HomeMy WebLinkAboutResolution - 2010-R0133 - Engagement Letter - City Of Lubbock And Utilitech, Inc. Of Atmos Engergy - 03/25/2010Resolution No. 2010-RO133
March 25, 2010
Item No. 5.4
RESOLUTION
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK:
THAT the City Council of the City of Lubbock hereby authorizes and directs the
Mayor of the City of Lubbock to execute an Engagement Letter by and between the City
of Lubbock and Utilitech, Inc. for informal review of the Atmos Engergy Corporation
2010 Rate Review Mechanism Filing and annual rate adjustment, which agreement and
any associated documents are attached hereto and made a part of this Resolution for all
intents and purposes.
Passed by the City Council on _ March 25, 2010
TOM MARTIN, MAYOR
ATTEST:
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Rebec Garza, City Secretary
APPROVED AS `IO CONTENT:
Andy Burcham. Chief Financial Officer
APPROVED AS TO FORM:
Sam Medina, Ci
vw:ccdocsiRES.Utditech, Inc -Engagement Ltr
2/25/10
UTI LITECH, INC. Resolution No. 2010-RO133
Regulatory and Management Consultants
P.O. Box 481934 • Kansas City, MO 64148-1934 - 816-525-5211 •Fax: 816-525-5258
February 19, 2010
The Honorable Tom Martin
Mayor
City of Lubbock
City Hall
1625 13th Street, Suite 201
Lubbock, TX 79401
RE: ENGAGEMENT LETTER FOR INFORMAL REVIEW OF ATMOS ENERGY
CORPORATION 2010 RRM FILING AND ANNUAL RATE ADJUSTMENT.
Dear Mayor Martin:
This letter is to serve as our agreement for Utilitech to conduct an informal regulatory analysis on
behalf of the City of Lubbock, in connection with the second annual filing under the three year pilot
Rate Review Mechanism ("Rider RRM"). Although Atmos is not scheduled to submit its Lubbock
RRM filing until April 1, 2010, the Company is expected to seek an overall rate increase to become
effective on or after August 1, 2010, which will include a 2009 true -up and a prospective 2010 revenue
change. Based upon our recent work involving the Atmos Mid -Tex Division (2007 rate case and two
Rider RRM filings) as well as prior West Texas 2009 RRM filings (i.e., both Lubbock and Amarillo).
our proposal contemplates a focus upon verification of compliance with the RRM tariff and
development of the revenue requirement accounting issues that may result from this filing, including
analysis of the accounting adjustments that are made, or needed but not made, by Atmos. We agree to
conduct the following work in connection with this engagement:
1. A thorough review of prefiled RRM supporting schedules and workpapers to
understand the basis for Atmos' asserted revenue change and the accounting records
relied upon to develop such evidence. We will also review the Company's filing for
compliance with RRM tariff terms and conditions and to identify potential
adjustments required to properly quantify Lubbock earnings and rate adjustments.
2. Preparation and submission of targeted and exploratory discovery to Atmos for
information beyond that contained within the filing, as needed for our analysis.
3. On-site interviews and document review at Atmos' offices in Dallas and follow-up
teleconferences with Company representatives, as necessary.
4. Analysis of Atmos' 2009 true -up and 2010 prospective earnings and rate base, as
allocated to Lubbock, to assess whether reasonable amounts are reflected in the
determination of RRM earnings and rate of return, quantifying any adjustments the
City may wish to consider in order to correct deficiencies in the Company's filing.
5. Preparation of a report containing earnings and revenue requirement computations to
either confirm the Atmos filing amounts, or to calculate alternative rate
recommendations for consideration by Lubbock.
• Page 2
February 19, 2010February 25, 2010
6. Support and consultation to Lubbock personnel in negotiation with Atmos and/or
presentation of recommendations before City authorities.
We propose to commence this work in mid to late April with a draft report in late June, scheduled
around pre-existing project commitments. Our proposed efforts assume a cooperative and informal
working environment with Atmos and do not include any depositions or formal testimony sponsorship
by Utilitech personnel. Since this is the second annual filing under the three-year RRM pilot, we do not
anticipate any work required to redefine or restructure the terms or conditions of Rider RRM. In the
event the RRM filing cannot be resolved informally, Utilitech would negotiate in good faith with
Lubbock for any further services that may required of us.
Fees for Utilitech services would be billed at our standard hourly rates for our current fiscal year for
Messrs. Brosch ($150 per hour) and Carver ($130 per hour). We expect that our administrative
personnel would assist in the processing of discovery, development of spreadsheet analyses and/or
preparation of draft testimony and exhibits. As needed, these services will be billed at $45 per hour.
Our work would be billed on an actual hours and expenses basis and we commit to not exceed a
proposed overall project cost estimate of $30,000, unchanged from our estimate for the 2009 RRM
filing review, without advanced notification to you and written agreement for such additional work.
Utilitech shall serve in the capacity of contractor, and not as employees of the City of Lubbock, and
will maintain all required insurance in connection with such services.
Qualifications and professional reference materials for Utilitech personnel have previously been
provided to you. If any additional references or Utilitech specimen work products are desired, please
let me know. I am available to discuss this proposal at your convenience. If you are in agreement with
the services and terms set forth herein, please so indicate by signing below and returning an original
copy. We appreciate this opportunity to again serve the gas utility ratepayers of Lubbock.
Sincerely,
Steven C. rye City of Lubbock
By:Y
Vic resident, Utilitech, Inc. Tom Martin, Mayor
Attest
By:
Rebecca G City Secretary
Approved as to Content:
BY:
Andy Burch , Chief Financial Officer
Approved as to F
Sam Medina, City Atto y