Res 085-2020 Settlement with Atmos RRM Filing with Atmos Cities Steering Committee 9/15/2020Resolution No. 85-2020
Resolution of the City Council of the City of Wichita Falls, Texas,
approving a negotiated settlement between the Atmos Cities
Steering Committee ("ACSC") and Atmos Energy Corp., Mid -Tex
Division regarding the Company's 2020 rate review mechanism
filing; declaring existing rates to be unreasonable; adopting tariffs
that reflect rate adjustments consistent with the negotiated
settlement; finding the rates to be set by the attached settlement
tariffs to be just and reasonable and in the public interest; approving
an attached exhibit establishing a benchmark for pensions and
retiree medical benefits; approving an attached exhibit regarding
amortization of regulatory liability; requiring the company to
reimburse ACSC's reasonable ratemaking expenses; determining
that this resolution was passed in accordance with the requirements
of the Texas Open Meetings Act; adopting a savings clause;
declaring an effective date; and requiring delivery of this resolution
to the company and the ACSC's legal counsel
WHEREAS, the City of Wichita Falls, 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, charges, and services of Atmos Mid -Tex; and
WHEREAS, the City is a member of the Atmos Cities Steering Committee
("ACSC'), a coalition of similarly -situated cities served by Atmos Mid -Tex ("ACSC Cities")
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, ACSC and the Company worked collaboratively to develop a Rate
Review Mechanism ("RRM") tariff that allows for an expedited rate review process by
ACSC Cities as a substitute to the Gas Reliability Infrastructure Program ("GRIP")
process instituted by the Legislature, and that will establish rates for the ACSC Cities
based on the system -wide cost of serving the Atmos Mid -Tex Division; and
WHEREAS, the current RRM tariff was adopted by the City in a rate ordinance in
2018; and
WHEREAS, on about March 31, 2020, Atmos Mid -Tex filed its 2020 RRM rate
request with ACSC Cities based on a test year ending December 31, 2019; and
WHEREAS, ACSC coordinated its review of the Atmos Mid -Tex 2020 RRM filing
through its Executive Committee, assisted by ACSC's attorneys and consultants, to
resolve issues identified in the Company's RRM filing; and
WHEREAS, the Executive Committee, as well as ACSC's counsel and
consultants, recommend that ACSC Cities approve an increase in base rates for Atmos
Mid -Tex of $90 million applicable to ACSC Cities with an Effective Date of December 1,
2020-land
WHEREAS, ACSC agrees that Atmos plant -in-service is reasonable; and
WHEREAS, with the exception of approved plant -in-service, ACSC is not
foreclosed from future reasonableness evaluation of costs associated with incidents
related to gas leaks; and
WHEREAS, the two month delayed Effective Date from October 1 to December 1
will save ACSC ratepayers approximately $9 million off new rates imposed by the
attached tariffs (Exhibit A), the impact on ratepayers should approximate the reasonable
value of the rate filing found by the ACSC Consultants' Report, which was $81 million;
and
WHEREAS, the attached tariffs (Exhibit A) implementing new rates are consistent
with the recommendation of the ACSC Executive Committee, are agreed to by the
Company, and are just, reasonable, and in the public interest; and
WHEREAS, the settlement agreement sets a new benchmark for pensions and
retiree medical benefits (Exhibit B); and
WHEREAS, the settlement agreement establishes an amortization schedule for
regulatory liability prepared by Atmos Mid -Tex (Exhibit C); and
WHEREAS, the RRM Tariff contemplates reimbursement of ACSC's reasonable
expenses associated with RRM applications;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF WICHITA FALLS, TEXAS:
Section 1. That the findings set forth in this Resolution are hereby in all things
approved.
Section 2. That, without prejudice to future litigation of any issue identified by
ACSC, the City Council finds that the settled amount of an increase in revenues of $90
million for ACSC Cities represents a comprehensive settlement of gas utility rate issues
affecting the rates, operations, and services offered by Atmos Mid -Tex within the
municipal limits arising from Atmos Mid-Tex's 2020 RRM filing, is in the public interest,
and is consistent with the City's authority under Section 103.001 of the Texas Utilities
Code.
Section 3. That despite finding Atmos Mid-Tex's plant -in-service to be
reasonable, ACSC is not foreclosed in future cases from evaluating the reasonableness
of costs associated with incidents involving leaks of natural gas.
Section 4. That the existing rates for natural gas service provided by Atmos Mid -
Tex are unreasonable. The new tariffs attached hereto and incorporated herein as Exhibit
A, are just and reasonable, and are designed to allow Atmos Mid -Tex to recover annually
an additional $90 million from customers in ACSC Cities, over the amount allowed under
currently approved rates. Such tariffs are hereby adopted.
Section 5. That the ratemaking treatment for pensions and retiree medical
benefits in Atmos Mid-Tex's next RRM filing shall be as set forth on Exhibit B, attached
hereto and incorporated herein.
Section 6. That subject to any future settlement or decision regarding the balance
of Excess Deferred Income Tax to be refunded to ratepayers, the amortization of
regulatory liability shall be consistent with the schedule found in Exhibit C, attached hereto
and incorporated herein.
Section 7. That Atmos Mid -Tex shall reimburse the reasonable ratemaking
expenses of the ACSC in processing the Company's 2020 RRM filing.
Section 8. That to the extent any resolution or ordinance previously adopted by
the Council is inconsistent with this Resolution, it is hereby repealed.
Section 9. 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 10. 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 11. That consistent with the City Ordinance that established the RRM
process, this Resolution shall become effective from and after its passage with rates
authorized by attached tariffs to be effective for bills rendered on or after December 1,
2020.
Section 12. That a copy of this Resolution shall be sent to Atmos Mid -Tex, care
of Chris Felan, Vice President of Rates and Regulatory Affairs Mid -Tex Division, 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.,
816 Congress Avenue, Suite 1900, Austin, Texas 78701.
PASSED AND APPROVED this the 15th day of September, 2020.
ATTEST:
cam, B
City Clerk
APPROVED AS TO FORM:
City Attorney
2557/32/8108360