HomeMy WebLinkAboutOrdinance No. 13/021 Atmos RRM ORDINANCE NO. 13/21
AN ORDINANCE OF THE CITY OF UNIVERSITY PARK, TEXAS, APPROVING AND
ADOPTING RATE SCHEDULE "RRM—RATE REVIEW MECHANISM" FOR ATMOS
ENERGY CORPORATION, MID-TEX DIVISION TO BE IN FORCE IN THE CITY
FOR A PERIOD OF TIME AS SPECIFIED IN THE RATE SCHEDULE; PROVIDING
FOR THE REPEAL OF ALL ORDINANCES IN CONFLICT; PROVIDING A
SEVERABILITY 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 ACSC LEGAL COUNSEL.
WHEREAS, the City of University Park, Texas ("City") is a gas utility customer of
Atmos Energy Corp., Mid-Tex Division ("Atmos Mid-Tex" or"the 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 cities, most of whom retain original jurisdiction over the rates and services of Atmos
Mid-Tex; and
WHEREAS, in 2007 ACSC member cities and Atmos Mid-Tex collaboratively
developed the Rate Review Mechanism ("RRM") Tariff that allows for an expedited rate review
process controlled by cities as a substitute for the legislatively-constructed Gas Reliability
Infrastructure Program ("GRIP"); and
WHEREAS, the GRIP mechanism does not permit the City to review rate increases, and
constitutes piecemeal ratemaking; and
WHEREAS, the RRM process permits City review of requested rate increases and
provides for a holistic review of the true cost of service for Atmos Mid-Tex; and
WHEREAS, the initial RRM tariff expired in 2011; and
WHEREAS, ACSC's representatives have worked with Atmos Mid-Tex to negotiate a
renewal of the RRM process that avoids litigation and Railroad Commission filings; and
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WHEREAS, the ACSC's Executive Committee and ACSC's legal counsel recommend
ACSC members approve the negotiated new RRM tariff; and
WHEREAS, the attached Rate Schedule "RRM — Rate Review Mechanism" ("RRM
Tariff') provides for a reasonable expedited rate review process that is a substitute for, and is
superior to,the statutory GRIP process; and
WHEREAS, the expedited rate review process as provided by the RRM Tariff avoids
piecemeal ratemaking; and
WHEREAS, the RRM tariff reflects the ratemaking standards and methodologies
authorized by the Railroad Commission in the most recent Atmos Mid-Tex rate case, G.U.D.No.
10170; and
WHEREAS, the RRM Tariff provides for an annual reduction in Atmos Mid-Tex's
requested rate increase of at least$3 million; and
WHEREAS, the RRM Tariff provides for a lower customer charge than if Atmos Mid-
Tex pursued GRIP filings; and
WHEREAS, the attached RRM Tariff as a whole is in the public interest;
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE
CITY OF UNIVERSITY PARK,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 RRM Tariff, which is attached hereto
and incorporated herein as Attachment A, is reasonable and in the public interest, and is hereby
in force and effect in the City.
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SECTION 3. To the extent any resolution or ordinance previously adopted by the City
Council is inconsistent or in conflict with this ordinance, it is hereby repealed.
SECTION 4. 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 5. If any one or more sections or clauses of this ordinance is judged 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 6. This ordinance shall take effect from and after its passage, as the law and
Charter in such cases provide.
SECTION 7. The City Secretary shall furnish a certified copy of this ordinance to:
Atmos Mid-Tex, care of Christopher Felan, Vice President of Rates and Regulatory Affairs for
Atmos Mid-Tex Division, Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1600, 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.
DULY PASSED AND APPROVED by the City Council of the City of University Park,
Texas, on the `t71-) day of Z-�Ne— 2013.
APPROVED:
W. RICHARD DAVIS, MAYOR
ATT T:
OW A. Are;
L r C R, CITY SECRETARY
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AP'R.VED A,TO F 9
ITY ATTORNEY
(RLD/5-7-13/60567)
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ATMOS ENERGY CORPORATION
MID-TEX DIVISION Attachment"A"
RATE SCHEDULE: RRM—Rate Review Mechanism
APPLICABLE TO: ALL AREAS IN THE MID-TEX DIVISION EXCEPT THE CITY OF DALLAS
CUSTOMERS
EFFECTIVE DATE: Bills Rendered on and after October 15, 2013 PAGE 1 OF 6
I. Applicability
Applicable to Residential, Commercial, Industrial, and Transportation tariff customers in
the Mid-Tex Division of Atmos Energy Corporation ("Company") except such customers
within the City of Dallas. This Rate Review Mechanism ("RRM") provides for an annual
adjustment to the Company's Rate Schedules R, C, I and T ("Applicable Rate
Schedules"). Rate calculations and adjustments required by this tariff shall be
determined on a System-Wide cost basis.
II. Definitions
"Test Period" is defined as the twelve months ending December 31 of each preceding
calendar year.
The "Effective Date" is the date that adjustments required by this tariff are applied to
customer bills. The annual Effective Date is June 1. The 2013 filing Effective Date is
October 15, 2013.
Unless otherwise noted in this tariff, the term "Final Order" refers the final order issued
by the Railroad Commission of Texas in GUD 10170.
The term "System-Wide" means all incorporated and unincorporated areas served by
the Company.
"Review Period" is defined as the period from the Filing Date until the Effective Date.
The "Filing Date" is as early as practicable but no later than March 1 of each year with
the exception of 2013, which shall have a Filing Date of July 15, 2013. The last annual
Effective Date is June 1, 2017.
Ill. Calculation
The RRM shall calculate an annual, System-Wide cost of service ("COS") that will be
used to adjust applicable rate schedules prospectively as of the Effective Date. The
annual cost of service will be calculated according to the following formula:
COS = OM + DEP + RI + TAX + CD - ADJ
Where:
OM = all reasonable and necessary operation and maintenance expenses from the
Test Period adjusted for known and measurable items and prepared
ATMOS ENERGY CORPORATION
MID-TEX DIVISION Attachment"A"
RATE SCHEDULE: RRM—Rate Review Mechanism
APPLICABLE TO: ALL AREAS IN THE MID-TEX DIVISION EXCEPT THE CITY OF DALLAS
CUSTOMERS
EFFECTIVE DATE: Bills Rendered on and after October 15, 2013 PAGE 2 OF 6
consistent with the rate making treatments approved in the Final Order.
Known and measurable adjustments shall be limited to those changes that
have occurred prior to the Filing Date. OM may be adjusted for atypical and
non-recurring items. Shared Services allocation factors shall be recalculated
each year based on the latest component factors used during the Test
Period, but the methodology used will be that approved in the Final Order.
DEP = depreciation expense calculated at depreciation rates approved by the Final
Order.
RI = return on investment calculated as the Company's pretax return multiplied by
rate base at Test Period end. Rate base is prepared consistent with the rate
making treatments approved in the Final Order, except that no post Test
Period adjustments will be permitted. Pretax return is the Company's
weighted average cost of capital before income taxes. The Company's
weighted average cost of capital is calculated using the methodology from the
Final Order including the Company's actual capital structure and long term
cost of debt as of the Test Period end (adjusted for any known and
measurable changes) and the return on equity from the Final Order.
However, in no event will the percentage of equity exceed 55%. Regulatory
adjustments due to prior regulatory rate base adjustment disallowances will
be maintained. Cash working capital will be calculated using the lead/lag
days approved in the Final Order. With respect to pension and other
postemployment benefits, the Company will record a regulatory asset or
liability for these costs until the amounts are included in the next annual rate
adjustment implemented under this tariff. Each year, the Company's filing
under this Rider RRM will clearly state the level of pension and other
postemployment benefits recovered in rates.
TAX = income tax and taxes other than income tax from the Test Period adjusted for
known and measurable charges occurring after the Test Period and before
the Filing Date, and prepared consistent with the rate making treatments
approved in the Final Order.
CD = interest on customer deposits.
ADJ = Downward adjustment to the overall, System-Wide test year cost of service in
the amount of $3,000,000.00, adjusted by a percentage equal to the total
percentage increase in base-rate revenue sought pursuant to this tariff.
IV. Annual Rate Adjustment
ATMOS ENERGY CORPORATION
MID-TEX DIVISION Attachment"A"
RATE SCHEDULE: RRM—Rate Review Mechanism
APPLICABLE TO: ALL AREAS IN THE MID-TEX DIVISION EXCEPT THE CITY OF DALLAS
CUSTOMERS
EFFECTIVE DATE: Bills Rendered on and after October 15, 2013 PAGE 3 OF 6
The Company shall provide schedules and work papers supporting the Filing's revenue
deficiency/sufficiency calculations using the methodology accepted in the Final Order.
The result shall be reflected in the proposed new rates to be established for the
effective period. The Revenue Requirement will be apportioned to customer classes in
the same manner that Company's Revenue Requirement was apportioned in the Final
Order. For the Residential Class, 40% of the increase may be recovered in the
customer charge. The increase to the Residential customer charge shall not exceed
$0.50 per month in any given year. The remainder of the Residential Class increase not
collected in the customer charge will be recovered in the usage charge. The Company
will forgo any change in the Residential customer charge with the first proposed rate
adjustment pursuant to this tariff. For all other classes, the change in rates will be
apportioned between the customer charge and the usage charge, consistent with the
Final Order. Test Period billing determinants shall be adjusted and normalized
according to the methodology utilized in the Final Order.
V. Filing
The Company shall file schedules annually with the regulatory authority having original
jurisdiction over the Company's rates on or before the Filing Date that support the
proposed rate adjustments. The schedules shall be in the same general format as the
cost of service model and relied-upon files upon which the Final Order was based. A
proof of rates and a copy of current and proposed tariffs shall also be included with the
filing. The filing shall be made in electronic form where practical. The Company's filing
shall conform to Minimum Filing Requirements (to be agreed upon by the parties),
which will contain a minimum amount of information that will assist the regulatory
authority in its review and analysis of the filing. The Company and regulatory authority
will endeavor to hold a technical conference regarding the filing within ten (10) calendar
days after the Filing Date.
The 2013 Filing Date will be July 15, 2013.
A sworn statement shall be filed by an Officer of the Company affirming that the filed
schedules are in compliance with the provisions of this Rate Review Mechanism and
are true and correct to the best of his/her knowledge, information, and belief. No
testimony shall be filed, but a brief narrative explanation shall be provided of any
changes to corporate structure, accounting methodologies, allocation of common costs,
or atypical or non- recurring items included in the filing.
VI. Evaluation Procedures
The regulatory authority having original jurisdiction over the Company's rates shall
review and render a decision on the Company's proposed rate adjustment prior to the
ATMOS ENERGY CORPORATION
MID-TEX DIVISION Attachment"A"
RATE SCHEDULE: RRM—Rate Review Mechanism
APPLICABLE TO: ALL AREAS IN THE MID-TEX DIVISION EXCEPT THE CITY OF DALLAS
CUSTOMERS
EFFECTIVE DATE: Bills Rendered on and after October 15, 2013 PAGE 4 OF 6
Effective Date. The Company shall provide all supplemental information requested to
ensure an opportunity for adequate review by the relevant regulatory authority. The
Company shall not unilaterally impose any limits upon the provision of supplemental
information and such information shall be provided within seven (7) working days of the
original request. The regulatory authority may propose any adjustments it determines to
be required to bring the proposed rate adjustment into compliance with the provisions of
this tariff.
The regulatory authority may disallow any net plant investment that is not shown to be
prudently incurred. Approval by the regulatory authority of net plant investment pursuant
to the provisions of this tariff shall constitute a finding that such net plant investment
was prudently incurred. Such finding of prudence shall not be subject to further review
in a subsequent RRM or Statement of Intent filing.
During the Review Period, the Company and the regulatory authority will work
collaboratively and seek agreement on the level of rate adjustments. If, at the end of the
Review Period, the Company and the regulatory authority have not reached agreement,
the regulatory authority shall take action to modify or deny the proposed rate
adjustments. The Company shall have the right to appeal the regulatory authority's
action to the Railroad Commission of Texas. Upon the filing of an appeal of the
regulatory authority's order relating to an annual RRM filing with the Railroad
Commission of Texas, the regulatory authority having original jurisdiction over the
Company's rates shall not oppose the implementation of the Company's proposed rates
subject to refund, nor will the regulatory authority advocate for the imposition of a third
party surety bond by the Company. Any refund shall be limited to and determined based
on the resolution of the disputed adjustment(s) in a final, non-appealable order issued in
the appeal filed by the Company at the Railroad Commission of Texas.
In the event that the regulatory authority and Company agree to a rate adjustment(s)
that is different from the adjustment(s) requested in the Company's filing, the Company
shall file compliance tariffs consistent with the agreement. No action on the part of the
regulatory authority shall be required to allow the rate adjustment(s) to become effective
on June 1. To the extent that the regulatory authority does not take action on the
Company's RRM filing by May 31, the rates proposed in the Company's filing shall be
deemed approved effective June 1. (2013 filing RRM rate will be effective October 15,
2013 if no action is taken). Notwithstanding the preceding sentence, a regulatory
authority may choose to take affirmative action to approve a rate adjustment under this
tariff. In those instances where such approval cannot reasonably occur by May 31, the
rates finally approved by the regulatory authority shall be deemed effective as of June 1.
To defray the cost, if any, of regulatory authorities conducting a review of the
Company's annual RRM filing, the Company shall reimburse the regulatory authorities
on a monthly basis for their reasonable expenses incurred upon submission of invoices
ATMOS ENERGY CORPORATION
MID-TEX DIVISION Attachment"A"
RATE SCHEDULE: RRM—Rate Review Mechanism
APPLICABLE TO: ALL AREAS IN THE MID-TEX DIVISION EXCEPT THE CITY OF DALLAS
CUSTOMERS
EFFECTIVE DATE: Bills Rendered on and after October 15, 2013 PAGE 5 OF 6
for such review. Any reimbursement contemplated hereunder shall be deemed a
reasonable and necessary operating expense of the Company in the year in which the
reimbursement is made. A regulatory authority seeking reimbursement under this
provision shall submit its request for reimbursement to the Company no later than
August 1 of the year in which the RRM filing is made and the Company shall reimburse
regulatory authorities in accordance with this provision on or before August 30 of the
year the RRM filing is made.
To the extent possible, the provisions of the Final Order shall be applied by the
regulatory authority in determining whether to approve or disapprove of Company's
proposed rate adjustment.
This Rider RRM does not limit the legal rights and duties of a regulatory authority.
Nothing herein shall abrogate the jurisdiction of the regulatory authority to initiate a rate
proceeding at any time to review whether rates charged are just and reasonable.
Similarly, the Company retains its right to utilize the provisions of Texas Utilities Code,
Chapter 104, Subchapter C to request a change in rates. The provisions of this Rider
RRM are implemented in harmony with the Gas Utility Regulatory Act (Texas Utilities
Code, Chapters 101-105).
The annual rate adjustment process set forth in this tariff shall remain in effect during
the pendency of any Statement of Intent rate filing.
VII. Reconsideration, Appeal and Unresolved Items
Orders issued pursuant to this mechanism are ratemaking orders and shall be subject
to appeal under Sections 102.001(b) and 103.021, et seq., of the Texas Utilities Code
(Vernon 2007).
VIII. Notice
Notice of each annual RRM filing shall be provided by including the notice, in
conspicuous form, in the bill of each directly affected customer no later than forty-five
(45) days after the Company makes its annual filing pursuant to this tariff. The notice to
customers shall include the following information:
a) a description of the proposed revision of rates and schedules;
b) the effect the proposed revision of rates is expected to have on the rates
applicable to each customer class and on an average bill for each affected
customer;
ATMOS ENERGY CORPORATION
MID-TEX DIVISION Attachment"A"
RATE SCHEDULE: RRM—Rate Review Mechanism
APPLICABLE TO: ALL AREAS IN THE MID-TEX DIVISION EXCEPT THE CITY OF DALLAS
CUSTOMERS
EFFECTIVE DATE: Bills Rendered on and after October 15, 2013 PAGE 6 OF 6
c) the service area or areas in which the proposed rates would apply;
d) the date the annual RRM filing was made with the regulatory authority; and
e) the Company's address, telephone number and website where information
concerning the proposed rate adjustment be obtained.
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