RES 2014-19TOWN OF TROPHY CLUB
RESOLUTION NO. 2014-19
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF
TROPHY CLUB, TEXAS, DENYING THE RATE INCREASE REQUESTED
BY ATMOS ENERGY CORP., MID-TEX DIVISION UNDER THE
COMPANY'S 2014 ANNUAL RATE REVIEW MECHANISM FILING IN
ALL CITIES EXERCISING ORIGINAL JURISDICTION; REQUIRING THE
COMPANY TO REIMBURSE CITIES' REASONABLE RATEMAKING
EXPENSES PERTAINING TO REVIEW OF THE RRM; AUTHORIZING
THE TOWN'S PARTICIPATION WITH ATMOS CITIES STEERING
COMMITTEE IN ANY APPEAL FILED AT THE RAILROAD
COMMISSION OF TEXAS BY THE COMPANY; REQUIRING THE
COMPANY TO REIMBURSE CITIES' REASONABLE RATEMAKING
EXPENSES IN ANY SUCH APPEAL TO THE RAILROAD
COMMISSION; DETERMINING THAT THIS RESOLUTION WAS
PASSED IN ACCORDANCE WITH THE REQUIREMENTS OF THE
TEXAS OPEN MEETINGS ACT; ADOPTING A SAVINGS CLAUSE;
AND REQUIRING DELIVERY OF THIS RESOLUTION TO THE
COMPANY AND THE STEERING COMMITTEE'S LEGAL COUNSEL;
AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the Town of Trophy Club, Texas ("Town") 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 Town is a member of the Atmos Cities Steering Committee ("ACSC"), a
coalition of approximately 164 similarly situated cities served by Atmos Mid -Tex 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, pursuant to the terms of the agreement settling the Company's 2007
Statement of Intent to increase rates, ACSC Cities and the Company worked collaboratively to
develop a Rate Review Mechanism ("RRM") tariff that allows for an expedited rate review
process controlled in a three-year experiment by ACSC Cities as a substitute to the current Gas
Reliability Infrastructure Program ("GRIP") process instituted by the Legislature; and
WHEREAS, the Town took action in 2008 to approve a Settlement Agreement with
Atmos Mid -Tex resolving the Company's 2007 rate case and authorizing the RRM tariff; and
WHEREAS, in 2013, ACSC and the Company negotiated a renewal of the RRM tariff
process for an additional five years; and
Town Council Page 65 of 160 Meeting Date: Monday, May 19, 2014
WHEREAS, the Town passed an ordinance renewing the RRM tariff process for the Town
for an additional five years; and
WHEREAS, the RRM renewal tariff contemplates reimbursement of ACSC Cities'
reasonable expenses associated with RRM applications; and
WHEREAS, on or about February 28, 2014, the Company filed with the Town its second
annual RRM filing under the renewed RRM tariff, requesting to increase natural gas base rates
by $45.7 million; and
WHEREAS, ACSC coordinated its review of Atmos Mid-Tex's RRM filing through its
Executive Committee, assisted by ACSC attorneys and consultants, to investigate issues
identified by ACSC in the Company's RRM, filing; and
WHEREAS, ACSC attorneys and consultants have concluded that the Company is unable
to justify a rate increase of the magnitude requested in the RRM filing; and
WHEREAS, ACSC's consultants determined the Company is only entitled to a $19 million
increase, approximately 42% of the Company's request under the 2014 RRM filing; and
WHEREAS, the Company would only be entitled to approximately $31 million if it had a
GRIP case; and
WHEREAS, the Company's levels of operating and maintenance expense have
dramatically risen without sufficient justification; and
WHEREAS, the Company has awarded its executives and upper management increasing
and unreasonable levels of incentives and bonuses, expenses which should be borne by
shareholders who received a 23% total return on investment in 2013; and
WHEREAS, the Company requested a drastically high level of medical expense that is
unreasonable and speculatively based upon estimates; and
WHEREAS, ACSC and the Company were unable to reach a compromise on the amount
of additional revenues that the Company should recover under the 2014 RRM filing; and
WHEREAS, the ACSC Executive Committee, as well as ACSC's counsel and consultants,
recommend that ACSC Cities deny the requested rate increase; and
WHEREAS, the Company's current rates are determined to be just, reasonable, and in
the public interest.
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF TROPHY
CLUB, TEXAS:
Town Council Page 66 of 160 Meeting date; Monday, May 19, 2014
\Section 1. That the findings set forth in this Resolution are hereby in all things
approved.
Section 2. That the Town Council finds that Atmos Mid -Tex was unable to justify the
appropriateness or the need for the increased revenues requested in the 2014 RRM filing, and
that existing rates for natural gas service provided by Atmos Mid -Tex are just and reasonable.
Section 3. That Atmos Mid -Tex shall reimburse the reasonable ratemaking expenses of
the ACSC Cities in processing the Company's RRM application.
Section 4. That in the event the Company files an appeal of this denial of rate increase
to the Railroad Commission of Texas, the Town is herebp authorized to intervene in such
appeal, and shall participate in such appeal in conjunction with the ACSC membership. Further,
in such event Atmos Mid -Tex shall reimburse the reasonable expenses of the ACSC Cities in
participating in the appeal of this and other ACSC Town rate actions resulting from the 2014
RRM filing.
Section 5. That the meeting at which this Resolution was approved was in all things
conducted in strict compliance with the Texas Open Meetings Act, Texas Government Code,
Chapter 551.
Section 6. That if any one or more sections or clauses of this Resolution is adjudged to
be unconstitutional or invalid, such judgment shall not affect, impair, or invalidate the
remaining provisions of this Resolution and the remaining provisions of the Resolution shall be
interpreted as if the offending section or clause never existed.
Section 7. That a copy of this Resolution shall be sent to Atmos Mid -Tex, care of Chris
Felan, Manager of Rates and Regulatory Affairs, at Atmos Energy Corporation, 5420 LBJ
Freeway, Suite 1862, Dallas, Texas 75240, and to Geoffrey Gay, General Counsel to ACSC, at
Lloyd Gosselink Rochelle & Townsend, P.C., P.O. Box 1725, Austin, Texas 78767-1725.
Section 8. That this Resolution shall become effective on the date of its passage.
PASSED AND ED by the Town Council of the Town of Trophy Club, Texas, on this
19th da of Ma Op
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Tao ryiy Ard, Yawn Secretary
Connie White, Mayor
APPROVED AS TO FORM:
atricia A. Adams, Town Attorney
Town Council Page 67 of 160 Meeting Date: Monday, May 19, 2014