HomeMy WebLinkAboutResolution 2014-015 RESOLUTION NO. 2014-015
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORTH
RICHLAND HILLS, TEXAS, DENYING THE RATE INCREASE
REQUESTED BY ATMOS ENERGY CORP., MID-TEX DIVISION UNDER
THE COMPANY'S 2014 ANNUAL RATE REVIEW MECHANISM FILING
IN ALL CITIES EXERCISING ORIGINAL JURISDICTION; REQUIRING
THE COMPANY TO REIMBURSE CITIES' REASONABLE
RATEMAKING EXPENSES PERTAINING TO REVIEW OF THE RATE
REVIEW MECHANISM; AUTHORIZING THE CITY'S PARTICIPATION
WITH ATMOS CITIES STEERING COMMITTEE IN ANY APPEAL FILED
AT THE RAILROAD COMMISSION OF TEXAS BY THE COMPANY;
REQUIRING THE COMPANY TO REIMBURSE CITIES' REASONABLE
RATEMAKING EXPENSES IN ANY SUCH APPEAL TO THE
RAILROAD COMMISSION; DETERMINING THAT THIS RESOLUTION
WAS PASSED IN ACCORDANCE WITH THE REQUIREMENTS OF THE
TEXAS OPEN MEETINS ACT; ADOPTING A SAVINGS CLAUSE; AND
REQUIRING DELIVERY OF THIS RESOLUTION TO THE COMPANY
AND THE STEERING COMMITTEE'S LEGAL COUNSEL.
WHEREAS, the City of North Richland Hills, Texas ("City") is a gas utility customer of
Atmos Energy Corp., Mid-Tex Division ("Atmos Mid-Tex" or "Company"),
and a regulatory authority with an interest in the rates and charges of
Atmos Mid-Tex; and
WHEREAS, the City is a member of the Atmos Cities Steering Committee ("ACSC"), a
coalition of approximately 164 similarly situated cities served by Atmos
Mid-Tex that have joined together to facilitate the review of and response
to natural gas issues affecting rates charged in the Atmos Mid-Tex service
area; and
WHEREAS, pursuant to the terms of the agreement settling the Company's 2007
Statement of Intent to increase rates, ACSC Cities and the Company
worked collaboratively to develop a Rate Review Mechanism ("RRM")
tariff that allows for an expedited rate review process controlled in a three-
year experiment by ACSC Cities as a substitute to the current Gas
Reliability Infrastructure Program ("GRIP") process instituted by the
Legislature; and
WHEREAS, the City took action in 2008 to approve a Settlement Agreement with
Atmos Mid-Tex resolving the Company's 2007 rate case and authorizing
the RRM tariff; and
WHEREAS, in 2013, ACSC and the Company negotiated a renewal of the RRM tariff
process for an additional five years; and
Resolution No.2014-015
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WHEREAS, the City passed an ordinance renewing the RRM tariff process for the City
for an additional five years; and
WHEREAS, the RRM renewal tariff contemplates reimbursement of ACSC Cities'
reasonable expenses associated with RRM applications; and
WHEREAS, on or about February 28, 2014, the Company filed with the City its second
annual RRM filing under the renewed RRM tariff, requesting to increase
natural gas base rates by $45.7 million; and
WHEREAS, ACSC coordinated its review of Atmos Mid-Tex's RRM filing through its
Executive Committee, assisted by ACSC attorneys and consultants, to
investigate issues identified by ACSC in the Company's RRM filing; and
WHEREAS, ACSC attorneys and consultants have concluded that the Company is
unable to justify a rate increase of the magnitude requested in the RRM
filing; and
WHEREAS, ACSC's consultants determined the Company is only entitled to a $19
million increase, approximately 42% of the Company's request under the
2014 RRM filing; and
WHEREAS, the Company would only be entitled to approximately $31 million if it had a
GRIP case; and
WHEREAS, the Company's levels of operating and maintenance expense have
dramatically risen without sufficient justification; and
WHEREAS, the Company has awarded its executives and upper management
increasing and unreasonable levels of incentives and bonuses, expenses
which should be borne by shareholders who received a 23% total return
on investment in 2013; and
WHEREAS, the Company requested a drastically high level of medical expense that is
unreasonable and speculatively based upon estimates; and
WHEREAS, ACSC and the Company were unable to reach a compromise on the
amount of additional revenues that the Company should recover under the
2014 RRM filing; and
WHEREAS, the ACSC Executive Committee, as well as ACSC's counsel and
consultants, recommend that ACSC Cities deny the requested rate
increase; and
WHEREAS, the Company's current rates are determined to be just, reasonable, and in
the public interest.
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BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND
HILLS, TEXAS:
SECTION 1. That the findings set forth in this Resolution are hereby in all things
approved.
SECTION 2. That the City Council finds that Atmos Mid-Tex was unable to justify the
appropriateness or the need for the increased revenues requested in the
2014 RRM filing, and that existing rates for natural gas service provided
by Atmos Mid-Tex are just and reasonable.
SECTION 3. That Atmos Mid-Tex shall reimburse the reasonable ratemaking expenses
of the ACSC Cities in processing the Company's RRM application.
SECTION 4. That in the event the Company files an appeal of this denial of rate
increase to the Railroad Commission of Texas, the City is hereby
authorized to intervene in such appeal, and shall participate in such
appeal in conjunction with the ACSC membership. Further, in such event
Atmos Mid-Tex shall reimburse the reasonable expenses of the ACSC
Cities in participating in the appeal of this and other ACSC City rate
actions resulting from the 2014 RRM filing.
SECTION 5. That 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.
SECTION 6. That if any one or more sections or clauses of this Resolution is adjudged
to be unconstitutional or invalid, such judgment shall not affect, impair, or
invalidate the remaining provisions of this Resolution and the remaining
provisions of the Resolution shall be interpreted as if the offending section
or clause never existed.
SECTION 7. That a copy of this Resolution shall be sent to Atmos Mid-Tex, care of
Chris Felan, Manager of Rates and Regulatory Affairs, at Atmos Energy
Corporation, 5420 LBJ Freeway, Suite 1862, Dallas, Texas 75240, and to
Geoffrey Gay, General Counsel to ACSC, at Lloyd Gosselink Rochelle &
Townsend, P.C., P.O. Box 1725, Austin, Texas 78767-1725.
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PASSED AND APPROVED this the 9th day of June, 2014.
""""""H u n k C I T Y R T H R A N D H LS
ici :r y: ��
u..a �" •rcar Tre o, May,
AT,EST: m4-t�f, .._._ d-1-
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Moni S.' •,�i s istant City Secretary
APP',• g A • TO FORM AND LEGALITY:
George A. S aple-, City Attorney
APP O ED AS TO CONTENT:
K ren Bostic, Assistant City Manager
Resolution No.2014-015
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