HomeMy WebLinkAboutResolution - 2020-R0384 - 90 day Suspension of Atmos Energy Rate IncreaseResolution No. 2020-RO384
Item No. 7.15
October 27, 2020
RESOLUTION NO. 2020-RO384
RESOLUTION BY THE CITY OF LUBBOCK, TEXAS ("CITY")
SUSPENDING THE EFFECTIVE DATE FOR NINETY DAYS IN
CONNECTION WITH ATMOS ENERGY'S STATEMENT OF INTENT
FILED WITH THE CITIES OF AMARILLO, CHANNING, DALHART,
AND LUBBOCK; FINDING THAT THE MEETING COMPLIES WITH
THE OPEN MEETINGS ACT; MAKING OTHER FINDINGS AND
PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN
EFFECTIVE DATE
WHEREAS, Atmos Energy ("Atmos" or "Company") filed a Statement of Intent with
the City on or about September 30, 2020, to change its rate schedules within the corporate
limits of this municipality, specifically to increase its annual revenue requirement by
approximately $8.3 million, which equates to an increase in annual revenue of approximately
10.8% excluding the cost of gas; and
WHEREAS, the City is a regulatory authority under the Gas Utility Regulatory Act
("GURA") and under Chapter 104, § 103.001 et seq. of GURA has exclusive original
jurisdiction over Atmos's rates, operations, and services within the municipality; and
WHEREAS, in order to maximize the efficient use of resources and expertise in
reviewing, analyzing and investigating Atmos's rate request and its changes in tariffs it is
prudent to coordinate the City's efforts with a coalition of similarly situated municipalities; and
WHEREAS, in matters regarding applications by Atmos to change rates, the cities of
Amarillo, Channing, Dalhart, and Lubbock have in the past coordinated their review of
Atmos's rates and join to form an alliance of cities collectively known as Atmos Texas
Municipalities ("ATM"); and
WHEREAS, Atmos's rate request consists of a voluminous amount of information
including Atmos's rate -filing package, exhibits, schedules, and workpapers; and
1 o f' 4
Atmos West Texas 2020
Statement of Intent
WHEREAS, Atmos's rate application is the Company's first general rate case since
about 2012, and follows annual increases approved under the Gas Reliability Improvement
Program ("GRIP"); and
WHEREAS, Atmos proposed November 4, 2020, as the effective date for its requested
increase in rates; and
WHEREAS, it is not reasonably possible for the City to complete its review of
Atmos's filing by November 4, 2020; and
WHEREAS, the City will need time to review and evaluate Atmos's rate application to
enable the City to adopt a final decision as a local regulatory authority with regard to Atmos's
requested rate increase.
WHEREAS, the City will require the assistance of specialized legal counsel and rate
experts to review the merits of Atmos's application to increase rates; and
WHEREAS, if Atmos submits a corresponding application with the Railroad
Commission of Texas or appeals the City's action to the Railroad Commission of Texas, the
decision of the Railroad Commission of Texas will have a direct impact on the City and its
citizens who are customers of Atmos, and in order for the City's participation to be meaningful
it is important that the City intervene in any such proceedings at the Railroad Commission of
Texas related to Atmos's application to increase rates.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
LUBBOCK, TEXAS THAT:
Section 1. The findings set out in the preamble are in all things approved and incorporated
herein as if fully set forth.
Section 2. Atmos's proposed effective date for its proposed increase in rates is hereby
SUSPENDED for ninety days beyond November 4, 2020, to February 2, 2 02 1.
2 of 4
Atmos West Texas 2020
Statement of Intent
Section 3. The statutory suspension period may be further extended if Atmos does not
provide timely and meaningful, and proper public notice of its request to increase rates, if its
rate -filing package is materially deficient, or by agreement.
Section 4. The City shall coordinate its review of Atmos Energy's proposed increase with
the other cities collectively referred to as the alliance of Atmos Texas Municipalities ("ATM"),
and authorizes intervention in proceedings related to Atmos's Statement of Intent before the
Railroad Commission of Texas and related proceedings in courts of law; and
Section 5. The City hereby orders Atmos to reimburse the City's rate case expenses
consistent with the Gas Utility Regulatory Act and that Atmos shall do so on a monthly basis
and within 30 days after submission of the City's invoices for the City's reasonable costs
associated with the City's activities related to this rate review or related to proceedings
involving Atmos before the City, the Railroad Commission of Texas, or any court of law.
Section 6. Subject to the right to terminate employment at any time, the City retains and
authorizes the law firm of Herrera Law & Associates, PLLC to act as Special Counsel with
regard to rate proceedings involving Atmos before the City, the Railroad Commission of Texas,
or any court of law, and to retain such experts as reasonably may be necessary to review
Atmos's rate application, subject to approval by the City.
Section 7. The City shall review the invoices of the lawyers and rate experts for
reasonableness before submitting the invoices to Atmos for reimbursement.
Section 8. A copy of this resolution shall be sent to Mr. Alfred R. Herrera, Herrera Law &
Associates, PLLC, 4400 Medical Parkway, Austin, Texas 78756, and a courtesy copy to
Atmos's local representative.
Section 9. The meeting at which this resolution was approved was in all things conducted
in strict compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551.
3 of 4
Atmas West Texas 2020
Statement of Intent
Section 10. This resolution shall become effective from and after its passage.
PASSED AND APPROVED this 27th day of October , 2020.
FIN 01Cki1P
Reb cca Garza, City Sec
APPROVED AS TO CONTENT:
W. Jarr Atkinson, City Manager
APPROVED AS TO FORM:
s, eputy City Attorney
4 of 4
DANIEL M. POPE, MAYOR
Rtmos West Texas 2020
Statement of Intent
AGENDA INFORMATION SHEET
ITEM NO.
SUSPENSION OF ATMOS ENERGY'S PROPOSED EFFECTIVE DATE
RELATED TO ITS REQUEST TO INCREASE RATES SUBMITTED
TO THE CITY ON SEPTEMBER 30, 2020
BACKGROUND
On about September 30, 2020 Atmos Energy Corporation ("Atmos" or "Company") filed
a Statement of Intent to increase rates within the incorporated areas of the cities of
Amarillo, Lubbock, Dalhart and Channing (collectively the "Atmos Texas Municipalities
("ATM") or "ALDC") in its West Texas Division. Atmos seeks an increase of
approximately $8.3 million in revenues; this equates to an increase in annual revenue of
about 7.7% including the cost of gas and approximately 10.8% excluding the cost of gas.
Atmos proposes an effective date of November 4, 2020, for its increased rates. As is
explained below, the proposed resolution related to Atmos's application to increase rates,
if adopted, suspends Atmos's proposed effective date for the statutory time period of 90
days, to February 2, 2021.
Atmos's application represents its first general rate case since 2012 (GUD No. 10174).
Prior to this filing, Atmos sought annual increases in rates pursuant to the Gas Reliability
Infrastructure Program ("GRIP"). However, Atmos has filed the maximum number of
GRIP filings it is authorized to make pursuant to state law, and thus, to the extent Atmos
seeks to increase it rates, it must do so in a general rate case.
BILL IMPACT:
The effect on a customer's bill under Atmos's proposed rates within the cities, including
the cost of gas, is as follows:
Class of
Customer
Amarillo,
Dalhart and
Channing
Lubbock
Residential
7.88% increase
8.27% increase
Commercial
7.49% increase
6.19% increase
Industrial
3.7% decrease
4.31 % increase
Transportation
5.09% increase
40.96% increase
Public
Authority
5.04% increase
7.86% increase
Note that these figures are inclusive of the cost of gas except for the Transportation class
of customers, for which Atmos does not assess a separate gas -cost charge.
1 of 4
Atmos West Texas Division - 2020 Statement oflntent
Under Atmos's proposed base rates, the effect on a customer's bill from the increase in
base rates, excluding the cost ofgas, is as follows:
Class of
Customer
Amarillo,
Dalhart and
Channing
Lubbock
Residential
10.76% increase
10.76% increase
Commercial
11.98% increase
9.57% increase
Industrial
7.35% decrease
8.89% increase
Transportation
5.09% increase
40.96% increase
Public
Authority
8.46% increase
13.67% increase
Note that Atmos recovers costs directly within Atmos's control, through its base rates.
The price of natural gas is a product of the market and not a cost Atmos can directly
control. Natural gas is a commodity that Atmos purchases in the energy markets and is a
cost passed on to ratepayers through Atmos's purchased -gas adjustment factor, which
Atmos calls its "Rider GCA." Because Atmos recovers those costs it directly controls
through its base rates, the effect on customer's bill from the change in Atmos's base rates
is the better barometer of the impact of Atmos's proposed increase in rates.
REVENUE IMPACT:
Assuming Atmos's proposed increase is approved, the percentage change in revenue for
each of its customer classes within the cities of Amarillo, Dalhart, Channing, and
Lubbock is as shown below:
Amarillo,
Amarillo,
Dalhart and
Dalhart and
Channing
Channing
Lubbock
Lubbock
Revue
Revue
Revenue
Revenue
Customer
Increase
Increase
Increase
Increase
Class(excluding
as(including
as(excluding
as(including
as
Residential
10.8%
7.9%
10.8%
8.3%
Commercial
12.0%
7.5%
9.6%
6.2%
Industrial &
Transportation
0.1 %
0.1 %
22.6%
14.1 %
Public
Authority
8.5%
5.0%
13.7%
7.9%
CURRENT BASE RATES VERSUS PROPOSED BASE RATES:
Atmos proposes to reduce the monthly customer charge for all customer classes while
increasing the consumption charge for all customer classes. The table below shows the
design of Atmos's current base rates and its proposed base rates:
2 of 4
Atmos West Texas Division - 2020 Statement of Intent
Cust.
Class
Amarillo Dalhart and Chan nin
Lubbock
Current
Proposed
$ Change
Chan a
Current
Proposed
Change
Change
Resid.
Customer
Charge
$27.67
$18.00
-$9.67
-34.95%
$27.67
$18.00
-$9.67
-34.95%
Charge per
CCF
$0.09205
$0.30556
0.21351%
231,95%
$0.11738
$0.37265
$0.25527
217.47%
2
Comm.
Customer
Charge
$69.02
$52.00
-$17.02
-24.66%
$69.02
$52.00
-$17.02
-24.66%
Charge per
CCF
$0.11056
$0,20310
$0.8804
76.52%
$0.10640
$20310
$0.8804
76.52%
Indust.
Customer
Charge
$808,18
$535.00
-$237.18
-33.8%
$808.18
$535.00
-$237.18
-3.8%
Charge per
MMBTU
$0.12386
$0.13435
$0,01049
8.47%
$0.08426
$0.13435
$0.05009
59.45%
Trans.
Customer
Charge
$808.18
$535.00
-$237.18
-33.8%
$808,18
$535,00
-$237.18
-33.8%
Charge per
MMBTU
$0.12386
$0.13435
$0.01049
8.47%
$0.08426
$0.13435
$0,05009
59.45%
Pub.
Auth.
Customer
Charge
$200.59
$52.00
-$148.49
-74.06%
$200.59
$52.00
-$148.49
-74.06%
Charge per
MMBTU
$0.11796
$0.26807
$0.15011
127.26%
$0.13740
$0.26807
$0.13067
95.1%
ACTION REQUIRED BY November 4, 2020
The City must take action on Atmos's Statement of Intent by November 4, 2020.
Absent such action, Atmos's rates are deemed approved by operation of law. The City
may deny Atmos's proposed increase, in which case Atmos will file an appeal to the
Railroad Commission of Texas, or the City may suspend Atmos's proposed effective date
for the statutorily allowed time of 90 days to allow the City's representatives to attempt
to reach an agreed -to outcome of Atmos's application to increase rates and avoid, if
possible, litigation at the Railroad Commission. As is noted below, the City's Special
Counsel recommends that the City suspend Atmos's proposed effective date to provide
the City's Special Counsel an opportunity to evaluate Atmos's request and to explore
opportunities for a resolution that avoids a contested proceeding at the Railroad
Commission of Texas.
ATMOS TEXAS MUNICIPALITIES
In the Atmos Energy -West Texas Division, the Atmos Texas Municipalities ("ATM") is
comprised of the municipalities of Amarillo, Channing, Dalhart, and Lubbock. Alfred R.
Herrera with the law firm of Herrera Law & Associates, PLLC, has previously
represented the City as part of this group of cities in rate cases involving Atmos.
3 of 4
limos West Texas Division 2020 Statement of Intent
CITY JURISDICTION TO SET ATMOS'S RATES
Unless a city cedes its original jurisdiction to the Railroad Commission of Texas, the Gas
Utility Regulatory Act § 103.001 grants a city exclusive original jurisdiction over a gas
utility's rates, services, and operations within the city limits.
RATE CASE EXPENSES
Cities by statute are entitled to recover their reasonable rate case expenses from the
utility. ATM's Special Counsel will submit monthly invoices to the coalition -designated
city that will be forwarded to Atmos for reimbursement. No individual city's budget is
negatively affected.
SUSPENSION
Atmos's rate -filing package is voluminous. In order to have time to review Atmos's
application to increase rates, the Council is requested to suspend Atmos's proposed
effective date for ninety (90) days as provided by GURA. It is a virtual impossibility for
the City to set just and reasonable rates without suspending the rate request for ninety
days. Suspension of Atmos's proposed effective date will permit its special regulatory
counsel and experts an opportunity to perform a better review of Atmos's application.
Further, should Atmos's notice prove to be deficient, then the statutory period would be
extended. Lastly, by agreement between the City and Atmos, the statutory suspension
period may be extended.
RECOMMENDATION
It is recommended that the City continue its participation in the Atmos Texas
Municipalities and retain the law firm of Herrera Law & Associates, PLLC to represent
the City's interest in matters related to Atmos's rate case and to advise the City with
regard to Atmos's application, and that, if Atmos either submits its application to the
Railroad Commission of Texas, or appeals the City's final decision to the Railroad
Commission, the City intervene in the proceeding before the Railroad Commission of
Texas, should such proceedings develop, and court appeals, if any.
The recommendation is also to suspend Atmos's proposed effective date of November 4,
2020, for the statutorily allowed period. Assuming Atmos's notice meets the statutory
criteria for sound notice, the suspension period runs until February 2, 2020.
The City must take action no later than November 4, 2020. If the City does not take
action by November 4, 2020, Atmos's proposed rates will be deemed approved by
operation of law, subject to the City's right to hold a hearing to address Atmos's
rate application.
4 of 4
Atmos West Texas Division - 2020 Statement of Intent