Ordinance 2006-38
ORDINANCE NO. 2006-38
AN ORDINANCE OF THE CITY OF WYLIE, TEXAS, DENYING THE
REQUEST OF ATMOS ENERGY CORP., MID-TEX DIVISION, FOR AN
ANNUAL GAS RELIABILITY INFRASTRUCTURE PROGRAM (GRIP)
RATE INCREASE IN THIS MUNICIPALITY, AS A PART OF THE
COMPANY'S STATEWIDE GAS UTILITY DISTRIBUTION SYSTEM;
APPROVING COOPERATION WITH OTHER CITIES WITHIN THE
ATMOS ENERGY CORP., MID-TEX DIVISION DISTRIBUTION
SYSTEM AS PART OF THE ATMOS CITIES STEERING COMMITTEE
(ACSC); AUTHORIZING ACSC TO HIRE LEGAL AND CONSULTING
SERVICES AND TO NEGOTIATE WITH THE COMPANY AND DIRECT
ANY NECESSARY LITIGATION; AUTHORIZING INTERVENTION AS
PART OF ACSC IN ANY APPEAL OF THE CITY'S ACTION TO THE
RAILROAD COMMISSION; PROVIDING A REQUIREMENT FOR A
PROMPT REIMBURSEMENT OF COSTS INCURRED BY THE CITY;
FINDING THAT THE MEETING AT WHICH THIS ORDINANCE IS
PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW; AND
PROVIDING FOR NOTICE OF THIS ORDINANCE TO ATMOS
ENERGY CORP., MID-TEX DIVISION.
WHEREAS, on or about March 30, 2006, Atmos Energy Corp., Mid- Tex Division, (the
"Company") filed with the City a request for an annual gas reliability infrastructure program
("GRIP") rate increase for customers on the Company's statewide gas utility system to be
effective May 30, 2006; and
WHEREAS, the City has exclusive original jurisdiction to evaluate the Company's
request as it pertains to the distribution facilities located within the City, pursuant to Texas
Utilities Code 99 102.001(b) and 103.001; and
WHEREAS, it is reasonable for the City to cooperate with other cities in a coalition of
cities in opposition to the Company's filing at the Railroad Commission ("Commission"), said
coalition being known as Atmos Cities Steering Committee ("ACSC"), in any appeal of the
cities' actions to the Commission; and
WHEREAS, the Gas Utility Regulatory Act ("GURA") grants local regulatory
authorities the right to intervene in rate proceedings filed at the Railroad Commission; and
WHEREAS, the Texas Utilities Code 9 103.022 provides that costs incurred by the City
in ratemaking activities are to be reimbursed by the regulated utility; and
WHEREAS, 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 and unreasonable; and
Ordinance No. 2006-38
Denial of Atmos Energy GRIP rate increase
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WHEREAS, the Company has publicly stated that it will receive substantial profit in
2005 and that its expenses are substantially below those on which the GUD No. 9400 rates it is
charging were based; and
WHEREAS, 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; and
WHEREAS, 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; and
WHEREAS, under the provisions of 9 104.301 of GURA, the interim rate adjustment is
subject to true-up in a general rate case filed within five years of the effective date of the interim
rate surcharge; and
WHEREAS, the Company has, on May 31, 2006, filed a Statement of Intent to increase
its distribution rates on a system-wide basis, using calendar year ending December 31, 2005, as
its test year; and
WHEREAS, the capital investment made by Atmos during 2005 will be reviewed in the
Statement of Intent filing, making the 2005 GRIP filing superfluous, duplicative, and
unnecessary;
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE
CITY OF WYLIE, TEXAS:
SECTION 1. That the Company's GRIP rate increase request is found to be
unreasonable, superfluous, duplicative, and unnecessary, and is therefore denied in all respects.
SECTION 2. That the City is authorized to cooperate with other Cities within the
Company's Distribution System that have formed ACSC to hire and direct legal counsel and
consultants, negotiate with the Company, make recommendations to the City regarding
reasonable rates, and to direct any necessary litigation associated with an appeal of a rate
ordinance and the rate case filed at the Commission.
SECTION 3. That the costs incurred by the City in reviewing the Company's GRIP
request shall be promptly reimbursed by the Company.
SECTION 4. That the City is authorized to intervene in any appeal of the City's action
filed at the Commission and any related litigation, and to participate in any such appeal or
litigation as a member of ACSC.
SECTION 5. This Ordinance shall become effective immediately from and after its
passage, as the law and charter in such cases provide.
Ordinance No. 2006-38
Denial of Atmos Energy GRIP rate increase
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SECTION 6. That it is hereby officially found and determined that the meeting at which
this Ordinance is passed is open to the public as required by law and that public notice of the
time, place and purpose of said meeting was given as required.
SECTION 7. A copy of this ordinance, constituting final action on the Company's
application, be forwarded to the following:
Richard T. Reis
Atmos Energy Corporation
5420 LBJ Freeway, Suite 1800
Dallas, Texas 75240
Lloyd Gosselink Blevins Rochelle & Townsend
c/o Geoffrey Gay
P.O. Box 1725
Austin, Texas 78767-1725.
DULY PASSED and approved by the City Council of the City of Wylie, Texas, on this
the 13th day of June, 2006.
APPROVED:
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ATTEST:
Ordinance No. 2006-38
Denial of Atmos Energy GRIP rate increase
3 3