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HomeMy WebLinkAboutResolution - 2008-R0179 - Allow Gas Utility Rate Change - Atmos Energy - 05/08/2008Resolution No. 2008—RO179 May 8, 2008 Item No. 6.1 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. 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 for gas services within the municipal boundaries of the City of Lubbock on April 28, 2008; 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 rates to the retail customers and have requested that the change in retail utility rates be allowed to take effect without delay; NOW THEREFORE BE IT ORDERED AND RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: 1. THAT, pursuant to the applicable provisions of the TEXAS UTILITIES 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 as outlined in its Statement of Intent filed with the City of Lubbock on April 28, 2008 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 ORDERED AND RESOLVED by the City Council this 8th day of May, fl: (-100" DAVID A. ILLER, MAYOR ATTEST: Reber a Garza, City Secretar APPROVED AS TO CONTENT: Lee Xriit Dumbauld, City Manager APPROVED AS TO FORM: Matt ew L. Wade, Natural Resources Attorney mlw/ccdocs/Res- Rate Resolution (Atmos)04.30.08 Page 2 of 2 t TMOS energy RFCFIVED APR 2 8 7008 U i r bi*'rlC jAJJY t-CSB4CK, TEXAS April 28, 2008 Mrs. Lee Ann Dumbauld Mr. Jeff` Yates City of Lubbock 1.025 13th Street Lubbock, TX 79401 Subject: Atmos Statement of Intent to change gas rates Dear Lee Ann and Jeff, Enclosed is the Atmos Statement of Intent to change gas rates for the City of Lubbock s pursuant to our agreement finalized on Friday. A highlight of the statement is the new Conservation and Customer Value Plan (CCVP) Rider that begins a new era in gas utility ratemaking in Lubbock. Some of the benefits of the CCVP include stable and predictable earnings for Atmos, reductions in ROE and capital structure and other items which will result in lower revenue requirements paid by our customers, and prescribed rate malting variables which will lower rate case review costs. My thanks to the City, especially Jeff and his team for their perseverance and professionalism. Sincerely, Gary Gregory Enclosure cc: file le Atmos Energy Corporation P.O. Rox I I' 1, 1.ubbock,'Texas 79408 FR(Hr-799-4495 atmusenergyxom Page 1 of 2 STATEMENT OF INTENT TO CHANGE GAS RATES Atmos Energy Corp., West Texas Division (Atmos), a "gas utility" as defined by Section 101.003(7) of the TEXAS UTILITIES CGDE ("TUC"), hereby states its intent to implement the revised gas tariffs attached hereto as Exhibits A and B and incorporated herein to be effective for gas service within the city limits of Lubbock., Texas (hereinafter the "City") on May S, 2008, or 35 days after filing with the City, whichever is later, unless expressly approved by ordinance or resolution by the City Council of the City of Lubbock prior to the proposed effective date. The proposed revisions and additions to the current Atmos rate schedules are indicated by bold print. New tariffs are designated as such in the page border. Summary of Proposed Changes Atmos proposes to institute a more formulaic methodology in the calculating and testing of the Company's earned rate of return and reduce the allowed Return on Equity from 11.25% to 9.60%. The proposed tariffs will also provide for auditable, annual financial reporting within a framework that is consistent with the promotion of energy conservation and efficiency. An affidavit attesting to the accounting standards incorporated and in use by Atmos is provided in Exhibit E. All previous interim increases and/or decreases have been incorporated in the proposed tariffs. The Gas Cost Adjustment Rider has been modified to include the recovery of Bad Debt Gas Cost. The Company also proposes a new Rider to support the Conservation and Customer Value Plan (CCVP) 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 band of earnings. (Please see Exhibit B). For comparative purposes, existing tariffs are shown in. Exhibit C. Expected Revenue Change And Number of Customers Affected The proposed changes set out in Exhibit A are expected to be revenue neutral and result in no increase or decrease in the Company's annual gross revenues and do not increase or decrease currently approved rates except for adjustments provided for in Exhibit B for future filings. 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. Page 2 of 2 Public Notice As there is no change in Atmos' final rates to customers, Atmos offers that notification is unnecessary to the public of the currently proposed changes in its gas rates; however, future changes will be noticed to the public in accordance with Exhibit B. 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. Bili Guy Vire President of Rates and Regulatory Affairs 5110 80`h Street, P.O. Box 1121 Lubbock, Texas 74408-1121 Tele, (806) 798-4457 Fax (806) 798-4494 Relief Requested Wherefore, Atmos 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 APRIL 28, 2008. Atmos Energy Corp., West Texas Division Lubbock Rate Division - ICL Exhibit A Page I of 6 RESIDENTIAL CAS SERVICE (RES) 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: $ 9.95 Commodity Charge: All Consumption S 0,09668 per Cef The Lubbock System Gas Cost Adjustment Rider applies to this schedule. The Lubbock Weather Normalization Adjustment Rider applies to this schedule The Lubbock System Conservation and Customer Value Plan (CCVP) Adjustment Rider applies to this schedule, EFFECTIVE: For Bills Rendered on or after May 8, 2008 inside city limits ISSUED BY, C.W. Guy, Vice President— Rates & Regulatory Affairs AUTHORIZATION: Atmos Energy Corp., Vilest Texas Division Lubbock Rate Division — ICL Exhibit A Page 2 of G COMMERCIAL GAS SERVICE (COM) 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 an alternative supply of natural gas. MONTHLY RATE Customer Charge: I5.75 Commodity Charge: All Consumption $0.0950 per Ccf The Lubbock System Gas Cost Adjustment Rider applies to this schedule The Lubbock System Weather Normalization Adjustment Rider applies to this schedule The Lubbock System Conservation and Customer Value Plan (CCVP) Adjustment Rider applies to this schedule. EFFECTIVE: For Bills Rendered on or after May 8, 2008 inside city limits ISSUED BY: C.W. Guy, Vice President — Rates & Regulatory Affairs AUTHORIZATION; Atmos Energy Corp., West Texas Division Lubbock Rate Division — ICL Exhibit A Page 3 of 6 SMALL INDUSTRIAL GAS SERVICE (IND) 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 and 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: 5 68.96 Commodity Charge: I s r 1000 $ 0.0965 per Ccf All over 1000 $ 0.075 per Ccf The Lubbock System Gas Cost Adjustment Rider applies to this schedule The Lubbock System Conservation and Customer Value Plan (CCVP) Adjustment Rider applies to this schedule. i EFFECTIVE: For Bills Rendered on or after May 8, 2008 inside city limits ISSUED BY: C.W. Guy, Vice President — Rates & Regulatory Affairs AUTHORIZATION: Atmos Energy Corp., West Texas Division Lubbock Rate Division — ICL Exhibit A Page 4 of 6 STATE INSTITUTION GAS SERVICE (SI) AVAILABILITY 'This schedule is applicable to gas service to state agencies (as provided in Texas Utilities Code, Section 104.241) 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. MONTFILY RATE Customer Charge: S "Al Commodity Charge: All Consumption $ 0.08645 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 System Conservation and Customer Value Plan (CCVP) Adjustment Rider applies to this schedule. EFFECTIVE: For Bills Rendered on or after May 8, 2008 inside city limits ISSUED BY: C. W. Guy, Vice President — Rates & Regulatory Affairs AUTHORIZATION: " Atmos Enemy Corp., West Texas Division Lubbock Rate Division -- ICL Exhibit A Page 5 of 6 PUBLIC AUTHORITY GAS SERVICE (PA) 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 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 Adjustment Rider applies to this schedule The Lubbock System Conservation and Customer Value Plan (CCVP) Adjustment Rider applies to this schedule. EFFECTIVE: For Bills Rendered on or after May 8, 2008 inside city limits ISSUED BY: C. W. Guy, Vice President — Rates & Regulatory Affairs AUTHORIZATION: Exhibit A Page 6 of S FF Atmos Energy Company t. Lubbock Distribution System GAS COST ADJUSTMENT RIDER APPLICATION Gas bills issued under rote schedules to which this rider applies will include adjustments to reflect decreases or increases in purchased gas costs or taxes. Accumulated Deferred Gas Costs shall also be adjusted for gas costs amounts which are uncollectible. Any such adjustments shall he filed with the City's Secretary before the beginning, of rhe 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 = ( GIS + CF) X TF Where: 1. "G", in dollars, is the expected cost of gas for the expected sales billing units. 2. "S". in Ccf as measured at local atmospheric pressure, is the expected sales billing units to be customers in the Company's Lubbock Service area. 3. "CF", in $lCcf as measured at local atmospheric pressure, is the correction factor charge per C. 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. 4. "TF", is a tax factor of 1.0752. Servieg An For Service inside city limits. EFFECTIVE: Bills rendered on and :after May 8. 2008 inside city limits. ISSUED BY: C.W. Goy, Vice President - Rates & Regulatory Affairs U9 E T A R F Atmos Energy Corp., West Texas Division Lubbock Rate Division — ICL Exhibit B CONSERVATION AND CUSTOMER VALUE PLAN (CCVP) A, This Rider is designed to promote gas conservation and stabilize utility earnings while rewarding management efficiency and shall be applicable to the following Rate Schedules: RES COM IND PA S1 B. Annual CCVP rate adjustments: 1. Customers receiving service under this Rider shall have included on each monthly bill, as a line item adjustment to the Customer Charge, a credit or charge resulting from the Conservation and Customer Value Plan ("CCVP" or "CCVP Plan"), The calculation to determine the credit or charge shall be made each CCVP Plan year. The three CCVP Plan years are the three (3) twelve-month periods ending December 31, 2007; December 31, 2008 and December 31, 2009. 2, The Return on Equity (ROE) upper band shall be an authorized ROE of 9.6 percent plus 25 basis points (e.g., authorized ROE of 9.6% plus 25 basis points equals an upper band of 9.85%). 3, The ROE lower band shall be the authorized ROE of 9.6 percent minus 25 basis points (e.g., authorized ROE of 9.6% minus 25 basis points equals a lower band of 9.35%). 4. Historical achieved earnings for each CCVP Plan year shall be calculated consistent with the Regulatory Rules specified in Part D herein. if the calculated historical ROE exceeds the ROE upper band (i.e., 9.85% ROE), 80 percent of any earnings that exceed the calculated upper band ROE plus 100% of the 25 basis point upper band will be translated into an equivalent pretax revenue value and credited to customers and shown as a credit on the monthly bill. The applicability and derivation of such credit will be performed as follows: a. The credit will be expressed on a dollars per Customer basis, using estimated Customer counts for the July through June billing periods subsequent to the CCVP Plan year. b. The credit shall be applicable if the historical achieved ROE exceeds the upper band, The amount credited to customers will be 80% of the incremental earnings revenue equivalent pretax value above the upper band plus 100% of the earnings EFFECTIVE: For Bills Rendered on or alter May 8, 2008 inside city limits ISSUED BY: C. W. Guy, Vice President — Rates & Regulatory Affairs AUTHORIZATION: Page 1 of 6 Atmos Energy Corp., West Texas Division Lubbock Rate Division -- ICL revenue equivalent pretax value of the 25 basis point band. C. The credit will be calculated annually and allocated among all rate classes using the most current rate increase or decrease allocation methodology as approved by the City of Lubbock. d. A true -up reconciliation of the credit shall be calculated, after actual July through June billing volumes are known, and any difference between actual and intended credits shall be recognized in determining the subsequent period credits or surcharges. 5. If the calculated historical achieved ROE in the CCVP Plan Year is less than the lower band (i.e. 9.35% ROE), 80 percent of any earnings that fall short of the lower band ROE plus 100% of the 25 basis point band will be translated into an equivalent pretax revenue value and charged to customers and shown as a surcharge on the monthly bill. The applicability and derivation of such charge will be performed as follows: a. The surcharge will be expressed on a dollars per Customer basis, using estimated Customer count for the July through June billing periods subsequent to the CCVP plan year. b. The surcharge shall be applicable if the historical achieved ROE falls short of the lower band. The amount charged to customers will be 80% of the incremental earnings revenue equivalent pretax value below the lower band of the ROE plus 100% of the earnings revenue equivalent pretax value of the 25 basis point band. C. The surcharge will be calculated annually and allocated among all rate classes using the most current rate increase or decrease allocation methodology as approved by the City of Lubbock. d, The surcharge will be limited, as necessary, to conform with the Operations and Maintenance Expense percentage limitation set forth in paragraph 7(a), below. e. A true -up reconciliation of the surcharge shall be calculated, after actual July through June billing volumes are known, and any difference between actual and intended surcharge amounts shall be recognized in determining the subsequent period credits or surcharges. 6. If the calculated historical achieved ROE is greater than the lower band and less than the upper band, there will be no charge or credit added to customers' monthly bills for that CCVP Plan Year. 7. The Company may further adjust rates for the Rate Effective Period to recognize the impact upon ROE of known and measurable changes to operating and maintenance costs occurring as of December 31 of the CCVP Plan Year including, but not limited to known and measurable changes in: payroll and compensation expense, medical and other employee benefit expense, pension expense, insurance costs, materials and supplies, bad debt cost, transportation and building and lease costs for the Rate Effective Period. Provided, however, that adjustments may only be made for costs that are reasonable, prudently incurred and necessary for the provision of utility services. 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 EFFECTIVE: For Bills Rendered on or after May 8, 2008 inside city limits ISSUED BY: C.W. Guy, Vice President — Rates & Regulatory Affairs AUTHORIZATION: Page 2 of 6 Atmos Energy Corp., West Texas Division Lubbock Rate Division -- ICL depreciation and amortization expense and accumulated deferred income taxes. In calculating the Company's known and measureable changes for prospective CCVP adjustment purposes, the following limitations will apply, a. Operating and Maintenance expenses for the Rate Effective Period cannot increase more than the change in annual CPI percentage as established in the 4`h calendar quarter of each. Evaluation Period, relative to the 4`h quarter of the preceding year, subject only to possible exception for force majeure events beyond any reasonable control of the Company, The Operation and Maintenance expense for the 2007 CCVP Evaluation Period will be the actual per books O&M expenses. The percentage increase in adjusted Operation and Maintenance expenses for the 2008 Rate Effective Period and subsequent Rate Effective Periods cannot exceed the previous year's Evaluation Period amount plus CPI percentage per year, without agreement of the City of Lubbock and Atmos that force majeure events beyond any control of management caused such excess expenses. b. The Company also shall provide a schedule demonstrating the "proof of Revenues" relied upon to calculate the proposed rate for the hate Effective Period. The proposed rates shall conform as closely as is practicable to the revenue allocation principles approved by the regulatory authority in its most recent order. C. Conservation Program Funding: To promote conservation -related activities, in each CCVP Plan year, the Company commits to annual funding of conservation expenditures of 112 % 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 October 1, 2008 and August 1 st each year thereafter through August 1, 2010. b. 50% of the expenditures made by Atmos under part (a) will be considered in determining the Company's annual earnings for CCVP rate adjustment purposes D. Earnings Calculation Rules: The Company will make a filing within 90 days of the December 31 calendar year of each CCVP Plan year providing the earnings calculation supporting the CCVP rate credit or charge calculation. The resulting credit or charge, if applicable, will be reflected in the billing months of July through June. The filing will include detailed calculations and supporting workpapers for each element of rate base and operating income as well as calculations of the proposed rate credits or surcharges. Earnings shall be calculated for the historical calendar year within the Lubbock Rate Area, employing the following methodology and ratemaking adjustments: a. Rate base to include the 13 month average investment in: Plant in Service, on ISSUED BY: C.W. Guy, Vice President— Rates & Regulatory Affairs AUTHORIZATION: Page 3 of 6 Atmos Energy Corp., West Texas Division Lubbock Rate Division — ICL Accumulated Depreciation, Accumulated Deferred Income Taxes, Customer Deposits, Customer Advances and Materials and Supplies, as well as allocated shared service business unit amounts for same (subject to allocation adjustment as noted in part c.iii). Cash Working Capital shall be deemed equal to zero dollars for purposes of CCVP Plan calculations. All adjusting and correcting entries made to the recorded investment in net plant attributed to Lubbock shall be fully explained and considered in the determination of rate base b. Cost of capital shall reflect the 13 month average consolidated Atmos debt ratio and cost of debt, with the debt ratio to be limited to no less than 52 percent of total capital. c. Operating Income shall be based upon recorded CCVP Plan year revenues and expenses and an actual per books year approach, including expense amounts allocable to the Lubbock Rate Area from shared service business units, subject to only the adjustments specified herein, as follows: i. Adjustments necessary to exclude or normalize abnormal, non-recurring or out of period transactions included in recorded operating income accounts, including but not limited to recorded revenue amounts associated with prior year CCVP rate credits and surcharges. Each adjustment shall be clearly identified and explained. ii. Adjustments to exclude expense amounts incurred for employee spousal travel, meals and entertainment; air travel costs exceeding published commercial coach air fares; hotel rooms exceeding $250 per night; alcoholic beverages; tickets to or sponsorship of entertainment, sports, an or cultural events; amounts for social club dues and fees; and all amounts excludable pursuant to Section E(5) of this tariff. iii. Adjustments to limit the change in adjusted O&M expenses for each Evaluation Period and for the corresponding Rate Effective Period to not exceed the change in CPI for each CCVP Plan Year, as described in B, hereinabove. iv. Shared service general office and customer service cost allocations (expense and rate base) shall be restated to conform to Mid -Tex four -factor allocations calculated as of October 1 of the CCVP Plan year. v. Depreciation and amortization based upon average plant investment and accrual rates affirmatively approved by Lubbock in past rate proceedings. vi. Revenue takes synchronized to match revenue recoveries of same. vii. Income taxes calculated with recognition of adjusted taxable income consistent with the rules stated herein and with synchronization of deductible interest based upon Rate Base (part a) and Cost of Capital (part b) stated herein. 3. Trial balance reports and detailed electronic spreadsheet analyses of monthly recorded expenses and rate base components by FERC Subaccount shall be submitted at the time of the required filing, along with copies of all account analyses and other documents relied upon by Atmos in preparing its filing. EFFECTIVE: For Bills Rendered on or after May 8, 2008 inside city limits ISSt1ED BY: C.W. Guy, Vice President — Rates & Regulatory Affairs AUTHORIZATION: Page 4 of 6 Atmos Energy Corp., West Texas Division Lubbock Rate Division — ICL 4. A company officer with knowledge of the subject matter shall attest to the accuracy completeness of the Company's filing. E. Notice and Review Procedures: 1. The City 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 "Review Period"). The Company shall provide all supplemental information as may be requested to ensure adequate review by the City. The Company shall not unilaterally impose any limits upon the provision of supplemental information and such information shall be provided within ten (10) business days of being requested by the City. The City may adjust the earnings calculations as it deems necessary in order to bring the earnings calculations into compliance with the CCVP Plan. 2. Following the Review Period there shall be a thirty (30) day response period (the "Response Period") during which the City and the Company shall work collaboratively and in good faith to seek agreement on the proposed adjustments to the Company's earning calculations and proposed rates. if agreement has been reached by the Company and the City, the City shall take appropriate action to reflect the agreement reached by the City and the Company. In the event the parties are unable to reach an agreement during the Response Period, the City may take any action authorized by law, including, but not limited to, ordering appropriate rates and tariffs to be implemented by the Company. The Company shall have the right to appeal the City's order or, in the event the City fails to act within thirty (30) days following the expiration of the Response Period, to the Railroad Commission of Texas. Upon the filing of any appeal, the Company may implement the proposed CCVP rate adjustment, subject to refund, only upon complying with the provisions of Section 104.109 TEx. UT1L. Core ANN. 3. 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). 4. Notice of the annual CCVP filing shall be provided pursuant to Section 104.103, Tlx. UTII.. 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 City; and e. the Company's address, telephone number and website where information concerning the proposed rate adjustment may be obtained. 5. The Company shall bear its own costs in preparation of its annual CCVP filing and incurred during the Review and Response Periods and shall not include any external legal, expert or consultant costs to prepare and/or provide supportive information related ISSUED BY: C.W. Guy, Vice President — Rates & Regulatory Affairs AUTHORIZATION: Page 5 of 6 Atmos Energy Corp., West Texas Division Lubbock Rate Division — ICL to its filing within the calculation of earnings pursuant to Part D hereinabove. The Company shall reimburse the City for any and all reasonable expenses incurred by the City in performance of its duties as a regulatory body investigating and reviewing any rate filing by the Company during the Review and Response Periods. This reimbursement by the Company is in addition to and in conjunction with any reimbursement authorized by state law including, but not limited to, Chapters 102, 103 and 104 of the Texas Utilities Code. Any reimbursements in excess of $30,000 per year will be included in cost of service for the Lubbock Rates Area. 6. Nothing contained herein shall be considered a waiver of any right or remedy available to the City under state law. Furthermore, nothing contained herein shall be considered any a waiver or surrender of the City's original jurisdiction over the rates and tariffs of the Company within the municipality. Definitions: a. The Evaluation Period is defined as the twelve month period ending December 31, of each calendar year. The initial Evaluation Period shall be, the calendar year 2007. b. 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. c. C.PI percentage shall mean the year over year percentage change in the 4t' quarter Texas Consumer Price Index as published by the Texas Comptroller's Office. EFFECTIVE: For Hills Rendered on or after May 8, 2008 inside city limits ISSUED BY: C.W. Guy, Vice President - Rates & Regulatory Affairs AUTHORIZATION: Page 6 of 6 Atmos Energy Corporation Lubbock Proposed CCVP O&M True -Up EXAMPLE OF PROPOSED CAP CALCULATION Deviation from Maximum Maximum Allowed Maximum Allowed Allowed O&M O&M Base for December 31 O&M O&M for Forward O&M for Previous Note: (+) Reflects Date Annual Filing CPI% Actuals Look & Annual Base Year True -up Unrecovered O&M (In thousands excerpt percentages) December 31, 2007 4A%s 6,000 June 1, 2008 6,000 4.0°x6 6,240 6,000 0 (First filing) December 31, 2008 5.0% 7,000 April 1, 2009 6,240 5.0% 6,552 6,240 +760 December 31, 2009 4.2%Q 6,500 April 1, 2010 6,500 4.2% 6,773 6,500 (52) Atmos Energy Corporation Lubbock Distribution System Exhibit C Page 1 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 service to premises with an alternative supply of natural gas. MONTHLY RATE Customer Charge. $ 9.45 2004 GRIP Charge: S 1.21 2005 rate reduction: ($0.71) Total Customer Charge: S9,95 Commodity Charge: All Consumption $ 0.0966$ per Ccf The West Texas System Gas Cost Adjustment Rider applies to this schedule except for service inside City limits of Odessa. The Lubbock System Weather Normalization Adjustment Rider applies to this schedule The Lubbock Rate Division 2004 and 2005 GRIP Adjustments apply to this schedule. EFFECTIVE: Sills rendered on and after October 1, 2006 -Inside City Limits ISSUED BY: C.W. Guy, Vice President— Rates & Regulatory Affairs Atmos Energy Corporation Exhibit C Lubbock Distribution System Page 2 of 5 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 an alternative supply of natural gas. MONTHLY RATE Customer Charge: $ 14.50 2004 GRIP Charge. $ 3.09 2005 rate reduction: S(2.24) Total Customer Charge: $ 1.75 Commodity Charge: All Consumption $ 0.095 per Ccf The West Texas System Gas Cost Adjustment Rider applies to this schedule except for service inside city limits of Odessa. The Lubbock System Weather Normalization Adjustment Rider applies to this schedule. The Lubbock Rate Division 2004 and 2005 GRIP Adjustments apply to this schedule. EFFECTIVE: Bills rendered on and after October 1, 2006 -Inside City Limits ISSUED BY: C. W, Guy, Vice President — Rates & Regulatory Affairs Atmos Energy Corporation Exhibit C Lubbock Distribution System page 3 of 5 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 outer similar type uses. This schedule is not available for service to premises with an alternative supply of natural gas. MQNTHLLY RATE Customer Charge: $41.00 2004 GRIP Charge: $ 17.29 2005 rate reduction S01.071 Total Customer Charge: $ 47.22 Commodity Charge: All Consumption S 0.091 per Ccf The West Texas System Gas Cost Adjustment Rider applies to this schedule except for service inside city limits of Odessa. The Lubbock System Weather Normalization Adjustment Rider applies to this schedule. The Lubbock Rate Division 2004 and 2005 GRIP Adjustments apply to this schedule. EFFECTIVE: Bills rendered on and after October 1, 2006 -Inside City Limits ISSUED BY: C. W, Guy, Vice President — Rates & Regulatory Affairs Atmos Energy Corporation Exhibit C Lubbock Distribution System Page 4 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 and 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. MONLILLY RATE Customer Charge: $ 55.00 2004 GRIP Charge: $ 38.82 2005 rate reduction. $(24.86) Total Customer Charge: $ 68,96 Commodity Charge: Consumption: 0-1000 Ccf $ 0.0965 per Ccf All over 1000 Ccf S 0.0750 per Ccf The West Texas System Gas Cost Adjustment Rider applies to this schedule except for service inside city limits of Odessa. The Lubbock Rate Division 2004 and 2005 GRIP Adjustments apply to this schedule. .EFFECTIVE: Bills rendered on and after October 1, 2006 -Inside City Limits ISSUED BY: C,W, Guy, Vice President -- Rates & Regulatory Affairs I Atmos Energy Corporation Exhibit C Lubbock Distribution System Page 5 of 5 STATE INSTITUTION GAS SERVICE AVAILABILITY I This schedule is applicable to gas service to state agencies (as provided in Texas Utilities Code, Section 104.201) 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. I MONTHLY RATE Customer Charge: $ 38.95 2004 GRIP Charge: $ 15.18 2005 rate reduction: $(9.72) Total Customer Charge: $ 44.41 � I I E Commodity Charge: All Consumption S 0.08645 per Ccf I I I The West Texas System Gas Cost Adjustment Rider applies to this schedule except for service inside city limits of Odessa. The Lubbock System Weather Normalization Adjustment Rider applies to this schedule. The Lubbock Rate Division 2004 and 2005 GRIP Adjustments apply to this schedule. s EFFECTIVE: Bills rendered on and after October 1, 2006 -inside City Limits ISSUED BY: C.W. Guy, Vice President - Rates & Regulatory Affairs Exhibit D Page 1 of I AFFIDAVIT QF DANIEL, M, PkIF71FRF Before me, the undersigned authority, on this dste personally appeared Daniel M. Meziere, known to me to be the person whose name is subscriber] below, and being by nie first duly swom, stated upon oath as follows: 1. "My name is Daniel M. Meziere, l am Director of Accounting Sorvices for Atmos Energy Corporation (the "Company'% a position i assumed in 2002. 1 havc worked in the energy industry for almost 20 years in a variety of accounting and finance positions. 1 am u certified public accountant in the State of Oklahoma. € am fully competent to make this aflidztvit, and each statement of fact herein is true of my own personal knowledge." 2. "Ibe Company keeps its books and records in accordance with the Rules of the Railroad Commission of Texas. and in accordance with the Federal F?nergy Regulatory Cormnission's (FERC) Uniform System of Accounts (USDA) prescribed for Natuna! Gas Companies subject to the Proviiiom of tate Natural flus Act (as amended from time to time) (FERC USDA) for all operating anti reporting purposes, utsless authudzrxf to depart from Such systent of aceountti by the applicable regulawry authorities." Daniel M. Meziere SWOWN AND SUONCRI<BED before me this the j!?_. day of May, 2007. Notary Public, State of r ECOW 19tttxry DbM r OWY P+r • STATE OF TDD W COTO*dm FSO" M�oroh Ob �T I ,ATMOS energy April 28, 2008 Atmos Energy Corporation 5110 80`" Street Lubbock, texas, 79424 Tel: 808-796-4451 Fav "-798-4494 Re: Atmos Energy, West Texas Division Statement of Intent to Change Rates in the City of Lubbock. With respect to any direct or indirect costs arising from the use of outside services relative to any non -Lubbock rate proceedings; all such costs will be excluded from the rates set for Lubbock, the cost of service for Lubbock and any surcharges to recover same. If you have any questions, please feel free to contact me. Yours truly, Gary Gregory TMOS energy April 28, 2008 Atmos Ensrgy Corporation 5110 ac Street Lubbock, Texas, 79424 Tet: SM798-4451 Fax Bo6-798-+1494 Re: Atmos Energy, West Texas Division Statement of Intent to Change Rates in the City of Lubbock. As previously agreed, and as a part of the approval of the CCVP and attendant Statement of Intent; with the initial filing for the 2007 CCVP (June 1, 2008 filing to be effective October 1, 2008), the residential customer charge will be reduced from $9.95 to $7.00 with an offsetting revenue neutral increase in the Commodity Charge in the rate schedule to offset the revenue impact of reduced Customer Charge. If you have any questions, please feel free to contact me. Yours truly, Gary Gregory