HomeMy WebLinkAbout18-3671 ord365
ORDINANCE NO. 18-3671
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
PLAINVIEW, TEXAS, APPROVING A TARIFF AUTHORIZING
AN ANNUAL RATE REVIEW MECHANISM ("RRM") AS A
SUBSTITUTION FOR THE ANNUAL INTERIM RATE
ADJUSTMENT PROCESS DEFINED BY SECTION 104.301 OF THE
TEXAS UTILITIES CODE, AND AS NEGOTIATED BETWEEN
ATMOS ENERGY CORP., WEST TEXAS DIVISION ("ATMOS
WEST TEXAS" OR "COMPANY") AND THE STEERING
COMMITTEE OF CITIES SERVED BY ATMOS WEST TEXAS;
REQUIRING THE COMPANY TO REIMBURSE CITIES'
REASONABLE RATEMAKING EXPENSES; ADOPTING A
SAVINGS CLAUSE; DETERMINING THAT THIS ORDINANCE
WAS PASSED IN ACCORDANCE WITH THE REQUIREMENTS
OF THE OPEN MEETINGS ACT; DECLARING AN EFFECTIVE
DATE; AND REQUIRING DELIVERY OF THIS ORDINANCE TO
THE COMPANY AND LEGAL COUNSEL FOR THE STEERING
COMMITTEE.
WHEREAS, the City of Plainview, Texas ("City") is a gas utility customer of Atmos
Energy Corp., West Texas Division ("Atmos West Texas" or "Company"), and a regulatory
authority with an interest in the rates and charges of Atmos West Texas; and
WHEREAS, the City and similarly -situated West Texas municipalities created the Steering
Committee of Cities Served by Atmos West Texas to efficiently address all rate and service matters
associated with delivery of natural gas; and
WHEREAS, the Steering Committee formed an Executive Committee to direct legal
counsel and to recommend certain specific actions to all aligned West Texas Cities through
resolution or ordinance; and
WHEREAS, pursuant to the terms of a November 2007 agreement between the Steering
Committee and Atmos West Texas that settled the Company's interim rate filing under Section
104.301 of the Texas Utilities Code (a "GRIP" rate case), the Steering Committee and the
Company collaboratively developed a Rate Review Mechanism ("RRM") Tariff, ultimately
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authorized by the City in 2008, that allows for an expedited rate review process as a substitute for
the GRIP process; and
WHEREAS, the City has kept some form of a RRM Tariff in place until 2017 when it
adopted an ordinance approving an RRM Tariff filing settlement and specifically calling for
termination of the existing RRM Tariff and negotiation of a replacement RRM Tariff following
the Railroad Commission's decision in a then -pending Atmos Texas Pipeline case (GUD No.
10580); and
WHEREAS, the Steering Committee's Executive Committee has recently approved a
settlement with the Company on the attached RRM Tariff that contains certain notable
improvements, from a consumer perspective, over the prior RRM Tariff, including a reduced rate
of return on equity, acceptance of certain expense adjustments made by the Railroad Commission
in the Order in GUD No. 10580, and the addition of two months to the time for processing a RRM
Tariff application; and
WHEREAS, the RRM Tariff contemplates reimbursement of Cities' reasonable expenses
associated with RRM Tariff applications; and
WHEREAS, the Steering Committee's Executive Committee recommends that all Steering
Committee member cities adopt this ordinance and the attached RRM Tariff; and
WHEREAS, the attached RRM Tariff is just, reasonable and 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 attached RRM Tariff re-establishing a form of Rate Review
Mechanism is just and reasonable and in the public interest, and is hereby adopted.
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Section 3. That Atmos West Texas shall reimburse the Cities' reasonable expenses
associated with adoption of this Ordinance and the attached RRM Tariff and in processing future
RRM Tariff applications filed pursuant to the attached tariff.
Section 4. That to the extent any resolution or ordinance previously adopted by the City
is inconsistent with this Ordinance, it is hereby repealed.
Section 5. 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 6. 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 this Ordinance shall be interpreted
as if the offending section or clause never existed.
Section 7. That this Ordinance shall become effective from and after its passage.
Section 8. That a copy of this Ordinance shall be sent to Atmos West Texas, care of Phillip
Littlejohn, Vice President of Rates and Regulatory, Atmos Energy Corporation, P. O. Box 1121,
Lubbock, Texas 79408-1121, and to Geoffrey Gay, General Counsel to West Texas Cities, at
Lloyd Gosselink Rochelle & Townsend, P.C., 816 Congress Avenue, Suite 1900, Austin, Texas
78701.
PASSED AND APPROVED on first reading this 27th day of February, 2018.
PASSED AND APPROVED on second reading this 13`h day of March, 2018.
Mayor
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ATTEST:
APPROVED AS TO FORM:
City Secretary - City Attorney
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WEST TEXAS DIVISION
ATMOS ENERGY CORPORATION
RATE SCHEDULE:
RRM — Rate Review Mechanism
APPLICABLE TO:
ALL INCORPORATED CUSTOMERS IN THE WEST TEXAS DIVISION
EXCEPT CUSTOMERS IN THE CITIES OF AMARILLO, LUBBOCK,
DALHART AND CHANNING.
EFFECTIVE DATE:
Bilis Rendered on and after October 1, 2018
PAGE: 1
I. Applicability
Applicable to Residential, Commercial, Industrial, Public Authority, and Transportation tariff incorporated
areas customers in the West Texas Division of Atmos Energy Corporation ("Company') with the exception
of those customers within the Cities of Amarillo, Lubbock, Dalhart, and Channing. This Rate Review
Mechanism ("RRM") provides for an annual adjustment to the Company's Residential, Commercial,
Industrial, Public Authority, and Transportation Rate Schedules ("Applicable Rate Schedules"). Rate
calculations and adjustments required by this tariff shall be determined on a System -Wide cost basis.
II. Definitions
"Test Period" is defined as the twelve months ending December 31st of each preceding calendar year.
The "Effective Date" is the date that adjustments required by this tariff are applied to customer bills. The
annual Effective Date is October 1.
Unless otherwise noted in this tariff, the term "Final Order" refers to the final order issued by the Railroad
Commission of Texas in GUD No.10174 and elements of GUD No. 10580 as specified in Section III below.
The term "System -Wide" means all incorporated and unincorporated areas served by the Company within
the West Texas Division.
"Review Period" is defined as the period from the Filing Date until the Effective Date.
The "Filing Date" is as early as practicable, but no later than April 1 of each year.
III. Calculation
The RRM shall calculate an annual, System -Wide cost of service ("COS") that will be used to adjust
applicable rate schedules prospectively as of the Effective Date. The Company may request recovery of
its total cost of service but will include schedules showing the computation of any adjustments. The
annual cost of service will be calculated according to the following formula:
COS = OM + DEP + RI + TAX + CD
Where:
OM = all reasonable and necessary operation and maintenance expenses from the Test Period
adjusted for known and measurable items and prepared consistent with the rate making
treatments approved in the Final Order. Incentive compensation (Management Incentive Plan,
Variable Pay Plan and Long Term Incentive Plan) related to Atmos' Shared Services Unit will
be applied consistent with treatment approved in GUD 10580. Additionally, O&M adjustments
will be incorporated and applied as modified by a final order, not subject to appeal, issued by
the Railroad Commission of Texas in subsequent rate cases involving the Atmos Mid -Tex or
West Texas divisions. Known and measurable adjustments shall be limited to those changes
that have occurred prior to the Filing Date. OM may be adjusted for atypical and non-recurring
items. Shared Services allocation factors shall be recalculated each year based on the latest
370
WEST TEXAS DIVISION
ATMOS ENERGY CORPORATION
RATE SCHEDULE:
RRM — Rate Review Mechanism
APPLICABLE TO:
ALL INCORPORATED CUSTOMERS IN THE WEST TEXAS DIVISION
EXCEPT CUSTOMERS IN THE CITIES OF AMARILLO, LUBBOCK,
DALHART AND CHANNING.
EFFECTIVE DATE:
Bills Rendered on and after October 1, 2018
PAGE: 2
component factors used during the Test Period, but the methodology used will be that
approved in the Final Order in GUD 10580.
DEP = depreciation expense calculated at depreciation rates approved by the Final Order.
Additionally, if depreciation rates are approved in a subsequent final order, not subject to
appeal, issued by the Railroad Commission of Texas for the West Texas division those rates
would be applicable for subsequent RRM filings.
RI
return on prudently incurred investment calculated as the Company's pretax return multiplied
by rate base at Test Period end. Rate base is prepared consistent with the rate making
treatments approved in the Final Order, and as in GUD 10580 as specifically related to
capitalized incentive compensation (Management Incentive Plan, Variable Pay Plan and Long
Term Incentive Plan) for Atmos' Shared Services Unit. However, no post Test Period
adjustments will be permitted. Additionally, adjustments will be incorporated and applied as
modified by a final order, not subject to appeal, issued by the Railroad Commission of Texas
in subsequent rate cases involving the Atmos Mid -Tex or West Texas divisions. Pretax return
is the Company's weighted average cost of capital before income taxes. The Company's
weighted average cost of capital is calculated using the methodology from the Final Order
including the Company's actual capital structure and long term cost of debt as of the Test Period
end (adjusted for any known and measurable changes that have occurred prior to the filing
date) and the return on equity of 9.8%. However, in no event will the percentage of equity
exceed 58%. Regulatory adjustments due to prior regulatory rate base adjustment
disallowances will be maintained. Cash working capital will be calculated using the lead/lag
days approved in the Final Order. With respect to pension and other postemployment benefits,
the Company will record a regulatory asset or liability for these costs until the amounts are
included in the next annual rate adjustment implemented under this tariff. Each year, the
Company's filing under this Rider RRM will clearly state the level of pension and other
postemployment benefits recovered in rates.
TAX = income tax and taxes other than income tax from the Test Period adjusted for known and
measurable changes occurring after the Test Period and before the Filing Date, and prepared
consistent with the rate making treatments approved in the Final Order. Atmos Energy shall
comprehensively account for, including establishing a regulatory liability to account for, any
statutory change in tax expense that is applicable to months during the Test Period calculation
to ensure recovery of tax expense under new and old income tax rates.
CD = interest on customer deposits.
IV. Annual Rate Adjustment
The Company shall provide schedules and work papers supporting the Filing's revenue
deficiency/sufficiency calculations using the methodology accepted in the Final Order. The result shall be
reflected in the proposed new rates to be established for the effective period. The Revenue Requirement
will be apportioned to customer classes consistent with class revenue distribution resulting from the
371
WEST TEXAS DIVISION
ATMOS ENERGY CORPORATION
RATE SCHEDULE:
RRM — Rate Review Mechanism
APPLICABLE TO:
ALL INCORPORATED CUSTOMERS IN THE WEST TEXAS DIVISION
EXCEPT CUSTOMERS IN THE CITIES OF AMARILLO, LUBBOCK,
DALHART AND CHANNING.
EFFECTIVE DATE:
Bills Rendered on and after October 1, 2018
PAGE: 3
settlement of the statement of intent filed October 18, 2013. For the Residential Class, 50% of the increase
may be recovered in the customer charge. However, the increase to the Residential customer charge shall
not exceed $0.60 per month in the initial filing and $0.70 per month in any subsequent year. The remainder
of the Residential Class increase not collected in the customer charge will be recovered in the usage
charge. For all other classes, the change in rates will be apportioned between the customer charge and the
usage charge, consistent with the Final Order. Test Period billing determinants shall be adjusted and
normalized according to the methodology utilized in the Final Order.
V. Filing
The Company shall file schedules annually with the regulatory authority having original jurisdiction over the
Company's rates on or before the Filing Date that support the proposed rate adjustments. The schedules
shall be in the same general format as the cost of service model and relied -upon files upon which the Final
Order was based. A proof of rates and a copy of current and proposed tariffs shall also be included with
the filing. The filing shall be made in electronic form where practical. The Company's filing shall conform
to Minimum Filing Requirements (to be agreed upon by the parties), which will contain a minimum amount
of information that will assist the regulatory authority in its review and analysis of the filing. The Company
and regulatory authority will endeavor to hold a technical conference regarding the filing within twenty (20)
calendar days after the Filing Date.
A sworn statement shall be filed by an Officer of the Company affirming that the filed schedules are in
compliance with the provisions of this Rate Review Mechanism and are true and correct to the best of
his/her knowledge, information, and belief. No testimony shall be filed, but a brief narrative explanation
shall be provided of any changes to corporate structure, accounting methodologies, allocation of common
costs, or atypical or non- recurring items included in the filing.
VI. Evaluation Procedures
The regulatory authority having original jurisdiction over the Company's rates shall review and render a
decision on the Company's proposed rate adjustment prior to the Effective Date. The Company shall
provide all supplemental information requested to ensure an opportunity for adequate review by the relevant
regulatory authority. The Company shall not unilaterally impose any limits upon the provision of
supplemental information and such information shall be provided within seven (7) working days of the
original request. The regulatory authority may propose any adjustments it determines to be required to
bring the proposed rate adjustment into compliance with the provisions of this tariff.
The regulatory authority may disallow any net plant investment that is not shown to be prudently incurred.
Approval by the regulatory authority of net plant investment pursuant to the provisions of this tariff shall
constitute a finding that such net plant investment was prudently incurred. Such finding of prudence shall
not be subject to further review in a subsequent RRM or Statement of Intent filing.
During the Review Period, the Company and the regulatory authority will work collaboratively and seek
agreement on the level of rate adjustments. If, at the end of the Review Period, the Company and the
regulatory authority have not reached agreement, the regulatory authority shall take action to modify or
deny the proposed rate adjustments. The Company shall have the right to appeal the regulatory authority's
action to the Railroad Commission of Texas. Upon the filing of an appeal of the regulatory authority's order
372
WEST TEXAS DIVISION
ATMOS ENERGY CORPORATION
RATE SCHEDULE:
RRM — Rate Review Mechanism
APPLICABLE TO:
ALL INCORPORATED CUSTOMERS IN THE WEST TEXAS DIVISION
EXCEPT CUSTOMERS IN THE CITIES OF AMARILLO, LUBBOCK,
DALHART AND CHANNING.
EFFECTIVE DATE:
Bills Rendered on and after October 1, 2018
PAGE: 4
relating to an annual RRM filing with the Railroad Commission of Texas, the regulatory authority having
original jurisdiction over the Company's rates shall not oppose the implementation of the Company's
proposed rates subject to refund, nor will the regulatory authority advocate for the imposition of a third party
surety bond by the Company. Any refund shall be limited to and determined based on the resolution of the
disputed adjustment(s) in a final, non -appealable order issued in the appeal filed by the Company at the
Railroad Commission of Texas.
In the event that the regulatory authority and Company agree to a rate adjustment(s) that is different from
the adjustment(s) requested in the Company's filing, the Company shall file compliance tariffs consistent
with the agreement. No action on the part of the regulatory authority shall be required to allow the rate
adjustment(s) to become effective on October 1. To the extent that the regulatory authority does not take
action on the Company's RRM filing by September 30, the rates proposed in the Company's filing shall be
deemed approved effective October 1. Notwithstanding the preceding sentence, a regulatory authority may
choose to take affirmative action to approve a rate adjustment under this tariff. In those instances where
such approval cannot reasonably occur by September 30, the rates finally approved by the regulatory
authority shall be deemed effective as of October 1.
To defray the cost, if any, of regulatory authorities conducting a review of the Company's annual RRM filing,
the Company shall reimburse the regulatory authorities on a monthly basis for their reasonable expenses
incurred upon submission of invoices for such review. Any reimbursement contemplated hereunder shall
be deemed a reasonable and necessary operating expense of the Company in the year in which the
reimbursement is made. A regulatory authority seeking reimbursement under this provision shall submit its
request for reimbursement to the Company no later than December 1 of the year in which the RRM filing is
made and the Company shall reimburse regulatory authorities in accordance with this provision on or before
December 31 of the year the RRM filing is made.
To the extent possible, the provisions of the Final Order shall be applied by the regulatory authority in
determining whether to approve or disapprove of Company's proposed rate adjustment.
This Rider RRM does not limit the legal rights and duties of a regulatory authority. Nothing herein shall
abrogate the jurisdiction of the regulatory authority to initiate a rate proceeding at any time to review whether
rates charged are just and reasonable. Similarly, the Company retains its right to utilize the provisions of
Texas Utilities Code, Chapter 104, Subchapter C to request a change in rates. The provisions of this Rider
RRM are implemented in harmony with the Gas Utility Regulatory Act (Texas Utilities Code, Chapters 101-
105).
The annual rate adjustment process set forth in this tariff shall remain in effect during the pendency of any
Statement of Intent rate filing.
VII. Reconsideration, Appeal and Unresolved Items
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).
373
WEST TEXAS DIVISION
ATMOS ENERGY CORPORATION
RATE SCHEDULE:
RRM — Rate Review Mechanism
APPLICABLE TO:
ALL INCORPORATED CUSTOMERS IN THE WEST TEXAS DIVISION
EXCEPT CUSTOMERS IN THE CITIES OF AMARILLO, LUBBOCK,
DALHART AND CHANNING.
EFFECTIVE DATE:
Bills Rendered on and after October 1, 2018
PAGE: 5
VIII. Notice
Notice of each annual RRM filing shall be provided by including the notice, in conspicuous form, in the bill
of each directly affected customer 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 rates would apply;
d) the date the annual RRM filing was made with the regulatory authority; and
e) the Company's address, telephone number and website where information concerning the
proposed rate adjustment can be obtained.