HomeMy WebLinkAboutOrdinance 2840
ORDINANCE NO. 2840
AN ORDINANCE OF THE CITY OF NORTH RICHLAND HILLS, TEXAS,
DENYING THE REQUEST OF ATMOS ENERGY CORP., MID-TEX
DIVISION, FOR AN ANNUAL GAS RELIABILITY INFRASTRUCTURE
PROGRAM (GRIP) RATE INCREASE IN THIS MUNICIPALITY, AS A
PART OF THE COMPANY'S STATEWIDE GAS UTILITY DISTRIBUTION
SYSTEM; APPROVING COOPERATION WITH OTHER CITIES WITHIN
THE ATMOS ENERGY CORP., MID-TEX DIVISION DISTRIBUTION
SYSTEM AS PART OF THE A TMOS CITIES STEERING COMMITTEE
(ACSC); AUTHORIZING ACSC TO HIRE LEGAL AND CONSULTING
SERVICES AND TO NEGOTIATE WITH THE COMPANY AND DIRECT
ANY NECESSARY LITIGATION; AUTHORIZING INTERVENTION AS
PART OF ACSC IN ANY APPEAL OF THE CITY'S ACTION TO THE
RAILROAD COMMISSION; APPROVING COSTS INCURRED AS
REASONABLE AND PROVIDING A REQUIREMENT FOR PROMPT
REIMBURSEMENT OF COSTS; FINDING THAT THE MEETING AT
WHICH THIS ORDINANCE IS PASSED IS OPEN TO THE PUBLIC AS
REQUIRED BY LAW; AND PROVIDING FOR NOTICE OF THIS
ORDINANCE TO ATMOS ENERGY CORP., MID-TEX DIVISION.
WHEREAS, on or about December 17, 2004, Atmos Energy Corp., Mid-Tex
Division, (the "Company") filed with the City of North Richland Hills ("City"), a request
pursuant to Texas Utilities Code § 104.301 for an annual gas reliability infrastructure
program (GRIP) rate increase for customers on the Company's statewide gas utility
system to be effective February 15, 2005, and subsequently extended that effective
date until March 4,2005, for some cities on its system; and
WHEREAS, the City has exclusive original jurisdiction to evaluate the Company's
request as it pertains to the distribution facilities located within the City, pursuant to
Texas Utilities Code §§ 102.001 (b) and 103.001; and
WHEREAS, the City timely acted to suspend the effective date of Atmos'
proposed rate increase; and
WHEREAS, it is reasonable for the City of North Richland Hills to cooperate with
other cities in a coalition of cities in opposition to the Company's filing at the Railroad
Commission ("Commission"), said coalition being knows as Atmos Cities Steering
Committee ("ACSC"), in any appeal of the cities' actions to the Commission; and
WHEREAS, the Gas Utility Regulatory Act grants local regulatory authorities the
right to intervene in rate proceedings filed at the Railroad Commission; and
WHEREAS, the Texas Utilities Code § 103.022 provides that costs incurred by
the City in ratemaking activities are to be reimbursed by the regulated utility; and
WHEREAS, ACSC's rate case expenses incurred in this proceeding are
reasonable and should be reimbursed by the Company; and
WHEREAS, counsel for ACSC, upon review of the Company's filing and upon
consultation with various consultants, recommends finding that the Company's proposal
is unjustified, unreasonable and is not in compliance with the GRIP statute (Texas
Utilities Code § 104.301) either in fact or in law; and
WHEREAS, information provided by the Company in response to ACSC's
requests for information indicates that the Company actually decreased per-customer
investment in infrastructure during calendar year 2003, and
WHEREAS, the Company has publicly stated that it will receive substantial profit
in 2005 over that approved by the Commission in GUD No. 9400; and
WHEREAS, the Company's GRIP request fails to "account for growth in numbers
of customers, thereby undercounting the revenues it will receive from its proposed GRIP
rate increase; and
WHEREAS, the Company's GRIP request fails to recognize that GUD No. 9400
rates included profit based on TXU Corporation's capital structure rather than Atmos
Energy Corp.'s current capital structure, which justifies a lower rate of return; and
WHEREAS, the information reviewed by the ACSC consultants indicates that
implementation of the Company's GRIP request would result in further over-earning by
the Company above that approved by the Commission in GUD No. 9400; and
WHEREAS, in consideration of the City taking action before August 12, 2005, on
the currently pending GRIP request, the Company has agreed not to file any additional
GRIP requests before September 15, 2005.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF NORTH RICHLAND HILLS, TEXAS:
SECTION 1. That the Company's GRIP rate increase request is found to be
unjustified, unreasonable and in violation of the GRIP statute and is therefore denied in
all respects. The defects in the request include, but are not limited to, the following: (a)
the Company improperly calculated its 2003 rate case; (b) the Company included in its
calculation projects unrelated to system improvement; (c) the Company failed to
recognize the increased revenues it is not receiving due to increased rates approved by
the Commission in GUD No. 9400 and due to customer growth; (d) information supplied
by the Company indicated that the Company actually decreased its per-customer
investment in infrastructure in calendar year 20043; (e) approval of the Company's
GRIP request would result in over-earning by the Company in the year of
implementation; and (f) the Company has failed to demonstrate that it meets the
statutory prerequisites to qualify for a GRIP rate increase or that its proposed method of
implementation of the BRIP statute constitutes a constitutional application of the statute.
Ordinance No. 2840
Page 2 of 3
SECTION 2. That the City is authorized to cooperate with other cities within the
Company's Distribution System that have formed ACSC to hire and direct legal counsel
and consultants, negotiate with the Company, make recommendations to the City
regarding reasonable rates and to direct any necessary litigation associated with an
appeal of this ordinance to the Commission.
SECTION 3. That the costs incurred by ACSC in reviewing the Company's GRIP
request and representing ACSC in this proceeding are hereby found to be reasonable
and, upon submission to the Company, shall be promptly reimbursed by the Company.
SECTION 4. That the City is authorized to intervene in any appeal of the City's
action filed at the Commission, and to participate in any such appeal as a member of
ACSC.
SECTION 5. That this Ordinance shall be come effective immediately from and
after its passage, as the law and charter in such cases provide.
SECTION 6. That it is hereby officially found and determined that the meeting at
which this Ordinance is passed is open to the public as required by law and that public
notice of the time, place and purpose of said meeting was given as required.
SECTION 7. That a copy of this ordinance, constituting final action on the
Company's application, shall be forwarded to the appropriate designated representative
of the Company within 10 days as follows: Richard Reis, Manager, Gas Regulation,
Atmos Energy Corp., Mid-Tex Division, Lincoln Center II, 18th Floor, 5420 LBJ Freeway,
Dallas, Texas, 75240.
DULY PASSED and approved by the City Council of the City of North Richland
Hills, Texas, on this the 25th day of July, 2005.
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Patricia Hutson, City Secretary
George Staples, City Attorney
Ordinance No. 2840
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