OR 2017-1473 ATMOSORDINANCE NO. 2017-1473
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF COPPELL,
TEXAS, APPROVING A NEGOTIATED SETTLEMENT BETWEEN THE
ATMOS CITIES STEERING COMMITTEE ("ACSC") AND ATMOS ENERGY
CORP., MID-TEX DIVISION REGARDING THE COMPANY'S 2017 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; REQUIRING
RECONCILIATION AND RATE ADJUSTMENTS IF FEDERAL INCOME TAX
RATES CHANGE; TERMINATING THE RRM PROCESS FOR 2018 PENDING
RENEGOTIATION OF RRM TERMS AND CONDITIONS; 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 Coppell, Texas ("City") is a gas utility customer of Atmos Energy
Corp., Mid -Tex Division ("Atmos Mid -Tex" or "Company"), and a regulatory authority with an
interest in the rates and charges of Atmos Mid -Tex; and
WHEREAS, the City is a member of the Atmos Cities Steering Committee ("ACSC"), a
coalition of similarly -situated cities served by Atmos Mid -Tex ("ACSC Cities") that have joined
together to facilitate the review of, and response to, natural gas issues affecting rates charged in
the Atmos Mid -Tex 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 Atmos Mid -Tex Division; and
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WHEREAS, on March 1, 2017, Atmos Mid -Tex filed its 2017 RRM rate request with
ACSC Cities; and
WHEREAS, ACSC coordinated its review of the Atmos Mid -Tex 2017 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 Executive Committee, as well as ACSC's counsel and consultants,
recommend that ACSC Cities approve an increase in base rates for Atmos Mid -Tex of $48 million
on a system -wide basis; and
WHEREAS, the attached tariffs 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;
WHEREAS, the RRM Tariff contemplates reimbursement of ACSC's reasonable expenses
associated with RRM applications;
WHEREAS, the Company and ACSC have agreed that rates should be adjusted if any
change in federal income tax rates is implemented during the period that rates approved herein
remain in place; and
WHEREAS, because ACSC believes that certain provisions of the current terms and
conditions of the RRM tariff are inconsistent with market conditions, the City expects
renegotiation of the current RRM tariff in the Summer of 2017.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
COPPELL, TEXAS:
Section 1. That the findings set forth in this Ordinance are hereby in all things approved.
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Section 2. That the City Council finds that the settled amount of an increase in revenues
of $48 million on a system -wide basis represents a comprehensive settlement of gas utility rate
issues affecting the rates, operations, and services offered by Atmos Mid -Tex within the municipal
limits arising from Atmos Mid-Tex's 2017 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 Atmos Mid -Tex are
unreasonable. The new tariffs attached hereto and incorporated herein as Attachment A, are just
and reasonable, and are designed to allow Atmos Mid -Tex to recover annually an additional $48
million in revenue over the amount allowed under currently approved rates, as shown in the Proof
of Revenues attached hereto and incorporated herein as Attachment B; such tariffs are hereby
adopted.
Section 4. That the ratemaking treatment for pensions and other post -employment benefits
in Atmos Mid-Tex's next RRM filing shall be as set forth on Attachment C, attached hereto and
incorporated herein.
Section 5. Consistent with Texas Utilities Code Section 104.055(c), Atmos Energy's
recovery of federal income tax expense through the Rider RRM has been computed using the
statutory income tax rate. In the event that a change in the statutory income tax rate is implemented
during the Rider RRM Rate Effective Date, Atmos Energy shall reconcile the difference between
the amount of federal income tax expense included in the Rider RRM calculation for the Rate
Effective Date with the amount of federal income tax expense authorized under the new statutory
income tax rate. The reconciliation period shall be from the date on which any new statutory
income tax rate is implemented through the Rate Effective Date. An interest component calculated
at the customer deposit interest rate then in effect as approved by the Railroad Commission of
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Texas shall be applied to the federal income tax expense reconciliation. Further, any required
reconciliation of federal income tax expense shall be included as part of Atmos Mid-Tex's next
annual RRM filing and shall be returned to or recovered from customers as a one-time credit or
surcharge to the customer's bill.
Section 6. The City requires renegotiation of RRM tariff terms and conditions during the
Summer of 20017. If an agreed renegotiated RRM tariff cannot be achieved, the City will
terminate the RRM process and consider initiation of a traditional rate case to reduce the
Company's authorized return on equity.
Section 7. That Atmos Mid -Tex shall reimburse the reasonable ratemaking expenses of
the ACSC in processing the Company's 2017 RRM filing.
Section 8. That to the extent any resolution or ordinance previously adopted by the Council
is inconsistent with this Ordinance, it is hereby repealed.
Section 9. 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 10. 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 11. 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 June 1, 2017.
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Section 12. That a copy of this Ordinance shall be sent to Atmos Mid -Tex, 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.
PASSED AND APPROVED this 2—j qday of
Ka n Selbo Hunt, Mayor
.... O.
Robe ager, City`
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2017.