HomeMy WebLinkAboutResolution - 2009-R0413 - Approve Resolution - Atmos Energy Corp. - Annual Rate Review Mechanism - 10/08/2009Resolution No. 2009—RO413
October 8, 2009
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 FIRST 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;
DOPTING A SAVINGS CLAUSE; DETERMINING THAT THIS ORDINANCE
AS 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.
41 'WHEREAS, pursuant to Section 103.001 of the TEXAS UTILITIES CODE, the
City of Lubbock ("City") has exclusive original jurisdiction over the rates, operations,
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
tmos Energy Corporation ("Company" or "Atmos West Texas") collaboratively
ped the Rate Review Mechanism ("RRM") tariff, ultimately authorized by the City
April 2009, that allows for an expedited rate review process controlled in a three year
periment 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 15, 2009, Atmos West Texas filed with the City its
application pursuant to the RRM tariff to increase natural gas rates by approximately
4 million, such increase to be effective inside the City's limits; and
WHEREAS, the City, assisted by its attorneys and consultants, coordinated the
of the RRM filing; and
WHEREAS, the Company has filed evidence that existing rates are unreasonable
should be changed; and
WHEREAS, independent analysis by the City's rate expert concluded that Atmos
est Texas is able to justify a rate increase of approximately $2.5 million; and
WHEREAS, after negotiation and review, Atmos West Texas representatives and
City were able to reach agreement that a $2.65 million increase in the Company's
requirement is reasonable; and
WHEREAS, the stipulation contemplates reimbursement of the City's reasonable
associated with the RPM application; and
WHEREAS, the City's lawyers and consultants, recommend that the City approve
attached rate tariffs ("Attachment A" to this Order and Resolution), which will
the Company's revenue requirement by $2.65 million consistent with the
resolution; and
WHEREAS, the attached tariffs implementing new rates, the attached Atmos
est Texas Proof of Revenues ("Attachment B" to this Order and Resolution), and the
Settlement Summary ("Attachment C" to this ordinance) are consistent with the
iated resolution reached by the City and are just, reasonable, and in the public
; and
WHEREAS, the negotiated resolution of the Company's RRM filing and the
sulting rates are, as a whole, in the public interest.
NOW, THEREFORE, BE IT ORDERED AND RESOLVED BY THE CITY
OUNCIL OF THE CITY OF LUBBOCK, TEXAS:
Section 1. That the findings set forth in this Order and Resolution are hereby in
1 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 new tariffs, the Atmos West
Texas Proof of Revenues, and the Settlement Summary which are attached hereto and
incorporated herein as Attachments 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 Attachments A, B, and C, nor should any methodology be inferred from the
lapproved 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
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
land 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
ning 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 October 1, 2009.
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 801h Street,
Lubbock, Texas 79424 and the City's legal counsel.
PASSED AND APPROVED this 8th day of October
2009.
� We _
TOM MARTIN, MAYOR
IATTEST:
Becky Garza, City
APPROVED AS TO CONTENT:
L& Z4t" " "
LWAnn Dumbauld, City Manager
i
6-1"q MINI
Order and Resolution 10-8-09 (v4)
Resolution No. 2409-RO413
Attachment A
gage 1 of 5
Atmos Energy Corp., West Texas Division
Lubbock Rate Division - ICL
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 service to premises with an
alternative supply of natural gas.
MONTHLY RATE
Customer Charge: $ 7.53
Commodity Charge:
All Consumption $ 0.18641 per Ccf
The Lubbock System Gas Cost Adjustment Rider applies to this schedule.
The Lubbock Systems Weather Normalization Adjustment Rider applies to this schedule.
The Lubbock Rate Review Mechanism (RRK Adjustment Rider applies to this schedule.
The Lubbock Conservation Program Adjustment Rider applies to this schedule.
EFFECTIVE: For Bills Rendered on and after October 1, 2009 inside city limits
ISSUED BY: C.W. Guy, Vice President - Rates & Regulatory Affairs
AUT14ORIZATION:
Attachment A
Page 2 of 5
Atmos Energy Corp., West Texas Division
Lubbock Distribution System - ICL
COMMERCIAL GAS SERVICE.
AVAILABILITY
This schedule is applicable to Commercial type 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 alternative supply of natural gas.
MONTHLY RATE
Customer Charge: $ 14.52
Commodity Charge:
All Consumption $ 0.14332 per Cof
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 (RRM) Adjustment Rider applies to this schedule.
The Lubbock Conservation Program Adjustment Rider applies to this schedule.
EFFECTIVE: For Bills Rendered on and after October 1, 2009 inside city limits
ISSUED BY: C.W. Guy, Vice President - Rates & Regulatory Affairs
AUTHORIZATION:
Attachment A
Page 9 of 5
Atmos Energy Corp., West Texas Division
Lubbock Rate division - ICL
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.
MQNTFILY RATE
Customer Charge: $ 95.18
Commodity Charge:
1st1000 S 0.12524 per Cof
All over 1000 $ 0.10374 per Ccf
The Lubbock System Gas Cost Adjustment Rider applies to this schedule.
The Lubbock (tate Review Mechanism (RRM) Adjustment Rider applies to this schedule.
The Lubbock Conservation Program Adjustment Rider applies to this schedule.
EFFECTIVE: For Bills Rendered on and after October 1, 2009 inside city limits
ISSUED BY: C.W. Guy, Vice president - Rates & Regulatory Affairs
AUTHORIZATION:
Attachment A
Page 4 of S
Atmos Energy Corp., West Texas Division
Lubbock Rate Division - ICL
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 universilse , 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
Customer Charge: $ 61.37
Commodity Charge:
All Consumption $ 0.11637 per Ccf
The Lubbock System Gas Cost Adjustment Rider applies to this schedule.
The Lubbock System Weather Normalization Adjustment hider 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: For Bills Rendered on and after October 1, 2009 inside city limits
ISSUED BY: C.W. Guy, Vice President - Rates & Regulatory Affairs
AUTHORIZATION:
Attachment A
Page 5 of 5
Atmos Energy Corp., West Texas Division
Lubbock Rate Division - ICL
PUBLIC AUTHORITY 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: S 65.27
Commodity Charge:
All Consumption S 0.12407 per Cef
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 (RRM) Adjustment Rider applies to this schedule.
The Lubbock Conservation Program Adjustment Rider applies to this schedule.
EFFECTIVE: For Bills Rendered on and after October 1, 2009 inside city limits
ISSUED BY; C.W. Guy, Vice President - Rates & Regulatory Affairs
AUTHORIZATION:
Resolution No. 2009—RO413
Attachment B page 1 of 8
Atmos Energy
LUBBOCK DISTRIBUTION SYSTEM
REVENUE COMPARISON
For Purposes of reporting, Public Authority and State Institutions are combined into one line
REVENUE AT
IMPACT ON TOTAL REVENUES
REVENUE AT
RESIDENTIAL
$51,053,572
$49,340,760
PROPOSED
CCF
PRESENT
Customers
DIFFERENCE
$694,012
3.886%
RATES
$3,199,185
RATES
$103,136
AMOUNT
%
RESIDENTIAL
$13,556,600
41,025,134
$11,843,787
65,740
$1,712,812
14.46%
COMMERCIAL
$3,407,003
16,570,551
$2,712,990
6,025
$694,012
25.58%
INDUSTRIAL
$389,832
3,073,690
$286,695
62
$103,136
35.97%
PUBLIC AUTHORITY
$529,832
3,039,852
$389,627
209
$140,205
35.98%
$17,883,265
63,709,228
$15,233,100
72,036
$2,650,166
17.40%
For Purposes of reporting, Public Authority and State Institutions are combined into one line
Privileged and Confidential Atmos Energy Corporation
IMPACT ON TOTAL REVENUES
RESIDENTIAL
$51,053,572
$49,340,760
$1,712,812
3.471%
COMMERCIAL
$18,552,486
$17,858,474
$694,012
3.886%
INDUSTRIAL
$3,199,185
$3,096,048
$103,136
3.331%
PUBLIC AUTHORITY
$3,308,257
$3,168,052
$140,205
4.426%
Privileged and Confidential Atmos Energy Corporation
Lubbock Distribution System
Comparison of Current and Modified Residential Rates
Test Year Ended December 31, 2048
Current Rates
Modified Rates
Attachment B page 2 of 8
Line
Charge !
Actual Bills !
Comm. % of
Rev. %
Actual Bills /
Comm. %
Rev. %
No.
Min Max Rate
Volumes
Revenue
Totai
of Total
Min Max Charge ! Rate
Volumes
Revenue
of Total
of Total
1
Customer Charge $ 9.95
785,341
$
7,814,136
66.8%
$ 7.53
785,341
$
5,913,614
50.5%
2
3
Commodity ChargE 1 > $ 0.09668
40,248,359
$
3,891,211
100.0%
312%
1 > 0.1439
40,248,359
$
5,791,739
100.0%
49.5%
4
5
6
7
_
8
9
�
10
11
Demand
785,341
$
7,814,138
Demand
785,341
$
5,913,614
12
13
Commodity
40,248,359
$
3,891,211
100.0%
Commodity
40.248,359
$
5,791,739
100%
14
15
Total
$ 11,705,350
100.0%
Total
$
11,705,353
100.0%
16
17
Settlement Rate Impact $
3
Privileged and Confidential Atmos Energy Corporation
Attachment B page 3 of 8
Lubbock Distribution System
Comparison of Modified and Proposed Residential Rates
Test Year Ended December 31. 2008
Modified Rates Proposed Rates
Line
Charge i
Bills /
Comm. %
Rev. %
Charge 1
Bills !
Comm. %
Rev. %
No.
Min Max Rate
Volumes
Mar in
of Total
of Total
Min Max Rate
Volumes
Margin
of Total
of Total
1
Customer Charge
$ 7.53
788,881
$ 5,940,271
50.2%
$ 7.53
788,881
$ 5,940,271
43.8%
2
3
Commodity Charge
1 > $ 0.14390
41,025,134
$ 5,903,517
100.0%
49.8%
1 > $ 0.17162
41,025,134
$ 7,040,734
92.4%
51.9%
4
5
True -up 2008
- $ 0.01479
38,917,883
$ 575,595
7.6%
4.2%m
6
7
_
8
9
> 0
10
11
Demand
788,881
$ 5,940,271
Demand
788,881
$ 5,940,271
12
13
Commodity
41,025,134
$ 5.903,517
100.0%
Commodity
41,025,134
$ 7.616,329
100.0%
14
"
15
Total
$ 11,843,787
100.0%
Total
$13,556,600
100.D°!o
16
17
Proposed Margin Increase $ 1,712,812
Privileged and Confidential Atmos Energy Corporation
Lubbock Distribution System
Comparison of Current and Modified Commercial Rates
Test Year Ended December 31, 2008
Current Rates
Line Charge / Bills! Comm. % Rev. %
No. Min Max Rate Volumes Revenue of Total of Total
Attachment B page 4 of 8
Modified Rates
Charge I Bills i Comm. % Rev. %
Min Max Rate Volumes Revenue of Total of Total
1 Customer Charge
$ 15.75
72,301
$
1,138,734 42.0%
$ 14.52
72,301
$
1,049,804 381%
2
3 Commodity Charge 1 >
$ 0.0950
16,570,551
$
1,574,202 100.0°10 58.0%
1 > $ 0.1004
16,570,551
$
1,663,186 100.0% 61.3%
4
5
6
7
8
9
10
11
Demand
72,301
$
1,138,734
Demand
72,301
$
1,049,804
12
13
Commodity
16.570,551
$
1,574,202 100.0%
Commodity
16,570,551
$
1,663,186_ 100%
14
15
Total
$
2,712,936 100.0%
Total
$
2,712,990 100.0%
16
17
Proposed Revenue Increase $
54
Privileged and Confidential Atmos Energy Corporation
Attachment B page 5 of 8
Lubbock Distribution System
Comparison of Modified and Proposed Commercial Rates
Test Year Ended December 31, 2008
Modified Rates Proposed Rates
Line
Charge 1
Bills 1
Comm. %
Comm, %
Rev. %
Charge 1
Bills 1
Comm. %
Comm. %
Rev. %
No.
Min Max Rate
Volumes
of Total
Revenue
of Total
of Total
Min Max Rate
Volumes
of Total
Revenue
of Total
of Total
1
Customer Charge
$ 14.52
72,301
$ 1,049,804
36.7%
$ 14.52
72,301
$ 1,049,804
30.8%
2
3
Commodity Charge
1 > $ 0.1004
16,570,551
100.0°1
$ 1,663,186
100.0%
61.3%
1 > $ 0.12820
16,570,551
100.0%
$ 2,124,345
90.1%
62.4%
4
5
True -up 2008
$ 0.01512
15,400,381
$ 232,654
9.9%
U%
6
7
8
9
10
11
Demand
72,301
$ 1,049,804
Demand
72,301
$ 1,049,804
12
13
Commodity
16,570,551
100.0%
$ 1,663,186
_ 100.0%
Commodity
16570,551
100%
$ 2,357,198
100%
14
15
Total
$ 2,712,990
100.0%
Total
$ 3,407.003
100.0%-
16
17
Proposed Revenue Increase
$ 694,012
Privileged and Confidential Atmos Energy Corporation
Attachment B page 6 of 8
Lubbock Distribution System
Comparison of Current and Proposed Industrial Rates
Test Year Ended December 31, 2008
Rates Proposed Rates
Line
Bills 1
Comm. %
Comm. %.
Rev. %.
Bills /
Comm. %,
Comm_ %
Rev. %
No.
Min
Max Charge f Rate
Volumes
of Total
Revenue
of Total
of Total
Min Max Charge I Rate
Volumes
of Total
Revenue
of Total
of Total
1
Customer Charge
$ 68.96
747
$ 51,513
18.0%
$ 88.11
747
$ 54,324
16.5%
2
3
True -up 2008
$ 9.07
631
$ 5,723
1.5%
4
5
1" Block 1 -
100 $ 0.0965
216,527
7.0%
$ 24,895
8,9%
7.3%
1 - 100 $ 0.11553
216,527
7.0%
$ 25,015
7.8%.
6.4%
6
2' Block 101 -
$ 0.0750
2,857.163
93.0%
$ 214,287
91,1%
74.7%
101 - $ 0.09403
2,857,163
93.0%
$ 268,659
84.0%
68.9%
7
8
True -up 2008
3 0.00971
2,686,964
$ 26,110
6.7%
9
10
11
Demand
747
$ 51,513
Demand
747
$ 70,047
12
13
Commodity
3,073„690
100.0%
$ 235,182
100.0%
Commodity
3,073.690
100%
$ 319,784
92%
14
15
Total
$ 286.695
100.0%
Total
$ 389,832100.007.
16
17
Proposed Revenue Increase
$ 103,136
Privileged and Confidential Atmos Energy Corporation
Lubbock Distribution System
Comparison of Current and Proposed Public Authority Rates
Test Year Ended December 31, 2008
Current Rates
Attachment B page 7 of 8
Proposed Rates
Line . Charge I Silts 1 Comm. % Rev, % Charge ! ®ills I Comm. % Rev. %
No. Min Max Rate Volumes Revenue of Total of Total Min Max Rate Volumes Revenue of Total of Total
1
Customer Charge
$ 47.22
1,932
$
91,229 31.3%
$ 58-97
1,932
$ 113,930
28.7%
2
3
True -up 2008
$ 6.30
1,60$
$ 10,130
2.6010
4
5
Commodity Charge 1 >
$ 0.0910
2,202,767
$
200,452 100.0% 68.7%
1 > $ 0.11364
2,202,767
$ 250,322
91.8% 63.1%
6
7
True -up 2008
- $ 0.01043
2,134,084
$ 22,258
8.2% 5.6%
8
9
10
11
Demand
1,932
$
91,229
Demand
1,932
$ 124,060
12
13
Commodity
2,202,767
$
200,452 100.0%
Commodit�r
2,202,767
$ 272,581
100%
14
—
15
Total
$
291,681 100.0%
Total
$ 396,641
100.0%
16
17
Proposed Revenue Increase
$ 104,961
Privileged and Confidential Atmos Energy Corporation
Attachment B page 8 of 8
Lubbock Distribution System
Comparison of Current and Proposed State Institution Rates
Test Year Ended December 31, 2008
Current Rates Proposed Rates
Line Charge I Bills I Comm. % Rev. % Charge ! Bills / Comm. % Rev. %
No. Min Max Rate Volumes Revenue of Total of Total Min Max Rate Volumes Revenue of Total of Total
1
Customer Charge
$ 44.41
576
$
25,580
26.1%
$ 55.46
576
$ 31,945
24,0%
2
3
True -up 2008
$ 5.91
481
$ 2,843
2.1%
4
5
Commodity Charge 1 >
$ 0.08645
837,085
$
72,366
100.0% 73.9%
1 > 0 $ 0.10795
837,085
$ 90,363
91.8% 67.8%
6
7
True -up 2008
$ 0.01042
771,564
$ 8,040
8.2% 6.0%
8
9
10
11
Demand
576
$
25,580
Demand
576
$ 34,788
12
13
Commodity
837,085
$
72,366
100.0%
Commodity
837,085
$ 98,403
10O%
14
15
Total
$
97,946
100.0%
Total
$ 133,191
100.0%
16
17
Proposed Revenue Increase
$ 35,245
Privileged and Confidential Atmos Energy Corporation
Resolution No. 2009-RO413
Attachment C
ATMOS ENERGY CORP., LUBBOCK RATE DIVISION
SETTLEMENT SUMMARY
TEST YEAR ENDING DECEMBER 31, 2008
The following is a summary of items adopted as part of the negotiated settlement in the 2008 RRM filing.
Operation and Maintenance Expense 6,283,061
Rate Base 54,733,508
Depreciation and Amortization Expense* 3,738,396
The Company's Shared Services Depreciation rates approved by the Texas Railroad Commission in Gas
Utility Docket 9762 are also adopted as part of the negotiated settlement.
The following is a summary of the rates adopted by the negotiated settlement segregated into true up
and prospective components.
Subtotal
State Institution - Prospective
State Institution - True Up
Subtotal
Public Authority - Prospective
Public Authority - True Up
Subtotal
$ 95.18
0.12524
Commodity
0.10795
Customer
Charge
$ 61.37
Charge
(per ccf)
Residential - Prospective
7.53
0.17162
Residential - True Up
0
0.01479
Subtotal
$ 7.53
0.18641
Commerical - Prospective
14.52
0.12820
Commerical - True Up
0
0.01512
Subtotal
$ 14.52
0.14332
Blocks Block 2
Industrial - Prospective
86.11
0.11553 0.09403
Industrial - True Up
9.07
0.00971 0.00971
Subtotal
State Institution - Prospective
State Institution - True Up
Subtotal
Public Authority - Prospective
Public Authority - True Up
Subtotal
$ 95.18
0.12524
55.46
0.10795
5.91
0.01042
$ 61.37
0.11837
58.97
0.11364
6.30
0.01043
$ 65.27
0.12407
0.10374