Title
An ordinance, on first reading, approving a negotiated settlement between the Atmos Cities Steering Committee (“ACSC”) and Atmos Energy Corp., Mid-Tex Division (“Company”) regarding the Company’s 2021 Rate Review Mechanism filing; 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 attached settlement tariffs to be just and reasonable and in the public interest; approving an attached exhibit establishing 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.
Body
On April 1, 2021, Atmos Energy filed its fourth rate case under the 2017 revised Rate Review Mechanism (RRM) requesting an adjusted $40.5 million increase in annual base revenues on a total system-wide basis with $29.3 million of this increase attributable to ACSC cities. ACSC rate consultants spent the past few months reviewing the rate filing and produced a report indicating that an increase of $16.8 million in revenues was justified based on the application of standards set forth in the revised RRM tariff. On July 21, 2021, after several rounds of negotiations, the parties settled on an increase of $22.78 million, with a two-month delay in the effective date that will produce additional savings of $3.8 million in 2022, bringing the total impact on ratepayers to $18.9 million and closer to the $16.8 million figure as determined by ACSC consultants. If not for the RRM process and the ability of ACSC cities to negotiate rates directly with the Company, Atmos would be entitled to recover $31.4 million from ACSC cities under the legislative GRIP process at the Railroad Commission.
The settlement results in a $0.60 cent increase to the monthly residential base customer charge, and the monthly bill impact for a typical residential customer would be an increase of $1.28 on average, an increase of 2.2 percent. The commercial base customer charge will increase by $2.00 per month, and the monthly bill impact for a typical commercial customer would be an increase of $4.03 on average, an increase of 1.6 percent. These new rates become effective on December 1, 2021.
The City Charter requires ordinances regulating rates for public utilities to be read and passed at two regular meetings of the City Council. The second and final reading of the proposed ordinance will take place at the September 7, 2021, City Council meeting.
Recommended/Desired Action
Staff recommends approval of the ordinance on first reading.
Attachment(s)
Ordinance
Rate Review Mechanism FAQ
Drafter
Ted Chinn
Head of Department
Ted Chinn