O436ORDINANCE NO. 436
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF KENNF,DALE, TEXAS, ("CITY") APPROVING A
NEGOTIATED RESOLUTION BETWEEN THF. ATMOS
CITIES STEERING COMMITTEE ("ACSC" OR
"STEERING COMMITTEE") AND ATMOS F,NERGY
CORP., MID-TEX DIVISION ("ATMOS MID-TEX" OR
"COMPANY") REGARDING "THE COMPANY'S RATE
REVIEW MECHANISM FILING IN ALL CITIES
EXERCISING ORIGINAL JURISDICTION; DECLARING
EXISTING RATES TO BE UNREASONABLE; REQUIRING
THE COMPANY TO REIMBURSE CITIES' REASONABLE
RATEMAKING EXPENSES; ADOPTING TARIFFS THAT
REFLECT RATE ADJUSTMENTS CONSISTENT WITH
THE NEGOTIATED SETTLEMENT AND FINDING THE
RATES TO BE SET BY THE ATTACHED TARIFFS TO BE
JZ1ST AND REASONABLE; APPROVING ATMOS' PROOF
OF REVENUES; ADOPTING A SAVINGS CLAUSE;
llETERMINING THAT THIS ORDINANCE WAS PASSED
IN ACCORDANCE WITH THE REQUIREMENTS OF THF,
TEXAS OPEN MEETINGS ACT; DECLARING AN
EFFECTIVE DATE; AND REQUIRING DELIVERY OF
THIS ORDINANCE "TO THE COMPANY AND THE
STEERING COMMITTEE'S LEGAL COUNSEL.
WHF,REAS, the City of Kennedale, Texas ("City") is a gas utility customer of Atmos
Energy Corp., Mid-Tex Division ("Atrnos 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" or
"Steering Committee"), a coalition of more than 150 similarly situated cities served by Atmos
Mid-Tee that have joined together to facilitate the review and response to natural gas issues
affectim~ rates charged in the Atmos Mid-Tes service area (such participating cities are referred
to herein as "ACSC Cities"); 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
Atmos RRM Ordinance
develop the 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 GRIP
process instituted by the Legislature; and
WHEREAS, the City took action in 2008 to approve a Settlement Agreement with Atmos
Mid-Tes resolving the Company's 2007 rate case and authorizing the RRM Tariff; and
1ti'HEREAS, the 2008 Settlement Agreement contemplates reimbursement of ACSC
Cities' reasonable expenses associated with RRM applications; and
WHF.RF.AS, on or about March 6, 2009, Atmos Mid T'cx filed with the City its second
application pursuant to the RRM tariff to increase natural gas rates by approximately $20.2
million. such increase to be effective in every municipality that has adopted the RRM tariff
within its Mid-Tex Division; and
WHEREAS, ACSC Cities coordinated its review of Atmos' RRM filing and designated a
Settlement Committee made up of ACSC representatives and assisted by ACSC attorneys and
consultants to resolve issues identitied by ACSC in the Company's RRM filing; and
WHEREAS, the Company has filed evidence that existing rates are unreasonable and
should he changed, and
WHEREAS, independent analysis by ACSC's rate expert concluded that Atmos Mid-Tex
is able to justify a slight rate increase over current rates; and
l~'HEREAS, the Steering Committee has advocated in other proceedings that Atmos
Mid-Tc~ hedge natural gas futures in order to mitigate the volatility of natural gas prices, which
are a t7ow through to customers; and
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WHF,REAS, the ACSC Executive Committee, as well as ACSC law~}~ers and consultants,
recommend that ACSC members approve the attached rate tariffs ("Attachment A" to this
Ordinance), which will increase the Company's revenue requirement by $2.6 million: and
WIIEREAS, the attached tariffs implementing new rates and Atmos' Proof of Revenues
("Attachment B" to this Ordinance) are consistent with the negotiated resolution reached by
ACSC Cities and are just, reasonable, and in the public interest; and
WHEREAS, it is the intention of the parties that if the City determines any rates,
revenues. terms and conditions, or benefits resulting from a Final Order or subsequent negotiated
settlement approved in any proceeding addressing the issues raised in the Company"s RRM
tiling ~~ould be more beneficial to the City than the terms of the attached tariff, then the more
tavorahle rates, revenues, terms and conditions, or benefits shall additionally accrue to the City;
and
WHEREAS, the negotiated resolution of the Company's RRM filing and the resulting
rates arc. as a whole, in the public interest.
NOW, THEREFORE, BE I'f ORDAINED BY THF, CITY COUNCIL OF THE CITY
OF KENNEDALE, TEXAS:
Section 1. That the findings set forth in this Ordinance are hereby in all things approved.
Section 2. That the City Council finds that the existing rates for natural gas service
provided by Atmos Mid-Tex are unreasonable and new tariffs and Atmos' Proof of Revenues,
which <<re attached hereto and incorporated herein as Attachments A and B, are just and
reasonahle and are hereby adopted.
Section i. That Atmos Mid-Tex shall reimburse the reasonable rate making expenses of
the ACSC Cities in processing the Company's rate application.
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Section 4. That to the extent any resolution or ordinance previously adopted by the
Council is inconsistent with this Ordinance, it is hereby repealed.
Section 5. 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 6. 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 7. That if the City determines any rates, revenues, terms and conditions, or
benefits resulting from a Final Order or subsequent negotiated settlement approved in any
proceeding addressing the issues raised in the Company's RRM filing would be more beneficial
to the ('ity than the terms of the attached tariff, then the more favorable rates, revenues, terms
and conditions, or benefits shall additionally accrue to the City.
Section 8. That the Company's Gas Cost Recovery tariff is revised to permit recovery of
certain costs associated with hedging natural gas futures.
Section 9. That 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 August 1, 2009.
tiection 10. That a copy of this Ordinance shall be sent to Atmos Mid-Tex, care of David
Park, Vice President Rates and Regulatory Affairs, at Atmos Energy Corporation, 5420 LBJ
Frccwa~ , Suite 1800, 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.
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PASSED AND APPROVED this ~J day of ~uef~ , 2009.
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~TTEST:
Mayor, Bryan Lankhorst
Kathy Turne ,City Secretary
~P~V~AS TO FORM:
Wayne K. Olson, City Attorney
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Atmos RRM Ordinance