HomeMy WebLinkAboutOrdinance 20219-05-2012ORDINANCE NO. 20219-05-2012
AN ORDINANCE DENYING THE RATES AND CHARGES PROPOSED
BY ATMOS ENERGY CORPORATION, MID -TEX DIVISION, AS
REFLECTED IN THE "STATEMENT OF INTENT TO INCREASE GAS
UTILITY RATES" FILED BY ATMOS ENERGY CORPORATION, MID -
TEX DIVISION ON JANUARY 31,2012; CONFIRMING THE MAXIMUM
PERMITTED RATES AND CHARGES THAT ATMOS ENERGY
CORPORATION, MID -TEX DIVISION, MAY CONTINUE TO ASSESS
CUSTOMERS IN THE CITY OF FORT WORTH; APPROVING AS
REASONABLE COSTS INCURRED THUS FAR BY THE ATMOS CITIES
STEERING COMMITTEE AND DIRECTING THAT ATMOS ENERGY
CORPORATION, MID -TEX DIVISION, REIMBURSE THE CITY FOR
ALL PAST AND FUTURE REASONABLE EXPENSES; ADOPTING
DECLARATIONS AND FINDINGS IN THE PREAMBLE HEREOF;
PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR AN
EFFECTIVE DATE; AND ORDERING DELIVERY OF ORDINANCE
WHEREAS, under Texas law, the City has exclusive original jurisdiction over the rates,
operations and services of any gas utility operating within the City; and
WHEREAS, on January 31, 2012, Atmos Energy Corporation, Mid -Tex Division,
( "Atmos ") filed with the City a "Statement of Intent to Increase Gas Utility Rates" ( "Rate
Filing ") under which rates charged by Atmos in the City were proposed to increase effective
March 6, 2012; and
WHEREAS, on March 6, 2012, in accordance with Section 104.107 of the Texas
Utilities Code, the Fort Worth City Council adopted Ordinance 20087 -03 -2012 (M &C G- 17536),
which suspended implementation of the proposed increased rates until the later of June 4, 2012
or the latest date permitted by law, or until the date of effectiveness of a rate order adopted by the
City Council in response to the Rate Filing; and
WHEREAS, on March 6, 2012, the Fort Worth City Council also authorized cooperation
with the Atmos Cities Steering Committee ( "Steering Committee ") to hire and direct legal
counsel and consultants, negotiate with Atmos. make recommendations to the City regarding
Ordinance No. 20219 -05 -201 2
Page I of 5
reasonable rates, and direct any administrative proceedings or litigation associated with the Rate
Increase filed with the City or with the Railroad Commission of Texas; and
WHEREAS, the rates proposed in Atmos's Rate Filing would result in an increase in
rates imposed by Atmos in the City of 4.36 %, including gas costs, or 11.94 %, excluding gas
costs, which increase equates to approximately $49 million in additional revenue per year for
Atmos; and
WHEREAS, consultants engaged by the Steering Committee have reviewed the Rate
Filing and have not found justification for Atmos's rates to be increased; and
WHEREAS, the Steering Committee appointed a Settlement Committee to engage with
Atmos in settlement discussions; and
WHEREAS, Atmos's representatives have indicated that settlement will not be reached
before the suspension period ends; and
WHEREAS, failure by the City Council to take action before expiration of the
suspension period would allow Atmos to impose the rates and charges in the Rate Filing on
residents of the City of Fort Worth; and
WHEREAS, as a result, the City staff has recommended that the City Council deny
Atmos's proposed rate increase to allow for continued settlement discussions pending Atmos's
appeal of the denial to the Railroad Commission of Texas; and
WHEREAS, Section 103.022 of the Texas Utilities Code provides that reasonable costs
incurred by cities in ratemaking activities are to be reimbursed by the regulated utility.
NOW, THEREFORE BE IT ORDAINED BY THE CITY COUNCIL OF THE
CITE OF FORT XVORTH, TEXAS THAT:
Ordinance No. 20219 -05 -201 2
Page 2 of 5
SECTION 1.
The Fort Worth City Council, pursuant to its exclusive original jurisdiction over the rates,
operations, and services of Atmos within the City and in the exercise of its sound legislative
discretion, finds, based on the analysis of the Steering Committee consultants and following a
public hearing, that the rates and charges proposed by Atmos Energy Corporation, Mid -Tex
Division, in its Rate Filing of January 31, 2012, are unreasonable and not in compliance with the
requirements of the Texas Utilities Code, and those rates are hereby denied.
SECTION 2.
Ordinance 19858 -08 -2011, which was adopted by the Fort Worth City Council on August
23, 2011, and which establishes the maximum permitted rates and charges that Atmos Energy
Corporation, Mid -Tex Division, may assess customers in the City of Fort Worth, shall continue
in full force and effect in its entirety, and Atmos Energy Corporation, Mid -Tex Division, shall
continue to assess customers within the City rates and charges in accordance with that
Ordinance.
SECTION 3.
The City Council finds the expenses incurred by the Steering Committee, of which the
City is a member, to be reasonable and necessary. Therefore, in accordance with Section
103.022(b) of the Texas Utilities Code, Atmos is hereby directed to reimburse the City for these
expenses and all future reasonable costs and expenses of any rate consultants, accountants,
auditors, attorneys, and engineers retained by the City or a steering committee of which the City
is a member, including the Steering Committee, and incurred in the course of the City's and /or
Ordinance No. 202 19-05-20 12
Page 3 of 5
the Steering Committee's involvement in any review of the Rate Filing, any litigation, and any
appeal to the Railroad Commission of Texas of the denial of the rates proposed in the Rate
Filing. The City is hereby authorized to intervene in any such litigation or appeal before the
Railroad Commission of Texas.
SECTION 4.
All of the declarations and findings contained in the preamble of this Ordinance are made
a part hereof and shall be fully effective as part of the ordained subject matter of this Ordinance.
SECTION 5.
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.
V ,%F.f T1nN
This Ordinance shall take effect and be in full force and effect from and after the date of
its adoption.
SECTION 7.
The City Secretary is hereby directed to deliver a certified copy of this Ordinance to
Atmos, care of David J. Park, Vice - President, Rates & Regulatory Affairs at Atmos Energy
Corporation, 5420 LBJ Freeway, Suite l SOO, Dallas, Texas 75240, and to Geoffrcv Gay, General
Ordinance No. 20219-05-2012
Page 4 of 5
Counsel to Atmos Cities Steering Committee, at Lloyd Gosselink Rochelle & Townsend, P.C.,
P.O. Box 1725, Austin, Texas 78767 -1725.
AND IT IS SO ORDAINED.
ADOPTED AND EFFECTIVE: May 15, 2012
APPROVED AS Tq FORM AND LEGALITY:
By:
Denis C. McEltLey
Assistant City
M &C: G -17599
Ordinance No. 20219-05-2012
Page 5 of 5
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION': Approved on 5 /15/2012 -- Ordinance No. 20219 -05 -2012
DATE: Tuesday, May 15, 2012 REFERENCE NO.: G -17599
LOG NAME: 12DENY ATMOS RATE INCREASE 2012
SUBJECT:
Adopt Ordinance Denying Rate Increase Proposed by Atmos Energy Corporation, Mid -Tex Division, and
Ordering Continued Effectiveness of Existing Rates (ALL COUNCIL DISTRICTS)
RECOMMENDATION:
It is recommended that the City Council adopt the attached ordinance denying the rate increase proposed
by Atmos Energy Corporation, Mid -Tex Division, in the "Statement of Intent to Increase Gas Utility Rates"
filed with the City on January 31, 2012, and ordering continued effectiveness of existing rates.
DISCUSSION:
On January 31, 2012, Atmos Energy Corporation, Mid -Tex Division ( Atmos), filed with the City of Fort
Worth (City) its "Statement of Intent to Increase Gas Utility Rates within All Incorporated Areas Served by
the Mid -Tex Division, with the exception of the City of Dallas" (Rate Filing). In the Rate Filing, Atmos is
requesting an increase in rates of 11.94 percent, excluding the cost of gas, which it estimates would
produce an annual revenue increase of $49,000,000.00 system -wide. The annual impact on customers
within the City of Fort Worth is estimated to be $5,351,041.00, in the aggregate.
Under state law, the City Council has exclusive original jurisdiction over the rates, operations, and
services of any gas utility operating in the City. When such a gas utility requests a rate change that
constitutes a major change over the rates currently in effect, the City Council is required to conduct a
public hearing in order to determine the propriety of the proposed rates.
On March 6, 2012, in accordance with Section 104.107 of the Texas Utilities Code, the City Council
adopted Ordinance 20087 -03 -2012 (M &C G- 17536), which suspended implementation of the proposed
increased rates until the latter of June 4, 2012 or the latest date permitted by law, in order to allow
sufficient time to analyze the Rate Filing. The City Council also authorized cooperation with the Atmos
Cities Steering Committee (Steering Committee) to hire and direct legal counsel and consultants,
negotiate with Atmos, make recommendations to the City regarding reasonable rates, and direct any
administrative proceedings or litigation associated with the Rate Increase filed with the City or with the
Railroad Commission of Texas.
The consultants engaged by the Steering Committee reviewed the Rate Filing and did not find justification
for Atmos' rates to be increased. The Steering Committee appointed a Settlement Committee to engage
with Atmos in settlement discussions, and although those negotiations have been promising, Atmos'
representatives have indicated that settlement will likely not be reached before the suspension period
ends. If the City Council fails to take action before expiration of the suspension period, Atmos would be
allowed to impose the rates and charges in the Rate Filing on residents of the City of Fort Worth.
As a result, it is recommended that the City Council deny Atmos' proposed rate increase, order the
continued effectiveness of Atmos' current rates as established by Ordinance 19858 -08 -2011 (August 23,
Logname: 12DENY ATMOS RATE INCREASE 2012 Page 1 of 2
2011), and find the expenses incurred by the Steering Committee's consultant to be reasonable and
subject to reimbursement by Atmos in accordance with state law.
If the City Council denies the rate increase, Atmos will be able to file an appeal of that decision with the
Railroad Commission of Texas. Such an appeal could be extremely expensive, and those costs would be
borne by ratepayers, in accordance with state law. Atmos has expressed optimism that a settlement may
still be reached while that appeal is pending. Staff will continue to work with the Steering Committee and
its consultants throughout the appeal and on -going settlement negotiations. If a tentative settlement is
reached, Staff will bring the matter back to the City Council for further consideration and possible action.
FISCAL INFORMATION / CERTIFICATION:
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: 12DENY ATMOS RATE INCREASE 2012 Page 2 of 2