSC's rate case expenses incurred in this proceeding are
reasonable and should be reimbursed by the Company; and
WHEREAS, counsel for ACSC, upon review of the Company's filing and upon
consultation with various consultants, recommends finding that the Company's proposal is
unjustified, unreasonable and is not in compliance with the GRIP statute (Texas Utilities
Code § 104.301) either in factor in law; and
WHEREAS, information provided by the Company in response to ACSC's requests
for information indicates that the Company actually decreased per-customer investment in
infrastructure during calendar year 2003; and
WHEREAS, the Company has publicly stated that it will receive substantial profit in
2005 over that approved by the Commission in GUD No. 9400; and
WHEREAS, the Company's GRIP request fails to account for growth in numbers of
customers, thereby undercounting the revenues it will receive from its proposed GRIP rate
increase; and
WHEREAS, the Company's GRIP request fails to recognize that GUD No. 9400
rates included profit based on TXU Corporation's capital structure rather than Amos
Energy Corp.'s current capital structure, which justifies a lower rate of return; and
• WHEREAS, the information reviewed by the ACSC consultants indicates that
implementation of the Company's GRIP request would result in further over-earning by the
Company above that approved by the Commission in GUD No. 9400; and
WHEREAS, in consideration of the city taking action before August 12, 2005, on
the currently pending GRIP request, the Company has agreed not to file any additional
GRIP requests before September 15, 2005.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
RICHLAND HILLS, TEXAS:
SECTION 1.
That the Company's GRIP rate increase request is found to be unjustified,
unreasonable and in violation of the GRIP statute and is therefore denied in all respects.
The defects in the request include, but are not limited to, the following: (a) the Company
improperly calculated its 2003 rate base; (b) the Company included in its calculation
projects unrelated to system improvement; (c) the Company failed to recognize the
increased revenues it is now receiving due to increased rates approved by the
Commission in GUD No. 9400 and due to customer growth; (d) information supplied by
the Company indicated that the Company actually decreased its per-customer investment
• in infrastructure in calendar year 2003; (e) approval of the Company's GRIP request
would result in over-earning by the Company in the year of implementation; and (f) the
Company has failed to demonstrate that it meets the statutory prerequisites to qualify for a
Ordinance denying ATMOS GRIP Request\July 12, 2005
Page 2 of 4
• GRIP rate increase or that its proposed method of implementation of the GRIP statute
constitutes a constitutional application of the statute.
SECTION 2.
That the City is authorized to cooperate with other Cities within the Company's
Distribution System that have fonned ACSC to hire and direct legal counsel and
consultants, negotiate with the Company, make recommendations to the City regarding
reasonable rates and to direct any necessary litigation associated with an appeal of this
ordinance to the Commission.
SECTION 3.
That the costs incurred by ACSC in reviewing the Company's GRIP request and
representing ACSC in this proceeding are hereby found to be reasonable and, upon
submission to the Company, shall be promptly reimbursed by the Company.
SECTION 4.
That the City is authorized to intervene in any appeal of the city's action filed at the
Commission, and to participate in any such appeal as a member of ACSC.
SECTION 5.
• That this Ordinance shall become effective immediately from and after its passage,
as the law and charter in such cases provide.
SECTION 6.
That 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 7.
That a copy of this ordinance, constituting final action on the Company's
application, shall be forwarded to the appropriate designated representative of the
Company within 10 days as follows: Richard Reis, Manager, Gas Regulation, Atmos
Energy Corp., Mid-Tex Division, Lincoln Center II, 18t" Floor, 5420 LBJ Freeway, Dallas,
Texas, 75240.
•
Ordinance denying ATMOS GRIP Request\July 12, 2005
Page 3 of 4
• DULY PASSED and approved by the City Council of the City of Richland Hills,
Texas on this 12t" day of July 2005.
APPROVED:
r
~ • ~ ~ ~ H~ HONORABLE N LDA S. STRODER
~g'• , MptYOR
•
. , = ATTEST:
~ 141 BUTTER, TRMC
CI Y SECRETARY
EFFECTIVE:
July 12, 2005
•
APPROVED S O F M D LEGALITY:
TIM G. SRALLA, CITY ATTORNEY
Ordinance denying ATMOS GRIP Request\July 12, 2005
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