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HomeMy WebLinkAboutOrdinance 23869-09-2019 ORDINANCE NO. 23869-09-2019 AN ORDINANCE APPROVING A NEGOTIATED SETTLEMENT BETWEEN THE ATMOS CITIES STEERING COMMITTEE ("ACSC") AND ATMOS ENERGY CORP., MID-TEX DIVISION (""COMPANY") REGARDING THE COMPANY'S 2019 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; APPROVING AN ATTACHED EXHIBIT ESTABLIGHING 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 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 Fort Worth, Texas ("City") is a gas utility customer of the Company, and a regulatory authority with an interest in the rates and charges of the Company; and WHEREAS, the City is a member of the ACSC, a coalition of similarly-situated cities served by the Company ("ACSC Cities") that have joined together to facilitate the review of, and response to, natural gas issues affecting rates charged in the Company 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 Company; and WHEREAS, on April 1, 2019, the Company filed its 2019 RRM rate request with the ACSC Cities based on a test year ending December 31, 2018; and Ordinance No.23869-09-2019 Page I of 4 WHEREAS, the ACSC coordinated its review of the Company's 2019 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 ACSC Executive Committee, as well as the ACSC's counsel and consultants, recommend that the ACSC Cities approve an increase in base rates for the Company of$35.4 million applicable to ASCS Cities; 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 (Exhibit C); and WHEREAS, the RRM Tariff contemplates reimbursement of the ACSC's reasonable expenses associated with RRM applications; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS: SECTION 1. That the findings set forth in this Ordinance are hereby in all things approved. SECTION 2. That, without prejudice to future litigation of any issue identified by the ACSC, the City Council finds that the settled amount of an increase in revenues of$35.4 million for ACSC Cities represents a comprehensive settlement of gas utility rate issues affecting the rates, operations, and services offered by the Company within the municipal limits arising from the Company's 2019 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 the Company are unreasonable. The new tariffs attached hereto and incorporated herein as Exhibit A are just and reasonable and are designed to allow the Company to recover annually an additional $35.4 million in revenue from customers in ACSC Cities over the amount allowed under currently approved rates. Such tariffs are hereby adopted. Ordinance No.23869-09-2019 Page 2 of 4 SECTION 4. That the ratemaking treatment for pensions and retiree medical benefits in the Company's next RRM filing shall be as set forth on Exhibit B, attached hereto and incorporated herein. SECTION 5. That amortization of regulatory liability shall be consistent with the schedule found in attached Exhibit C, attached hereto and incorporated herein. SECTION 6. That the Company shall reimburse the reasonable ratemaking expenses of the ACSC in processing the Company's 2019 RRM filing. SECTION 7. That to the extent any resolution or ordinance previously adopted by the City Council is inconsistent with this Ordinance, it is hereby repealed. SECTION 8. 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 9. 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 10. 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 October 1, 2019. SECTION 11. That a copy of this Ordinance shall be sent to the Company, 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. (signature page follows) Ordinance No.23869-09-2019 Page 3 of 4 PASSED AND APPROVED this 24th day of September, 2019. P or ATTEST: APPROVED AS TO FORM Mary J. Kay , Py-yWretary Sarah FullenWder, City Attorney �F FORS.` Ordinance No.23869-09-2019 Page 4 of 4 Exhibit A Rate Tariffs Effective October 1, 2019 MID-TEX DIVISION RRC Tariff No: ATMOS ENERGY CORPORATION RATE SCHEDULE: R—RESIDENTIAL SALES APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 10/01/2019 PAGE: 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 Ccf charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Bill $ 19.55 per month Rider CEE Surcharge $ 0.05 per month' Total Customer Charge $ 19.60 per month Commodity Charge—All Ccf $0.17423 per Ccf 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. 'Reference Rider CEE-Conservation and Energy Efficiency as approved in GUD 10170. Surcharge billing effective July 1,2019. MID-TEX DIVISION RRC Tariff No: ATMOS ENERGY CORPORATION RATE SCHEDULE: C—COMMERCIAL SALES APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 10/01/2019 PAGE: 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 30,000 Ccf. 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 Ccf charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Bill $46.50 per month Rider CEE Surcharge $ 0.02 per month Total Customer Charge $46.52 per month Commodity Charge—All Ccf $0.09924 per Ccf 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. 'Reference Rider CEE-Conservation and Energy Efficiency as approved In GUD 10170. Surcharge billing effective July 1,2019. MID-TEX DIVISION RRC Tariff No: ATMOS ENERGY CORPORATION RATE SCHEDULE: I—INDUSTRIAL SALES APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 10/01/2019 PAGE: 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 $845.50 per month First 0 MMBtu to 1,500 MMBtu $0.3572 per MMBtu Next 3,500 MMBtu $0.2616 per MMBtu All MMBtu over 5,000 MMBtu $0.0561 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." 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. MID-TEX DIVISION RRC Tariff No: ATMOS ENERGY CORPORATION RATE SCHEDULE: I—INDUSTRIAL SALES APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 1010112019 PAGE: 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 RRC Tariff No: ATMOS ENERGY CORPORATION RATE SCHEDULE: T—TRANSPORTATION APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF __7EFFECTIVE DATE: Bills Rendered on or after 10/01/2019 PAGE: Application 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 furnished. 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 $845.50 per month First 0 MMBtu to 1,500 MMBtu $0.3572 per MMBtu Next 3,500 MMBtu $0.2616 per MMBtu All MMBtu over 5,000 MMBtu $0.0561 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. Monthly Imbalance Fees Customer shall pay Company the greater of(1)$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. MID-TEX DIVISION RRC Tariff No: ATMOS ENERGY CORPORATION RATE SCHEDULE: T—TRANSPORTATION APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 10/01/2019 PAGE: 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. MID-TEX DIVISION ATMOS ENERGY CORPORATION RIDER: WNA—WEATHER NORMALIZATION ADJUSTMENT APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 11/0112019 PAGE: Provisions for Adjustment The Commodity Charge per Ccf(100 cubic feet)for gas service set forth in any Rate Schedules utilized by the cities of the Mid-Tex Division service area for determining normalized winter period revenues shall be adjusted by an amount hereinafter described, which amount is referred to as the "Weather Normalization Adjustment." The Weather Normalization Adjustment shall apply to all temperature sensitive residential and commercial bills based on meters read during the revenue months of November through April. The five regional weather stations are Abilene,Austin, Dallas,Waco,and Wichita Falls. Computation of Weather Normalization Adjustment The Weather Normalization Adjustment Factor shall be computed to the nearest one-hundredth cent per Ccf by the following formula: (HSFi x (NDD-ADD)) WNAFi = Ri (BLi + (HSFi x ADD) ) Where i = any particular Rate Schedule or billing classification within any such particular Rate Schedule that contains more than one billing classification WNAFi = Weather Normalization Adjustment Factor for the ith rate schedule or classification expressed in cents per Ccf Ri = Commodity Charge rate of temperature sensitive sales for the ith schedule or classification. HSFi = heat sensitive factor for the ith schedule or classification divided by the average bill count in that class NDD = billing cycle normal heating degree days calculated as the simple ten-year average of actual heating degree days. ADD = billing cycle actual heating degree days. Bli = base load sales for the ith schedule or classification divided by the average bill count in that class The Weather Normalization Adjustment for the jth customer in ith rate schedule is computed as: WNA= WNAFi x q;j Where qq is the relevant sales quantity for the jth customer in ith rate schedule. MID-TEX DIVISION ATMOS ENERGY CORPORATION RIDER: WNA—WEATHER NORMALIZATION ADJUSTMENT APPLICABLE TO: ALL CUSTOMERS IN THE MID-TEX DIVISION UNDER THE RRM TARIFF EFFECTIVE DATE: Bills Rendered on or after 11/01/2019 PAGE: Base Use/Heat Use Factors Residential Commercial Base use Heat use Base use Heat use Weather Station Ccf Ccf/HDD Ccf Ccf/HDD Abilene 9.77 0.1487 88.49 0.7036 Austin 9.04 0.1537 201.48 1.0000 Dallas 13.07 0.2202 184.64 1.1385 Waco 8.77 0.1470 135.70 0.7744 Wichita 11.40 0.1468 117.90 0.5943 Falls Weather Normalization Adiustment(WNA)Report On or before June 1 of each year, the company posts on its website at atmosenergy.com/mtx-wna, in Excel format, a Weather Normalization Adjustment(WNA) Repoli to show how the company calculated its WNAs factor during the preceding winter season. 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Report of City Staff:Juanita Rigsby;b.Citizen Presentations;c.Council Action:Close Public Hearing and Vote on M&C) RECOMMENDATION: It is recommended that the City Council adopt the attached Ordinance establishing maximum permitted rates and charges that Atmos Energy Corporation,d/b/a Atmos Energy Corporation,Mid-Tex Division, may assess customers in the City of Fort Worth,effective October 1,2019, pursuant to a negotiated settlement of Atmos'proposed rate increase under its 2019 Rate Review Mechanism filing. DISCUSSION: The purpose of this Mayor and Council Communication(M&C)is to approve a negotiated settlement with Atmos Energy Corporation,d/b/a Atmos Energy Corporation,Mid-Tex Division(Atmos), regarding Atmos'2019 filing under the Rate Review Mechanism(RRM).The settlement was negotiated and is recommended by the Executive Committee of the Atmos Cities Steering Committee(ACSC),which is a coalition of 172 cities; including Fort Worth,that works cooperatively to provide members with more effective and efficient representation on gas-related issues. The RRM Tariff was most recently re-adopted in 2018(M&C G-19380)and serves as an alternative rate adjustment mechanism to the default process outlined in state law.Like the state-law adjustment mechanism,the RRM allows Atmos to adjust rates to recover capital improvement costs, but unlike state law,the RRM takes into account Atmos'overall financial situation,including operating costs and revenues and allows cities, as regulatory entities,to review filings and identify expenses or investments considered to be unreasonable or unnecessary that should be reduced or disallowed.Since it was originally adopted,the RRM process has generally resulted in rate increases that are less than Atmos would have been entitled to implement under the default state-law adjustment mechanism. On or about April 1,2019,Atmos filed its rate increase request under the RRM Tariff.That filing sought additional revenues in the amount of$54 million system-wide.The City worked with and through ACSC to analyze the schedules and evidence offered by Atmos to support its request to increase rates. The attached Ordinance reflects the terms of a negotiated settlement between ACSC and Atmos to resolve issues raised by ACSC during the review and evaluation of Atmos's filing.Under the Ordinance Atmos'revenues would increase by$35.4 million.This figure represents a reduction of approximately$18.6 million dollars from the amount Atmos requested in its RRM filing. The monthly bill impact for the average residential customer in the Atmos system consuming 45.7 Ccf will be an increase of$2.05,or about 3.7%. The average Atmos system commercial customer consuming 367.6 Ccf will see an increase of$6.18,or 2.31%. On approval of the attached Ordinance,the rates shown in Exhibit A of the Ordinance will be effective for bills rendered on or after October 1, 2019. Key elements of the rate changes are as follows: Residential Present Recommended Customer Charge $ 18.85 $ 19.55 Rider CEE Surcharge* $ 0.03 $ 0.05 Total Customer Charge $ 18.88 $ 19.60 All Ccf $ 0.14846 $ 0.17423 Commercial Customer Charge $ 43.50 $ 46.50 Rider CEE Surcharge* $ (0.03) $ 0.02 Total Customer Charge $ 43.47 $ 46.52 All Ccf $ 0.09165 $ 0.09924 Industrial Customer Charge $784.00 $845.50 First 0 MMBtu to 1,500 $ 0.3312 $ 0.3572 MMBtu Next 3,500 MMBtu $ 0.2425 $ 0.2616 All over 5,000 MMBtu $ 0.0520 $ 0.0561 Transportation Customer Charge $784.00 $845.50 First 0 MMBtu to 1,500 $ 0.3312 $ 0.3572 MMBtu Next 3,500 MMBtu $ 0.2425 $ 0.2616 All over 5,000 MMBtu $ 0.0520 $ 0.0561 `Surcharge imposed under the Conservation and Energy Efficiency Rider(Rider CEE)as approved by the RRC in Gas Utility Docket No. 10170. This M&C does not request approval of a contract with a business entity. A Form 1295 is not required because:This M&C does not request approval of a contract with a business entity. FISCAL INFORMATION I CERTIFICATION: The Director of Finance certifies that this action will have no material effect on City Funds. Submitted for City Manager's Office by: Kevin Gunn 2015 Originating Business Unit Head: Steve Cooke 5134 Additional Information Contact: Roger Venables 6334