HomeMy WebLinkAboutResolution - 2009-R0199 - Engagement Lterrer - Utilitech Inc.- Informal Review Of Atmos Energy Corp. Rates - 05/28/2009Resolution No. 2009-RO199
May 28, 2009
Item No. 5.2
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
2009 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 this 2&:h day of May , 2009,
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TOM MARTIN, MAYOR
ATTEST:
Reber Garza, City Secretary
PF,OVEU AS TO CONTENT:
Andy urcham
Chief Financial Officer
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May 13, 2009
UTILITECH, INC. Resolution No. 2009-R0199
Regulatory and Management Consultants
P.O. Box 481934 • Kansas City, MO 64148-1934 • 816-525-5211 • Fax: 816-525-5258
May 6, 2009
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 2009 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 three year pilot Rate Review Mechanism ("Rider
RRM") Atmos submitted on April 15, 2009. Atmos is seeking an overall rate increase of $3.475
million to become effective on or after October 1, 2009, which amount is about equally split between a
2008 true -up and a prospective 2009 revenue change. Based upon our recent work involving the Atmos
Mid -Tex Division rate case and the review of filings under the Mid -Tex Rider RRM, 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:
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' 2008 true -up and 2009 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.
6. Support and consultation to Lubbock personnel in negotiation with Atmos and/or
presentation of recommendations before City authorities.
• Page 2 May 6, 2009
We propose to commence this work in late June or early July, as focus on pre-existing project
commitments begin to ease. 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. In the event the RRM ding 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 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. Thank you for this opportunity to once again serve the gas utility ratepayers of Lubbock.
Sincerely,
Steven C City of Lubbock
By: �� 1'y Aig 4
Vice President, Utilitech, Inc. Tom Martin, Mayor
Attest
By: �p a�" —
Rebecca Ga6 City Secretary
App oved as to Content:
By:
AndyburclWm, Chief Financial Officer
ADDmved as to Forme r
By:o
Don Van iver, ity Attorney