Ord 46-2006 6/20/2006 ORDINANCE NO.� �� � �Q
ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WICHITA
FALLS, 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 ATMOS 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;
PROVIDING A REQUIREMENT FOR A PROMPT REIMBURSEMENT OF
COSTS INCURRED BY THE CITY; FINDING AND DETERMINING THAT
THE MEETING AT WHICH THIS ORDINANCE WAS PASSED WAS
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 March 30, 2006, Atmos Energy Corp., Mid-Tex Division,
(the "Company") filed with the City a request for an annual gas reliability infrastructure
program ("GRIP") rate increase for customers on the Company's statewide gas utility
system to be effective May 30, 2006; 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 UTiuT�ES CooE §§102.001(b) and 103.001; and,
WHEREAS, it is reasonable for the City 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 known as Atmos Cities Steering Committee
("ACSC"), in any appeal of the cities' actions to the Commission; and,
WHEREAS, the Gas Utility Regulatory Act ("GURA") grants local regulatory
authorities the right to intervene in rate proceedings filed at the Railroad Commission;
and,
WHEREAS, TExas UTiuTiES Co�E §103.022 provides that costs incurred by the
City in ratemaking activities are to be reimbursed by the regulated utility; 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 and unreasonable; and,
WHEREAS, the Company has publicly stated that it will receive substantial profit
in 2005 and that its expenses are substantially below those on which the GUD No. 9400
rates it is charging were based; 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, under the provisions of §104.301 of GURA, the interim rate
adjustment is subject to true-up in a general rate case filed within five years of the
effective date of the interim rate surcharge; and,
WHEREAS, the Company has, on May 31, 2006, filed a Statement of Intent to
increase its distribution rates on a system-wide basis, using calendar year ending
December 31, 2005, as its test year; and,
WHEREAS, the capital investment made by Atmos during 2005 will be reviewed
in the Statement of Intent filing, making the 2005 GRIP filing superfluous, duplicative,
and unnecessary.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF WICHITA FALLS, TEXAS, THAT:
SECTION 1. The Company's GRIP rate increase request is found to be
unreasonable, superfluous, duplicative, and unnecessary, and is therefore denied in all
respects.
SECTION 2. 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 a rate ordinance and the rate case fled at the Commission.
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SECTION 3. The costs incurred by the City in reviewing the Company's GRIP
request shall be promptly reimbursed by the Company.
SECTION 4. The City is authorized to intervene in any appeal of the City's action
fled at the Commission and any related litigation, and to participate in any such appeal
or litigation as a member of ACSC.
SECTION 5. This Ordinance shall become effective immediately from and after
its passage, as the law and charge in such cases provide.
SECTION 6. 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. A copy of this ordinance, constituting final action on the Company's
application, be forwarded to the following:
Richard T. Reis
Atmos Energy Corporation
5420 LBJ Freeway, Suite 1800
Dallas, Texas 75240
Lloyd Gosselink Blevins Rochelle & Townsend
c/o Geoffrey Gay
P. O. Box 125
Austin, Texas 78767-1725
PASSED AND APPROVED this the 20 day of June, 2006.
MAYOR
ATTEST:
�
i Clerk