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HomeMy Public PortalAboutOrdinance No. 1148-09 08-11-2009 ORDINANCE NO. 1148-09 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF Richland Hills ,TEXAS, ("CITY") 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 RATE REVIEW MECHANISM 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' PROOF OF REVENUES; 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 City of RICHLAND xILLS ~ Texas ("City") 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 City is a member of the Atmos Cities Steering Committee ("ACSC" or "Steering Committee"), a coalition of more than 150 similarly situated cities served by Atmos Mid-Tex that have joined together to facilitate the review 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 Atmos RRM Ordinance 1 develop the 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 City 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 6, 2009, Atmos Mid-Tex filed with the City its second application pursuant to the RRM tariff to increase natural gas rates by approximately $20.2 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' RRM filing and designated a Settlement Committee made up of ACSC representatives and 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 WHEREAS, independent analysis by ACSC's rate expert concluded that Atmos Mid-Tex is able to justify a slight rate increase over current rates; and WHEREAS, the Steering Committee has advocated in other proceedings that Atmos Mid-Tex hedge natural gas futures in order to mitigate the volatility of natural gas prices, which are a flow through to customers; and Atmos RRM Ordinance 2 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 $2.6 million; and WHEREAS, the attached tariffs implementing new rates and Atmos' 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 City 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 RRM filing would be more beneficial to the City than the terms of the attached tariff, then the more favorable rates, revenues, terms and conditions, or benefits shall additionally accrue to the City; and 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 CITY COUNCIL OF THE CITY OF RICHLAND HILLS ,TEXAS: Section 1. That the findings set forth in this Ordinance are hereby in all things approved. Section 2. That the City Council finds that the existing rates for natural gas service provided by Atmos Mid-Tex are unreasonable and new tariffs and Atmos' 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 rate making expenses of the ACSC Cities in processing the Company's rate application. Atmos RRM Ordinance 3 Section 4. That to the extent any resolution or ordinance previously adopted by the Council is inconsistent with this Ordinance, it is hereby repealed. Section 5. 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 5 51. Section 6. 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 provisions of this Ordinance and the remaining provisions of the Ordinance shall be interpreted as if the offending section or clause never existed. Section 7. That if the City 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 RRM filing would be more beneficial to the City than the terms of the attached tariff, then the more favorable rates, revenues, terms and conditions, or benefits shall additionally accrue to the City. Section 8. That the Company's Gas Cost Recovery tariff is revised to permit recovery of certain costs associated with hedging natural gas futures. 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 August 1, 2009. 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 1800, 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. Atmos RRM Ordinance 4 PASSED AND APPROVED this 11th da August , 2009. ayor \~~~~~n n nin~~i,,,~ ~ '~lv, ity Secretary = v ~ PROVED AS TO F RM: - • ~ ; City Attorney ~~''~~~iunnm~"```~ Atmos RRM Ordinance 5 Lloyd 816 Congress Avenue, Suite 1900 Austin, Texas 78701 Gosselink Telephone: (512) 322-5800 Facsimile: (512) 472-0532 ATTORNEYS A T LAW www.lglawfirm.com Ms. Doyle's Direct Line: (512) 322-5820 Email: kdoyle@lglawfinn.com MEMORANDUM TO: Atmos City Steering Committee (ACSC) Members FROM: Geoffrey Gay Kristen Doyle DATE: July 8, 2009 RE: Atmos RRM Settlement -FINAL ACTION NEEDED BY AUGUST 31, 2009 The ACSC Settlement Committee (Jay Doegey -Arlington, Danny Reed -Fort Worth, Mark Israelson -Plano, Phil Boyd -Lewisville, Odis Dolton -Abilene), with the advice and input of ACSC consultants and lawyers, has worked to resolve the Company's pending $20.2 million Rate Review Mechanism ("RRM") rate increase request without the necessity of a protracted and costly contested case proceeding. The attached tariff that reflects rates that will increase Atmos' revenues by $2.6 million. The negotiated result reduces Atmos' requested rate increase by more than 85%. The monthly bill impact for an average residential customers will be $0.15. The ACSC Executive Committee recommends approval of the negotiated resolution because it represents an outcome that is equal to or better than the outcome expected from a lengthy contested case proceeding, and maintains cities' role as a regulator of natural gas rates. Please schedule consideration of the Ordinance at your next available council meeting. Final council action to approve the Ordinance must take place by August 31, 2009. To assist you, several documents are attached: • An ordinance setting new rates. The approved Ordinance should include the attached Tariffs ("Attachment A" to the Ordinance) and Proof of Revenues ("Attachment B") A model staff report • A RRM fact sheet with customer impacts by class Please contact Kristen (5121322-5820, kdoyle@lglawfirm.com) immediately if your city is unable to meet the August 31st deadline for final action. Once final action has been taken by your city, please forward a copy of the Ordinance to Atmos Mid-Tex and to our paralegal, Barbara Kimmell (fax number: 512/472-0532, bkimmell@lglawfirm.com). Lloyd Gosselink Rochelle & Townsend, P.C. MODEL STAFF REPORT The City, along with 150 other cities served by Atmos Energy Mid-Tex Division ("Atmos Mid-Tex" or "Company"), is a member of the Atmos Cities Steering Committee ("ACSC" or "Steering Committee"). On March 6, 2009, Atmos Mid-Tex filed with the City an application to increase natural gas rates pursuant to the Rate Review Mechanism ("RRM") tariff approved by the City as part of the settlement of the Atmos Mid-Tex 2007 Statement of Intent to increase rates. The Atmos Mid-Tex March RRM filing sought a $20.2 million rate increase. The City worked with ACSC to analyze the schedules and evidence offered by Atmos Mid-Tex to support its request to increase rates. The Ordinance and attached RRM tariff are the result of negotiation between ACSC and the Company to resolve issues raised by ACSC during the review and evaluation of ACSC's RRM filing. The Ordinance and RRM tariffs approve rates that will increase the Company's revenues by $2.6 million effective for bills rendered on or after August 1, 2009. The monthly bill impact for the average residential customer will be a $0.15 increase (about a 0.22% increase in the total bill). Please note that current rates contain atrue-up component ($9 million tv be collected over twelve months) from the first RRM in 2008. Collection of the 2008 true-up amount is scheduled to end on November 1, 2009. The rate impact of that 2008 true-up amount for the period August 1 -October 31, 2009 is $1,006,073. To simplify the process and to reduce rate fluctuations, the parties have agreed to eliminate collection of the 2008 true-up on August 1, 2009 rather than November 1, 2009. The remaining $1,006,073 that is still owed from the 2008 true-up will be recovered as part of the 2009 true-up over 12 months rather than 3 months. This change related to the 2008 true-up amount is revenue and rate impact neutral. The ACSC Executive Committee recommends that all ACSC Cities adopt the Ordinance implementing the rate change. RRM Baclcground• The RRM tariff was approved by ACSC Cities as part of the settlement agreement to resolve the Atmos Mid-Tex 2007 rate increase case. Atmos Mid-Tex's current action represents the second filing pursuant to the three-year trial project known as the RRM process. The RRM process was created collaboratively by ACSC and Atmos Mid-Tex as an alternative to the GRIP surcharge process. The RRM process allows for a more comprehensive rate review and annual adjustment that will function as a substitute for future GRIP filings during the three-year trial period specified by the tariff. There are two components to the RRM adjustment. The prospective component adjusts rates for known and measurable changes in O&M and net plant investment. Atmos Mid-Tex and ACSC agreed to cap changes to expenses and invested capital at no more than 5%. The true-up component evaluates whether the Company has over or underrecovered its earnings for the previous year. For purposes of the RRM true-up component, the Atmos Mid-Tex rate of return on equity and its capital structure are frozen to avoid the parent company from manipulating the overall rate of return. Costs expressly prohibited from recovery through the RRM include first- Atmos RRM Ordinance Staff Report 1 class air fare, travel, meals or entertainment for an employee's spouse, alcohol, sports events, entertainment, arts and cultural events, sponsorship of sports, arts or cultural events, and social club membership dues. Purpose of the Ordinance: The purpose of the Ordinance is to approve rate tariffs ("Attachment A") and Proof of Revenues ("Attachment B") that reflect the negotiated rate change pursuant to the RRM process. In addition to the RRM tariffs, the Ordinance also approves a revision to the Atmos Mid-Tex current Gas Cost Recovery ("GCR") tariff to allow the Company to recover certain hedging costs associated with natural gas futures through the GCR tariff. As a result of the negotiations, ACSC was able to reduce the Company's requested $20.2 million RRM increase by more than 70%. Approval of the Ordinance will result in rates that implement a $2.6 million increase in Atmos' revenues effective August 1, 2009. Reasons Justifying Approval of the Negotiated Resolution: During the time that the City has retained original jurisdiction in this case, consultants working on behalf of ACSC cities have investigated the support for the Company's requested rate increase. While the evidence does not support the $20.2 million increase requested by the Company, ACSC consultants agree that the Company can justify a slight increase in revenues. The agreement on $2.6 million is a compromise between the positions of the parties. The alternative to a settlement of the RRM filing would be a contested case proceeding before the Railroad Commission of Texas ("RRC") on the Company's current application, would take several months and cost ratepayers millions of dollars in rate case expenses and would not likely produce a result more favorable than that to be produced by the settlement. The ACSC Executive Committee recommends that ACSC members take action to approve the Ordinance authorizing new rate tariffs. With regard to the revision to the GCR tariff, ACSC has advocated that the Company use hedging as a risk management tool to help mitigate volatile natural gas prices. The tariff change is consistent with ACSC's prior position. Explanation of "Be It Ordained" Paragraphs: 1. This paragraph approves all findings in the Ordinance. 2. This section adopts the attached tariffs ("Attachment A") and the Company's Proof of Revenues ("Attachment B") in all respects and finds the rates set pursuant to the attached tariffs to be just, reasonable and in the public interest. Note that only new tariffs or existing tariffs being revised are attached to the Ordinance. Existing tariffs not being changed in any way are not attached to the Ordinance. 3. This section requires the Company to reimburse ACSC for reasonable rate making costs associated with reviewing and processing the RRM application. Atmos RRM Ordinance Staff Report 2 4. This section repeals any resolution or ordinance that is inconsistent with this Ordinance. 5. This section finds that the meeting was conducted in compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. 6. This section is a savings clause, which provides that if any section(s) is later found to be unconstitutional or invalid, that finding shall not affect, impair or invalidate the remaining provisions of this Ordinance. This section further directs that the remaining provisions of the Ordinance are to be interpreted as if the offending section or clause never existed. 7. This section is a "Most Favored Nations" clause, which protects the City by mandating that if the City 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 RRM filing would be more beneficial to the City than the terms of the attached tariff, then the more favorable rates, revenues, terms and conditions, or benefits shall additionally accrue to the City. 8. This section allows the Company to recover certain costs associated with natural gas hedging through the GCR tariff. 9. This section provides for an effective date upon passage. 10. This paragraph directs that a copy of the signed Ordinance be sent to a representative of the Company and legal counsel for ACSC. Atmos RRM Ordinance Staff Report 3 Attachment A ATMOS ENERGY CORPORATION MID-TEX DNISION REVISION N0: Q RATE SCHEDULE: R - RESIDENTIAL SALES APPLICABLE TO: All Cities dsslgnatad as "Group A" on the Clues Served List EFFECTNE DATE: Bills Rendered on or after 0810112009 PAGE: 29 Application Applicable to Residential Customers for all natural gas provided at one Point of Delivery and measured through one meter. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being famished. Monthly Rate Customers monthly bill will be caculated by adding the following Customer and Mcf charges to the amounts due under the riders listed below: Charge Amoun# Customer Charge per Bill $ 7.00 per month Commodity Charge -All Mcf 52.2707 per Mcf Gas Cast Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Weather Normalization Adjustment: Plus or Minus an amount for weather normalization ca~ulated in accordance with Rider WNA. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Agreemerrt An Agreement for Gas Service may be required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. issued By: David J. Park vice President, Rates and Regulatory Affairs Date Issued: Attachment A ATMOS ENERGY CORPORATION MID-TEX DNI31ON REVISION N0: Q RATE SCHEDULE: C -COMMERCIAL SALES APPLICABLE TO: All Clues designated as "Group A" on the Citiss Served List EFFECTNE DATE: Bills Rendered on or after 08/0112009 PAGE: 30 Application Applicable to Commercial Customers for all natural gas provided at one Point of Delivery and measured through one meter and to Industrial Customers with an averege annual usage of less than 3,000 Mcf. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, addfional charges and special contract arrangements between Company and Customer may be required prior to service being famished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and Mcf charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Bill $ 13.50 per month Commodity Charge -All Mcf $ 0.9877 per Mcf Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Weather Normalization Adjustment: Plus or Minus an amount for weather normalization cak:ulatedin accordance with Rider WNA. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Agreement An Agreement for Gas Service may be required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. Issued By: David J. Park V'~ce President, Rates and Regulatory Affairs Date Issued: Attachment A ATMOS ENERGY CORPORATION MID-TEX DNISION REVISION N0: 0 RATE SCHEDULE: 1-INDUSTRIAL SALES APPLICABLE TO: All Cities designated as "Group A" on the Cities Served Llat EFFECTNE DATE: Bills Rendered on or after 08/0112009 PAGE: 31 Application Applicable to Industrial Customers with a maximum dairy usage (MDU) of less than 3,500 MMBtu per day for all natural gas provided at one Point of Delivery and measured through one meter. Service for Industrial Customers with an MDU equal to or greater than 3,500 MMBtu per day will be provided at Company's sole option and will require special contract arrangements between Company and Customer. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and MMBtu charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Meter $ 425.00 per month First 0 MMBtu to 1,500 MMBtu $ 0.2583 per MMBtu Next 3,500 MMBtu $ 0.1884 per MMBtu All MMBtu over 5,000 MMBtu $ 0.0404 per MMBtu Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Curtalbnent Overpull Fee Upon notification by Company of an event of curtailment or interruption of Customer's deliveries, Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay Company 200% of the midpoint price for the Katy point listed in Plaits Gas Daily published for the applicable Gas Day in the table entitled "Daily Price Survey." Issued By: David J. Park Vice President, Rates and Regulatory Affairs Date Issued: Attachment A ATMOS ENERGY CORPORATION MID-TEX DNISION REVISION NO: 0 RATE SCHEDULE: I -INDUSTRIAL SALES APPLICABLE TO: All Cltiss designated as "Group A" on the Cities Served List EFFECTNE DATE: Bills Rendered on or after 08/01/2009 PAGE: 32 Replacement Index to the event the "midpoint or "common" price for the Katy point listed in Platts Gas Daily in the table entitled "Daily Price Survey" is no longer published, Company will cak:ulate the applicable imbalance fees utilizing a daily price index recognized as authoritative by the natural gas industry and most closely approximating the applicable index. Agreement An Agreement for Gas Service may be required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. Special Conditions In order to receive service under Rate I, Customer must have the type of meter required by Company. Customer must pay Company all costs associated with the acquisition and installation of the meter. Issued By: David J. Park Vice President, Rates and Regulatory Affairs Date Issued: Attachment A ATMOS ENERGY CORPORATION MID-TEX DMSION REVISION N0: 0 RATE SCHEDULE: T -TRANSPORTATION APPLICABLE TO: All Citiss designated as "Group A" on the Cities Served List EFFECTNE DATE: Bills Rendered on or after 08/01/2009 PAGE: 33 Applkation Applicable, in the event that Company has entered into a Transportation Agreement, to a customer directly connected to the Atmos Energy Corp., Mid-Tex Division Distribution System (Customer) for the transportation of all natural gas supplied by Customer or Customer's agent at one Point of Delivery for use in Customers facility. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customers bill will be calculated by adding the following Customer and MMBtu charges to the amounts and quantities due under the riders listed below: Charge Amount Customer Charge per Meter $ 425.00 per month First 0 MMBtu to 1,500 MMBtu S 0.2583 per MMBtu Next 3,500 MMBtu $ 0.1884 per MMBtu All MMBtu over 5,000 MMBtu $ 0.0404 per MMBtu Upstream Transportation Cost Recovery: Plus an amount for upstream transportation costs in accordance with Part (b) of Rider GCR. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Retention Adjustment: Plus a quantity of gas as calculated in accordance with Rider RA. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Sun;harges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Imbalance Fees All fees charged to Customer under this Rate Schedule will be charged based on the quantities determined under the applicable Transportation Agreement and quantifies will not be aggregated for any Customer with multiple Transportation Agreements for the purposes of such fees. Issued By: David J. Park Vice President, Rates and Regulatory Affairs Date Issued: Attachment A ATMOS ENERGY CORPORATION MIO-TEX DMSION REVISION N0: 0 RATE SCHEDULE: T -TRANSPORTATION APPLICABLE TO: All Cities designated as "Group A" on the Cities Served List EFFECTIVE DATE: Bills Rendered on or after 08/01/2008 PAGE: 34 Monthly Imbalance Fees Customer shall pay Company the greater of (i) 50.10 per MMBtu, or (ii) 150°~ of the difference per MMBtu between the highest and lowest "midpoint price for the Katy point listed in Plaits Gas Daily in the table entitled "Daily Price Survey' during such month, for the MMBtu of Customer's monthly Cumulative Imbalance, as defined in the applicable Transportation Agreement, at the end of each month that exceeds 10% of Customer's receipt quantities for the month. Curtailment Overpull Fee Upon notification by Company of an event of curtailment or interruption of Customer's deliveries, Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay Company 200% of the midpoint price for the Katy point listed in Plats Gas Daily published for the applicable Gas Day in the table entitled "Daily Price Survey." Replacement Index In the event the "midpoint' or "common" price for the Katy point listed in P/acts Gas Daily in the table entitled "Daily Price Survey" is no longer published, Company will calculate the applicable imbalance fees utilizing a daily price index recognized as authoritative by the natural gas industry and most closely approximating the applicable index. Agreement A transportation agreement is required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. Special Conditions In order to receive service under Rate T, customer must have the type of meter required by Company. Customer must pay Company all costs associated with the acquisition and installation of the meter. Issued By: David J. Park Vice President, Rates and Regulatory Affairs Date Issued: Attachment A ATMOS ENERGY CORPORATION MID•TEX DNISION REVISION NO: 0 RIDER: WNA - tNEATHER NORMALIZATION ADJUSTMENT APPLICABLE TO: All Cities designated as "Group A" on the Cities Served Llst EFFECTNE DATE: Bills Rendered on or after 08/0112009 PAGE: 45 Provisions for Adiustment The base rate per Mcf (1,000,000 Btu) for gas service set forth in any Rate Schedules utilized by the cities of the Mid-Tex Division service area for determining normalized winter period revenues shall be adjusted by an amount hereinafter described, which amount is referred to as the "Weather Normalization Adjustment." The Weather Normalization Adjustment shall apply to all temperature sensitive residential, and commercial bills based on meters read during the revenue months of November through April. The five regional weather stations are Abilene, Austin, Dallas, Waco, and Wichita Falls. Cpmputation of Weather Normalization Adjustment The Weather Normalization Adjustment Factor shall be computed to the nearest one-hundredth cent per Mcf by the following fornula: (HSFi x (NDD-ADD) ) WNAFi = Ri (gl.i + (HSFi x ADD) ) Where i = any particular Rate Schedule or billing classification within any such particular Rate Schedule that contains more than one billing classification WNAFi = Weather Normalization Adjustment Factor for the ith rate schedule or classification expressed in cents per Mcf Ri = base rate of temperature sensifrve sales for the ith schedule or classification approved by the entity exercising original jurisdiction. HSFi = heat sensitive factor for the ith schedule or classification calculated as the slope of the linear regression of average sales per bill (Mcf) and actual heating degree days by month for the test year by schedule or classification and weather station as part of the RRM tiling. NDO = billing cycle normal heating degree days caculated as the simple ten-year average of actual heating degree days. ADD = billing cycle actual heating degree days. gli = base load sales for the ith schedule or classification calculated as the y- intercept of the linear regression of average sales per bill (Mcf) and actual heating degree days by month for the test year by schedule or classification and weather station as part of the RRM filing. The Weather Normalization Adjustment for the jth customer in ith rate schedule is computed as: Issued By: David J. Park Vice President, Rates and Regulatory Affairs Dste Issued: Attachment A ATMOS ENERGY CORPORATION MID-TEX DMSION REVISION N0: 0 RIDER: WNA -WEATHER NORMALIZATION ADJUSTMENT APPLICABLE T0: All Cities designated as "Group A" on the Cities Served Liat EFFECTNE DATE: Bills Rendered on or after 08/0112009 PAGE: 46 WNPy = WNAFi x qy Where qy is the relevant sales quantity for the jth customer in ith rate schedule. Filings with Entities Exercising Original Jurisdiction As part of its annual RRM filing the Company will file (a) a copy of each computation of the Weather Normalization Adjustment Factor, (b) a schedule showing the effective date of each such Weather Normalization Adjustment, (c) a schedule showing the factors of values used in calculating such Weather Normalization Adjustment and (d) a random sample and audit of thirty (30) actual customer bills, with customer information deleted, for each rate schedule or classification to which the WNA was applied in the preceding 12 month period. To the extent that source data is needed to audit the WNA application, such data will be provided by the Company as part of the annual RRM filing. If the RRM is discontinued, as provided in the Rider RRM tariff, the information required herein to be filed with the entities exercising original jurisdiction shall be filed on March 1 of each year. Base Use/Heat Use Factors Residential Commercial Base use Heat use Base use Heat use Weather Station Mcf Mcf/HDD M Mcf/HDD Abilene 0.98 .0140 9.64 .0629 Austin 1.30 .0161 20.00 .0815 Dallas 1.60 .0212 20.12 .1018 Waco 1.12 .0139 11.69 .0608 Wichita 1.12 .0159 11.67 .0649 Falls Samole WNgFj Ca~ulation~ (.0140 x (30-17) ) .3393 per Mcf = 2.2707 x (0.98 + (.0140 x 17) ) Where i = Residential Single Blxk Rate Schedule Ri = 2.2707 per MCF HSFi = .0140 (Residential -Abilene Area) Issued iBy: David J. Park Vice President, Rates and Regulatory Affairs Date Issued: Attachment A ATMOS ENERGY CORPORATION MID-TFJ( DMSION REVISION NO: Q RIDER: WNA -WEATHER NORMALIZATION ADJUSTMENT APPLICABLE T0: All Cities designated as "Group A" on the Cities Served Liat EFFECTIVE DATE: Bills Rendered on or after 08/0112009 PAGE: 47 NDD = 30 HDD (Simple ten-year average of Actual HDD for Abilene Area - 9115106 - 10/14106) ADD = 17 HDD (Actual HDD for Abilene Area - 9/15/06 - 10/14/06) gli = 0.98 Mcf (Residential -Abilene Area) Issued By: David J. Park Vice President, Rates and Regulatory Affairs Date Issued: Attachment A ATMOS ENERGY CORPORATION MID-TEX DNISION REVISION N0: 0 RIDER: GCR -GAS COST RECOVERY APPLICABLE T0: All Citles Except Dallas EFFECTNE DATE: Bills Rendered on or after 8N/2008 PAGE: 68 Applicable to Rate R, Rate C, and Rate I for all gas sales made by Company, and applicable to Rate R, Rate C, Rate I, and Rate T for recovery of Pipeline System costs. The total gas cost recovery amount due is determined by adding the gas cost calculated in Section (a) below and the pipeline cost calculated in Section (b) below. The amount due for gas cost (Section (a)) is determined by multiplying the Gas Cost Recovery Factor (GCRF) by the Customer's monthly volume. For Customers receiving service under Rate R and Rate C, monthly volume will be calculated on a Mcf basis. For Customers receiving service under Rate 1, monthly volume will be calculated on an MMBtu basis and the quantities wilt be adjusted as necessary to recover actual gas costs. The amount due for pipeline cost (Section (b)) is determined by multiplying the Pipeline Cost Factor (PCF) by the Customer's monthly volume. For Customers receiving service under Rate R and Rate C, monthly volume will be calculated on an Mcf basis. For Customers receiving service under Rate I and Rate T, monthly volume will be calculated on an MMBtu basis and the quantities will be adjusted as necessary to recover actual gas costs. (a) Gas Cost Method of Calculation The monthly gas cost adjustment is calculated by the application of a Gas Cost Recovery Factor (GCRF), as determined with the following formula: GCRF =Estimated Gas Cost Factor (EGCF) + Reconciliation Factor (RF) + Taxes (TXS) EGCF =Estimated cost of gas, including lost and unaccounted for gas attributed to residential, commercial, and industrial sales, and any reconciliation balance of unrecovered gas costs, divided by the estimated total residential, commercial, and industrial sales. Lost and unaccounted for gas is limited to 5°k. RF =Calculated by dividing the difference between the Actual Gas Cost Incurred, inclusive of interest over the preceding twelve-month period ended June 30 and the Actual Gas Cost Billed over that same twelve-month period by the estimated total residential, commercial, and industrial sales for the succeeding October through June billing months. The interest rate to be used is the annual interest rate on overcharges and under charges by a utility as published by the Public Utility Commission each December. The interest rate for calendar year 2009 is 2.09%. Actual Gas Cost Incurred =The sum of the costs booked in Atmos Energy Corp., Mid-Tex Division acxount numbers 800 through 813 and 858 of the FERC Uniform System of Accounts, incuding the net impact of injecting and withdrawing gas from storage. Also includes a credit or debit for any out-of-period adjustments or unusual or nonrecurring costs typiglly considered gas costs and a credit for amounts received as Imbalance Fees or Curtailment Overpull Fees. Also includes any Issued By: David J. Park Vice President, Rates and Regulatory Affairs Date Issued: Attachment A ATMOS ENERGY CORPORATION MID-TEX DNISION REVISION N0: 0 RIDER: GCR -GAS COST RECOVERY APPLICABLE T0: All Cities Except Dallas EFFECTIVE DATE: Bills Rendered on or after 811/2008 PAGE: 69 prudently incurred transaction-related fees, gains or losses and other transaction costs associated with the use of various financial instruments that are executed by the Company for the purpose of price volatility mitigation. Actual Gas Cost BNled = EGCF multiplied by the monthly volumes billed to Residential, Commercial and Industrial Sales customers, less the total amount of gas cost determined to have been uncollectible and written off which remain unpaid for each month of the reconciliation period. Any amount remaining in the reconciliation balance after the conclusion of the period of amortization will be maintained in the reconcliaton balance and included in the collection of the next RF. Atmos Energy shall file annual reports with the Commission, providing by month the following amounts: Gas Cost Written Off. Margin Written Off, Tax and Other Written Off, Total Written Off, Gas Cost Collected and Margin Collected. TXS =Any statutorily imposed assessments or taxes applicable to the purchase of gas divided by the estimated total residential, commercial, and industrial sales. ADJ =Any surcharge or refund ordered by a regulatory authority, inclusive of interest, divided by the estimated total residential, commercial, and industrial sales is to be included as a separate line item surcharge. (b) Pipeline Cost Method of Calculation Each month, a Pipeline Cost Factor (PCF) is calculated separately for each Pipeline Cost Rate Class listed below. The formula for the PCF is: PCF = PP / S, where: PP = (P - A) x D, where: P =Estimated monthly cost of pipeline service calculated pursuant to Rate CGS D =Pipeline service allocation factor for the rate class as approved in the Company's most recent rate case, as follows: issued By: David J. Park Vice President, Rates and Regulatory Affairs Date Issued: Attachment A ATMOS ENERGY CORPORATION MID-TEX DNISION REVISION NO: 0 RIDER: GCR -GAS COST RECOVERY APPLICABLE T0: All Cities Except Dallas EFFECTNE DATE: Bills Rendered on or after 8H/2008 PAGE: TO Pi aline Cost Rate Class Allocation Factor D Rate R -Residential Service .634698 Rate C -Commercial Service .302824 Rate I -Industrial Service and Rate T -Trans rtation Service .062478 A =Adjustment applied in the current month to correct for the difference between the actual and estimated pipeline cost revenue of the second preceding month, calculated by the formula: A = R - (C - A2), where: R =Actual revenue received from the application of the PP component in the second preceding month. C =Actual pipeline costs for the second preceding month. A2 =The adjustment (A) applied to the PP component in the second preceding month. S =Estimated Mcf or MMBtu for the rate class for the current billing month. The PCF is calculated to the nearest 0.0001 cent. The Pipeline Cost to be billed is determined by multipying the Mcf or MMBtu used by the appropriate PCF. The Pipeline Cost is determined to the nearest whole cent. issued By: David J. Park vice President, Rates and Regulatory Affairs Date Issued: Attachment A ATMOS ENERGY CORPORATION MID-TEX DNISION REVISION N0: 0 RIDER: CEE - CONSERVATION ~ ENERGY EFFICIENCY APPLICABLE T0: All Cities except Dallas EFFECTNE DATE: Bills Rendered on or after 8H/2008 PAGE: 84 Purpose Atmos Energy Mid-Tex is proposing to institute a complete Conservation & Energy Efficiency program which will offer assistance to qualified customer segments in reducing energy consumption and lowering energy utility bills. The proposal is one where Atmos Energy shareholders wi{I fund a percentage of the allowable expenses incurred annually, with a customer rate component providing the remainder of the funding. Following is ahigh-level, concept summary of the proposal. Atmos Energy Mid-Tex Division proposes to work with the communities it serves to develop the details of a new tariff and programs addressing conservation and energy efficiency. ~nopsis: Voucher system to provide free energy savings materials and supplies to qualifying customers of Atmos Mid-Tex. Qualified Customers will receive up to one thousand five hundred dollars ($1,500.00) worth of caulking, weather-stripping, sheathing, sealing, water heater blankets, related gas plumbing, and like materials, other energy saving devices such as clock-thermostats, set-back devices ("covered items") from approved suppliers /retailers including necessary labor. Company will undertake efforts to enlist support from community groups, including its own Employee Action Program, to assist customers with installation. If it is determined that professional installation capabilities are necessary, the parties will agree on labor assistance amounts. Eli i ili Low Income -Low-income rate-payers that qualify for heating bill assistance through LIHEAP and other government energy efficiency program agencies and all agencies that distribute Atmos "Share the Warmth" funds. Agencies that allocate assistance funds denote customer as Low Income, a status that lasts for one year. Senior Citizen -Primary account holder can request eligibility through ATM call center or web-site. Customer provides primary SSN which is verified through Social Securityr Administration. And account holder that is or turns 65 years old in that year becomes eligible. Fun i Initial annual program funding will be at two million dollars ($2,000,000). Atmos Energy shareholders will contribute one million dollars ($1,000,000.00) to this initiative annually with ratepayers providing one million dollars ($1,000,000.00) per year. It is proposed that the program operate on an October 1 through September 30 year, with regulatory asseUliability accounting employed by Atmos to track the difference between program funding and qualifying program expenditures. No Atmos employee labor will be charged as a program expenditure. Administration: A third-party administrator will coordinate qualification of customers, voucher distribution, subsequent verification and reimbursement of eligible expenditures and general program administration. Program administration expenses will be funded from the annual approved budget. Issued By: David J. Park Vice President, Rates and Regulatory Affairs Date Issued: Attachment A ATMOS ENERGY CORPORATION MID TEX DMStON REVISION N0: 0 RIDER: CEE - CONSERVATION b ENERGY EFFICIENCY APPLICABLE T0: All Cities except Dallas EFFECTNE DATE: Bills Rendered on or after 8h/2009 PAGE: 88 Audits will be provided all interested parties within 120 days of the end of each program year to determine effectiveness. Report Atmos shall file an annual report detailing cost to administer the program including the amounts paid out of the program for energy conversation assistance. The report shall also detail the number of applicants and expenditures by geographic location, including the numbers of applications rejected and accepted and reason if rejected. The report shall be filed with the Director of the Gas Services Division of the Railroad Commission within 120 days of the end of each program year and with counsel of record for municipalities served by the Mid-Tex Division. Issued By: David J. Park Vice President, Rates and Regulatory Affairs Date hzsued: Rate Review Mechanism Fact Sheet *The Rate Review Mechanism (RRM) was created in 2008 as part of a collaborative agreement between ACSC and Atmos. It replaces the unworkable and contentious Gas Reliability Infrastructure Program (GRIP) surcharge process. *The RRM authorizes cities to meaningfully review and dispute the company's annual rate filings in an expedited rate proceeding at the city level. This authority was lacking under the GRIP process. *The RRM is a substitute for GRIP filings during the three-year trial period (2008 - 2010). *The RRM permits the Company to seek an annual review of its revenues, estimated cost of operations, and capital investments. In most cases, the company cannot seek rate adjustments greater than 5 percent. The Company must provide evidence as part of the annual review process that cities can assess and, if necessary, challenge. *The RRM process allows Atmos to seek a surcharge from ratepayers if its anticipated expenses exceed its anticipated revenues fora 12 month period. However, if the Company's revenues exceed its authorized rate of return, it must issue refunds. Costs Expressly Prohibited from Recovery Under the RRM: First class airfare, travel, meals or entertainment for an employee's spouse, alcohol, sports events, entertainment, arts and cultural events, sponsorship of sports, arts or cultural events, and social club membership dues. The RRM is applicable only to the Company's base rates -the cost of delivering natural gas to customers. The commodity price of natural gas is apass-through cost to customers that can change monthly based upon the price of natural gas. RRM Bill Impacts• Pursuant to the negotiated agreement between Atmos and the Steering Committee, the tariffs implementing the RRM will increase rates by $2.6 million. The average monthly customer impact by class will be: Residential (4.7 Mcf/month) - $0.15/month increase (0.22% overall increase) Commercial (36.1 Mcf/month) - $0.26lmonth increase (0.06% overall increase) Industrial (3480 MMBtu/month) - $46.80/month decrease (1.96% overall decrease) ATTACHMENT B ATMOS ENERGY CORP., MID-TEX DIVISION PROOF OF REVENUES TEST YEAR ENDING DECEMBER 31, 2008 (2009 RRM SETTLEMENT PROPOSAL) Line Prospective Total change from No. Description Rate Increase 2008 True-up current rates (a) (b) (c) (d) 1 Rate R 2 Consumption Charge per MCF 3 Change from Current Rate $0.1047 $0.0060 $0.0297 4 Billing Units for Specified Period 82,321,960 82,321,960 82,321,960 5 Total Change in Base Revenue $8,619,109 $493,932 $2,444,962 6 Associated Revenue Taxes 532 144 30 495 150 952 7 Total Rate Impact $9,151,253 $524,427 $2,595,914 8 Number of Bills for Specified Period 17,244,058 17,244,058 17,244,058 9 Average Impact per Bill $0.53 $0.03 $0.15 10 Rate C 11 Consumption Charge per MCF 12 Change from Current Rate $0.0383 $0.0052 $0.0068 13 Billing Units for Specified Period 52,439,100 52,439,100 52,439,100 14 Total Change in Base Revenue $2,008,418 $272,683 $356,586 15 Associated Revenue Taxes 124 000 16 835 22 016 16 Total Rate Impact $2,132,417 $289,519 $378,601 17 Number of Bills for Specified Period 1,452,943 1,452,943 1,452,943 18 Average Impact per Bill $1.47 $0.20 $0.26 19 Rates 18~T -1st block 20 Consumption Charge per MCF 21 Change from Current Rate $0.0144 $0.0087 ($0.0150) 22 Billing Units for Specified Period 9,681,181 9,681,181 9,681,181 23 Total Change in Base Revenue $139,409 $84,226 ($145,218) 24 Associated Revenue Taxes 8 607 5 200 8 966 25 Total Rate Impact $148,016 $89,426 ($154,183) 26 Rates 18T - 2nd block 27 Consumption Charge per MCF 28 Change from Current Rate $0.0105 $0.0064 ($0.0109) 29 Billing Units for Specified Period 10,782,882 10,782,882 10,782,882 30 Totai Change in Base Revenue $113,220 $69,010 ($117,533) 31 Associated Revenue Taxes 6 990 4 261 7 257 32 Total Rate Impact $120,210 $73,271 ($124,790) 33 Rates 18T - 3rd block 34 Consumption Charge per MCF 35 Change from Current Rate $0.0023 $0.0014 ($0.0023) 36 Billing Units for Specified Period 19,798,632 19,798,632 19,798,632 37 Total Change in Base Revenue $45,537 $27,718 ($45,537) 38 Associated Revenue Taxes $2.811 1 711 {$2.8111 39 Total Rate Impact $48,348 $29,429 ($48,348) 40 Rates I&T - Totai 41 Total Rate Impact $316,575 $192,127 ($327,322) 42 Number of Bills for Specified Period 11,571 11,571 11,571 43 Average Impact per Bill $12.79 $7.73 t$13 32? 44 45 Total Change in Base Revenue 510,925,693 5947,570 52,493,260 46 Total Rate Impact (Inc. Rev. Taxes) 511,600,245 51,006,073 52,847,194