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HomeMy WebLinkAbout07-3494 ord31 ORDINANCE NO. 07-3494 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PLAINVIEW, TEXAS, ("CITY") APPROVING A SETTLEMENT AGREEMENT BETWEEN THE CITY AND ATMOS ENERGY CORP., WEST TEXAS DIVISION ("ATMOS WEST TEXAS" OR "THE COMPANY") WITH REGARD TO THE COMPANY'S PROPOSAL TO IMPLEMENT INTERIM GRIP RATE ADJUSTMENTS FOR GAS UTILITY INVESTMENT IN 2006 FILED ON JULY 27, 2007; ADOPTING A TARIFF THAT REFLECTS AN INTERIM GRIP RATE ADJUSTMENT CONSISTENT WITH THE SETTLEMENT AGREEMENT; ADOPTING A SAVINGS CLAUSE; DETERMINING THAT THIS ORDINANCE WAS PASSED IN ACCORDANCE WITH THE REQUIREMENTS OF THE TEXAS OPEN MEETINGS ACT; DECLARING AN EFFECTIVE DATE; AND REQUIRING DELIVERY OF THIS ORDINANCE TO THE COMPANY AND LEGAL COUNSEL. WHEREAS, the City of Plainview, Texas ("City") is a gas utility customer of Atmos Energy Corp., West Texas Division ("Atmos West Texas" or "the Company"), and a regulatory authority with an interest in the rates and charges of Atmos West Texas; and WHEREAS, Atmos West Texas made filings with the City and the Railroad Commission of Texas ("Railroad Commission") on or about July 27, 2007, proposing to implement interim rate adjustments ("GRIP rate increases"), pursuant to Texas Utilities Code § 104.301, on all customers served by Atmos West Texas, effective September 25, 2007; and WHEREAS, the City took action to suspend the September 25, 2007 Effective Date and to coordinate a response to Atmos' filing with other similarly situated municipalities through the Steering Committee of Cities Served by Atmos West Texas; and Ordinance No. 07-3494 Page 1 of 4 32 WHEREAS, Atmos on several occasions extended the Effective Date such that the City's jurisdiction over the GRIP matter ends January 15, 2008; and WHEREAS, Atmos and the Steering Committee Cities have been in continuing disagreement, dispute, and litigation over the application of Section 104.301 of the Texas Utilities Code and the GRIP rate increases established by the Railroad Commission of Texas ("RRC" or the "Commission"); and WHEREAS, show cause proceedings were initiated by many of the Steering Committee Cities wherein Atmos was ordered to demonstrate that its existing rates should not be reduced; and WHEREAS, the Steering Committee Cities desire to avoid the litigation expense and drain on resources that would result if those proceedings were to go forward and precipitate a contested system-wide rate case before the RRC; and WHEREAS, a GRIP proceeding involves rate making, entitling cities to reimbursement of reasonable rate case expenses; and WHEREAS, Steering Committee Cities desire to recoup certain costs they previously incurred in connection with GRIP-related proceedings (costs which Atmos contends are not reimbursable rate case expenses under the Texas Utilities Code), as well as costs incurred in connection with the referenced show cause proceedings; WHEREAS, the Executive Committee of Atmos West Texas Cities Steering Committee negotiated with the Company a Settlement Agreement resolving the issues raised in the Company's GRIP filing and in the show cause proceedings; and WHEREAS, the Tariff implementing GRIP rates is consistent with the Settlement Agreement and is just, reasonable, and in the public interest; and Ordinance No. 07-3494 Page 2 of 4 33 WHEREAS, the Settlement Agreement as a whole is in the public interest; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PLAINVIEW, TEXAS: Section 1. That the findings set forth in this Ordinance are hereby in all things approved. Section 2. That the City Council finds that the Settlement Agreement and Tariff, which are attached hereto and incorporated herein as Exhibit "A" and "B" respectively, are just, reasonable and in the public interest and hereby adopted in all respects. Section 3. That to the extent any resolution or ordinance previously adopted by the Council is inconsistent with this Ordinance, it is hereby repealed. Section 4. That the meeting at which this ordinance was approved was in all things conducted in strict compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. Section 5. That if any one or more sections or clauses of this Ordinance is adjudged to be unconstitutional or invalid, such judgment shall not affect, impair or invalidate the remaining provisions of this Ordinance and the remaining provisions of the Ordinance shall be interpreted as if the offending section or clause never existed. Section 6. That this Ordinance shall become effective from and after its passage. Section 7. That a copy of this Ordinance shall be sent to Atmos West Texas, care of C. W. "Bill" Guy, at Atmos Energy Corporation, 5110 80~h Street, Lubbock, Texas 79424, and to Geoffrey Gay, legal counsel to Atmos West Texas Steering Ordinance No. 07-3494 Page 3 of 4 34 Committee Cities, at Lloyd Gosselink, 816 Congress Avenue, Suite 1900, Austin, Texas 78701. PASSED AND APPROVED on first reading this 11th day of December, 2007. PASSED AND APPROVED on second reading this 20th day of December, 2007. o .Anderson, yor ATTEST; Belinda Hinojosa, City Secr ry APPROVED AS TO CONTENT: Leslie pear Pearce, ity Attorney Ordinance No. 07-3494 Page 4 of 4 APPROVED AS TO FORM: 35 J SETTLEMENT AGREEMENT THIS SETTLEMENT AGREEMENT ("Agreement") is entered by and between Atmos Energy Corp., West Texas Division ("Atmos" or the "Company"), and the municipalities served by the Company listed on Exhibit "A" attached hereto and incorporated herein (the "Cities"), effective November 15, 2007. Exhibit "A" shall be updated from time-to-time to include all additional municipalities who join in this Agreement, as evidenced by written notice to the Company from Cities' undersigned counsel or his co-counsel. WHEREAS, Atmos and the Cities have been in continuing disagreement, dispute, and litigation over the application of Section 104.301 of the Texas Utilities Code and the so-called Gas Reliability Infrastructure Program ("GRIP") established thereunder by the Railroad Commission of Texas ("RRC" or the "Commission"); and WHEREAS, under Section 104.301 Atmos has filed for interim rate adjustments with both the Cities (for areas inside the Cities' incorporated limits) and the RRC (for areas outside the Cities' incorporated limits) based upon changes in investment occurring in 2006, and Atmos and the Cities would prefer to resolve issues relating to those filings on an agreed basis rather than resort to further litigation; and WHEREAS, Atmos and the Cities both desire to explore the possible adoption and implementation of a Rate Review Mechanism or similar approach as an alternative to interim rate adjustments under Section 104.301 as a way to recognize net increases in the Company's revenue requirements without the necessity and expense of full-blown contested rate cases; and 1 WHEREAS, show cause proceedings have been initiated by many of the Cities wherein Atmos has been ordered to demonstrate that its existing rates should not be reduced, and both Atmos and the Cities desire to avoid the litigation expense and drain on resources that would result if those proceedings were to go forward and precipitate a contested systemwide rate case before the RRC; and WHEREAS, the Cities desire to recoup certain costs they previously incurred in connection with GRIP-related proceedings (costs which Atmos contends are not reimbursable rate case expenses under the Texas Utilities Code), as well as costs incurred in connection with the referenced show cause proceedings; Ordinance No. 07-3494 Exhibit "A" Page 1 of 3 36 THEREFORE, in consideration of the foregoing, the mutual covenants set forth hereinbelow, and the benefits flowing to Atmos and the Cities (together, the "Parties") under the terms hereof, the Parties hereby AGREE as follows: 1. Rate Review Mechanism ("RRM"): The Parties agree to negotiate in good faith and design, develop, approve, and implement a new Rate Review Mechanism for periodically evaluating changes in the Company's costs and revenues and adjusting its rates upward or downward to reflect net increases or decreases in its revenue requirements. The Parties agree to do so on an accelerated basis, striving in good faith to meet target dates of March 31, 2008, for Atmos to file its initial request under an agreed mechanism, and July 1, 2008, for the Company to implement the initial rate adjustments thereunder. However, the Company expressly reserves its rights to request rate increases or seek additional interim rate adjustments under Section 104.301 of the Texas Utilities Code until such time as an agreed-upon RRM is in-place throughout the West Texas service area and operating to the mutual satisfaction of the Company and the Cities. 2. Pending 2006 GRIP Filin>?s: The Parties agree that the Cities' review of the Company's pending GRIP filings for 2006 shall proceed on an expedited basis, and that interim GRIP adjustments shall be approved by the Cities on or before January 15, 2008, based upon a reduced revenue increase equal to 90% of the revenue increase originally requested by Atmos at the municipal level and other parameters that collectively result in the GRIP surcharges for 2006 shown on the revised tariffs included in Exhibit "B" attached hereto and incorporated herein, which shall also be approved by the Cities by said date. The Parties further agree that the resultant interim GRIP adjustments shall be taken into account, reconciled, and rolled into the Company's permanent rates when rates are first set under the RRM or in the Company's next general rate case, whichever shall first occur. 3. Abeyance & Ultimate Dismissal of Show Cause Proceedings: The Parties further agree that all pending or contemplated show cause proceedings shall be abated until after completion of the first review under the RRM. Upon completion of that first review to the Company's and the Cities' mutual satisfaction and implementation of any resultant rate adjustments, any show cause proceedings still pending at the municipal level shall be dismissed with prejudice. In the event the Parties cannot agree upon a RRM in accordance with paragraph 1 above, or are unable to implement or apply an agreed-upon RRM to their mutual satisfaction, the Cities may upon written notice to the Company reactivate and proceed with any pending show cause proceedings or initiate additional ones. 4. Cities' Legal & Consulting Costs: Upon approval and implementation of the agreed GRIP adjustments for 2006 pursuant to paragraph 2 above, it is agreed that Atmos shall pay the Cities $70,505 in GRIP-related costs incurred by the Cities and identified in Exhibit "C" attached hereto and incorporated herein; provided, however, that such payment shall neither constitute a waiver of the Company's position that GRIP-related costs do not qualify as recoverable rate case expenses under the Texas Utilities Code, nor be asserted or cited as precedent to the contrary in any ratemaking, rulemaking, judicial, legislative, or other legal proceeding. In addition, Atmos shall reimburse the Cities for any portion of the $27,995 incurred by the Cities in connection with the referenced show cause proceedings, also identified in the attached Exhibit "C", that has not already been reimbursed by the Company. It is further Ordinance No. 07-3494 Exhibit "A" Page 2 of 3 37 agreed that Atmos will not request reimbursement of said GRIP-related costs from the Company's customers, but upon its request shall be authorized by the Cities to recover both the Cities' and the Company's own show cause-related costs from customers as reasonable and necessary rate case expenses. 5. Extension of Proposed GRIP Implementation Date: In order to enable counsel for the Cities a reasonable opportunity to discuss this Agreement with his clients and obtain their approval of same, Atmos has by separate letter (a copy of which is attached hereto and incorporated herein as Exhibit "D") previously agreed to extend its proposed implementation date for the referenced 2006 GRIP adjustments until November 16, 2007, which in turn extended the maximum period for suspension of the Company's proposed tariffs effectuating same to December 31, 2007. The Company hereby agrees to further extend its proposed implementation date to December 31, 2007, which in turn extends the maximum period for suspension to January 15, 2008. 6. Reservation of Rights & Authori~: Through this Agreement, Atmos and the Cities seek to establish a more cooperative and less litigious approach for adjusting the Company's rates, when warranted, between general rate cases. However, the other provisions of this Agreement notwithstanding, by entering into this Agreement, Atmos reserves and does not waive its rights under the Texas Utilities Code to request rate changes or interim rate adjustments, and the Cities reserve and do not waive or surrender their jurisdiction and authority under said Code to initiate and conduct rate inquiries or otherwise act as a regulatory authority thereunder. AGREED & EXECUTED at Austin, Texas, by the Parties' undersigned counsel on the dates set forth below: ATMOS ENERGY CORP., WEST TEXAS DIVISION By: J. Alan Holman Date: THE ATMOS WEST TEXAS MUNICIPALITIES By: Geoffrey M. Gay Date: Ordinance No. 07-3494 Exhibit "A" Page 3 of 3 38 Exhibit "B" Atmos Energy Corporation West Texas Distribution System 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: $ 8.50 2004 GRIP Charge: $ 1.09 2005 GRIP Charge: $ 0.00 2006 GRIP Charge $ 0.49 Total Customer Charge: $10.08 Commodity Charge: All Consumption $ 0.11035 per Ccf The West Texas System Gas Cost Adjustment Rider applies to this schedule except for service inside City limits of Odessa. The West Texas System Weather Normalization Adjustment Rider applies to this schedule The West Texas Rate Division 2004, 2005 and 2006 GRIP Adjustments apply to this schedule. EFFECTIVE: Proposed effective date September 25, 2007 ISSUED BY: C.W. Guy, Vice President -Rates & Regulatory Affairs 39 1 Atmos Energy Corporation West Texas Distribution System COMMERCIAL GAS SERVICE 1 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: $ 14.00 2004 GRIP Charge: $ 3.09 2005 GRIP Charge: $ 0.00 2006 GRIP Charge $ 1.43 Total Customer Charge: $ 18.52 Commodity Charge: All Consumption $ 0.0970 per Ccf The West Texas System Gas Cost Adjustment Rider applies to this schedule except for service inside city limits of Odessa. The West Texas System Weather Normalization Adjustment Rider applies to this schedule. The West Texas Rate Division 2004, 2005 and 2006 GRIP Adjustments apply to this schedule. 1 EFFECTIVE: Proposed effective date September 25, 2007 ISSUED BY: C.W. Guy, Vice President -Rates & Regulatory Affairs 40 Atmos Energy Corporation West Texas Distribution System 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: $ 42.00 2004 GRIP Charge: $ 7.67 2005 GRIP Charge: $ 0.00 2006 GRIP Charge $ 3.52 Total Customer Charge: $ 53.19 Commodity Charge: All Consumption $ 0.083 per Ccf The West Texas System Gas Cost Adjustment Rider applies to this schedule except for service inside city limits of Odessa. The West Texas System Weather Normalization Adjustment Rider applies to this schedule. The West Texas Rate Division 2004, 2005 and 2006 GRIP Adjustments apply to this schedule. EFFECTIVE: Proposed effective date September 25, 2007 ISSUED BY: C.W. Guy, Vice President -Rates & Regulatory Affairs 41 Atmos Energy Company West Texas Distribution System 1 1 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. MONTHLY RATE Customer Charge: $ 55.00 2004 GRIP Charge: $ 30.17 2005 GRIP Charge: $ 0.00 2006 GRIP Charge: $ 21.44 Total Customer Charge: $106.61 Commodity Charge: Consumption: 0-1000 Ccf $ 0.0965 per Ccf All over 1000 Ccf $ 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 West Texas Rate Division 2004, 2005 and 2006 GRIP Adjustments apply to this schedule. EFFECTIVE: Proposed effective date September 25, 2007 ISSUED BY: C.W. Guy, Vice President -Rates & Regulatory Affairs 42 Atmos Energy Company West Texas Distribution System STATE INSTITUTION GAS SERVICE AVAILABILITY 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. MONTHLY RATE Customer Charge: $ 40.74 2004 GRIP Charge: $ 11.91 2005 GRIP Charge: $ 0.00 2006 GRIP Charge: $ 7.07 Total Customer Charge: $ 59.72 Commodity Charge: All Consumption $ 0.08051 per Ccf The West Texas System Gas Cost Adjustment Rider applies to this schedule except for service inside city limits of Odessa. The West Texas System Weather Normalization Adjustment Rider applies to this schedule. The West Texas Rate Division 2004, 2005 and 2006 GRIP Adjustments apply to this schedule. EFFECTIVE: Proposed effective date September 25, 2007 ISSUED BY: C.W. Guy, Vice President -Rates & Regulatory Affairs