HomeMy WebLinkAboutResolution - 2009-R0151 - Authorize Atmos Energy To Establish Gas Utility, Terms, Rates, Etc. - 04_09_2009Resolution No. 2009-RO151
April 9, 2009
Item No. 6.4
ORDER AND RESOLUTION
AN ORDER AND RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LUBBOCK SITTING AS A REGULATORY AUTHORITY PURSUANT TO
SECTION 103.001 OF THE TEXAS UTILITIES CODE, WITH REGARD TO A
STATEMENT OF INTENT FILED BY THE WEST TEXAS DIVISION OF ATMOS
ENERGY CORPORATION FILED WITH THE CITY OF LUBBOCK AND
AUTHORIZING THE MAYOR TO EXECUTE AN ASSOCIATED LETTER
AGREEMENT WITH ATMOS PERTAINING TO THE STATEMENT OF INTENT.
WHEREAS, pursuant to Section 103.001 of the TEXAS UTILITIES CODE, the City
of Lubbock has exclusive original jurisdiction over the rates, operations, and services of a
gas utility operating within the corporate limits of the City of Lubbock; and
WHEREAS, the West Texas Division of Atmos Energy Corporation ("Atmos
Energy") has heretofore filed a Statement of Intent to change the retail gas utility rates tor'
gas services within the municipal boundaries of the City of Lubbock on March 11, 2009
consisting of a "Rate Review Mechanism" Tariff and a Conservation Program Rider; and
WHEREAS, Atmos Energy has represented to the City of Lubbock in its
Statement of Intent that the change in the retail utility rates will not increase or decrease
the aggregate revenues of Atmos Energy by more than the greater of ,100,000 or 2.5%')
and, therefore is not a "major change" as defined by Section 104.101 of the TEXAS
UTILITIES CODE; and
WHEREAS, Atmos Energy has represented to the City of Lubbock in its
Statement of Intent that the change in the retail utility rates will not change the final rate~
to the retail customers and have requested that the change in retail utility rate, be aliuwed
to take effect without delay; and
WHEREAS, further understandings between Atmos Energy and the City of
Lubbock are contained in a Letter Agreement attached hereto; NOW THERLF'ORE:
BE IT ORDERED AND RESOLVED BY THE CITY COUNCIL OF THE CITY OF
LU13BOCK:
1. THAT, pursuant to the applicable provisions of the TEXAS LI`rII +rws,
CODE, Atmos Energy shall be entitled to place into effect for usage the retail gas utility
rates, terms and conditions, gas cost adjustment clauses and riders including the Kate
Review Mechanism and the Conservation Program rider as outlined in its Statement of
Intent filed with the City of Lubbock on March It, 2009 and which is attached hereto and
incorporated herein as though set forth fully herein.
2. THAT, based on the representations made by Atmos Energy in its
Statement of Intent, the City Council of the City of Lubbock finds, pursuant to the
Section 104.104 of the TEXAS UTILITIES CODE, that good cause exists to allow the
requested change in retail gas utility rates to take effect immediately.
Page 1 of 2
3. THAT the Mayor of the City of Lubhock is hereby authorized and directed to
execute the Letter Agreement by and between Atn-tos Energy and the City of Lubbock
pertaining to the aforementioned Statement of Intent. which Letter Agreement is attached
j hereto and made a part hereof for all purpose,.
ORDERED AND RESOLVED by the City Council this 9th day of April. 2009.
ATTEST-
Rebec a Garza, City Secretary
VED AS TO CONTENT_
�7 Gilbreath, Mayor Pro Tern
Lt da DeLeon, C®Unellniember, District I
APPROVED AS TO FORM:
—-
Don andiver, City Attorney
Don/Res/AunosRateRes034)9
April 3, 2009
try
TOM MARTIN, MAYOR
Page 2 of 2
TMOS
energy
April 6, 2009
City of Lubbock
1625 13th Street
Lubbock, Texas 79401
Resolution No. 2009--RO151
v 1VED
O_Arlt� 0 Zoos
C ITY ,Zi Cri1AF1Y
C U>t K. EXAS
To the Honorable Mayor and City Council of Lubbock, Texas
This letter is to confirm the agreement of Atmos Energy Corp's West Texas Division
("Atmos" or "the Company") and the City of Lubbock ("the City" or "Lubbock") on
matters relating to the adoption of an annual Rate Review Mechanism for Atmos' use
with the City. This Letter Agreement resolves all issues relating to the adoption of a Rate
Review Mechanism in the City pursuant to the following terms:
In an effort to streamline the regulatory review process, Atmos and the City
have agreed to undertake a new mechanism for reviewing the Company's cost
of service on an annual basis. The new mechanism is known as the Rate
Review Mechanism ("Rider RRM"). Rider RRM provides for an annual rate
adjustment to reflect changes in billing determinates, operating and
maintenance expense, depreciation expense, other taxes expense, and
revenues as well as changes in the capital investment and associated changes
in gross revenue and taxes. See Attachment A-i for a copy of the Statement
of Intent that was filed with the City Secretary's office on March 11, 2009
which includes a copy of Rider RPM in Exhibit E.
2. Atmos and the City agree that the Rider RRM shall be implemented annually
over a three-year trial period. On or after December 31, 2011, if the City
opposes the continued use of the Rider RRM to set rates for areas within its
original jurisdiction, it shall provide written notification to the Company of
this fact. Such notice shall be provided no later than January 31, 2012. Upon
receipt of such written notification, Atmos shall cease making an annual Rider
RRM filing with the City and instead, shall file a general rate case with the
City within one hundred twenty (120) days from the date the notification is
received by the Company. The last effective rates under the Rider RRM shall
remain in effect for the City until such time as new rates are established for
the City in a general rate case. In the absence of such notification, Rider
RRM shall continue subject to any changes that may be agreed to in writing
between the City and Atmos.
Letter Agreement
City of Lubbock — RRM
April 6, 2009
3. Atmos agrees that effective with the implementation of the first RRM rates
adjustment, Atmos shall file with the City a revised Residential Gas Service
Tariff to reduce the customer charge per bill from $9.95 per month to $7.00
plus revenue related taxes per month and to increase the volumetric portion of
the rate to the appropriate level to reflect the reduction in the customer charge
from $9.95 to $7.00, as well as to reflect any change resulting from the RRM
implementation. Atmos further agrees that effective with the implementation
of the first RRM adjustment, Atmos shall file with the City of Lubbock a
revised Commercial Gas Service Tariff to reduce the customer charge per bill
from $15.75 to $13.50 plus revenue related taxes per month and to increase
the volumetric portion of the rate to the appropriate level to reflect the
reduction in customer charge from $15.75 to $13.50, as well as to reflect any
change resulting from the RRM implementation. The first RRM rate
adjustment shall occur for bills rendered on or after August 15, 2009. Atmos
and the City agree that following the initial RRM adjustment any subsequent
implementation of RRM adjustments shall be supported as described in the
Rider RRM, and shall limit changes to residential and commercial customer
charge to no more than 20%. Further, the parties agree that any approved
adjustment in excess of the 20% limitation on the residential and commercial
customer charge shall be recovered through the volumetric portion of the
rates.
4. The following types of expenses shall be removed from all expense and rate
base amounts included within Rider RRM filings for each Evaluation Period
and corresponding Rate Effective Period:
• Amounts incurred for travel, meals, or entertainment of employee spouses
• Amounts for air travel that exceed published commercial coach air fares.
• Amounts incurred for hotel rooms exceeding $250 per night inclusive of
taxes and fees assessed on such rooms.
• Amounts for alcoholic beverages
• Amounts paid for admission to entertainment, sports, art or cultural
events, and all event sponsorship costs.
• Amounts for social club dues or fees.
5. With respect to the RRM, Atmos further agrees to pay all reasonable and
necessary expenses of the City that are incurred to review the proposed rate
for any Rate Effective Period, the Company shall not include (1) any external
legal, expert, or consultant costs to prepare and/or provide supportive
information related to its filing; or (2) reimbursements to original jurisdiction
entities.
6. Notwithstanding paragraph 7 of this Letter Agreement, Atmos and the City
agree that in the event of an appeal of a City decision regarding a proposed
RRM adjustment, recovery of rate case expenses shall be determined
Letter Agreement
City of Lubbock — RRM
April 6, 2009
according to Chapters 103 and 104, TEX. UTIL. CODE ANN. Further, in the
event of such appeal(s), Atmos shall recover any reimbursement made to the
City through a surcharge to all customer rates that are subject to the
Commission's jurisdiction in that proceeding or proceedings that might be
joined therewith, regardless of whether such reimbursements are made during
the initial review or appeal period.
7. It is the intention of the Signatories of this Letter Agreement that the City
receive the benefit of any letter agreement that Atmos enters into with any
other city within Texas regarding the Rider RRM within twelve (12) months
of the execution of the Letter Agreement. Therefore, Atmos agrees that if the
terms and conditions, or benefits accruing to any city within Texas with
respect to the Rider RRM would be more beneficial to the City than the terms
of this Letter Agreement, as determined by the City, such more favorable
terms and conditions, or benefits shall be made available to the City for
adoption. The City's exercise of this right is conditioned upon the City's
acceptance of all terms and conditions of any subsequent letter agreement in
toto.
8. The City agrees that it will not challenge the legal basis of the rates, terms,
and conditions reflected in Attachment A-1, or any annual RRM adjustment
that is implemented pursuant to Rider RRM.
9. Atmos and the City further agree that the express terms of the Rider RRM are
supplemental to the filing, notice, regulatory review, or appellate procedural
process of the ratemaking provisions of Chapter 104 of the Texas Utility
Code. If the statute requires a mandatory action on behalf of the municipal
regulatory authority or Atmos, the parties will follow the provisions of such
statute. If the statute allows discretion on behalf of the municipal regulatory
authority, the City agrees that it shall exercise discretion in such a way as to
implement the provisions of the RRM tariff. If Atmos appeals an action or
inaction of the City regarding an RRM filing to the Railroad Commission, the
City agrees that it will not oppose the implementation of interim rates or
advocate the imposition of a bond by Atmos consistent with the RRM tariff.
Atmos agrees that it will make no filings on behalf of its Lubbock rate
division under the provisions of TEX UTIL. CODE ANN. § 104.301 while
the Rider RRM is in place, and any such filings pending at the time the RRM
is approved will be trued -up for revenue and rate base components prior to
implementation of the annual RRM. In the event that a regulatory authority
fails to act or enters an adverse decision regarding the proposed annual RRM
adjustment, the Railroad Commission of Texas shall, pursuant to the
provisions of the Texas Utilities Code, have exclusive appellate jurisdiction to
review the action or inaction of the regulatory authority exercising exclusive
original jurisdiction over the RRM request. In addition, the Signatories agree
that this Letter Agreement shall not be construed as a waiver of the City's
Letter Agreement
City of Lubbock — RRM
April 6, 2009
right to initiate a show cause proceeding or the Company's right to file a
Statement of Intent under the provisions of the Texas Utilities Code.
10. Atmos and the City commit that during the Initial Implementation Period, as
defined in the RRM tariff, Atmos and the City will not devote resources or
efforts to advocate statutory changes involving rate stabilization mechanisms
or the Gas Reliability Infrastructure Program that is currently codified under
TEX. UTIL. CODE § 104.301.
l 1. Atmos and the City agree that expense associated with lost and unaccountable
gas shall, based on an annual period, be recoverable through the Company's
Rider GCR up to a maximum of five (5) percent of the quantity of metered
gas, as provided under Commission Rule 7.5525, Lost and Unaccounted for
Gas.
12. Included as part of the attached Statement of Intent, Exhibit C is a new gas
conservation program tariff rider.
13. Atmos and the City agree that Atmos may make all future filings, including,
but not limited to, the annual RRM adjustment and any Statement of Intent
filing with the City on an electronic basis, rather than by paper copy.
Electronic Filings shall fulfill the requirements of TEX. UTIL. CODE
§ 104.103. Atmos further agrees to make paper copies of filings available to
the City upon request.
14. In the spirit of improving communication and cooperation, Atmos agrees to
initiate meetings with the City to provide information, answer questions, and
receive input from the City. As part of theses meetings, Atmos will update the
City of its significant activities as well as any service related issues associated
with the provision of gas services.
15. Atmos and the City agree that the City should approve this Letter Agreement
and adopt an ordinance or resolution to implement the rates, terms, and
conditions reflected in the tariffs attached to the Letter Agreement as
Attachment A-1 .
16. The Signatories agree that the terms of this Letter Agreement are
interdependent and indivisible, and that if the City enters an order that is
inconsistent with this Letter Agreement, then any Signatory may withdraw
without being deemed to have waived any procedural right or to have taken
any substantive position on any fact or issue by virtue of that Signatory's
entry into the Letter Agreement or its subsequent withdrawal. If the City
rejects this Letter Agreement, then this Letter Agreement shall be void ab
inilio.
4
Letter Agreement
City of Lubbock — RRM
April 6, 2009
17. The Signatories agree that neither this Letter Agreement nor any oral or
written statements made during the course of settlement negotiations may be
used for any purpose other than as necessary to support the entry by the City
of an ordinance or resolution implementing this Letter Agreement.
18. The Signatories agree that this Letter Agreement is binding on each Signatory
only for the purpose of settling the issues set forth herein and for no other
purposes, and, except to the extent the Letter Agreement governs a
Signatory's rights and obligations for future periods, this Letter Agreement
shall not be binding or precedential upon a Signatory outside this proceeding.
19. The Signatories agree that this Letter Agreement may be executed in multiple
counterparts and may be filed with facsimile signatories.
Agreed to this day of /21 L 2009,
By:
Bill Guy
Vice President, Rates anegulatory Affairs
West Texas Division
City Representative(s) sign below:
Agreed to this 9th day of April , 2009.
By: q�--
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5
RECEIVED
AHN 0 8 2009
CI T Y SECRETARY
Lt3E1,e30CK, TEYAS
Resolution No. 2009-RO151
STATEMENT OF INTENT
TO CHANGE GAS RATES
Attachment A-1
Atmos Energy Company (Atmos), a "gas utility" as defined by Section
101.003(7) of the TEXAS UTILITIES CODE ("TUC"), hereby states its intent to
implement the revised gas tariffs attached hereto as Exhibits A, B, and C and
incorporated herein to be effective for gas service within the city limits of Lubbock,
Texas (hereinafter the "City") on April 22, 2009, or 35 days after filing with the City,
whichever is later. The proposed revisions and additions to the current Atmos rate
schedules are indicated by bold print.
Summary of Proposed Changes
Atmos proposes to restructure its gas rates to institute a more formulaic
methodology in the calculating and testing of the Company's earned rate of return. The
proposed tariffs will also provide for auditable annual financial reporting within a
framework that is consistent with the aggressive promotion of energy conservation and
efficiency. The Company also proposes a new Rider to support the Rate Review
Mechanism (RRM) tariff which allows for annual review of the actual and adjusted rate
of return experienced by the Company with adjustments both upward and downward to a
preset rate of return (Please see Exhibit B). In addition, the Company proposes a new
Rider to support the Conservation Program tariff wIvch provides for the funding of
weatherization services directly to the City of Lubbock (PIease see Exhibit Q. For
comparative purposes, existing tariffs are shown in Exhibit D.
Number of Customers Affected
And Expected Revenue Change
The proposed changes will affect all classes of tariff customers including
Residential, Commercial, Public Authority, Small Industrial, and State Institutions
customers who elect gas service from Atmos. There are approximately 70,000 Atmos
tariff customers within the City and in the City's environs.
The proposed changes set out in Exhibit A are revenue neutral and result in no
increase or decrease in the Company's annual gross revenues for all classes of customers.
Public Notice
Because the proposed changes do not constitute an increase in rates, public notice
is not required.
Attachment A-1
The Proposed Change is Not
A "Major Change"
The proposed rate change will not increase or decrease the aggregate revenues of
the Company by more than the greater of $100,000 or 2.5% and, therefore is not a "major
change" as defined by Section 104.101 of the TUC.
Company Representative
For Notification
Notices of Hearings and other communications related to this proposal should be
directed to:
Mr. Bill Guy
Vice President of Rates and Regulatory Affairs
5110 80"' Street, P.O. Box 1121
Lubbock, Texas 79408-1121
Tele. (806) 798-4457
Fax (806) 798-4494
Relief Requested
Wherefore, At2nos respectfully requests that the gas rates, terms and conditions,
gas cost adjustment clauses and riders proposed herein as Exhibits A and B be allowed to
take effect without delay.
Respectfully submitted,
Atmos Energy Company,
By its Vice President of
Rates and Regulatory Affairs
C.W. `Bill" Guy
FILED WITH THE CITY ON MARCH 11, 2009.
Atmos Energy Corp., West Texas Division Attachment A-9
Lubbock Rate Division - ICL EXHIBIT A Page, I of 5
RESIDENTIAL GAS SERVICE
AVAA.AI3TLITY
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
Customer Charge: $ 9.95
Commodity Charge:
All Consuunption $ 0,09668 per Caf
The Lubbock System Gas Cost Adjustment Rider applies to this schedule.
The Lubbock System Weather Normalization Adjustment Rider applies to this schedule.
The Lubbock Rate Review Mechanism (RRI) Adjustment Rider applies to this schedule.
The Lubbock Conseiryation Program Adjustment Rider applies to this schedule,
EFFECTIVE: For Bills Rendered after Apail 22, 2009 inside city limits
ISSUED BY: C.W. Gary, Vice President - Rates & Regulatory Affairs
AUTHORIZATION:
Atmos Energy Corp., West Texas Division Attachment A-1
Lubbock Distribution System - ICL EXHIBIT A Page 2 of 5
RFTCCTIVE: For Bills Rendered after April 22, 2009 inside city limits
ISSUED BY: C.W. Guy, Vice President - Rates & Regulatory Affairs
AUTHORIZATION:
Atmos Energy Coyp., West Texas Division Attachment A-1
Lubbock Rate Division - ICL EXHIBIT A Page 3 of 5
SMALL INDUSTRIAL GAS SERVICE
AVAILABILITY
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
Customer Charge: $ 6896
Commodity Charge:
1st 1000 $ 0.0965 per Cef
All over 1000 $ 0.0750 per Ccf
The Lubbock System Gas Cost Adjustment Rider applies to this schedule.
The Lubbock Rate Review Mechanism (RRM) Adjustment Rider applies to this schedule.
The Lubbock Conservation Program Adjustment Rider applies to this schedule.
EFFECTIVE: Fdr Bills Rendered after April 22, 2009 inside city limits
ISSUED BY: C.W. Guy,' Vice President - Rates & Regulatory Affairs
AUTHORIZATION:
Atmos Energy Corp., West Texas Division Attachment A-1
Lubbock Rate Division - ICL EXHIBIT A Page 4 of 5
STATE [NSTITUTION GAS SERVICE -
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, Ml-lMR schools, agriculture, highway and
public safety departments, prisons, and other facilities owned or operated by the State of Texas for the purpose
of heating, couking, refrigeration, water heating and other similar type uses_
MONTHLY RATE
Customer Charge: 44.41
Commodity Charge:
All Consumption S 0.08645 per Ccf
The Lubbock System Gas Cost Adjustment Rider applies to this schedule.
The Lubbock System Weather Normalization Adjustment Rider applies to this soltedule.
The Lubbock Rate Review Mechanism (RRM) Adjustment Rider applies to this schedule.
The Lubbock Conservation Program Adjustment Rider applies to this schedule. .
EFFECTIVE: For Bills Rendered after April 22, 2009 inside city limits
ISSUED BY: C.W. Guy, Vice President - Rates & Regulatory Affairs
AUTHORIZATION:
Atmos Energy Corp., West Texas Division Attachment A-1
Lubbock Rate Division - ICL EXHIBIT A Page 5 of 5
PUBLIC AUT14ORITY GAS SERVICE
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
Customer Charge: $ 47.22
Commodity Charge:
All Consumption $ 0.091 per Ccf
The Lubbock System Gas Cost Adjustment Rider applies to this schedule.
The Lubbock System Weather Normalization Adjushment Rider applies to this schedule.
The Lubbock Rate Review Mechanism (RRM) Adjustment hider applies to this schedule.
The Lubboelt Conservation Program Adjustment Rider applies.to this schedule.
EFFECTIVE: For Bills Rendered after April 22, 2009 inside city lirnits
ISSUED BY: C.W. Guy, Vice President - Rates & Regulatory Affairs
AUTHORIZATION:
Resolution No. 2009—RO151
EXHIBIT B Attachment A-1
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
LUBBOCK RATE DIVISION
RIDER:
Rider RRM — Rate Review Mechanism
APPLICABLE TO:
Lubbock Rate Division
REVISION
DATE:
EFFECTIVE DATE:
PAGE: I of 9
October 1, 2009
RIDER RRM — RATE REVIEW MECHANISM
P_ urpose:
This mechanism is designed to provide annual earnings transparency. All rate calculations under this tariff
shall be made on a system wide basis. If, through the implementation of the provisions of this mechanism,
it is determined that rates should be decreased or increased, then rates will be adjusted accordingly in the
manner set forth herein. The rate adjustments implemented under this mechanism will reflect annual
changes in the Company's cost of service and rate base. This adjustment will be authorized for an Initial
Implementation Period. With the conclusion of the final rate adjustment, if any, for the Initial
Implementation Period, each entity having original jurisdiction may revoke, amend, or approve Subsequent
Implementation Period(s) for, the mechanism.
Definitions
a) The Annual Evaluation Date shall be the date the Company will make its annual filing under this
mechanism. The Annual Evaluation Date shall be no later than April 1, of each year. This filing shall be
effective in electronic form where practicable. The initial filing shall be made no later than April 15, 2009.
b) Audited Financial Data shall mean the Company's books and records related to the Company's
Lubbock operating area and shared services operations. Audited Financial Data shall not require the
schedules and information provided under this tariff to undergo a separate financial audit by an outside
auditing firm similar to the Company's annual financial audit.
c) The Evaluation Period is defined as the twelve month period ending December 31, of each calendar
year. The initial Evaluation Period shall be calendar year 2008.
d) The Rate Effective Period is defined as the earlier of the twelve month period for which rates
determined under this mechanism will be in effect or subsequent rates are implemented.
e) Per Connection Basis is defined as the existing average number of Lubbock Rate Division active meters
to customers during the Evaluation Period.
0 Initial Implementation Period is defined as the three (3) year period commencing with the Company's
filing under this mechanism for the calendar year 2008, effective October 1, 2009, and shall conclude with
the implementation of rate adjustments, if any, for the third Rate Effective Period.
g) Subsequent Implementation Period is defined as any three (3) year period after the conclusion of the
Initial Implementation Period.
h) Final Order is defined as the most recent order establishing the Company's latest effective rates for the
area in which the mechanism is implemented, and shall include municipal rate ordinances and resolutions.
EXHIBIT B Attachment A-1
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
LUBBOCK RATE DIVISION
RIDER:
Rider RRM — Rate Review Mechanism
APPLICABLE TO:
Lubbock Rate Division
REVISION
DATE:
EFFECTIVE DATE:
PAGE: 2 of 9
October I, 2009
Rate Review Mechanism
The Company shall file with each regulatory authority having original jurisdiction over the Company's
rates the schedules specified below for the Evaluation Period, with the filing to be made by the Annual
Evaluation Date following the end of the Evaluation Period. The schedules, which will be based upon the
Company's Audited Financial Data, as adjusted, and will include the following:
a) Company's 13 month average actual gross plant in service, accumulated depreciation,
accumulated deferred income taxes, inventory, working capital, and other rate base components
for the Evaluation Period. A 13 month average will be used for these items for the true up
calculation; Evaluation Period ending balances for these items will be used for the calculation of
rates for the Rate Effective Period. The ratemaking treatments, principles, findings and
adjustments included in the Final Order will apply where they are not in conflict or specifically
addressed elsewhere in this tariff or the letter agreement. The 4 part allocation methodology as
approved for the Mid -Tex Operating Division in GUD 9670 will be used in place of the current 3
part methodology used by the West Texas Operating Division. Regulatory adjustments due to
prior regulatory rate base adjustment disallowances will be maintained. The ARM Schedules &
Information section of this tariff identifies those ADIT components to be included in the
calculation of rate base for both the Evaluation Period and Rate Effective Period calculations.
b) The Company's depreciation expense, operating and maintenance expense, and taxes other than
income taxes booked in the period will be used for the true -up calculation purposes. Depreciation
rates booked in the period will be those approved in the Final Order, or the rate most recently
approved. All calculation methodologies will be those approved in the Final Order except where
noted or included in this tariff, or in the most recent order addressing the methodology. In
addition, the Company shall exclude from operating and maintenance expense the discretionary
costs to be disallowed from Rider RRM filings listed in the RRM Schedules and Information
section of this tariff.
c) Return on Equity (ROE) shall be maintained at 9.6%.
d) Cost of debt will reflect actual cost for the Evaluation Period. A 13 month average cost of debt
and capital structure will be used for the true up calculation; Evaluation Period ending balances for
cost of debt and capital structure will be used for the calculation of rates for the Rate Effective
Period. Capital structure will be the actual Evaluation Period ratio of long-term debt and equity,
with percentage equity not to exceed 48.1 % equity, based on the calculation methodology
outcomes used above.
e) All applicable accounting adjustments along with all supporting work papers. Such adjustments
may include:
1) Pro -forma adjustments to update and annualize costs and revenue billing determinants for
the Rate Effective Period.
EXHIBIT B Attachment A-1
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
LUBBOCK RATE DIVISION
RIDER:
Rider RRM — Rate Review Mechanism
APPLICABLE TO:
Lubbock Rate Division
REVISION
DATE:
EFFECTIVE DATE:
PAGE: 3 of 9
October I, 2009
2) Pro -forma or other adjustments required to properly account for atypical, unusual, or
nonrecurring events recorded during the Evaluation Period.
f) Shared Services allocation factors shall be recalculated each year based on the latest component
factors used during the Evaluation Period, as referenced in (a) above.
Calculation of Rate Adiustment
a) The Company shall provide additional schedules indicating the following revenue
deficiency/sufficiency calculations using the methodology accepted in the Final Order, a 13 month
average will be used for the specified items for the true up calculation, Evaluation Period ending
balances will be used for the calculation of rates for the Rate Effective Period. These schedules
shall identify the rate adjustments necessary for both a true -up of revenue for the Evaluation
Period and the setting of prospective rates for the Rate Effective Period. The net result of these
rate adjustments shall be reflected in the proposed new rates to be established for the Rate
Effective Period. In calculating the required rate adjustments, such adjustments will be made pro -
ratably to the customer charge and usage charge based upon actual revenue generated, as adjusted
under the Company's approved Weather Normalization Adjustment (WNA) Rider. Provided,
however, that neither the Residential nor the Commercial customer charges may increase more
than 20% per year.
b) If Company's earnings during the Evaluation Period exceed 9.6% return on common equity, the
Company shall calculate a decrease to rates to reduce the revenue required to achieve a return on
equity of 9.6% for the Evaluation Period. If Company's earnings during the Evaluation Period are
below 9.6% return on common equity, the Company shall calculate an increase in rates to collect
the additional revenue required to increase its return on equity for the Evaluation Period to 9.6%.
In order to avoid double -counting of true -up revenues, any true -up revenue booked during the
Evaluation Period that is related to prior periods will be removed in determining both the
prospective rates for the Rate Effective Period and the true -up increase or decrease related to the
current Evaluation Period. The RRM Schedule & Information section of this tariff provides an
example calculation. After the prospective rates for the Rate Effective Period are calculated, the
true -up element shall be added to or deducted from those rates in order to determine the rates that
shall thereafter be recovered. The first true -up will be collected between October 1, 2009 and July
31, 2010 to eliminate overlapping true -up periods.
c) The Company may also adjust rates for the Rate Effective Period to include recovery of any
known and measurable changes to operating and maintenance costs including, but not limited to,
all payroll and compensation expense, all benefit expense, all pension expense, insurance costs,
materials and supplies, bad debt costs, all medical expense, transportation and building and lease
costs for the Rate Effective Period. Provided, however, that adjustments may only be made for
costs that are reasonable and necessary. Additionally, utility plant and rate base for the Rate
Effective Period will be established by using the Evaluation Period ending balances, including
associated changes in depreciation and amortization expense and taxes,
In calculating the Company's known and measurable changes for prospective RRM adjustment
purposes, Operating and Maintenance expenses per connection for the Rate Effective Period
cannot increase more than the Texas Consumer Price Index ("CPI") per year without specific
EXHIBIT B Attachment A-1
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
LUBBOCK RATE DIVISION
RIDER:
Rider RRM — Rate Review Mechanism
APPLICABLE TO:
Lubbock Rate Division
REVISION
DATE:
EFFECTIVE DATE:
PAGE: 4 of 9
October 1, 2009
identification and justification. Any proposed adjustment above the Texas CPI per year, is subject
to the provisions of the Evaluation Procedures of this tariff. Such procedures provide that the
regulatory authority will review the proposed adjustment and that the Company and regulatory
authority will work collaboratively to seek agreement on the proposed adjustments to the
Company's schedules and proposed rates. Justification for such expenditures over the cap shall
include an event or combination of events beyond the control of the Company. The beginning
adjusted Operation and Maintenance expense per connection for the 2009 RRM Rate Effective
Period will be limited to not exceed the final O&M as established for the 12 month period ended
December 31, 2008 divided by the connections for the period. The increase in adjusted Operation
and Maintenance expenses per connection for the 2010 Rate Effective Period and subsequent Rate
Effective periods cannot exceed the Texas CPI per year, without specific identification and
justification. The RRM Schedule & Information section of this tariff provides an example
calculation of the Texas CPI limit.
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 Evaluation Period or
Statement of Intent filing.
d) The Company also shall provide a schedule demonstrating the "proof of revenues" relied upon to
calculate the proposed rate for the Rate Effective Period. The proposed rates shall conform as
closely as is practicable to the revenue allocation principles approved in the Final Order.
Attestation
A sworn statement shall be filed by the Company's Chief Officer in Charge of West Texas Operations
affirming that the filed schedules are in compliance with the provisions of this mechanism and are true and
correct to the best of his/her knowledge, information and belief. No testimony shall be filed.
Evaluation Procedures
The regulatory authority having original jurisdiction over the Company's rates shall have no less than
ninety (90) days to review the Company's filed schedules and work papers. The Company will be prepared
to provide all supplemental information as may be requested to ensure 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 ten (10) working days of the
original request. The regulatory authority may propose any adjustments it determines to be required to
bring the schedules into compliance with the above provisions.
During and following the ninety (90) day review period and a thirty (30) day response period, the Company
and the regulatory authority will work collaboratively and seek agreement on, the proposed adjustments to
the Company's schedule and proposed rates. If agreement has been reached by the Company and the
regulatory authority, the regulatory authority shall authorize an increase or decrease to the Company's rates
so as to achieve the revenue levels indicated for the Rate Effective Period. If, at the end of the thirty (30)
day response period, the Company and the regulatory authority have not reached agreement on the
proposed adjustments, the Company shall have the right to appeal the regulatory authority's action or
EXHIBIT B Attachment A-1
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
LUBBOCK RATE DIVISION
RIDER:
Rider RRM — Rate Review Mechanism
APPLICABLE TO:
Lubbock Rate Division
REVISION
DATE:
EFFECTIVE DATE:
PAGE: 5 of 9
October 1, 2009
inaction to the Railroad Commission of Texas. Upon the filing of any appeal, the Company shall have the
right to implement the proposed RRM rate adjustment, subject to refund.
If approved by the entity exercising original jurisdiction, the rates established pursuant to the Rate Review
Mechanism for the first Rate Effective Period shall be effective for bills rendered on or after October 1,
2009. Thereafter, rates established pursuant to the Rate Review Mechanism for subsequent Rate Effective
Periods, if approved as provided herein, shall be effective on August l of each year.
Reconsideration and Appeal
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).
Notice
Notice of the annual Rate Review Mechanism filing shall be provided pursuant to Section 104.103, TEx.
UTIL. CODE ANN. 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;
c) the service area or areas in which the proposed rate adjustment would apply;
d) the date the proposed rate adjustment was filed with the regulatory authority; and
e) the Company's address, telephone number and website where information concerning the
proposed rate adjustment may be obtained.
RRM Schedules and Information
Accumulated Deferred Income Tax ("ADIT") Items To Be Recognized in Rate Base
The following list identifies those ADIT components to be included in the calculation of rate base for both
the Evaluation Period and Rate Effective Period calculations:
WTX Rate Division:
Gas Plant in Service
Insurance Accruals
Benefit Accruals
Deferred Expense Projects
Allowance for Doubtful Accounts
EXHIBIT B Attachment A-1
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
LUBBOCK RATE DIVISION
RIDER:
Rider RRM — Rate Review Mechanism
APPLICABLE TO:
Lubbock Rate Division
REVISION
DATE:
EFFECTIVE DATE:
PAGE: 6 of 9
October 1, 2009
Accumulated Deferred Income Tax ("ADIT) Items To Be Recognized in Rate Base (continued):
Customer Advances
Regulatory Asset - West Texas
Regulatory Liability - West Texas
Other Plant
SSU - Customer Support:
Gas Plant in Service
SSU - General Office:
Gas Plant in Service
Insurance Accruals
Benefits Accruals
Deferred Expense Projects
Prepaid Expenses
Regulatory Liability - Atmos 109
FAS 115 Adjustment
Treasury Lock Adjustment
State Bonus Depreciation
R & D Credit Valuation Allowance
Other Plant
Discretionary Costs to Be Disallowed from Rider RRM filings
The following types of employee reimbursed expenses and directly incurred costs are to be removed from
all expense and rate base amounts included within Rider RRM filings for the Evaluation Period and for the
Rate Effective Period:
Amounts incurred for travel, meals or entertainment of employee spouses.
Amounts for air travel that exceed published commercial coach air fares.
Amounts incurred for hotel rooms exceeding $250 per night inclusive of taxes and fees assessed
on such rooms.
Amounts for alcoholic beverages.
Amounts paid for admission to entertainment, sports, art or cultural events, and all event
sponsorship costs.
Amounts for social club dues or fees.
EXHIBIT B Attachment A-1
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
LUBBOCK RATE DIVISION
RIDER:
Rider RRM --- Rate Review Mechanism
APPLICABLE TO:
Lubbock Rate Division
REVISION
DATE:
EFFECTIVE DATE:
PAGE: 7 of 9
October I, 2009
Example Calculation A - Revenue for RRM True -Up Portion of Rate
"FOR ILLUSTRATION PURPOSES ONLY.
AMOUNTS ARE HYPOTHETICAL, AND DO NOT CORRESPOND
WITH OTHER EXAMPLE SCHEDULES*"
Per Books Revenue, excluding True -Up Revenue
from prior Evaluation Periods
Per -Books True -Up Revenue based on 2007
Evaluation Period [1]
Per -Books True -Up Revenue based on 2008
Evaluation Period [1]
Per -Books True -Up Revenue based on 2009
Evaluation Period [I]
Total Per -Books Revenue
Add / (Subtract):
Revenue from Riders GCR, FF. & TAX
Surcharges for Rate Case Cost Recovery
True -Up Revenue for 2007 Evaluation Period [1]
True -Up Revenue for 2008 Evaluation Period [1]
Remove out -of -period and unusual items
Realized Revenue for True -Up Calculation
Revenue Requirement at 9.6% ROE [2]
Calendar Calendar Calendar Calendar Calendar
2007 2008 2009 2010 2011
$150,000 $156.000 $157,700 $I58,200 $158,700
800 1,200
(364) (546)
234 351
$150.000 $156,800 $158„536 $157,888 $159,051
(110„000) (111,000) (112,000)
(200) (200) (200)
(800) (1,200)
364
39,800 44,800 45,500
41,800 43,890 46,085
True -Up Increase (Decrease), subject to Revenue -
Related Tax Gross -up $ 2,000 $ (910) $ 585
[1] For illustration purposes, example assumes 40% of the total calculated true -up is collected in the
following calendar year. Each true -up is subject to a proof of collection or refund after the
collection/refund period, and any residual amount will be refunded or collected in the
subsequent period.
[2) Since realized revenue for the true -up calculation excludes Riders GCR, FF, and TAX, as well as
surcharges for rate case cost recovery, the revenue requirement for purposes of the true -up calculation
also excludes all corresponding expenses for the Evaluation Period.
EXHIBIT B Attachment A-1
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
LUBBOCK RATE DIVISION
RIDER:
Rider RRM — Rate Review Mechanism
APPLICABLE TO:
Lubbock Rate Division
REVISION
DATE:
EFFECTIVE DATE:
PAGE: 8 of 9
October 1, 2009
Example Calculation B - Revenue for RRM Prospective Portion of Rate
"FOR ILLUSTRATION PURPOSES ONLY.
AMOUNTS ARE HYPOTI IETICAL, AND DO NOT CORRESPOND
WITH OTHER EXAMPLE SCHEDULES"
Oct 2008 - Sept July 15, 2009 - July 15, 2010 -
2009 July 14, 2010 July 14, 2011
Rate Effective Period Revenue Price -Out at Current Rates
[ I ] $ 60,000 S 65,000 $ 68,000
Remove True -Up Portion of Revenue t2]
Revenue at Current Rates for Rate Effective Period
Deficiency Calculation
Revenue Requirement for Rate Effective Period
(2,500) 1,100
60,000 62,500 69,100
65,000 69,250 71,663
Rate Effective Period Revenue Increase / (Decrease) before
True -Up, subject to Revenue Tax Gross -Up [3] $ 5,000 $ 5,750 S 2,563
[I] To be calculated using pro -forma annualized billing determinants, as provided for in this tariff, priced
out at the current rates at the time of the deficiency calculation.
[2] To be calculated using pro -forma annualized billing determinants, as provided for in this tariff, priced
out at the portion of current rates at the time of the deficiency calculation intended to true up prior
Evaluation Period(s).
[3] This represents the prospective deficiency portion of the RRM adjustment. The true -up adjustment,
demonstrated in Example Calculation A, will be combined with this adjustment to determine the
total adjustment for the Rate Effective Period.
EXHIBIT B Attachment A-1
TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.,
LUBBOCK RATE DIVISION
RIDER: Rider RRM — Rate Review Mechanism
APPLICABLE TO: Lubbock Rate Division REVISION
DATE:
EFFECTIVE DATE: PAGE: 9 of 9
October 1, 2009
Example Calculation C - Operation & Maintenance Expense Cap Test
"All Amounts are Hypothetical, and do not correspond with other example calculations"
Evalulation Period (Calendar Year) 2007 2008 2009
Benchmark O&M Per Connection (increased 5% annually)
Gas Service Connections [11
Maximum O&M &flowed
$ 97.23 $ 102.09 $ 107.19
1,553,000 1,560,000 1,567,000
$ 151,000,000 $ 159.260,400 $ 167,966.730
[I ] For illustration purposes only, Gas Service Connections are estimated for 2007 and are assumed to
increase 7,000 connections per year. Therefore, `Maximum O&M Allowed' is estimated for 2008 and
2009. Actual Gas Service Connections for 2007 will be used to calculate the 2007 O&M per Connection.
For each subsequent Evaluation Period, the prior period O&M per Connection will be increased by 5%, and
then multiplied by the actual Gas Service Connections for the same period to derive the `Maximum O&M
Allowed'.
Resolution No. 2009-RO151
Atmos Energy Corp., West Texas Division.
Lubbock Rate Division - ICL
CONSERVATION PROGRAM
Attachment A-1
Exhibit C Page t of I
To promote conservation -related activities, in each RRM Plan year, Atmos Energy Corporation ("Company"), commits
to annual funding of conservation expenditures of %Z% of prior calendar year margin revenues (less any revenue related
taxes) or $100,000 whichever is greater.
a. 100% of this amount will be provided directly to the City of Lubbock for weatherization services by August I",
2009 and August I" each year thereafter through August 1, 2011.
b. 50% ofthe expenditures made by Atmos under part (a) will be considered in determining the Company's annual
earnings for RRM rate adjustment purposes,
EFFECTIVE: For Bills Rendered on or after August 1, 2009 inside city limits
ISSUED BY: C.W. Guy, Vice President— Rates & Regulatory Affairs
AUTHORIZATION:
Atmos Energy Corp., West Texas Division Attachment A-1
Lubbock Rate Division - ICL EXHIBIT D Page I of 5
RESIDENTIAL GAS SERVICE
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 se►•vice to premises with an
alternative supply of natural gas.
MONTHLY RATE
Customer Charge: $ 9.95
Commodity Charge:
All Consumption S 0,09668 per Ccf
The West Texas System Gas Cost Adjustment Rider applies to this schedule.
The Lubbock System Weather Normalization Adjustment Rider applies to this schedule.
EFFECTIVE: For Bills Rendered after May 8, 2009 inside city limits
ISSUED BY: QW. Guy, Vice President- Rates & Regulatory Affairs
AUTHORIZATION: Resolution No. 2008-RO179
Atmos Energy Carp., West Texas Division Attachment A-1
Lubbock Distribution System - ICL EXHIBIT D Page 2 of 5
COMMERCIAL GAS SERVICE
AVAILABILITY
This schedule is applicable to Commercial type customers, including hospitals and churches, for heating,
cooking, refrigeration, wafer heating and other similar type uses, This schedule is not available for
service to premises with alternative supply of natural gas.
MONTHLY RATE
Customer Charge: $ 15.75
Commodity Charge:
All Consumption $ 0.0950 per Cef
The Lubbock System Gas Cost Adjustment Rider applies to this schedule,
The Lubbock System Weather Normalization Adjustment Rider applies to this schedule.
EFFECTIVE: For Bills Rendered after May 8, 2008 inside city limits
ISSUED BY: C,W, Guy, Vice President - Rates & Regulatory Affairs
AUTHORIZATION: Resolution No, 2008-RO179
Atmos Energy Corp., West Texas Division Attachment A-1
Lubbock Rate Division - ICL EXHIBIT D Page 3 of 5
SMALL INDUSTRIAL GAS SLRVTCE
AVAILABILITY
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 contract specifying the
maximum hourly Ioad. This schedule is not available for service to premises with an alternative supply
of natural gas.
MONTHLY RATE
Customer Charge: $ 68.96
Conunodity Charge:
1st 1000 S 0.0965 per Cef
All over 1000 $ 0.0750 per Cef
The Lubbock System Gas Cost Adjustment Rider applies to this schedule.
EFFECTIVE: For Bills Rendered after May 8, 2008 inside city limits
ISSUED BY: C.W. Guy, Vice President - Rates & Regulatory Affairs
AUTHORIZATION: Resolution No. 2008-RO179
Atmos Energy Corp., West Texas Division Attachment A-1
Lubbock Rate Division - ICL EXHIBIT D Page 4 of 5
STATE INSTITUTION GAS SERVICE
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, D4HMR 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
Customer Charge: $ 44.41
Commodity Charge:
All Consumption $ 0.08645 per Ccf
The Lubbock System Gas Cost Adjustment Rider applies to this schedule.
The Lubbock System Weather Normalization Adjustment Rider applies to this schedule.
EFFECTIVE: For Bills Rendered after May 8, 2008 inside city limits
ISSUED BY: C.W. Guy, Vice President - Rates & Regulatory Affairs
AUTHORIZATION: Resolution No. 2008-RO179
Atmos Energy Corp., West Texas Division Attachment A-1
Lubbock Rate Division - ICL EXHIBIT D Page 5 of 5
EFFECTIVE: For Bills Rendered after May 8, 2009 inside city liniits
ISSUED BY; C.W. Guy, Vice President - Rates & Regulatory Affairs
AUTHORIZATION: Resolution No. 2008-ROI79