Ord 16-2017 5/16/2017 ORDINANCE NO. 16-2017
Ordinance 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 2017 rate review mechanism filings; 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 settlement tariffs to be just and
reasonable and in the public interest; requiring reconciliation
and rate adjustments if federal income tax rates change;
terminating the RRM process for 2018 pending renegotiation of
RRM terms and conditions; requiring the Company to
reimburse ACSC'S reasonable ratemaking expenses;
determining that this ordinance 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 ordinance 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 and charges 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 new
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, on March 1, 2017, Atmos Mid-Tex filed its 2017 RRM rate request
with ACSC Cities; and
WHEREAS, ACSC coordinated its review of the Atmos Mid-Tex 2017 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$48 million on a system-wide basis; and
WHEREAS, the attached tariffs 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;
WHEREAS, the RRM Tariff contemplates reimbursement of ACSC's reasonable
expenses associated with RRM applications;
WHEREAS, the Company and ACSC have agreed that rates should be adjusted
if any change in federal income tax rates is implemented during the period that rates
approved herein remain in place; and
WHEREAS, because ACSC believes that certain provisions of the current terms
and conditions of the RRM tariff are inconsistent with market conditions, the City expects
renegotiation of the current RRM tariff in the Summer of 2017.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF WICHITA FALLS, 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 settled amount of an increase in
revenues of $48 million on a system-wide basis 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 2017 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 the existing rates for natural gas service provided by Atmos Mid-
Tex are unreasonable. The new tariffs attached hereto and incorporated herein as
Attachment A, are just and reasonable, and are designed to allow Atmos Mid-Tex to
recover annually an additional $48 million in revenue over the amount allowed under
currently approved rates, as shown in the Proof of Revenues attached hereto and
incorporated herein as Attachment B; such tariffs are hereby adopted.
Section 4. That the ratemaking treatment for pensions and other post-employment
benefits in Atmos Mid-Tex's next RRM filing shall be as set forth on Attachment C,
attached hereto and incorporated herein.
Section 5. Consistent with Texas Utilities Code Section 104.055(c), Atmos
Energy's recovery of federal income tax expense through the Rider RRM has been
computed using the statutory income tax rate. In the event that a change in the statutory
income tax rate is implemented during the Rider RRM Rate Effective Date, Atmos Energy
shall reconcile the difference between the amount of federal income tax expense included
in the Rider RRM calculation for the Rate Effective Date with the amount of federal income
tax expense authorized under the new statutory income tax rate. The reconciliation
period shall be from the date on which any new statutory income tax rate is implemented
through the Rate Effective Date. An interest component calculated at the customer
deposit interest rate then in effect as approved by the Railroad Commission of Texas shall
be applied to the federal income tax expense reconciliation. Further, any required
reconciliation of federal income tax expense shall be included as part of Atmos Mid-Tex's
next annual RRM filing and shall be returned to or recovered from customers as a one-
time credit or surcharge to the customer's bill.
Section 6. The City requires renegotiation of RRM tariff terms and conditions
during the Summer of 20017. If an agreed renegotiated RRM tariff cannot be achieved,
the City will terminate the RRM process and consider initiation of a traditional rate case
to reduce the Company's authorized return on equity.
Section 7. That Atmos Mid-Tex shall reimburse the reasonable ratemaking
expenses of the ACSC in processing the Company's 2017 RRM filing.
Section 8. That to the extent any resolution or ordinance previously adopted by
the Council is inconsistent with this Ordinance, it is hereby repealed.
Section 9. 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 10. 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 11, That consistent with the City Ordinance that established the RRM
process, this Ordinance shall become effective from and after its passage with rates
authorized by attached tariffs to be effective for bills rendered on or after June 1, 2017.
Section 12. That a copy of this Ordinance shall be sent to Amos Mid-Tex, care
of Chris Felan, Vice President of Rates and Regulatory Affairs Mid-Tex Division, Atmos
Energy Corporation, 5420 LJB 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 16t day of May, 2017.
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