Ord 056-2005 8/2/2005ORDINANCE NO. 5LQ-9.0
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;
APPROVING COSTS INCURRED AS REASONABLE AND PROVIDING
A REQUIREMENT FOR PROMPT REIMBURSEMENT OF COSTS; AND
PROVIDING FOR NOTICE OF THIS ORDINANCE TO ATMOS ENERGY
CORP., MID -TEX DIVISION; FINDING AND DETERMINING THAT THE
MEETING AT WHICH THIS ORDINANCE WAS PASSED WAS OPEN
TO THE PUBLIC AS REQUIRED BY LAW.
WHEREAS, on or about December 17, 2004, Atmos Energy Corp., Mid -Tex
Division, (the "Company ") filed with the City of Wichita Falls ( "City ") a request pursuant
to TEXAS UTILITIES CODE §104.301 for an annual Gas Reliability Infrastructure Program
(GRIP) rate increase for customers on the Company's statewide gas utility system to be
effective February 15, 2005, and subsequently extended that effective date until
March 4, 205, for some cities on its systemi; 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 UTILITIES CODE § §102.001(b) and 103.001; and,
WHEREAS, the City timely acted to suspend the effective date of Atmos'
proposed rate increase; and,
WHEREAS, it is reasonable for the City of Wichita Falls 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 grants local regulatory authorities the
right to intervene in rate proceedings filed at the Railroad Commission; and,
WHEREAS, the TEXAS UTILITIES CODE §103.022 provides that costs incurred by
the City in ratemaking activities are to be reimbursed by the regulated utility; and,
WHEREAS, ACSC's rate case expenses incurred in this proceeding are
reasonable and should be reimbursed by the Company; 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, unreasonable and not in compliance with the GRIP statute (TEXAS
UTILITIES CODE §104.301) either in fact or in law; and,
WHEREAS, information provided by the Company in response to ACSC's
requests for information indicates that the Company actually decreased per- customer
investment in infrastructure during calendar year 2003; and,
WHEREAS, the Company has publicly stated that it will receive substantial profit
in 2005 over that approved by the Commission in GUD No. 9400; 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, the information reviewed by the ACSC consultants indicates that
implementation of the Company's GRIP request would result in further over - earning by
the Company above that approved by the Commission in GUD No. 9400; and,
WHEREAS, in consideration of the City taking action before August 12, 205, on
the currently pending GRIP request, the Company has agreed not to file any additional
GRIP requests before September 15, 2005.
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
unjustified, unreasonable and in violation of the GRIP statute, and is therefore denied in
all respects. The defects in the request include, but are not limited to, the following: (a)
the Company improperly calculated its 2003 rate base; (b) the Company included in its
calculation projects unrelated to system improvement; (c) the Company failed to
recognize the increased revenues it is now receiving due to increased rates approved
by the Commission in GUD No. 9400 and due to customer growth; (d) information
supplied by the Company indicated that the Company actually decreased its per -
customer investment in infrastructure in calendar year 2003; (3) approval of the
Company's GRIP request would result in over - earning by the Company in the year of
implementation; and (f) the Company has failed to demonstrate that it meets the
statutory prerequisites to qualify for a GRIP rate increase, or that its proposed method
of implementation of the GRIP statute constitutes a constitutional application of the
statute.
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 this ordinance to the Commission.
SECTION 3 . The costs incurred by ACSC in reviewing the Company's GRIP
request and representing ACSC in this proceeding are hereby found to be reasonable
and, upon submission to the Company, shall be promptly reimbursed by the Company.
SECTION 4 . The City is authorized to intervene in any appeal of the city's action
filed at the Commission, and to participate in any such appeal as a member of ACSC.
SECTION 5 . This ordinance shall become effective immediately from and after
its passage, as the law and charter in such cases provide.
SECTION 6 . A copy of this ordinance, constituting final action on the Company's
application, shall be forwarded to the appropriate designated representative of the
Company within 10 days as follows: Richard Reis, Manager, Gas Regulation, Atmos
Energy Corp., Mid -Tex Division, Lincoln Center II, 18 Floor, 5420 LBJ Freeway,
Dallas, Texas 75240.
SECTION 7 . It is hereby officially found and determined that the meeting at
which this ordinance was passed was 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.
PASSED AND APPROVED this the 2 day of August, 2005.
W E
r • •
ATTEST:
�ityrk