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HomeMy WebLinkAboutOrdinance 19858-08-2011ORDINANCE NO. 19858 -08 -2011 AN ORDINANCE ESTABLISHING MAXIMUM PERMITTED RATES AND CHARGES THAT ATMOS ENERGY CORP., MID -TEX DIVISION, MAY ASSESS CUSTOMERS IN THE CITY OF FORT WORTH; APPROVING AND RATIFYING A RELATED SETTLEMENT AND RESOLUTION BETWEEN ATMOS ENERGY CORP., MID -TEX DIVISION, AND THE ATMOS CITIES STEERING COMMITTEE, OF WHICH THE CITY IS A MEMBER; ADOPTING DECLARATIONS AND FINDINGS RELATED TO RATES AND CHARGES ASSESSED TO CUSTOMERS IN THE CITY OF FORT WORTH; DIRECTING ATMOS ENERGY CORP., MID -TEX DIVISION, TO REIMBURSE ALL RATE CASE EXPENSES; REPEALING ANY PREVIOUSLY ADOPTED ORDINANCES IN CONFLICT HEREWITH; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, on May 16, 2006 the City Council adopted Resolution No. 3348 -05 -2006 authorizing participation by the City of Fort Worth (the "City ") in the Atmos Cities Steering Committee (the "Steering Committee ") for assistance in rate cases involving Atmos Energy Corp., Mid -Tex Division ( "Atmos "), including the retention of consultants and outside legal counsel associated with such assistance ; and WHEREAS, on February 19, 2008 the City Council adopted Ordinance No. 17989 -02- 2008 approving a Settlement Agreement between Atmos and the Steering Agreement as to disputed matters in certain matters identified in that Ordinance, including, but not limited to, continuing disagreement, disputes, and litigation over the application of and basis for Gas Reliability Infrastructure Program (GRIP) surcharges, as provided in Section 104.301 of the Texas Utilities Code (the "Settlement Agreement "); and WHEREAS, in accordance with the Settlement Agreement, pursuant to Ordinance No. 17989 -02 -2008, the City Council approved an expedited rate review mechanism ("RRM") for future rate proceedings involving Atmos through at least 2011; and Page 1 45 Annos RRM Ordinance (201 1) WHEREAS, in accordance with the process outlined in the Settlement Agreement, on or about April 1, 2011, Atmos filed with the City an application pursuant to the RRM tariff to increase natural gas rates by approximately $15.7 million aggregate increase applicable to each municipality that adopted the RRM tariff as part of their approval of the Settlement Agreement (the "2011 RRM Filing "); and WHEREAS, the Steering Committee and its lawyers and consultants have reviewed the 2011 RRM Filing and concluded that the evidence provided by Atmos in support of its 2011 RRM Filing does not justify the proposed rate increase; and WHEREAS, on the basis of the review and analysis of Atmos's 2011 RRM Filing undertaken by the Steering Committee's lawyers and consultants, the Steering Committee's executive committee has recommended that the City Council adopt the rate tariffs attached hereto as Exhibit "A ", which is hereby made a part of this Ordinance for all purposes, resulting in an increase of approximately $6.6 million in Atmos's revenue requirements in all municipalities that adopted the RRM tariff as part of their approval of the Settlement Agreement; and WHEREAS, the negotiated resolution of the 2011 RRM Filing and the resulting rates are, as a whole, in the public interest; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS: Pagc 2 of 5 Atmos RRM Ordinancc 1201 1 1 Section 1. FINDINGS. That the City Council, pursuant to its exclusive original jurisdictional authority over the rates, operations, and services of Atmos within the City and in the exercise of its sound legislative discretion, makes the following findings of fact: 1.1. The statements set forth in the Recitals above are true and correct and are hereby incorporated as part of the findings herein. 1.2. Independent analysis by the Steering Committee's rate expert concluded that Atmos's 2011 RRM Filing is unable to justify an increase over current rates except for undisputed costs of $6.6 million to cover the costs of a steel service line replacement program initiated in 2010. 1.3. Based on all information previously provided to and before the City Council, the City Council hereby finds that the rates proposed by Atmos in its 2011 RRM Filing are unreasonable. 1.4. The tariffs attached hereto as Exhibit "A ", which will increase Atmos's revenue requirement by $6.6 million to allow recovery of incremental direct costs of a steel service line replacement program, are just and reasonable and in the public interest. Section 2. RATES AND CHARGES ORDERED. That based on the findings of fact set forth in Section 1 of this Ordinance and all other information before the City Council, Atmos is hereby authorized and ordered to implement the tariffs attached hereto as Exhibit "A ". Page 3 of i Atmos RRM Ordinance (201 1 ) Section 3. REIMBURSEMENT OF RATE CASE EXPENSES. That Atmos shall reimburse the reasonable ratemaking expenses of the City, as part of the Steering Committee, in processing the 2011 RRM Filing. Section 4. REPEAL OF ORDINANCES IN DIRECT CONFLICT. That if any provisions or conditions of this Ordinance directly conflict with any provisions or conditions of other Ordinances previously adopted by the City Council, the conflicting provisions of such previously adopted Ordinances are hereby repealed. Section 5. COMPLIANCE WITH OPEN MEETINGS ACT REQUIREMENTS. That the meeting in which this Ordinance was adopted was in all things conducted in strict compliance with the Texas Open Meetings Act, as codified at Chapter 551, Texas Government Code. Section 6. SEVERABILITY. That if any portion, section or part of a section of this Ordinance is subsequently declared invalid, inoperative or void for any reason by a court of competent jurisdiction, the remaining portions, sections or parts of sections of this Ordinance shall be and remain in full force and effect and shall not in any way be impaired or affected by such decision, opinion or judgment. Page 4 of 5 ntmos RRM Ordinance (201 1) Section 7. EFFECTIVE DATE. That this Ordinance shall take effect and be in full force and effect from and after the date of its adoption, with the tariffs attached hereto in Exhibit "A" to be effective for bills rendered on and after September 1, 2011. The City Secretary is hereby directed to deliver a certified copy of this Ordinance to Atmos, care of David Park, Vice President Rates and Regulatory Affairs, Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1862, Dallas, TX 75240, and to the Steering Committee's outside legal counsel, Geoffrey Gay, Lloyd Gosselink Rochelle & Townsend, P.C., P.O. Box 1725, Austin, TX 78767 -1725. AND IT IS SO ORDAINED. ADOPTED AND EFFECTIVE: August 23, 2011 APPROVED AS TO FORM AND LEGALITY: By:_ fiAE Peter Vaky Deputy City Attorney M &c: G-17,361 Z -23 -/l Page 5 of 5 Atmos RRM Ordinance (201 1 ) MID -TEX DIVISION ATMOS ENERGY CORPORATION RATE SCHEDULE: R — RESIDENTIAL SALES APPLICABLE TO: All Cities except the City of Dallas EFFECTIVE DATE: i Bills Rendered on or after 9/1/2011 Application Applicable to Residential Customers for all natural gas provided at one Point of Delivery and measured through one meter. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and Mcf charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Bill $ 7.50 per month Commodity Charge — All Mcf $ 2.5116 per Mcf Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Weather Normalization Adjustment: Pius or Minus an amount for weather normalization calculated in accordance with Rider WNA. Franchise Fee Adjustment Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Agreement An Agreement for Gas Service may be required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. EXHIBIT "A" MID -TEX DIVISION ATMOS ENERGY CORPORATION RATE SCHEDULE: C — COMMERCIAL SALES APPLICABLE TO: All Cities except the City of Dallas EFFECTIVE DATE: Bills Rendered on or after 9!1!2011 Application Applicable to Commercial Customers for all natural gas provided at one Point of Delivery and measured through one meter and to Industrial Customers with an average annual usage of less than 3,000 Mcf. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customers monthly bill will be calculated by adding the following Customer and Mcf charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Bill $ 16.75 per month Commodity Charge - All Mcf $ 1.0217 per Mcf Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR, Weather Normalization Adjustment: Plus or Minus an amount for weather normalization calculated in accordance with Rider WNA_ Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Agreement An Agreement for Gas Service may be required_ Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. MID -TEX DIVISION ATMOS ENERGY CORPORATION RATE SCHEDULE: 1— INDUSTRIAL SALES APPLICABLE TO: All Cities except the City of Dallas EFFECTIVE DATE: Bills Rendered on or after 8/1/2011 Next 3,500 MMBtu Application Applicable to Industrial Customers with a maximum daily usage (MDU) of less than 3,500 MMBtu per day for all natural gas provided at one Point of Delivery and measured through one meter. Service for Industrial Customers with an MDU equal to or greater than 3,500 MMBtu per day will be provided at Company's sole option and will require special contract arrangements between Company and Customer. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and MMBtu charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Meter $ 450.00 per month First 0 MMBtu to 1,500 MMBtu $ 0.2750 per MMBtu Next 3,500 MMBtu $ 0.2015 per MMBtu All MMBtu over 5,000 MMBtu $ 0.0433 per MMBtu Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX, Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s) Curtailment Overpull Fee Upon notification by Company of an event of curtailment or interruption of Customer's deliveries, Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay Company 200% of the midpoint price for the Katy point listed in Platts Gas Daily published for the applicable Gas Day in the table entitled "Daily Price Survey." MID -TEX DIVISION ATMOS ENERGY CORPORATION RATE SCHEDULE: I — INDUSTRIAL SALES APPLICABLE TO: All Cities except the City of Dallas EFFECTIVE DATE: Bills Rendered on or after 8/1/2011 Replacement Index In the event the "midpoint" or "common" price for the Katy point listed in Platfs Gas Daily in the table entitled "Daily Price Survey" is no longer published, Company will calculate the applicable imbalance fees utilizing a daily price index recognized as authoritative by the natural gas industry and most closely approximating the applicable Index. Agreement An Agreement for Gas Service may be required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. Special Conditions In order to receive service under Rate I, Customer must have the type of meter required by Company. Customer must pay Company all costs associated with the acquisition and installation of the meter. MID TEX DIVISION ATMOS ENERGY CORPORATION RATESCHEDULE: T— TRANSPORTATION APPLICABLE TO: All Cities except the City of Dallas EFFECTIVE DATE: Bills Rendered on or after 9/1/2011 Next 3,500 MMBtu Appllcation Applicable, in the event that Company has entered into a Transportation Agreement, to a customer directly connected to the Atmos Energy Corp., Mid -Tex Division Distribution System (Customer) for the transportation of all natural gas supplied by Customer or Customer's agent at one Point of Delivery for use in Customer's facility. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being fumished. Monthly Rate Customer's bill will be calculated by adding the following Customer and MMBtu charges to the amounts and quantities due under the riders listed below: Charge Amount Customer Charge per Meter $ 450.00 per month First 0 MMBtu to 1,500 MMBtu $ 0.2750 per MMBtu Next 3,500 MMBtu $ 0.2015 per MMBtu All MMBtu over 5,000 MMBtu $ 0.0433 per MMBtu Upstream Transportation Cost Recovery: Plus an amount for upstream transportation costs in accordance with Part (b) of Rider GCR. Retention Adjustment: Plus a quantity of gas as calculated in accordance with Rider RA. Franchise Fee Adjustment Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). imbalance Fees All fees charged to Customer under this Rate Schedule will be charged based on the quantities determined under the applicable Transportation Agreement and quantities will not be aggregated for any Customer with multiple Transportation Agreements for the purposes of such fees. MID -TEX DIVISION ATMOS ENERGY CORPORATION RATE SCHEDULE: T — TRANSPORTATION APPLICABLE TO: All Cities except the City of Dallas EFFECTIVE DATE: Bills Rendered on or after 9/1/2011 Monthly Imbalance Fees Customer shall pay Company the greater of (i) $0.10 per MMBtu, or (ii) 150% of the difference per MMBtu between the highest and lowest "midpoint" price for the Katy point listed in Platts Gas Daily in the table entitled "Daily Price Survey" during such month, for the MMBtu of Customer's monthly Cumulative Imbalance, as defined in the applicable Transportation Agreement, at the end of each month that exceeds 10% of Customer's receipt quantities for the month. Curtailment Overpull Fee Upon notification by Company of an event of curtailment or interruption of Customer's deliveries, Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay Company 200% of the midpoint price for the Katy point listed in Platts Gas Daily published for the applicable Gas Day in the table entitled "Daily Price Survey." Replacement Index In the event the "midpoint" or "common" price for the Katy point listed in Platts Gas Daily in the table entitled "Daily Price Survey" is no longer published, Company will calculate the applicable imbalance fees utilizing a daily price index recognized as authoritative by the natural gas industry and most closely approximating the applicable index. Agreement A transportation agreement is required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. Special Conditions In order to receive service under Rate T, customer must have the type of meter required by Company. Customer must pay Company all costs associated with the acquisition and installation of the meter. City of Fort Worth, Texas Mayor and Council Communication COUNCIL ACTION: Approved on 8/2312011 - Ordinance Nu: 19858 -08 -2011 DATE: Tuesday, August 23, 2011 LOG NAME: 12ATMOS 2011 RRM REFERENCE NO.: * *G -17361 SUBJECT: Adopt Ordinance Establishing Maximum Permitted Rates and Charges that Atmos Energy Corporation, Mid -Tex Division, May Assess Customers in the City of Fort Worth (ALL COUNCIL DISTRICTS) RECOMMENDATION: It is recommended that the City Council adopt the attached ordinance establishing maximum permitted rates and charges that Atmos Energy Corporation, Mid -Tex Division, may assess customers in the City of Fort Worth pursuant to a negotiated settlement and resolution of Atmos' proposed rate increase under 2011 Rate Review Mechanism Filing. DISCUSSION: On May 16, 2006, the City Council adopted Resolution No. 3348- 05 -06, which authorized participation with other cities in the Atmos Energy Corporation ( Atmos) service area to form a standing steering committee with the authority to act on behalf of its members in any proceeding relating to gas utility regulation (M &C G- 15202). This committee is known as the Atmos Cities Steering Committee (ACSC). On September 20, 2007, Atmos filed with the City of Fort Worth (City) a Statement of intent to Increase Gas Utility Rates within the Incorporated Areas Served by the Mid -Tex Division. ACSC and Atmos representatives negotiated an Agreement to settle this case that included a provision for an annual rate review. The Rate Review Mechanism (RRM) was intended to expedite the rate review process by the cities without costly litigation. On February 19, 2008, the City Council adopted Ordinance No. 17989 -02- 2008 approving the Settlement Agreement and authorizing the RRM tariff. Atmos filed an application to increase natural gas rates pursuant to the RRM tariff with the cities which approved the Settlement Agreement on or about April 1, 2011. The application requested approximately $15.7 million in additional revenue. ACSC designated a negotiation committee made up of city representative, which included the Utility Administrator for the City of Fort Worth, assisted by ACSC's attorney, and consultant, to resolve issues identified in the Company's RRM filing. The negotiating committee and Atmos reached an Agreement to increase Atmos' revenue requirement by $6.6 million to be recovered through the customer charge component of rates to cover direct incremental costs associated with a steel service line replacement program approved as part of last year's rate adjustment. All other relief requested by Atmos Mid -Tex is denied. In 2010, under pressure from the Railroad Commission to establish a comprehensive program to replace service lines that contain steel which is subject to corrosion and leaks, ACSC worked with Atmos Mid -Tex to establish a risk based approach to steel service line replacement that accomplishes the following goals: 1. Replace all service lines throughout the Mid -Tex Region with the highest degree of risk within two years; Logname: 12ATMOS 2011 RRM Page 1 of 3 2. Coordination between ACSC city members and Atmos Mid -Tex to minimize disruption of rights of way without compromising safety; 3. To minimize and spread the rate impact on customers of the replacement program, the service lines with little relative risk of leaks should be replaced over a 10 -year period; and 4. Current recovery of incremental (above and beyond normal maintenance and repair addressed in RRM proceedings) direct (excluding Atmos Mid -Tex overheads) cost of service line replacement should be permitted as an adder to customer charges. The Agreement between ACSC and Atmos approved in 2010 contemplates that incremental revenue to cover future steel service line replacement costs would be recovered through customer charges. Consistent with that approach, the $6.6 million in additional revenues to be recovered following the passage of the Ordinance is accomplished by increasing customer charges. The tariffs to be approved by the Ordinance set monthly customer charges at $7.50 and $16.75 for residential and commercial customers, respectively. Under this settlement the average residential customer (using 4.5Mcf a month) will have an increase of $0.31 per month or 0.66 percent, the average commercial customer (using 34.8Mcf a month) will have an increase of $0.88 per month or 0.88 percent. ACSC recommends that its members approve the attached rate tariffs (Exhibit A) and find that the rates therein are just, reasonable and in the public interest. The following table shows the current and recommended rates: Residential Present Recommended Customer Charge $7.15 $7.50 All Mcf $2.5246 $2.5116 Commercial Present Recommended Customer Charge $13.91 $16.75 All Mcf $ 1.0796 $ 1.0217 Industrial Present Recommended Customer Charge $450.00 $450.00 First 1,500 MMBtu $ 0.2750 $ 0.2750 Next 3,500 MMBtu $ 0.2015 $ 0.2015 All over 5,000 MMBtu $ 0.0433 $ 0.0433 Transportation Present Recommended Customer Charge $450.00 $450.00 First 1,500 MMBtu $ 0.2750 $ 0.2750 Next 3,500 MMBtu $ 0.2015 $ 0.2015 All over 5,000 MMBtu $ 0.0433 $ 0.0433 Upon adoption of the attached ordinance, the rate schedule set forth in Exhibit A of the ordinance will take effect with bills rendered after September 1, 2011. FISCAL INFORMATION / CERTIFICATION: Logname: 12ATMOS 2011 RRM Page 2 of 3 The Financial Management Services Director certifies that this action will have no material effect on City funds. FUND CENTERS: TO Fund /Account/Centers CERTIFICATIONS: Submitted for City Manager's Office by: Originating Department Head: Additional Information Contact: FROM Fund /Account/Centers Charles Daniels (6199) Sarah Fullenwider (7606) Bridgette Garrett (8518) Logname: 12ATMOS 2011 RRM Page 3 of 3