HomeMy WebLinkAboutOrdinance 16524-07-2005ORDINANCE NO. ~~p J ~ `'~ ~~--~aD..~
AN ORDINANCE DENYING THE RATE ADJUSTMENTS PROPOSED
BY ATMOS ENERGY CORP MID-TEX DIVISION AS REFLECTED IN
THE ANNUAL GAS RELIABILITY INFRASTRUCTURE RATE
ADJUSTMENT" FILED BY ATMOS ENERGY CORP MID-TEX
DIVISION ON DECEMBER 17 2004, AUTHORIZING THE
PARTICIPATION IN THE ATMOS CITIES STEERING COMMITTEE
AND THE HIRING OF CONSULTANTS AND ATTORNEYS BY SUCH
COMMITTEE IN RESPONDING TO ANY LITIGATION OR APPEAL TO
THE TEXAS RAILROAD COMMISSION APPROVING COSTS
INCURRED BY THE COMMITTEE THUS FAR AS REASONABLE AND
DIRECTING THAT ATMOS ENERGY CORD MID-TEX DIVISION
REIMBURSE THE CITY FOR ALL PAST AND FUTURE REASONABLE
EXPENSES, ADOPTING DECLARATIONS AND FINDINGS IN THE
PREAMBLE, PROVIDING A SEVERABILTTY CLAUSE, PROVIDING
FOR AN EFFECTIVE DATE, AND DIRECTING THAT CERTIFIED
COPIES OF THIS ORDINANCE BE DELIVERED TO ATMOS ENERGY
CORP MID-TEX DIVISION FOLLOWING ITS ADOPTION
WHEREAS, on December 17 2004 Atmos Energy Corp., Mid Tex Division ("Atmos")
filed with the City Secretary an Annual Gas Rehabihty Infrastructure Rate Adjustment" ("Rate
Filing") pursuant to Section 104 301 of the Texas Utilities Code, under which adjusted rates of
Atmos would go into effect in the City on February 15 2005 and
WHEREAS under Texas law the City has. exclusive original ~unsdiction over the rates,
operations and services of any gas utihty operating within the Crty and
WHEREAS pursuant to Ordinance No 16276-02 2005 adopted by the City Council on
February 1 2005 the Crty tnnely acted to suspend the effective date of unplementation of
Atmos s adjusted rates, as proposed in the Rate Fihng; and
WHEREAS, pursuant to that Ordinance, the City Council authorized the City to
participate in a steering committee (the Atmos Cities Steering Committee, hereinafter referred to
as the `Steering Committee") to hire and direct legal counsel and consultants to make
recommendations to participating municipalities, including the City regarding the Rate Filing and
to dnrect any adminnstrative proceedings or htngatnon associated with the Rate Filing; and
WHEREAS, information provided by Atmos in response to the Steering Committee s
requests for information indicates that Atmos actually decreased per-customer investment in
infrastructure during calendar year 2003 and
WHEREAS, Atmos has publicly stated that rt will receive substanrial profits in 2005 over
that approved by the Texas Railroad Commission in GUD No 9400• and
WHEREAS, Atmos s Rate Filing fails to account for growth in numbers of customers,
thereby undercounting the revenues rt will receive from the proposed rate adjustment under the
Rate Filing; and
WHEREAS, Atmos s Rate Filing fails to recognize that rates authorized by the Texas
Railroad Commission in GUD No 9400 included profit based on TXU Corporation s capital
structure rather than on Atmos Energy Corporation s current capital structure, which justifies a
lower rate of return than that wlrnch would be received under GUD No 9400; and
WHEREAS, information provided by Atmos in response to the Steering Committee s
requests for information indicates that implementation of the proposed rates under Atmos s Rate
Filing would result in further over-earning by Atmos above that approved by the Texas Railroad
Commission in GUD No 9400• and
WHEREAS, as a result of the above facts, counsel for the Steering Committee, upon
review of Atmos s filings and upon consultation with various consultants, recommends that
municrpahties participating in the Steering Committee find that the adjusted rates proposed by
Atmos in its Rate Filing are unjustified, unreasonable and not within compliance of Section
104 301 of the Texas Utilities Code;
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NOW THEREFORE BE IT ORDAINED BY THE CITY COUNCIL OF THE
CITY OF FORT WORTH, TEXAS THAT
Section 1
FINDINGS.
The City Council, pursuant to its exclusive original jurisdictional authority over the rates,
operations and services of Atmos within the City and m the exercise of its sound legislative
discretion, makes the following findings of fact based on all information before it:
1.1. The statements set forth m the recitals above are true and correct.
1.2. Atmos improperly calculated its 2003 rate base.
1.3. Atmos included in the calculation of its proposed adjusted rates under the Rate
Filing projects unrelated to the improvement of its system.
1.4. In calculating its proposed adjusted rates under the Rate Filing, Atmos failed to
recognize the increased revenues it is now receiving due to increased rates
approved by the Texas Railroad Commission in GUD No. 9400 and due to
customer growth.
1.5. Information supplied by Atmos indicates that Atmos actually decreased its per
customer investment in infrastructure in calendar year 2003
1.6. Approval of the adjusted rates proposed by Atmos in its Rate Filing would result
in over-earning by Atmos in the year of implementation.
1.7 Atmos has failed to demonstrate that it meets the statutory prerequisites to qualify
for the rate adjustment proposed in its Rate Filing or that the proposed
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implementation of Section 104.301 of the Texas Utilities Code amounts to a
constitutional application of that statute.
Section 2.
Continued Participation in the Steering Committee.
The City Manager or lus authorized designee ~ hereby authorized to continue to
cooperate with other participating murucipahties in the Steering Commttee to hire and direct
legal counsel and consultants to make recommendations to participating murucipahties, including
the City regarding the Rate Filing and to direct any admiustrative proceedings or htigation
associated with the Rate Filing, subject to the City's nght to terminate such participation at any
time by written notice to the steering committee and to act independently in the exercise of its
regulatory authority
Section 3.
Reimbursement of Expenses.
Expenses incurred by the Steering Committee, of which the City ~s a member are
reasonable, have been necessary and should be reimbursed by Atmos. 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 the
Steering Commttee s involvement in any review of the Rate Filing, any litigation and any appeal
to the Texas Railroad Cominussion of the denial of the adjusted rates proposed in the Rate Filing.
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The City is hereby authorized to intervene in any such litigation or appeal before the Texas
Railroad Commission.
Section 4.
Incorporation of Recitals and Findings.
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.
Severability
If any portion, section or part of a section of this Ordinance ~s subsequently declared
invalid, inoperative or void for any reason by a court of competent jurisdiction, the remaiung
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, opiuon or judgment.
Section 6.
Delivery of Ordinance to Atmos.
This Ordinance shall take effect and be in full force and effect from and after the date of
its adoption. The City Secretary is hereby directed to deliver certified copies of this Ordinance to
Atmos as follows. Richard Reis, Manager Gas Regulation, Atmos Energy Corp., Mid Tex
Division, Lincoln Center II, 18th Floor 5420 LBJ Freeway Dallas, TX 75240
AND IT IS SO ORDAINED.
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ADOPTED AND EFFECTIVE ~ ~ o~ Cn
APPROVED AS TO FORM AND LEGALITY
By.
Peter Vaky
Assistant City Attorney
ivI&c: G-l~8'7S
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION Approved on 7/26/2005 Ordinance No 16524-07 2005
DATE Tuesday July 26 2005
LOG NAME. 03ATMOS-RATES REFERENCE NO G-14875
SUBJECT
Adopt Ordinance Denying Interim Rate Adjustments Proposed by Atmos Energy Corporation Mid-
Tex Division
RECOMMENDATION
It is recommended that the City Council adopt the ordinance denying the implementation of the Interim Rate
Adjustments filed with the City on December 19 2004 by Atmos Energy Corporation Mid-Tex Division
formerly .known as TXU Gas Distribution
DISCUSSION
On December 19 2004 Atmos Energy Corporation, Mid-Tex Division (Atmos Energy) formerly known as
TXU Gas Company filed with the City of Fort Worth (City) the Company's Annual Gas. Reliability
Infrastructure Program Rate Adjustment (GRIP) The proposed adjustment would have produced
approximately $8 5 million per year in additional revenue for Atmos Energy The proposed effective date of
the new rates was February 15 2005 The City Council having original jurisdiction over rates operations
and services of any gas utility operating in the City acted timely to suspend the effective date of the
proposed rates. The City Council also authorized the City Manager to join with other cities affected by the
rate increase to form Atmos Cities Steering Committee (ACSC) that would hire and direct legal counsel and
consultants negotiate with the Company make recommendations to the City regarding reasonable rates,
and direct any administrative proceedings or litigation associated with the Interim Rate Adjustments filed
with the City or with the Railroad Commission
Information provided by the Company in response to ACSC's requests for information indicates that the
Company actually decreased per-customer investment in infrastructure during calendar year 2003 The
Company has publicly stated that it will receive substantial profit in 2005 over that approved by the
Commission in Gas Utility Docket (GUD) No 9400 The Company's GRIP request fails to account for
growth in numbers of customers thereby undercounting the revenues it will receive from its proposed GRIP
rate increase The Company's GRIP request fails to recognize that GUD No 9400 rates included profit
based on TXU Corporation s capital structure rather than Atmos Energy Corp s current capital structure
which justifies a lower rate of return
Counsel for ACSC upon review of the Company's filing and upon consultation with various consultants
recommends finding that the Company's proposal is unjustified unreasonable and is not in compliance with
the GRIP statute (Texas Utilities Code § 104 301) either in fact or in law
FISCAL INFORMATION/CERTIFICATION
The Finance Director certifies that this action will have no material effect on City funds
Logname 03ATMOS-RATES Page 1 of 2
TO Fund/Account/Centers
FROM Fund/AccountlCenters
Submitted for City Manager's Office b~ Richard Zavala (Acting) (6222)
Originating Department Head. Bridgette Garrett (8518).
Additional Information Contact: Danny Reed (6145)
Logname 03ATMOS-RATES Page 2 of 2