HomeMy WebLinkAboutResolution - 2011-R0383 - Declare Atmos Rates Unreasonable - Request Reimbursing Rasonable Rate Case - 09/08/2011 (2)Resolution No. 2011-RO383
September 8, 2011
Item No. 5.5
ORDER AND RESOLUTION
AN ORDER AND RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LUBBOCK, TEXAS, ("CITY") APPROVING A NEGOTIATED RESOLUTION
BETWEEN THE CITY AND ATMOS ENERGY CORP., WEST TEXAS
DIVISION ("ATMOS WEST TEXAS" OR "COMPANY") REGARDING THE
COMPANY'S THIRD ANNUAL RATE REVIEW MECHANISM FILING IN THE
CITY; DECLARING EXISTING RATES TO BE UNREASONABLE;
REQUIRING THE COMPANY TO REIMBURSE THE CITY'S REASONABLE
RATE CASE 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 ORDER AND RESOLUTION TO THE
COMPANY AND THE CITY'S LEGAL COUNSEL.
WHEREAS, pursuant to Section 103.001 of the TEXAS UTILITIES CODE, the
0 City of Lubbock ("City") has exclusive original jurisdiction aver the rates, operations,
and services of a gas utility operating within the corporate limits of the City of Lubbock.
WHEREAS, the City and the Lubbock Rate Area of the West Texas Division of
Atmos Energy Corporation ("Company" or "Atmos West Texas") collaboratively
developed the Rate Review Mechanism ("RRM") tariff, ultimately authorized by the City
in April 2009, that allows for an expedited rate review process controlled in a three year
experiment by the City as a substitute to the current GRIP process described in Section
104.301 of TEXAS UTILITES CODE;
WHEREAS, on or after April 1, 2011, Atmos West Texas filed with the City its
third application pursuant to the RRM tariff to increase natural gas rates by $2,293,802
($1,990,811 prospective increase, less a $26,265 2010 true -up credit, plus an increase
from the expiring 2009 true -up rate credits totaling $329,256), such change in rates to be
effective inside the City's limits; and
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WHEREAS, the City, assisted by its attorneys and consultants, coordinated the
review of the RRM filing; and
WHEREAS, the Company has filed evidence that existing rates are unreasonable
and should be changed; and
WHEREAS, independent analysis by the City's rate expert initially concluded
that Atmos West Texas is able to justify a rate increase of $435,588 ($1,183,248
i
prospective increase, less a $1,076,916 2010 true -up credit, plus an increase from the
expiring 2009 true -up rate credits totaling $329,256); and
WHEREAS, after negotiation and further analysis, Atmos West Texas
representatives and the City were able to reach agreement that a total $904,242 annual
revenue increase ($574,986 prospective increase plus the expiring 2009 true -up totaling
$329,256) in the Company's revenue requirement is reasonable and avoids further
litigation expenses and time; and
WHEREAS, the stipulation contemplates reimbursement of the City's reasonable
expenses associated with the RRM application; and
WHEREAS, the City's lawyers and consultants, recommend that the City approve
the attached rate tariffs ("Exhibit All to this Order and Resolution), which will increase
the Company's annual revenues in the amount of $904,242 consistent with the negotiated
resolution; and
WHEREAS, the attached tariffs implementing new rates and the attached Atmos
West Texas Proof of Revenues ("Exhibit B" to this Order and Resolution) are consistent
with the negotiated resolution reached by the City and are just, reasonable, and in the
public interest; 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 ORDERED AND RESOLVED BY THE CITY
COUNCIL OF THE CITY OF LUBBOCE, TEXAS:
Section 1. That the findings set forth in this Order and Resolution are hereby in
all things approved.
Section 2. That the City Council finds that the existing rates for natural gas
service provided by Atmos West Texas are unreasonable and the new tariffs and the
Atmos West Texas Proof of Revenues, which are attached hereto and incorporated herein
as Exhibits A and B, are just and reasonable and are hereby adopted, and that neither
Atmos West Texas in agreeing to, nor the City in approving such rates, is bound by any
particular ratemaking methodology, with regard to the rates set forth in Exhibits A and B,
nor should any methodology be inferred from the approved rates or increase in revenue.
Section 3. That Atmos West Texas shall reimburse the reasonable rate case
expenses of the City in processing the Company's rate application within thirty (30) days
from receipt of the invoices reflecting the City's rate case expenses.
Section 4. That, except as to the specific rates adopted herein, none of the terms
and conditions contained in that certain Resolution No. 2009-R0151, adopted by the City
Council of the City of Lubbock on April 9, 2009 shall be modified hereby, and said terms
and conditions shall remain in full force and effect for all purposes.
Section 5. That the meeting at which this Order and Resolution was approved
was in all things conducted in strict compliance with the Texas Open Meetings Act,
Texas Government Code, Chapter 551.
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Section 6. That if any one or more sections or clauses of this Order and
Resolution is adjudged to be unconstitutional or invalid, such judgment shall not affect,
impair or invalidate the remaining provisions of this Order and Resolution and the
remaining provisions of the Order and Resolution shall be interpreted as if the offending
section or clause never existed.
Section 7. That this Order and Resolution shall become effective from and after
its passage with rates authorized by attached tariffs to be effective for bills rendered on or
after September 1, 2011.
Section 8. That a copy of this Order and Resolution shall be sent to Atmos West
Texas, care of Jeff Foley at Atmos Energy Corporation, 5110 80th Street, Lubbock, Texas
79424 and the City's legal counsel.
PASSED AND APPROVED this 8th day of September ,
TOM MARTIN, MAYOR
ATTEST:
Rebe ca Garza, City Secretary
APPROVED AS TO CONTENT:
Andy Burcham, Chief Financial Officer
APPROVED AS TO FORM:
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Resolution No. 2011-RO383
Exhibit "A"
Availability
This schedule is applicable to general use by Residential customers for heating, cooking,
refrigeration, water heating and other similar type uses. This schedule is not available for service
to premises with an alternative supply of natural gas.
Monthly Rate
Charge
Amount
Customer Charge
$ 7.86
Commodity Charge
All Consumption
$ 0.17913 per Ccf
The West Texas Division Gas Cost Adjustment Rider applies to this schedule.
The West Texas Division Weather Normalization Adjustment Rider applies to this schedule.
This schedule is applicable to Commercial customers, including hospitals and churches, for
heating, cooking, refrigeration, water heating and other similar type uses. This schedule is not
available for service to premises with an alternative supply of natural gas.
Monthly Rate
ChargeAmount
Customer Charge $15.59
Commodity Charge
All Consumption $ 0.13767 per Ccf
The West Texas Division Gas Cost Adjustment Rider applies to this schedule.
The West Texas Division Weather Normalization Adjustment Rider applies to this schedule.
This schedule is applicable to the sales of any industrial or commercial customer whose
predominant use of natural gas is other than space heating, cooking, water heating or other similar
type uses. Service under this schedule is available to eligible customers following execution of a
contract specifying the maximum hourly load. This schedule is not available for service to
premises with an alternative supply of natural gas.
Monthly Rate
Charge
Amount_
Customer Charge
$ 94.57
Commodity Charge
0 - 1,000 Ccf
$ 0.12573 per Ccf
All over 1,000 Ccf
$ 0.10350 per Ccf
The West Texas Division Gas Cost Adjustment Rider applies to this schedule.
Availability
This schedule is applicable to general use by Public Authority type customers, including public
schools, for heating, cooking, refrigeration, water heating and other similar type uses. This
schedule is not available for service to premises with an alternative supply of natural gas.
Monthly Rate
Charge
Amount
Customer Charge
$ 65.38
Commodity Charge
All Consumption
$ 0.12602 per Ccf
The West Texas Division Gas Cost Adjustment Rider applies to this schedule.
The West Texas Division Weather Normalization Adjustment Rider applies to this schedule.
Availability
This schedule is applicable to gas service to state agencies (as provided in Texas Utilities Code,
Section 104.202) including, but not limited to, state college and universities, MHMR schools,
agriculture, highway and public safety departments, prisons, and other facilities owned or operated
by the State of Texas for the purpose of heating, cooking, refrigeration, water heating and other
similar type uses.
Monthly Rate
Charge
Amount
Customer Charge
$ 60.65
Commodity Charge
All Consumption
$ 0.11806 per Ccf
The West Texas Division Gas Cost Adjustment Rider applies to this schedule.
The West Texas Division Weather Normalization Adjustment Rider applies to this schedule.
Resolution No. 2011-R0383
West Texas Division Weather Normalization Ad
iustment (WNA) Rider
Provisions for Adiustment
The base rate per Ccf (100,000 Btu) for gas service set forth in any Rate Schedules utilized in the cities of the
Lubbock 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, commercial, public authority, and state
institution bills based on meters read during the revenue months of October through May.
Computation of Weather Normalization Adiustment
The Weather Normalization Adjustment Factor shall be computed to the nearest one -hundredth cent per Ccf by the
following formula:
WNAF ; ( HSF ; ( NDD - ADD) )
- R' (BL ; + (HSF ; x ADD )
Where
i = any particular Rate Schedule or billing classification within any such particular
Rate Schedule that contains more than one billing classification
WNAF ; = Weather Normalization Adjustment Factor for the i`" rate schedule or
classification expressed in cents per Ccf
R, - base rate of temperature sensitive sales for the it" schedule or classification
utilized
HSF ; = heat sensitive factor for the iSh schedule or classification divided by the
average bill count in that class
NDD = billing cycle normal heating degree days
ADD = billing cycle actual heating degree days
BL ; = base load sales for the i`h schedule or Classification divided by the average bill
count in that class
The Weather Normalization Adjustment for the j"' customer in i'" rate schedule is computed as:
WNA ; = WNAF ; x qii
Where qii is the relevant sales quantity for the j'h Customer in i`h rate schedule
Filings with Regulatory Agencies
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, and (c) a schedule showing the factors of
values used in calculating such Weather Normalization Adjustment.
Resolution No. 2011-RO383
Atmos Energy Exhibit B page 1 of 7
LUBBOCK DISTRIBUTION SYSTEM
REVENUE COMPARISON
2010 Prospective and True -up Rate Adjustments
REVENUE AT
REVENUE AT
A
B
A + B
PROPOSED
CCF
PRESENT
Customers
EXPIRING PROSPECTIVE
TOTAL
RATES
RATES
TRUE UP
RATES
CHANGE
RESEDENTIAL
$13,769,403
41,665,123
S13,184,988
66,841
212,800
371,616
$584,415
4.43%
COMMERCIAL
3,409,513
16.614,615
3.172,715
5,999
86,223
150,574
236,798
7.46%
INDUSTRIAL
382,597
2,974577
347.407
57
12,814
22.377
35,190
10.13%
STATE AGENCY
138,427
839,612
126,402
54
4,379
7,647
12,026
9.51%
PUBLIC AUTHORITY
363,295
1,984,329
327,481
144
13,043
22,772
35,815
10.94°%
$18,063,237
64,078,256
$17,168,993
73,095
329,256
574,986
$904,244
5,27%
IMPACT ON TOTAL REVENUES
RESIDENTIAL
$37,435.193
$36,850.777
$584,415
1.5860%
COIu1MERCIAL
12,846.614
12,609,817
235,798
14878°%
INDUSTRIAL
2.072.157
2,036.967
35,190
1.7280%
STATE AGENCY
615,327
603,302
12,026
1.993%
PUBLIC AUTHORITY
1,490,395
1,454,580
35,815
2.462%
Prospective
Expiring 09
ComtXned Present Avg Bill
Overall `Yo
$0.46
0.27
0.73
45.94
16%
2.09
1.20
329
175 17
1 90%
32.96
18.87
51.83
2,999.95
1.7%
11.80
676
18.56
931 02
2.0%
13.15
7,53
20.68
839.83
2.5%
Atmos Energy
LUBBOCK DISTRIBUTION SYSTEM
CLASS ALLOCATION
Calendar Year 2010 Rate Adlustments
2009
Class
2010
2009
Settlement
Allocation
Prospective
True -Up Roll -off
SYSTEMWIDE
$574,986
329,256
RESIDENTIAL
($12,094)
64.63%
371,616
212,799
COMMERCIAL
(4,900)
26.19%
150,574
86,224
INDUSTRIAL
(728)
3.89%
22,377
12,814
STATE AGENCY
(249)
1.33%
7.647
4,379
PUBLIC AUTHORITY
(741)
3.96%
22,772
13,040
TOTAL SETTLEMENT
(18,712)
Exhibit B page 2 of 7
Exhibit B page 3 of 7
Atmos Energy
LUBBOCK DISTRIBUTION SYSTEM
CURRENT AND PROPOSED RESIDENTIAL RATES
Calendar Year 2010 Rate Adjustments
Current Rates Proposed Rates
Line
Bills / Comm. %
Comm. %
Rev. %
Bolls P
Comm. %
Comm. %
No,
Charge / Rate
Volumes of Tolal
Margin
of Total
of Total
Min Max Charge ! Rate
Volumes
of Total
Margin
of Total
Rev. % of Total
1
2
Customer Gharge
S 765
802,088 $
6,135,973
3 7.86
802,088
$ 6,306,113
16.8%
3
Customer Charge Trine-U
(0,12)
600,712
(99,395)
0.0%
4
5
Commodity Charge
0 17429
41,665,123
7,261,814
017913
41.666,123
100.0%
7,463,290
19.9%
6
7
Commodity Charge True-
(0,0028)
40,081,414
(113,401)
0.0%
8
9
Gas Cast
0 5680
41,665,123
23,665,790
0.568
41,665,123
23,665,790
10
11
12
13
Demand
802.088 $
6036.575
45.78%
16.38%
Demand
802,088
$ 6,306,113
45.80%
16.85%
14
15
Commodity
41,665.123
7,148,413
54,22%
19,40%
Commodity
41,665.123
100.0%
7,463,290
54.20'%
19.94%
16
17
Gas Cost
23,665,790
64.22%
Gas Cost
23,665,790
6122%
18
19
Total $
36,850.777
100.01!
Total
$ 37,436,193
100 0%
20
21
Proposed Ma
in Increase
$ 584 415
Exhibit B page 4 of 7
Atmos Energy
LUBBOCK DISTRIBUTION SYSTEM
CURRENT AND PROPOSED COMMERCIAL RATES
Calendar Year 2010 Rate Adjustments
Current Rates
Proposed Rates
Line
Bills I
Comm. % Comm % Rev % of
Bills I Comm. %
Comm. % Rev. % of
No
Charge I Rate
Volumes
of Totai Revenue of Total Total
Min Max Charge/ Rate
Volumes of Total
Revenue of Total Total
1
Customer Charge
S 14,90
71,908
S 1.072.621
$ 15.59
71,988 $
1,122,141
2
3
Customer Charge True-UI
(0.41)
71,688
(29,203)
4
5
Commodity Charge
0.13159
16,614,615
2,186,317
0-13767
16,614,515 100 0%
2,287,372
6
7
Commodity Charge True-1
(0.00360)
15,553,742
(57,020)
8
9
Gas Cost
0.5680
16,614,615
9,437,101
0,5680
16,514.615
9,437,101
10
12
13
Demand 71,988 $ 1,043,416
32.899/6 8.27%
Demand 71,988
$ 1.122,141
32.91 % 873%
14
15
Commodity 16,614,615 2,129,297
67,11% 16,89%
Commodity 16,614,615
100% 2.287,372
67.09% 17,81%
16
17
Gas Cost 9,437.101
74 84%
Gas Cost
9,437,101
73.46%
18
19
Total $ 12,609,817
100.0%
Total
$ 12,846,614
100.0%
20
21
Proposed Revenue Increase
5 236,798
Exhibit B page 5 of 7
Atmos Energy
LUBBOCK DISTRIBUTION SYSTEM
CURRENT AND PROPOSED PUBLIC AUTHORITY RATES
Calendar Year 2010 Rate Adiustments
Current Rates Proposed Rates
Line Charge 1 Bills / Comm. % Comm. % Rev. % Bills / Comm % Comm. % Rev- % of
No. Rafe Volumes of Total Revenue of Total of Total Min Max Charge 1 Rate Volumes of Total Revenue of Total Total
1
Customer Charge
$ 61.29
1.732
5 106,154
$ 65.38
1.732
$ 113,238
2
3
Customer Charge True-U
(2.46)
1,740
(4,281)
4
5
Commodity Charge
0.11811
1.984,329
234,369
0.12602
1,984,329
250,057
6
7
Commodity Charge True-
(0.00474)
1,848,126
(8,762)
8
9
Gas Cost
05680
1.984,329
1,127,099
0.5680
1.984,329
1,127,099
10
11
12
13
Demand
1,732
S 101,874
31.11% 7.00%
Demand
1,732
$ 113,238
31.17% 7,60%
14
15
Commodity
1.984,329
225.607
68.89% 15.51%
Commodity
1,984,329
250,067
68.83% 16.78%
16
17
Gas Cost
1,127,099
77.49%
Gas Cost
1,127,099
75.62%
16
19
Total
S 1,454.580
100.0%
Total
S 1,490,395
100.0%
20
21
Proposed Revenue Increase
$ 35,815
Exhibit S page 6 of 7
Atmos Energy
LUBBOCK DISTRIBUTION SYSTEM
CURRENT AND PROPOSED STATE INSTITUTION RATES
Calendar Year 2010 Rate Adlustments
Current Rates
Proposed Rates
Comm.
Line
Charge I
Bills 1
Comm. %
Comm. % Rev. % of
Sills 1 % of
Comm. %
Rev. % of
No.
Rate
Volumes
of Total Revenue
of Total Total
Min Max Charge / Rate
Volumes Total
Revenue
of Total
Total
1
Customer Charge
$ 57.30
648
$ 37,130
$ 60,65
648
$
39.303
2
3
Customer Charge True -Li
(1.95)
624
(1,219)
4
5
Commodity Charge
0.11154
839.612
93,650
0.11806
839,612
99,125
6
7
Commodity Charge True-
(0.00380)
830,605
(3,169)
8
9
Gas Cost
0.5680
839,612
476,900
0.5680
839,612
476,900
10
11
12
13
Demand
648
$ 35,911
28.41% 5.95%
Demand
648
S
39,303
28.39%
6.39%
14
15
Commodity
839.612
90.491
71,59% 15.00%
Commodity
839,612
99,125
71.61%
16,11%
16
17
Gas Cost
476,900
79.05%
Gas Cost
476,900
77.50%
18
19
Total
$ 603,302
100.0%
Total
5
615,327
100.0%
20
21
Proposed Revenue Increase
$
12,026
Exhibit i3 page 7 of 7
Atmos Energy
LUBBOCK DISTRIBUTION SYSTEM
CURRENT AND PROPOSED INDUSTRIAL RATES
Calendar Year 2010 Rate Adjustments
Current Rates
Proposal Rats.
Lrne
Rills 1
Comm, % Comm. % Rev % of
Bills I
Comm %
Comm %
Rev- % of
No,
Charge 1 Rate
Volumes
of Total Revenue of Total Total Min
Max Charge I Rate
Volumes
of Total
Revenue
of Total
Totai
I
Customer Charge
$ 89.05
679
$ 60,465 3.0%
$ 94.57
679
$ 64,213
2
3
Customer Charge True- Up
(3.12)
732
(2,281)
4
5
Commodity Charge
, 1000
0.11947
472.688
56,472 15.9% 2.8%
0.12573
472,688
15.91A
59,432
6
, 1000
009724
2.501,889
243.284 84.1% 119%
010350
2,501,889
B4.1%
258.952
7
8
Commodity Charge True -Up
� 1000
(0.0035)
531,659
{1,883)
9
Commodity Charge True -Up
- 1000
(0.0035)
2,441,907
{8,649)
10
11
Gas Cost
0,5680
2,974,577
1,689,560
0 56$0
2,974,577
1.689.560
12
13
Demand _
679
$ 58,184 16.75% 2.86%
Demand
679
$ 64,213
16.78%
3-10%
14
15
Commodity
2,974,577
289,223 B3.25% 14.20%
Commodity
2,974,677
100 %
318.385
$3.22%
15.36%
16
17
Gas Cost
1,6e9,560 82.94%
Gas Cost
1689,560
8154%
16
19
Total
$ 2,036,967 100.0%
Total
_
$ 2,072,157
100.0%
20
21
Proposed Revenue Increase
$ 35,190