To approve a negotiated settlement between the Atmos Cities Steering Committee (“ACSC”) and Atmos Energy Corp., Mid-Tex Division (“Atmos Mid-Tex” or “Company”) regarding the Company’s 2024 Rate Review Mechanism (“RRM”) 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 attachment establishing a benchmark for pensions and retiree medical benefits; 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; adopting a severability clause; declaring an effective date; and requiring delivery of this Ordinance to the Company and the ACSC’s legal counsel. Adopted Ordinance No. 2024-8-10

An Ordinance approving the negotiated settlement between Atmos Cities Steering Committee and Atmos Energy Corp., Mid-Tex Division regarding Atmos' Rate Review Mechanism was passed at the August 28, 2023 City Council meeting. 

The City of Plano, along with 181 other Mid-Texas cities served by Atmos Energy Corporation, Mid-Tex Division (Atmos Mid-Tex) is a member of the Atmos Cities Steering Committee (ACSC). 

In 2007, ACSC and Atmos Mid-Tex settled a rate application filed by Atmos Mid-Tex 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). The settlement created a substitute rate review process referred to as Rate Review Mechanism (RRM), as a substitute for future filings under the GRIP statue. 

Since 2007, there have been several modifications to the original RRM Tariff. The most recent iteration of the RRM Tariff that implemented new procedures and the criteria for the RRM  process was reflected in an ordinance adopted by ACSC members in 2018. 

Around April 1, 2024, Atmos Mid-Tex filed a rate request pursuant to the RRM Tariff adopted by ACSC members. Atmos Mid-Tex claimed that its cost of service in a test year ending December 31, 2023 entitled it to additional system-wide revenues of $196.8 million. In applying the standards set forth in ACSC's RRM Tariff, ACSC's consultants and Atmos Mid-Tex have agreed to settle Atmos Mid-Tex's request to $164.7 million, which is a reduction of $32.1 million to Atmos Mid-Tex's initial request. 

The impact of the settlement on average residential usage is an increase of $5.52 a month. The increase for average commercial usage is an increase of $13.39 a month. While residents outside municipal limits must pay rates governed by GRIP, there are some cities served by Atmos Mid-Tex that chose to remain under GRIP rather than adopt RRM. Additionally, the City of Dallas adopted a version of RRM which is referred to as DARR. When new rates become effective on October 1, 2024, ACSC residents will maintain an economic monthly advantage over GRIP and DARR rates. Comparison of RRM Cities including City of Plano to other Mid-Tex Rates (Residential) are as follows: 

The RRM process has proven to be more efficient and less costly than the GRIP process. The settlement at $164.7 million is fair and reasonable, and will be effective October 1, 2024. In order for Plano and the other ACSC member cities to receive the settlement rate, they should take action approving the Ordinance before September 30, 2024. 

This item has no financial impact. 

Approval of this item supports the City's Strategic Plan Critical Success Factor of Excellent, Innovative, and Accountable City Government.