The City of Plano, along with 171 other Mid-Texas cities served by Atmos Energy Corporation, Mid-Tex Division "Atmos Mid-Tex" or "Company") is a member of the Atmos Cities Steering Committee ("ACSC").
In 2007, ACSC and Atmos Mid-Tex settled a rate application filed by the Company pursuant to Section 104.301 of the Texas Utilities Code for an interim rate adjustment commonly referred to as a GRIP filing (arising out of the Gas Reliability Infrastructure Program legislation). That settlement created a substitute rate review process, referred to as Rate Review Mechanism (“RRM”), as a substitute for future filings under the GRIP statute.
Since 2007, there have been several modifications to the original RRM Tariff. The most recent iteration of an RRM Tariff was reflected in an ordinance adopted by ACSC members in 2018.
On or about March 31, 2020, the Atmos Mid-Tex Division filed a rate request pursuant to the RRM Tariff adopted by the ACSC members. The Company claimed that its cost-of-service in a test year ending December 31, 2019, entitled it to additional system-wide revenues of $141.2 million. This application of the standards set forth in ACSC’s RRM Tariff required Atmos to reduce its request to $136.3 million, $98.7 million of which would be applicable to ACSC members. This request is significantly larger than any filing Atmos Mid-Tex has ever made in its history. No prior request in a traditional rate case filed has exceeded $70 million. Atmos Mid-Tex claims that 95% of the increase relates to the recovery of expenses related to pipe replacement, damage prevention and leak surveying activities. ACSC’s consultants concluded that the system-wide deficiency under the RRM regime should be $111.5 million instead of the claimed $136.3 million. The amount of the $111.5 million deficiency applicable to ACSC members would be $80.8 million.
After the Company reviewed ACSC’s consultants’ report, ACSC’s Executive Committee and the Company negotiated a settlement whereby the Company would receive an increase of $90 million from ACSC Cities, but with a two-month delay in the Effective Date until December 1, 2020. This should save ratepayers approximately $9 million such that the case is functionally equivalent to ACSC’s consultants’ recommendation of $80.8 million.
The Executive Committee recommends a settlement at $90 million. The Effective Date for new rates is December 1, 2020. ACSC members should take action approving the Ordinance before November 1, 2020.