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HomeMy WebLinkAboutContract 40556CITY SECRETARY 13uo L Lookout Drive, Ste too Richardson, TX 75082 CQN WI T NUJ. 4 t 972 680 2000 t 972 680 2007 515 Congress Avenue, Ste 1515 Austin, TX 18701 t 512 479 7900 t 512 479 7905 June 19, 2010 Ms. Bridgette Garrett Budget Administrator City of Fort Worth 1000 Throckmorton Street Fort Worth, Texas 76102 Dear Ms. Garrett: J. Stowe & Co., LLC ("J. Stowe & Co.") is pleased to propose its services concerning a review of the franchise fees paid by Atmos Energy to the City of Fort Worth as a member of a coalition of cities that includes Addison, Allen, Carrollton, Euless, Farmers Branch, Flower Mound, Harker Heights, McKinney, Rockwall and Waco, Texas ("Cities"). Ms. Connie Cannady, who will be conducting the analysis, has completed numerous studies to assist franchising authorities in determining franchise fee computational compliance.' Ms. Cannady is highly qualified to provide assistance to the Cities based on the following: • Crver twenty-five (25+) years of experience in dealing with franchising and regulatory issues before various governmental entities concerning utility services; • Significant experience in evaluating performance aspects of utility service providers; and • Significant experience in assisting municipalities negotiate with service providers regarding franchise fee, service levels, service rates and other franchise requirements. The following proposal provides a more detailed description of the project scope and the proposed project fees and expenses. Please note that the proposed costs are based on project activities identified within the proposal, and based on the participation of the above listing of cities. C. PROJECT SCOPE J. Stowe & Co. proposes to conduct a review of franchise fees paid by Atmos to each of the Cities for the period beginning January 2007 through the CIAC payment due in April 2010. The activities that will be conducted for the Cities will include: • Review of franchise agreement and related information • Review of remittance amounts and accompanying information provided by the Company to the Cities • Evaluate the customer billing system used to record revenue received from inside and outside City limits and compare to general ledger amounts • Evaluate accounting procedures applied to customer and non -customer revenue ' Ms. Cannady maybe assisted by other J. Stowe & Co. staf;' as required. However, she will be responsible for the overall conduct of the engagement and will participate in the day-to-day analyses. Environmental E c o n O m i s t s www.jstoweco.com 07-13-10 A10�57 1N a: Ms. Bridgette Garrett June 19, 2010 Page 2 • Evaluate accounting policies related to gross receipts tax and franchise fees • Evaluate computation of amounts related to: * Franchise fee receipts from customers * Value of third party gas * Revenue from transportation customers * Connect, disconnects, reconnects * NSF checks charges * Other service charges collected * Contributions in Aid of Construction * Any Most Favored Nations adjustments * Any revenue sources not included in the computation • Evaluate accuracy of internal reporting related to franchise fees • Review the annexation procedures for transfer of customers to the City service area • Review natural gas usages for the review period • Document any significant changes in natural gas usage Per Atmos Energy Corporation, Mid -Tex Division's tariff, effective June 24, 2008, the Company is authorized to "adjust Customer's bill[s] each month in an amount equal to the municipal franchise fees payable for the Gas Service provided to Customer by Company.s2 Based on recent analyses by J. Stowe & Co., it is possible that, at a minimum, Atmos may not be including franchise fees in their calculation of revenue related to gas sales. Depending on the franchise agreement language, such exclusion could be in conflict with the franchise requirements. The question of whether franchise fees collected from customers could be included as a component of gross receipts was decided by the Sth Circuit Court of Appeals in 1997.3 The Court determined that such monies could be included in the term gross revenue as being revenue derived from the operation of a business. Deliverables Based on the results of the analyses, J. Stowe & Co. will prepare a written report for each of the Cities identifying the extent to which Atmos has been in compliance with the current franchise agreement requirements for computation and remittance of franchise fees. Additionally, the report will identify any issues with respect to potential consideration to be given during future franchise renewals. The proposed project costs also include one joint meeting with Cities' representatives to discuss the findings and possible next steps. II. PROJECT COSTS Based on the activities identified above that will be conducted for the Cities, the fees for the City of Fort Worth's participation are as follows: Professional Fees $ 3,500 Estimated Out-0f--Pocket Expenses 1/11 �' of $200 184 Total Estimated Project Costs $ 3,518 2 Atmos Energy Corporation, Mid -Tex Division, Franchise Fee Adjustment Rider, page 73, effective June 24, 2008. 3 118 F. 3d 393 a "I he estimated out-of-pocket expense is based on expected mileage to and from Atmos facilities as well as the joint coalition meeting with the Cities. Ms. Bridgette Garrett June l 9, 2010 Page 3 Additional Services Additional assistance can be provided on an as needed basis, but not without specific authorization from the Cities. Such assistance may include, but not be limited to, the following: • Meetings with Company representative to discuss findings; • Additional meetings with City representatives to discuss potential actions; • Assistance to City staff in preparing any Council documentation; and • Presentation of findings and recommendations before the City Council. The billing for any additional services will be at the hourly billing rate oC$195, plus out-of-pocket expenses. IIL ACCEPTANCE J. Stowe & Co. greatly appreciates this opport�uiity to work with the Cities. If this letter is in agreement with the City of Fort Worth's understanding as to the scope of services to be provided and the associated fees, please execute this agreement and return a copy to: J. Stowe & Co. LLC 1300 E. Lookout Drive, Suite 100 Richardson, Texas 75082 If you have any questions, please contact Ms. Cannady at 972.680.2000 or via email at ccannady@j stoweco. com. Very holy yours, . .32q towe & Co. LLC CITY OF FORT WORTH, TEXAS By: Title Date: OFFICI�tL RECORD CITY SECRETARY FT WORTH, TX 1 �a Attested by> I-�e�d�rix, Secretary 5