HomeMy Public PortalAboutOrdinance No. 1333-17 05-16-2017ORDINANCE NO. 1333-17
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
RICHLAND HILLS, TEXA5, APPROVING A NEGOTIATED
SETTLEMENT BETWEEN THE ATMOS CITIES STEERING
COMMITTEE ("ACSC") AND ATMOS ENERGY CORP., MID-
TEX DIVISION REGARDING THE COMPANY'S 2017 RATE
REVIEW MECHANISM FILINGS; DECLARING EXISTING
RATES TO BE UNREASONABLE; ADOPTING TARIFFS THAT
REFLECT RATE ADJUSTMENTS CONSISTENT WITH THE
NEGOTIATED SETTLEMENT; FINDING THE RATES TO BE
SET BY THE SETTLEMENT TARIFFS TO BE JUST AND
REASONABLE AND IN THE PUBLIC INTEREST; REQUIRING
RECONCILIATION AND RATE ADJUSTMENTS IF FEDERAL
INCOME TAX RATES CHANGE; TERMINATING THE RRM
PROCESS FOR 2018 PENDING RENEGOTIATION OF RRM
TERMS AND CONDITIONS; REQUIRING THE COMPANY TO
REIMBURSE ACSC'S REASONABLE RATEMAHING
EXPENSES; DETERMINING THAT THIS ORDINANCE WAS
PASSED IN ACCORDANCE WITH THE REQUIREMENTS OF
THE TEXAS OPEN MEETINGS ACT; ADOPTING A SAVINGS
CLAUSE; DECLARING AN EFFECTIVE DATE; AND
REQUIRING DELIVERY OF THIS ORDINANCE TO THE
COMPANY AND THE ACSC'S LEGAL COUNSEL.
WHEREAS, the City of Richland Hills, 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"), a
coalition of similarly-situated cities served by Atmos Mid-Tex ("ACSC Cities") 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; and
WHEREAS, ACSC and the Company worked collaboratively to develop a new Rate
Review Mechanism ("RRM") tariff that allows for an expedited rate review process by ACSC
Cities as a substitute to the Gas Reliability Infrastructure Program ("GRIP") process instituted by
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the Legislature, and that will establish rates for the ACSC Cities based on the system-wide cost
of serving the Atmos Mid-Tex Division; and
WHEREAS, on March 1, 2017, Atmos Mid-Tex filed its 2017 RRM rate request with
ACSC Cities; and
WHEREAS, ACSC coordinated its review of the Atmos Mid-Tex 2017 RRM filing
through its Executive Committee, assisted by ACSC's attorneys and consultants, to resolve
issues identified in the Company's RRM filing; and
WHEREAS, the Executive Committee, as well as ACSC's counsel and consultants,
recommend that ACSC Cities approve an increase in base rates for Atmos Mid-Tex of $48
million on a system-wide basis; and
WHEREAS, the attached tariffs implementing new rates are consistent with the
recommendation of the ACSC Executive Committee, are agreed to by the Company, and are just,
reasonable, and in the public interest;
WHEREAS, the RRM Tariff contemplates reimbursement of ACSC's reasonable
expenses associated with RRM applications;
WHEREAS, the Company and ACSC have agreed that rates should be adjusted if any
change in federal income tax rates is implemented during the period that rates approved herein
remain in place; and
WHEREAS, because ACSC believes that certain provisions of the current terms and
conditions of the RRM tariff are inconsistent with market conditions, the City expects
renegotiation of the current RRM tariff in the Summer of 2017.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF RICHLAND HILLS, TEXAS:
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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 settled amount of an increase in revenues
of $48 million on a system-wide basis represents a comprehensive settlement of gas utility rate
issues affecting the rates, operations, and services offered by Atmos Mid-Tex within the
municipal limits arising from Atmos Mid-Tex's 2017 RRM filing, is in the public interest, and is
consistent with the City's authority under Section 103.001 of the Texas Utilities Code.
Section 3. That the existing rates for natural gas service provided by Atmos Mid-Tex are
unreasonable. The new tariffs attached hereto and incorporated herein as Attachment A, are just
and reasonable, and are designed to allow Atmos Mid-Tex to recover annually an additional $48
million in revenue over the amount allowed under currently approved rates, as shown in the
Proof of Revenues attached hereto and incorporated herein as Attachment B; such tariffs are
hereby adopted.
Section 4. That the ratemaking treatment for pensions and other post-employment
benefits in Atmos Mid-Tex's next RRM filing shall be as set forth on Attachment C, attached
hereto and incorporated herein.
Section 5. Consistent with Texas Utilities Code Section 104.055(c), Atmos Energy's
recovery of federal income tax expense through the Rider RRM has been computed using the
statutory income tax rate. In the event that a change in the statutory income tax rate is
implemented during the Rider RRM Rate Effective Date, Atmos Energy shall reconcile the
difference between the amount of federal income tax expense included in the Rider RRM
calculation for the Rate Effective Date with the amount of federal income tax expense authorized
under the new statutory income tax rate. The reconciliation period shall be from the date on
which any new statutory income tax rate is implemented through the Rate Effective Date. An
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interest component calculated at the customer deposit interest rate then in effect as approved by
the Railroad Commission of Texas shall be applied to the federal income tax expense
reconciliation. Further, any required reconciliation of federal income tax expense shall be
included as part of Atmos Mid-Tex's next annual RRM filing and shall be returned to or
recovered from customers as a one-time credit or surcharge to the customer's bill.
Section 6. The City requires renegotiation of RRM tariff terms and conditions during the
Summer of 20017. If an agreed renegotiated RRM tariff cannot be achieved, the City will
terminate the RRM process and consider initiation of a traditional rate case to reduce the
Company's authorized return on equity.
Section 7. That Atmos Mid-Tex shall reimburse the reasonable ratemaking expenses of
the ACSC in processing the Company's 2017 RRM filing.
Section 8. That to the extent any resolution or ordinance previously adopted by the
Council is inconsistent with this Ordinance, it is hereby repealed.
Section 9. 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 10. 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 11. That consistent with the City Ordinance that established the RRM process,
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 June 1, 2017.
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Section 12. That a copy of this Ordinance shall be sent to Atmos Mid-Tex, care of Chris
Felan, Vice President of Rates and Regulatory Affairs Mid-Tex Division, Atmos Energy
Corporation, 5420 LJB Freeway, Suite 1862, Dallas, Texas 75240, and to Geoffrey Gay, General
Counsel to ACSC, at Lloyd Gosselink Rochelle & Townsend, P.C., 816 Congress Avenue,
Suite 1900, Austin, Texas 78701.
PASSED AND APPROVED this 16t" day of May, 2017.
ATTEST:
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ayor, Bill Agan i
APPROVED AS TO FORM:
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City Secret y Cathy Bourg City Attorney y Elam
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