HomeMy WebLinkAboutResolution - 2010-R0387 - Annual Rate Review Btwn The City And Atmos Energy Corp., West TX Division - 08/26/2010Resolution No. 2010—RO387
August 26, 2010
Item No. 5.4
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 SECOND 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 AN AGREED CAP CALCULATION; 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
City of Lubbock ("City") has exclusive original jurisdiction over 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 the TEXAS UTILITES CODE;
WHEREAS, on or after April 1, 2010, Atmos West Texas filed with the City its
second application pursuant to the RRM tariff to increase natural gas rates by
japproximately $873,000 ($10,000 decrease after expiring 2008 true -up rate increase),
such change in rates to be effective inside the City's limits; and
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 decrease of about $292,000.00 (or $1.18
million after expiring 2008 true -up amounts are removed); and
WHEREAS, after negotiation and further analysis, Atmos West Texas
representatives and the City were able to reach agreement that a $19,000 decrease
($902,000 net of expiring true -up) 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
-xpenses associated with the RRM application; and
WHEREAS, the City's lawyers and consultants, recommend that the City approve
the attached rate tariffs ("Exhibit A" to this Order and Resolution), which will decrease
the Company's revenue requirement by a net amount of $902,000 consistent with the
negotiated resolution; and
WHEREAS, the attached tariffs implementing new rates, the attached Atmos
West Texas Proof of Revenues ("Exhibit B" to this Order and Resolution), and the
attached O&M Expense Cap Calculation ("Exhibit C" 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
WHEREAS, in the interest of promoting the collaborative approach to rate review
under the RRM, through negotiations, the City's lawyers and consultants and Atmos'
representatives determined that a reasonable expense cap for operations and maintenance
(O&M) for the 2009 evaluation period for use in the setting of rates under the RRM be
established at $6,700,000 with adjustments in future proceedings for changes in the Texas
Consumer Price Index as illustrated in Exhibit C ("Expense Cap Calculation"); and
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 LUBBOCK, 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, the Atmos
West Texas Proof of Revenues, and the agreed Expense Cap Calculation, which are
attached hereto and incorporated herein as Exhibits A, B, and C 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
I' approved rates or increase in revenue, but both City and Company agree to be bound by
.Exhibit C for the next RRM filing.
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-RO151, 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.
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
�I
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, 2010.
Section 8. That a copy of this Order and Resolution shall be sent to Atmos West
Texas, care of C. W. "Bill" Guy, at Atmos Energy Corporation, 5110 80'h Street,
JLubbock, Texas 79424 and the City's legal counsel.
PASSED AND APPROVED this August 26, 2010 , 2010.
TTEST:
Rebe ca Garza, City Secretary
4
TOM MARTIN, MAYOR
APPROVED AS TO CONTENT:
ATMOS ENERGY CORPORATION
LUBBOCK DISTRIBUTION SYSTEM
Exhibit A page 1 of 6
Resolution No. 2010—R0387
RATE SCHEDULE:
RESIDENTIAL GAS SERVICE
APPLICABLE TO:
LUBBOCK SERVICE AREA — Inside City Limits (ICL)
EFFECTIVE DATE:
Bills Rendered on and after 0910112010
TPAGE:
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
Prospective
$ 7.65
True -up
($0.12)
Commodity Charge — All Consumption
Prospective
$ 0.17429
True -up
($.00283)
The West Texas Division Gas Cost Adjustment Rider applies to this schedule.
The West Texas Division Weather Normalization 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.
ATMOS ENERGY CORPORATION
LUBBOCK DISTRIBUTION SYSTEM
Exhibit A page 2 of 6
RATE SCHEDULE:
COMMERCIAL GAS SERVICE
APPLICABLE TO:
LUBBOCK SERVICE AREA — Inside City Limits (ICL)
EFFECTIVE DATE:
Bills Rendered on and after 09/01/2010
TPAGE:
Availability
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
Charge
Amount
Customer Charge
Prospective
$ 14.90
True -up
($0,41)
Commodity Charge — All Consumption
Prospective
$ 0.13159
True -up
($0.0036)
The West Texas Division Gas Cost Adjustment Rider applies to this schedule.
The West Texas Division Weather Normalization 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.
ATMOS ENERGY CORPORATION
LUBBOCK DISTRIBUTION SYSTEM
Exhibit A page 3 of 6
RATE SCHEDULE:
SMALL INDUSTRIAL GAS SERVICE
APPLICABLE TO:
LUBBOCK SERVICE AREA — Inside City Limits (ICL)
EFFECTIVE DATE:
Bills Rendered on and after 0910112010
TPAGE:
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
Charge
Amount
Customer Charge
Prospective
$ 89.05
True -up
($3.12)
Commodity Charge
Prospective
0-1000 Ccf
$ 0.11947
All over 1000 Ccf
$ 0.09724
True -up
All Consumption
($0.0035)
The West Texas Division 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.
ATMOS ENERGY CORPORATION
LUBBOCK DISTRIBUTION SYSTEM
Exhibit A page 4 of 6
RATE SCHEDULE:
STATE INSTITUTION GAS SERVICE
APPLICABLE TO:
LUBBOCK SERVICE AREA — Inside City Limits (ICL)
EFFECTIVE DATE:
Bills Rendered on and after 09/01/2010 T
PAGE:
Availability
This schedule is applicable 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
Prospective
$ 57.30
True -up
($1.95)
Commodity Charge — All Consumption
Prospective
$ 0.11154
True -up
($0.00380)
The West Texas Division Gas Cost Adjustment Rider applies to this schedule.
The West Texas Division Weather Normalization 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.
ATMOS ENERGY CORPORATION
LUBBOCK DISTRIBUTION SYSTEM
Exhibit A page 5 of 6
RATE SCHEDULE:
PUBLIC AUTHORITY GAS SERVICE
APPLICABLE TO:
LUBBOCK SERVICE AREA — Inside City Limits (ICL)
EFFECTIVE DATE:
Bills Rendered on and after 09/01/2010 T
PAGE:
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 to premises with an alternative supply of natural gas.
Monthly Rate
Charge
Amount
Customer Charge
Prospective
$ 61.29
True -up
($2.46)
Commodity Charge — All Consumption
Prospective
$ 0.11811
True -up
($0.00474)
The West Texas Division Gas Cost Adjustment Rider applies to this schedule.
The West Texas Division Weather Normalization 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.
ATMOS ENERGY CORPORATION
WEST TEXAS DIVISION
Exhibit A page 6 of 6
RATE SCHEDULE:
WEST TEXAS DIVISION GAS COST ADJUSTMENT RIDER
APPLICABLE TO:
ALL SERVICE AREAS IN THE WEST TEXAS DIVISION
EFFECTIVE DATE:
Bills Rendered on and after 09/01/2010
PAGE:
Application
Gas bills issued under rate schedules to which this Rider applies will include adjustments to reflect decreases or increases
in purchased gas costs or taxes. Purchased gas costs includes any prudently incurred transaction related fees, gains or
losses and other transaction costs associated with the use of various financial instruments that are executed by the
Company for the purpose of price volatility mitigation. Accumulated Deferred Gas Costs shall also be adjusted for gas
cost amounts which are uncollectible. Any such adjustments shall be filed with the City's Secretary before the beginning
of the month in which the adjustment will be applied to bills. The amount of each adjustment shall be computed as
follows:
Gas Cost Adjustment (GCA)
The GCA to be applied to each Ccf billed shall be computed as follows and rounded to the nearest $0.01:
GCA = (G/S + CF) x TF
Where:
1. "G", in dollars, is the expected cost of gas for the expected sales billings units.
2. "S", in Ccf as measured at local atmospheric pressure, is the expected sales billing units to be billed to customers in the
respective section of the Company's Amarillo and West Texas Service Area.
3. "CF", in $/Ccf as measured at local atmospheric pressure, is the correction factor charge per Ccf to adjust for the
cumulative monthly difference between the cost of gas purchased by the Company and
the amount of gas cost billed to the customer plus any gas cost which is uncollectible.
More specifically, CF shall be calculated as follows:
CF = (a/b) + (c/b)
a = over (under) collection dollar amount for the 12 month period ending September.
b = expected estimated sales volumes for the future 12 month period ending November.
c = net uncollectible gas cost, that is:
(uncollectible gas cost for the previous 12 months ended September) — (subsequently collected gas cost for the previous
12 months ended September)
Once a year, on a 12 months ended September basis, the Company shall review the percentage of lost and unaccounted for
gas. If this percentage exceeds 5% of the amount metered in, the correcting account balancewill be reduced so that the
customer will effectively be charged a maximum of 5% for lost and unaccounted for gas and the Company will absorb the
excess.
4. "TF" is the tax factor. The tax factor for all unincorporated areas is 1. For incorporated areas the tax factor
for each service area is calculated as: 1 / [ 1-(SGR+FFR) ] where SGR = the applicable state gross receipts rate
imposed by sections 182-021 —182-025 of the Texas Tax Code that is not otherwise collected by a separate
rider and where FFR = the applicable franchise fee rate per city ordinance that is not otherwise collected by a
separate rider.
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Resolution No. 2010-RO387
Exhibit C
Atmos Energy Corporation - Lubbock Rate Division
Attachment to Ordinance Regarding Settlment of RRM Filed April 1, 2010
The 0&M expense cap for the 2009 Evaluation Period is established at $6,700,000. This amount shall be
subject to adjustment for future changes in the Texas CPI, as illustrated below, for RRM expense cap
determinations.
2009 Approved Evaluation Period 0&M
2010 Estimated Evaluation Period 0&M Costs Allowed*
2010 Estimated Prospective Period 0&M Costs Allowed*
Estimated 2010 Expense Cap Calculation
2009 RRM Evaluation Period Approved 0&M
Average Active Meters (12 ME Dec -09)
2009 RRM O&M Cost per Connection
Estimated Increase (Decrease) in Texas CPI*
2010 RRM Evaluation Period 0&M Cost per Connection
Proposed Connections (2010 BDs actual/adjusted)"
2010 RRM Evaluation Period O&M Costs Allowed
Percent Increase in Texas CPI
1.55% [ (b -a) / a ] = Evaluation Period
2.44% [ (c -a) / a ] = Prospective Period
NOTES:
6,700,000
6,804,179
6,863,678
Evaluation
Texas CPI
Estimated*
Period
2009
2010
Jan
192.68
196.85
Feb
193.79
197.28
Mar
194.23
197.59
Apr
195.12
198.18
May
194.78
198.10
Jun
196.67
198.30
Jul
196.34
198.64
Aug
196.40
198.98
Sep
196.81
199.32
Oct
196.81
199.66
Nov
196.85
200.00
Dec
196.27
200.34 c
Avg
195.5625 a
198.60 b
Percent Increase in Texas CPI
1.55% [ (b -a) / a ] = Evaluation Period
2.44% [ (c -a) / a ] = Prospective Period
NOTES:
6,700,000
6,804,179
6,863,678
Evaluation
Prospective
Period
Period
6,700,000
6,700,000
72,339
72,339
92.62
92.62
1.55%
2.44%
94.06
94.88
72,339
72,339
6,804,179
6,863,678
* 2010 Estimates are subject to change once actual Texas CPI numbers for 2010 become available.
** 2010 Proposed Connections are subject to change once actual 2010 billing determinates are available.