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HomeMy WebLinkAboutR2008-012s:\our documen[s\resolutions\08~atm settlement resolu[ion.doc RESOLUTION NO. 2®OO -d~Z A RESOLUTION OF THE OF CITY OF DENTON, TEXAS, APPROVING A SETTLEMENT AGREEMENT BETWEEN ATMOS ENERGY CORPORATION, MID-TEX DIVISION AND ATMOS TEXAS MUNICIPALITIES; DECLARING EXISTING RATES TO BE UNREASONABLE; ADOPTING RATE ADJUSTMENTS CONSISTENT WITH THE SETTLEMENT AGREEEMENT; FINDING THE RATES TO BE SET BY THE ATTACHED TARIFFS TO BE JUST AND REASONABLE; FINDING THAT THE MEETING COMPLIED WITH THE OPEN MEETINGS ACT; REQUIRING DELIVERY OF THIS RESOLUTION TO THE COMPANY AND LEGAL COUNSEL; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the City of Denton ("City") is a regulatory authority under the Gas Utility Regulatory Act ("GURA") and under § 103.001 of GURA has exclusive original jurisdiction over Atmos Energy Corporation -Mid-Tex Division ("Atmos") rates, operations, and services of a gas utility within the municipality; and WHEREAS, the City has participated in prior cases regarding Atmos as a part of a coalition of cities known as the Atmos Texas Municipalities ("ATM"), including Railroad Commission Gas Utilities ("GUD") Docket No. 9400, numerous filings by Atmos pursuant to Section 104.301 of GURA, and GUD Docket No. 9670; and WHEREAS, ("Atmos") filed a Statement of Intent with the City on or about September 20, 2007 to increase its system-wide, annual revenue requirement, by approximately $51.9 million; and WHEREAS, the City has, by previous ordinance or resolution, denied the requested rate increase, authorized participation in ATM and authorized the hiring of lawyers and rate experts; and WHEREAS, Atmos has appealed the previous ordinance or resolution to the Railroad Commission of Texas, which has docketed the appeal along with other appeals as GUD No. 9762; and WHEREAS, ATM has conducted extensive discovery upon Atmos and has engaged in extensive negotiations regarding the appropriate rates and rate structure for Atmos; and WHEREAS, Atmos and ATM have entered into a Settlement Agreement resolving all disputes regazding the appropriate rates, terms and conditions for Atmos; and WHEREAS, Atmos and ATM have determined that the best method to implement such settlement agreement is to have it approved by each ATM city; and WHEREAS, in order for City to examine the Settlement Agreement, it has reestablished its original jurisdiction over the rates of Atmos by issuing a Show Cause against Atmos; and s:\our documen[sUesolutions\08\atm setllemem resolution.doc WHEREAS, the City has given reasonable notice to Atmos regarding the consideration of the Settlement Agreement and WHEREAS, the Settlement Agreement will resolve several previously-litigated cases and will resolve all issues currently pending before the Railroad Commission in GUD No. 9762, as well as issues relating to franchise agreements with Atmos; and WHEREAS, the Settlement Agreement will result in Atmos receiving a $10 million system-wide rate increase, which is significantly smaller than the $51.9 million sought by Atmos, and WHEREAS, the Settlement Agreement creates an experimental and expedited rate review process ,called the Rate Review Mechanism ("RRM") in lieu of the Section 104.301 filings, which will allow for a consideration of both increases and decreases in expenses and investments and will allow for increased participation by City regulators in future rate cases; and WHEREAS, the RRM will also allow Atmos a greater opportunity to earn its authorized rate of return, but no more, by use of a "true-up" calculation contained within the RRM tariff; and WHEREAS, the Settlement Agreement calls for a reduction in customer changes for residential and commercial customers and WHEREAS, the Settlement Agreement excludes specified expenses from recovery by Atmos; and WHEREAS, the Settlement Agreement contains a "most-favored-nations" clause that provides City with the benefit of any other RRM settlement or any other settlement of the issues related to the September 20, 2007 Statement of Intent or GUD No. 9672, under certain conditions; and WHEREAS, the Settlement Agreement authorizes other changes in rates and tariffs that should enable Atmos to provide efficient service at reasonable rates and provides for the reimbursement of ATM expenses; and WHEREAS, the Settlement Agreement provides for quarterly meetings between Atmos and City representatives in order to improve communication and cooperation; and WHEREAS, the Settlement Agreement provides a mechanism for the City to amend or renew its franchise agreement with Atmos at 5% of Gross Revenues; and WHEREAS, the Settlement Agreement resolves numerous cases currently pending on appeal and provides for payment to ATM associated with such cases; and Page 2 s:\our documents\resolutions\OS\atm settlement resolution.doc WHEREAS, the City desires to avoid the cost and uncertainty of litigating the cases at the Railroad Commission and the courts; and WHEREAS, the ATM lawyers as well as numerous representatives from the ATM Cities have negotiated with Atmos on several occasions; and WHEREAS, the ATM lawyers have recommended the approval of the Settlement Agreement: and WHEREAS, the City has examined the Settlement Agreement and its attached taziffs, rates, terms and conditions; and WHEREAS, the Settlement Agreement as a whole is consistent with the public interest; and WHEREAS, the tariffs, rates, terms and conditions attached to the Settlement Agreement should be found to be just, reasonable and in the public interest; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The statements set out in the preamble to this Resolution are hereby in all things approved and adopted. SECTION 2. Pursuant to Utilities Code Section 104.151, the City finds that the existing rates, terms and conditions of Atmos aze unreasonable and determines that such rates, terms and conditions should be changed. SECTION 3. The City Council finds that the Settlement Agreement, which is attached hereto and incorporated herein as Attachment A, is in the public interest and is hereby endorsed in all respects. SECTION 4. The City Council finds that the new taziffs, which are attached hereto and incorporated herein as Attachment B, aze just and reasonable and aze hereby adopted. SECTION 5. To the extent any resolution or ordinance previously adopted by the Council is inconsistent with this Resolution, it is hereby repealed. SECTION 6. 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 7. A copy of this Resolution shall be sent to Atmos Mid-Tex, caze of Joe T. Christian, Director of Rates, at Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1800, Dallas, Texas 75204, and to Jim Boyle, Counsel to ATM, Herrera and Boyle, PLLC, 860 Congress Avenue, Suite 1120, Austin, TX 78701. Page 3 s:\our documents\resolu[ions\OSta[m settlement resolu[ion.doc SECTION 8. This Resolution shall become effective from and after its passage with rates authorized by the attached Taziffs to be effective in accordance with the terms of the Settlement Agreement. PASSED AND APPROVED this the ~~Z day of ~~t/L~. , 2008. PERRY R. McNEILL, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPR VEDA O LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY Page 4 WHEREAS, this settlement agreement is entered into and by Atmos Energy Corp'sMid-Tex Division and Atmos Texas Municipalities ("ATM") whose members include the Cities of'Austin, Balch Springs, Bandera, Baztlett, Belton, Blooming Grove, Bryan, Cameron, Cedaz Pazk, Clifton, Commerce, Copperas Cove, Corsicana, Denton,' Electra, FYedericksbmg, Galesville, Georgetown, GoldWwaite, Granbury, Greenville, Groesbeck, Hamilton, Henrietta, Hickory Creek, Hico, Hillsboro, Hutto, Kerens, Lampasas, Leander; Comets, Longview, Mart, Mexia, Olney, Pflugervillle, Ranger; Rice, Riesel, Rogers, Round Rock, San Angelo, Sanger,Somerville, Star Harbor, Trinidad, Trophy Club, and Whitney; and WHEREAS, ATM is an active intervenor in Statement of Intent Filed by Atmos Energy Corporation to Increase Utility Rates Within the Unincorporated Areas Served by the Atmos Energy Corp, Mid-Tex Division, GUD Docket No. 9762 at the Railroad Commission of Texas ("Commission'); and WI-AREAS, ATM has hued experts and lawyers to analyze the rates and iiders proposed by Atmos Energy Corp.'s, Mid-Tex Division ("Atmos" or "Company's in GUD Docket No. 9762; and WHEREAS, the Settlement Agreement resolves all issues between Atmos and ATM Lhe Signatories") regarding GUD Docket No. 9762, which is currently pending before the Commission, in a manner that the Signatories believe is consistent with the public interest, and the Signatories represent diverse interests; and WHEREAS, the Signatories believe that the resolution of the issues raised in GUD Docket No.. 9762 can best be accomplished by each ATM City approving this Settlement Agreement and the rates, terms and conditions reflected in the tariffs attached to this Settlement Agreement as Exhibit A; NOW, THEREFORE, in consideration of Ure mutual agreements and covenants established herein, the Signatories, through their undersigned representatives, agree to the following Settlement Terms as a means of fully resolving all issues in the pending appealbetweentheATMCitiesandAtmos: Settlement Terms Upon the execution of'this Settlement Agreement, each ATM city will issue a show cause against Atmos, following appropriate city procedures.. After the issuance of the show cause, Atmos and the counsel for the ATM cities will recommend that an ordinance or resolution be adopted to approve this Settlement Ageement and implement the rates, terms and conditions reflected in the tariff's attached to this Settlement Agreement as Exhibit A. Said tariffs should allow Atmos an additional 10 million in annual revenue by implementation of'rates shown in the proof of revenues attached as Exhibit B. The uniform implementation of gas rates, terms and conditions established by this Settlement Agreement shall be effective for bills rendered on or after March 1, 2008, or as soon thereafter as the ATM city adopts an 1 SEITLEMENI AGREEMENT GAS tJi'II.TIIES DOCKET N0.9762 (AND CONSOLIDATED CASES) FEaRUARY11,2008 ordinance or resolution to implement for the ATM city the sates, terms, and conditions reflected in the taziffs attached to this Settlement Agreement.. 2. The net plant amount of $1,243,607,206 is reasonable for the plant that is used and useful in providing gas utility service. 3. In an effort to sneamline the regulatory review process, Atmos and ATM have agreed to undertake a new mechanism for reviewing the Company's cost of'service on an annual basis.. The new mechanism is lmown as the Rate Review Mechanism Rider RRM'~. Rider RRM provides for an annual rate adjustment to reflect changes in billing determinants, operating and maintenance expense, depreciation expense, other taxes expense, and revenues as well as changes in capital investment and agsociated changes in Boss revenue related taxes. 4.. Atmos and ATM agree that the Rider RRM shall be implemented annually over a tluee-yeaz hial period.. On or after December 31, 2010, any ATM City that opposes the continued use of the Rider RRM to set rates for areas within its original jurisdiction shall provide written notification to the Company of'this fact..' Such notice shall be provided no later-than .January .31, 2011. Upon receipt of'such written notification, Atmos shall cease making an annual Rider RRM filing with the notifying ATM City and instead, shall file a general rate case with the notifyingATMCitywithineighteenmonthsfiomthedatethenotificationisreceivedbythe Company.. The last effective rates under the Rider RRM shall remain in effect for the notifying ATM City until such time as new rates aze established for that city in a general rate case.. 1n the absence of such notification, Rider RRM shall continue subject to any changes that may be agreed to in writing between the ATM Cities and Atmos. Atmos agees that effective with the implementation of the first RRM rate adjustment, Atmos shall file with the ATM Cities a revised Rate R-Residential Sales Taziff to reduce the customer' charge per bill firm $10.69 per- month to $7.00 per monffi and to increase the volumetric portion of'the rate (shown as $1.271 in Exhibit A) to tlrf; appropriate level to reflect the reduction in customercharge firm. $10.69 to 7.00, as well as to reflect any change resulting from the RRM implementation. Atmos further agrees that effective with the implementation of the fast RRM adjustment, Atmos shall file with the ATM Cities a revised Rate C- Commercial Sales Tariff to reduce the customer chazge per bill finm $20.•28 to $1.3..50 per month and to increase the volumetric portion of the rate (shown as $.,7104 in Exhibit A) to the appropriate level to reflect the reduction in customer charge from $20,28 to 13..50, as well as to reflect any change resulting fiom the RRM implementation.The fast RRM rate adjustment shall occur October 1, 2008. Atmos and the ATM Cities agree that following the initial RRM adjustment any subsequentimplementationofRRMadjustmentsshallbesupportedasdescribedintheKiller RRM, and shall limit changes to residential and commercial customer charge to no mare than 20%. Further, the patties agree that any approved adjustment in excess of the 20% limitation on the residential and commercial customer chazge shall be recovered through the volumettic portion of the rate. sErrL.En~LENT acxEEMENr GAS UTII,I'TTES DOCKET N0.9762 (AND CONSOLIDATED CASES) F~tixUARV 11, 2008 6.. The following types of expenses shall be removed fiom all expense and rate base amounts included within Rider RRM filings for each Evaluation Period-and corresponding Rate Effective Period: Amounts incurred for travel, meals or entertainment of employee spouses.. Amounts far au Navel that exceed published commercial coach air fazes. Amounts inewred for hotel moms exceeding $250 per' night inclusive of taxes and fees assessed on such rooms.. Amounts for alcbhohc beverages, Amounts paid for admission to entertainment, sports, art or cultural events, and all event sponsorship costs. Amounts for social club dues or fees. With respect to the RRM, Atmos fiuther agrees to pay all reasonable and necessary expenses of each entity having original jwisdiction that are incwted to review the Company's annual RRM filings. Atmos fwther agrees .that in calculating the proposed rate for any Rate Effective Period, the Company shall not include: (1) any external legal, expert; or consultant coats to prepaze and/or provide supportive information related to its filing; or (2) reimbwsements to original jwisdiction entities. 8. Notwithstanding pazagaph 7 of this Settlement Agreement, Atmos and ATM agree that in the event of an appeal of an original jwisdiction entity's decision regarding a proposed RRM adjustment, recovery of rate case expenses shall be detemrined according to Chapters 103 and 104, TF.x. UTa. CODE ANN, Fhther, in the event of such appeal(s), Atmos shall recover any reimbursement made to the original jwisdicfion entity tluough a swchazge to all customer rates that are subject to the Commission's,jwisdicdon in that pioceeding or proceedings that might be joined therewith, regazdless of whether such reimbwsements are made dwing the initial review period or appeal period.. 9. It is the intention of'the Signatories that the ATM Cities receive the benefit of any agreed upon annual RRM adjustment that Atmos enters into with any other RRM- implementing city within the Mid-Tex division dwing the same yeaz,. Therefore, Atmos agrees that if; as determined by the ATM Cities, the annual RRM adjustment agreed to between Atmos and an RRM-unplementing city is more beneficial to the ATM Cities, Abnos will make the more beneficial annual RRM adjustment available to the ATM Cities for adoption. 10, The ATM Cities agree that they will not challenge the legal basis of the rates, terms, and conditions reflected in Exhibit A, or any annual RRM adjustment that is implemented pwsuant to Rider RRM,. 11, Atrnos and the ATM Cities further agree that the express terms of'the Rider RRM aze supplementai to the filing, notice, regulatory review, or appellate procedwal process of the ratemaking provisions of Chapter 104 of'the Texas Utilities Code. If' the statute requires a mandatory action on behalf of the municipal regulatory authority or Atmos, the pazties will follow the provisions of such statute. If' the statute allows discretion on behalf' of the municipal regulatory authority, the ATM SETILBMENI AGREEMENT GAS iJTILITIES DOCKET N0.9762 (AND CONSOIIDAiED CASES) F$BRiJARY 11, 2UU8 Cities agree that they shall exercise such discretion in such a way as to implement the provisions of'the RRM tazifl'. If'Atrnos appeals an action or inaction of'an ATM City regarding an RRM filing to the Railroad Commission, the ATM Cities agree that they will not oppose the implementation of interim rates or advocate the imposition of'a bond by Atmos consistent with the RRM tariff:. Atmos agrees that it will make no filings on behalf' of its Mid-Tex division under the provisions of TEX.. UI¢. CDDB Axrr.. § 104.301 while the Rider RRM is in place, and any such filings pending at the time the RR1VI is approved will be hued-up for revenue and rate base components prior to implementation of the annual RRM.. In the event that a regulatory authority fails to act or enters an adverse decision regadding the proposed annual RRM adjustment, the Railroad Commission of Texas shall, pursuant to the provisions of the Texas Utilities Code, have exclusive appellate jurisdiction to review the action or inaction of'the regulatory authority exercising exclusive original jurisdiction over the RRM request. In addition, the Signatories agree that this Settlement Agreement shall not be construed as a waiver ofthe ATM Cities' right to initiate a show cause proceeding or the Company's light to file a Statement of Intent under the provisions ofthe Texas Utilities Code. 12.. Atmos and ATM commit that during the Initial Implementation Period, as defined in the RRM tariff; Atmos and the ATM Cities will not devote resources or efforts to advocate statutory changes involving rate stabilization mechanisms or the Gas Reliability Infrastructure Program that is currently codified under TEX. UrtL. Conn 104 301. 13 Atmos and the ATM Cities agree that the gas cost portion of uncollectible expense shall be recovered through the Company's Ridet GCR rather than through base rates. The change in accounting for the gas cost portion of'uncollectible expense including both the accrual of expense and write-off' of accounts) shall become effective with the implementation of'the first RRM rate adjustment..The first RRM. rate adjustment is expected to occur October 1, 2008. 'In calculating the rate forthe first Rate Effective Period, the Company shall htilize the same methodology as used in the Company's September 20, 2007 Statement of Intent with the only modification being to exclude the effects of the gas cost portion of uncollectible expense fiom the base rate calculation. 14 Atmos and the ATM Cities fiuther ogee that expense associated with lost and unaccountable gas shall, based on an annual period, be recoverable tluough the Company's Rider GCR up to a maximum of five (5) percent of the quantity of metered gas, as provided under Commission Rule 7.5525, Lost and Unaccounted for Gas. Such change shall be effective with the complete 12 month reporting period ending .June 30, 2008.. 15. .Included as part of Exhibit A to this Settlement Agreement is a new gas conservation program tariff (Rider CEE) that will be effective October 1, 2008. Atmos and the ATM Cities agree that Atmos will fund $1 million of the allowable expenses incurred annually, with a customer late component providing the remainder' $1 million of funding. All customer-supplied funds will, prior to the commencement of the program, be used toward program implementation efforts sErf LEIvtENr aGREEtv1ENr GAS UTILITIES DOCKET N0.9762 (AND CONSOLIDAIED CASES) FEBRUARY 11, 2008 and, upon implementation, be applied drrectly to the gas conservation materials and supplies. 16, Atmos and the ATM Cities agree that the Company's requested revision of its weather normalization adjustment ("WNA'~ mechanism is appropriate and should be approved as set forth in Exhibit A to this Settlement Agreement. Specifically, the revision excludes non-weather sensitive commercial customers and modifies the WNA mechanism to calculate the WNA adjustment based on weather stations at a regional level rather than under the current practice of associating all customers with a single weather location for purposes of determining the WNA adjustment. 17. Atmos and the ATM Cities agree that the three-year gas cost review process that is currently in effect for the Mid-Tex division should be eliminated.. Atmos and the ATM Cities further agee to collaborate to establish an alternate process wherein the prudence of gas costs recovered through the Rider GCR can be addressed. Until an agreed upon replacement mechanism has been established, the current gas cost review process shall remain in effect, unless changed by order of'the Cornmission. 18_ It is the intention of the Signatories that the ATM Cities receive the benefit of any settlement agreement that Atmos enters into with other entities azising out of the September 2Q 2007 Statement of Intent or GUD No. 9672 (consolidated cases) or any associated appeals of GUD No. 9672.. Therefore, Atmos agees that ifthe rates, revenues, terms and conditions, or benefits accruing to the settling entity would be more beneficial to the ATM Cities than the terms of'this Settlement Agreement, as determined by the ATM Cities, such mote favorable rates, revenues, terms and conditions, or benefits shall additionally accrue to the ATM Cities, Similarly, if'the Final Order in GUD No.. 9672 or orders resulting from any associated appeals are determined by the ATM Cities to result in rates, revenues, terms and conditions, or benefits that are more beneficial than the terms or this Settlement Agreement, such more favorable terms, revenues, terms and conditions shall additionally accrrie to the ATM Cities.. The ATM Cities' exercise of'this right is conditioned upon the ATM Cities' acceptance of all rates, revenues, terms and conditions of'the Final Order in GUD No. 9672 in tote.. If there is a subsequent settlement ageement azising out of the September 20, 2007 Statement of Intent or GUD No. 9672 (consolidated cases) or any associated appeals of GUD No.. 9672 that is deemed by the ATM Cities to be more beneficial than this Settlement Agreement, the ATM Cities shall be required to accept all of'the rates, revenues, terms and conditions of'such set$ementagieement in tote.. 19, Atmos and the ATM Cities agree that all reasonable rate case expenses directlyincurredbyAtmosinwnnectionwiththeSeptember20, 2007 Statement of'Intent filed on behalf' of its Mid-Tex Division through kebruazy 29, 2008, as well as all expenses reimbursed to the ATM Cities for such cases shall be recoverable through a surehazge to all customer rates within the ATM Cities. The amount to be recovered through the surohazge to customers within the ATM Cities shall be determined on a pro rata basis, consistent with the ATM Cities' percentage of'total Mid-Tex residential load.. The surcharge shall be recovered over athirty-six month period beginning in April of 2008, or as soon thereafter as approved by the last SETILEMENI AGREEMENI ~ ' GAS iITII..ITIES DOCKET NO.. 9762 (AND CONSOLIDAIED CASES) F~ERUARY11,2008 ATM City.. Atmos fmther agrees that it will continue to reimburse ATM Cities for the rate case expenses intoned in connection with the September 20, 2007 Statement of Intent on a monthly basis in accordance with the agreement entered between the Signatories on October I5, 2007. 20 Atmos and the ATM Cities agree that Atmos may make all future filings, including, but not limited to, the annual RRM adjustment and any Statement of Intent filing with the ATM Cities on an eectonic basis, rather than by paper copy.. Electronic Filings shall fulfill the requuements of TEx.. IJIII.. CODE §104.103. The appropriate ATM Cities representative shall provide a list of the ATM Cities to Atmos by Mareh 1, 2008, and agrees to notify Atmos of any change in the ATM Cities Coalition within 30 days of the effective date of any such change in order for Atmos to maintain adequate service records. Atmbs further agrees to make paper copies of filings available to any ATM City that requests a copy. 21. In the spirit of improving communication and cooperation, Atmos agrees to initiate quazterly meetings with the ATM Cities to provide information, answer questions, and receive input from the ATM Cities regazding capital projects in the Mid-Tex service territory. As pazt of the quarterly meetings, Atinos will update the ATM Cities of its activities is the cities, as well as any service related issues associated with the provision of gas utility services to ATM city customers., Atmos and the ATM Cities will work cooperatively regarding the level of project detail to be presented at the quarterly meetings. Until changed by the patties, the level of project detail supplied by Atmos at such meetings shall be similaz to the project spreadsheets on GRIP projects attached to the prefiled duect testimony of'James S. Powell in GUD No 9762. Atmos shall not be required to obtain the pre-approval of the ATM Cities to place projects in service. 22. Atmos and the ATM Cities agree that each ATM city should approve this Settlement Agreement and adopt an ordinance or resolution to implement for the ATM Cities the rates, terms, and conditions reflected in the tariffs attaches to this Settlement Agreement as Exhibit A. 23 The Signatories agree that the terms af'the Settlement Agreement aze interdependent and indivisible, and that if'any ATM city enters an order that is inwnsistent with this Settlement Agreement, then any Signatory may withdraw without being deemed to have waived any procedural right or to have taken any substantive position on any fact or issue by virtue of that Signatory's enhy into the Settlement Agreement or its subsequent withdrawal. If any ATM city rejects this Settlement Agreement, then this Settlement Agreement shall be void ab ir:itio and counsel for the ATM Cities shall thereafter only take such actions as are in accordance with the Texas Disciplinary Rules ofProfessional Conduct.. 24.. Atmos agrees that it will accept and approve a request pursuant to this Agreement by any municipality that is currently receiving franchise payment from the Company to execute or amend that municipality's applicable 5anchise agreement to increase the franchise fee payment payable by the Company under the terms of the municipality's franchise agreement to not more than 5% of'Gross Revenues (as that 6 SETILEMENI AGREEMENT GAS UTIIITIES DOCKET N0.4162 (AND CONSOLIDAIED CASES) FEBRUARY 11,2008 team is defined in the applicable franchise_ The terms of this pazagraph shall supersede any and all language currently contained in the applicable franchise, as amended or extended, ganting the right to increase the periodic franchise fee payment following the passage and approval of a new, amended, or renewed franchise that provides for a higher franchise fee payment with another municipality. Any municipality that elects to exercise the option granted herein shall notify the Company of such election by written notice given not less than sixty (60) days prior to the effective date of the increase.. Upon receipt of the written notice from the electing municipality, the Company and the municipality shall enter into a new, amended or renewed franchise agreement (hereinafter referred to as an Amendment"). The Company shall calculate the 5% on the gross revenue (as that fern is defined in the applicable franchise) from the prior yeaz• or the prior quarter, depending on the franchise teems; based upon the gross revenue for the prior yeaz or quarter', respectively. The payment that is made during the current year or quarter is for the privilege of gas operations durirrg that time period.. This interpretation applies to.all payments made or to be made under the franchise ag<ement. Each city shall adopt the Amendment in a manner that is consistent with their chazter or applicable laws in the case of a general law city.. The effective date. of the Amendment shall be May 1, 2008 or the date the Amendment is adopted if' after May 1, 2008. The Company shall be entitled to collect any franchise fees, whether or not increased under the terms hereof; from customers within each municipality pursuant to the terms of the Company's hider FF . 25.. In exchange for ATM's dismissal oYnon-suit of'tlre sorts specified below, Atmos agrees to pay the ATM Cities $560,000 for expenses associated with all 2003, 2004, 2005, and 2006 GRIP filings and related court appeals within 30 days of'the date of the last ATM city ordinance or resolution approving this Settlement Ag<eement is entered. Such payment shall be recovered through the surehazge to customers within the ATM Cities at a rate of $.0053 per Mcf. Atmos and the ATM Cities further agree that the surcharge shall be recovered over a twelve month period begirmirrg with the implementation of the first annual Rate Review Mechanism RRM'~ adjustment, which is expected to occur. on October i, 2008. 26. Within .30 days following the date the last ATM city ordinance or resolution approving this Settlement Agreement is entered, Atmos and the ATM Cities agree to file a Notice of Non-Suit or Motion to Dismiss, whichever is applicable, in the following proceedings: Cause No. D-I-GN-06-000337 (Consolidated); Atmos Cities Steeling Committee v. The Railroad Commission of Texas, Tn the 345th District Court, Travis County, Texas. This case includes the following cases: a. Cause No.. D-1-GN-502179 - Atmos Texar Municipalities v The Railroad Commission ofTexas, In the 250x` Disttict Court, Travis County, Texas. ** b. Cause No.. D-1-GV-06-000057 -Cities of'Caldwetl, Celina, Copperas Cove, Corsicana, Crowley, Denton, Fredericksburg Frost, Galesville, Goldthwaite, Greenville, Groesbacl~ Hamilton, Hickory Creek, Hillsboro, SETTLEMENT AGREEMENI GAS UTIL•TIIES DOCKET N0.9762 (AND CONSOLIDAIED CASES) FEBRUARY 11, 200$ Lexington, Llano, Longview, Mart, Whitney ("Cities') v. The Railroad Dishict Court, Ttavis County, Texas. Mexia, Somerville, 77torndale, and Commission of Texas, 111 the 35.3`a c.. Cause No D-1-GV-06-000061 -City of Ranger ("City') v. The Raiboad Commission of'Texar, In the 200x' District Court, Travis County, Texas, d. Cause No.. D-1-GV-06-000076 -City of'McGregor ("City) v. -The Raiboad Commission of'Texas; In the 126a' Dishict Court, Travis County, Texas.. e. Cause No. D-1-GV-06-000077 -City oJ' West ("City) v. The Railroad Commission of'Texas, Tn the 200x' District Court, Travis County, Texas. f'. Cause No. D-1-GV-06-000078 -Cities of Balch Springs, Belton, Cron, Commerce, Dublin, Electra, Lampasas, Lometa, PJlugerville, San Saba and Seymour ("Cities) v. The Railroad Commission of Texas, In the 201" Dishict Coutt, Travis County, Texas.. g. Cause No.. D-1-GV-06-000079 -Cities ofBurnet, Coleman and Round Rock Cities') v. The Raiboad Commission of Texas, In the 250x' District Court, Travis County, Texas.. h. Cause No. D-1-GV-06-000106 -City of Kemp ("City') v. The Railroad Commission of Texas, In the 98u District Court, Travis County, Texas.. i. Cause No. D-1-GV-06-001095 -The Cities ofBalch Springs, Belton, Bwnet, Clifton, Coleman, Copperas Cove, Corsicana, Denton, Dublin, Fredericksbwg, Frost, GatesvilJe, Goldthwaite, Cranbury, Grandview, Greenville, Groesbeck, Hillrboro, Lampasas, Leander, Llano, Lometa, Longview, Mexia, Pflugerville, Ranger, Riesel, Round Roc1~ San Saba, Somerville, TYinidad and Whitney ('Atmos Texas Municipalities" w' ATM) v. The Raiboad Commission of Texas, In the 126th Dishict Coutt, Travis County.. j. Cause No. D-1-GV-06-000578 - Atmos Texas Municipalities v. The Texas Railroad Commission of Texas, In the 201st Dishict Court, Travis County, Texas..** k. Cause Number: 03-06-00580-CV; Atmos Energy Corpaiation, as successor by merger to TXU Gas Company, Allied Coalition of Citea, and City of Dallas v. Raiboad Commission of Texas; In the Third Dishict Court of Appeals at Austin,Texas, Non-suit or Dismissal will occur only with respect to the defendant, Atmos Energy, Corp., Mid-Tex division SETTI.EMENI AGItEEMENI GAS UTILITIES DOCKET NO. 9162 (AND CONSOLIDAIED CASES) FEBRUARY 11, 200$ 27, The Signatories agree that all negotiations, discussions and conferences related to the Settlement Agreement aze privileged, inadmissible, and not relevant to prove any issues associated with GUD Docket No. 9762. 28. The Signatories agree that neither this Settlement Agreement nor any oral or written statements made dwing the cowse of settlement negotiations may be used for any pwpose other than as necessazy to support the entry by the ATM Cities of an ordinance or resolution implementing this Settlement Agreement.. 29.. The Signatories agree that this Settlement Agreement is binding on each Signatory only for the pwpose of settling the issues set fo[th herein and for no other pwposes, and, except to the extent the Settlement Ag<eement governs a Signatory's rights and obligations for futtue periods, this Settlement Ageement shall not be binding or precedential upon a Signatory outside this proceeding. 30. The Signatories agree that this Settlement Agreement may be executed in multiple counterparts and maybe filed with facsimile signatures. SETTLEMENT AGREEMEN I GAS UTIL17tES POCKE7N0..9162 (AND CONSOLiDA7ED CASES) FEBRUARY 11, 20pp--S Agreed to this (L~Oday of Februazy, 2008 A7MOS ENERGY CORP., MID•SEX DIVISION B ~ ~ ' ~~Y~ _ 7o A Patis ident, Ind-TeY Division 10 SEI'ILEMENT AGREEMENT GAS UTTLIIIES DOCKET NO 9162 (AND CONSOLIDAIED CASES) FEBRUARY 11, 2,Op$ Agreed to this `~ day of'Febiuary 2008 ATTORNEY FOR AIMOS IEXAS MUNICIPALITIES, WHOSE MEMBERS INCLUDE THE CITIES OF AUSTIN, BALCH SPRINGS, BANDERA, BARTLETT, BECTON, BLOOAdING GROVE, BRYAN, CAMERON, CEDAR PARK, CLIFTON, COMMERCE, COPPERAS COVE, CORSICANA, DENTON, ELECTRA, FREDERICKSBURG, GATESVILLE, GEORGETOWN, GOLDTHWAITE, GRANBURY, GREENVILLE, GROESBECK, HAMILTON, HENRIETTA, HICKORY CREEK, HICO, HILLSBORO, HUTTO, KERENS, LAMPASAS, LEANDER, LOMETA, LONGVIEW, MART, MEXIA,.OLNEY, PFLUGERVII.LLE, RANGER, RICE, RIESEL, . ROGERS, ROUND ROCK, SAN ANGELO, BANGER, SOMERVILLE, STAR HARBOR, TRINIDAD, TROPHY UB, AND WHTI'NEY By: '~ B ale Subject to approval by ATM City Cb~lncils 11 EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID-TEX DIVISION RATE SCHEDULE:TABLE OF CONTENTS APPLICABLE TO:Entire System REVISION DATE: EFFECTIVE DATE:PAGE: 7 OF 1 UTILITY OPERATIONS II. CITIES AND COUNTIES SERVED III.. DEFINITIONS N. GAS SERVICE RATES 8 RIDERS Rate R - Resitlential Sales Rate C -Commercial Sales Rate I - IndusVial Sales Rate T - Transportatlon Rider CT - CompefiUve Transport Rider GCR -Gas Cost Recovery Rider FF -Franchise Fee Adjustment Rider STIR=Surcharges Rata LEP-Line E#enslon Policy Rate M -Miscellaneous Charges Rider RA -Retention Adjustment Rider TAX -Tax Adjustment Rider WNA-Weather Normalization Adjustment Rider RRM -Rate Review Mechanism Rider CEE - Conservatiori and Energy Efrciency V. SERVICE RULES AND REGULATIONS IXHIBIT A TARIFF FOR GAS SERVICE ATINOS ENERGY CORP., unn_rev m~ne~n~~ RATE SCHEDULE:Rate R -Residential Sales APPLICABLE TO:Entire System REVISION: DATE: EFFECTIVE DATE:PAGE:1 OF 1 RATE R -RESIDENTIAL SALES Appllcatton Appllceble to Residential Customers for all natural gas provided at one Point of Delivery and measured through one meter.. Type of Service Where seMce of fhe type desired by Customer is not alfeady available at the Point of Delivery, additional charges end special contract arrengements between Companyand Customer may be required prior to service being furnished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and Md charges to the amwnts due under the riders listed below: Gas Cost Recovery: Plus an amdunt for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, df Rider GCR. WeatherNormalization Adjustment: Plus or Minus an amount forweadier normalization calwlated in accordance with Rider WNA Rale Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment: Plus an amount forfranchise fees celwlated M accordance with Rider FF. Tax Adjustmeht: Plus an amount for tax calculated In accordance with Rider TAX Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s).. Agreement An Agreement for Gas SeMce may be required.. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies havingJurisdictionandtotheCompany's Tariff for Gas Service. EXHIBR A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., YIn TCV 1'\I\IICIf1~1 RATE SCHEDULE:Rate C -Commercial Sales APPLICABLE TO:Entire System REVISION: DATE: EFFECTIVE DATE:PAGE: 1 OF 1 RATE C -COMMERCIAL SALES Application Applicable to Commercial Customers for all natural gas provided at one Point of Delivery and measured through one meter and to Industrial Customers with an average annual usage of less than 3,000 Md Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Companyand Customer maybe required prior to service being fumished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and Mcf charges to the amounts due under the riders listed below. Custbmer Charge per Bill $ 20.28 per month Commodity Charge -All Mcf $ 0.7104 per Mcf Gas Cost Recovery: Plus en amount for gas costs and upstream trehsportatlon costs calculated inaccordandewithPart (a) and Part (b), respectivety, of Rider GCR.. Weather Normalization Adjustment: Plus or Minus an amount for weather normalization calculated inaccordancewithRiderWNA. Rate Review Mechanism: Plus or Minus an amount for rates as glculated In accordance with RiderRRM.. Franchise Fee Adjustment: Plus an amauntforfranchlsefees calculated In accordance with Rider FF.. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Agreement An Agreement for Gas Service may be required.. Notrca Service hereunder and the rates for services provided are subJect to the orders of regulatory bodies havingjudsdictlonandtotheCompany's Tariff for Gas Service. EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., Mm_TFY nNICIffN RATE SCHEDULE:Rate 1-Industrial Sales APPLICABLE TO:Entire System REVISION: DATE: EFFECTNE DATE:PAGE: 1 OF 2 RATE 1 • INDUSTRIAL SALES Appllcatlon Applicable to Industrial Customers with a maximum daily usage (MDU) of less than 3,500 MMBtu per day for all natural gas provided at one Point of Delivery and measured through one meter. Service for Industrial Clistomars with an MDU equal to or greater than 3,500 MMBtu per day will be provided at Companys sole option and will require special contrail arrangements between Company and Customer. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contrail arrangements between Company and Customer may be required priorto service being furnished. Monthly Rate Customer's monthty bill will be plculated by adding the following Customer end MMBtu charges to the amounts due under the riders listed below: Gas Cost Recovery: Plus an amount forges costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment: Plus an amount for franchise fees glculated'm accordance with Rider FF.. Tax Adjustment: Plus an amount for tax calculated fit accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s).. Curtellment Overpull Fee Upon notiFlceUon by Company of en event of curtailment or Interruptlon of Customer's deliveries, Customerwill, for each MMBtu delivered in excess of the stated level of cutallment or interruption, pay Company200%of the midpoint price for the Katy point listed In Platte Gas Dally published for the applicable Gas Day In the table entitled'Daily Price Survey" EXHIBR A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.., Mlrl_TFY nNISIf1W RATE SCHEDULE:Rata I -Industrial Sales APPLICABLE TO:Entire System REVISION: DATE: EFFECTNE DATE:PAGE: 2 OF 2 February 1; 2008 Replacementlndex In the event the °rrlidpolnt" or °common" price for the Katy point listed in Platts Gas Daily in the table entitled Daily Price Survey" Is no longer published, Company will calculate the applicable imbalance fees utilizing a dally price Index recognized as authoritative by the natural gas Industry and most closely approximating the applicebie Index Agreement An Agreement for Gas Service maybe required.. Notice Service hereunder and the retes for services provided ara subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. Special Conditions In order to receNe service under Rate I, Customer must have the type of meter required by Company..Customer must pay Company all costs associated with the acquisition and installation of the meter. FJgiIBR A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID-TIX.DIVISION RATE SCHEDULE:Rater-Transportation APPLICABLE TO:Entire System REVISION: DATE: EFFECTIVE DATE:PAGE:1 OF 2 RATE T • TRANSPORTATION Application Applicable, In the event that Comparry has entered Into a Transportation Agreement, ro a customer dlrecUyconnectedtotheAtmosEnergyCorp ,Mid-Tex Division Distribution System (Customer for thetransportationofallnaturalgassuppliedbyCusomerorCustomer's agent at one Point of Delivery for use in Customer's facility. Type of service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and spedal contract anangements between Companyand Customermaybe required prior to service being furnished. Monthly Rate Customer's bill will be calculated by adding the following Customer and MMBtu charges to the amounts and quantities due under the riders listed below: Upstream Trensportatlon Cost Recevery: Plus an amount for upstream transportation costs In accordance with Part (b) df Rider GCR. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Retention Adjustment. Plus a quantity of gas as calculated in accordance with Rider RA. Franchise Fee Adjustment: Plus an emountfarftanchisefees celculated In accordance with Rider FF.. Tax Adjustment: Plus en amount for tax calculated In accordance with Rider TAX. Surdharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s).. Imbalance Fees All fees charged to Customer under this Rate Schedule will be charged based on the quantities determined under the applicable Trensportatan Agreement and quantities will not be aggregated for any Customer with multiple Transportation agreements for the purposes of such fees.. Monthly Imbalance Fees Customer shall pay Company the greater of (i) $0..10 per MMBtu, or (ii)150% of the difference per MMBtu between the highest and lowest "mldpoinY price forthe Katy point listed in PNatts Gas Deity in the table entitled Daily Price Survey' during such month, for the MMBtu of Customer's monthly Cumulative Imbalance, as EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.., MIn.TFY 111VISIr1N RATE SCHEDULE:Rate T • Trenspokatfon APPLICABLE TO:Entire System REVISION: DATE: EFFECTIVE DATE:PAGE: 2 OF 2 February 1, 2008 defined In the applicable Transportation Agreement; at the end of each month that exceeds 10% of Cusiomer's receipt quantifies for the month.. Curtailment Overpull Fee Upon notification by Company of an event of curtailment or Interruption of Customer's deliveries, Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay Compariy 200% of the midpoint price for the Katy point listed in Plans Gas Da11y publlshed for the applicable Gas Day in the table entitled "Daily Price Survey." Replacement Index In the event the "midpoint" or "common° price for the Katy point listed in Platts Gas Dally In the table entitled Dally Price Survey is no longer publlshed, Company w(II celwlate the applicable Imbalance fees utilizing a dairy price Index recognized as authoritative by the natural gasindustry and most closely approximating the applicable Index. Agreement A transportation agreement is required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies havingjurisdictionandtotheCompanysTariffforGasService. Special Conditions In order to receive service under Rata T, customer must have the type of meter required by Company..Customer must pay Company all costs associated with the acquistlion and installation of the meter.. EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID-TFJt DNISION RIDER:Rider GCR -Gas Cost Recovery APPLICABLE TO:Entire System REVISION: DATE: EFFECTIVE DATE:PAGE: 1 OF. 3 Octoher 7, 2008 Rider GCR -Gas Cost Recovery Applicable to Rate R, Rate C, and Rate I for alt gas sales made by Company, and applicable to Rate R, Rate C, Rate I, and Rate T for recovery of Pipeline System casts. The total gas cost recovery amount due Is determined by adding the gas cost calculated in Section (e) below and the pipeline cost calculated in Section (b) below The amount due for gas cost (Section (a)) is determined by multiplying the Gas Cost Recovery Factor GCRF) by the Customer's monthly volume.. For Customers receiving service under Rate R and Rete C, monthly volume will be calculated on an Mcf basis For Customers receiving service under Rate I, mgnthty volume will be calculated on an MMBtu basis and the quantities will be adjusted as necessary to recover actual costs. The amount due for pipeline cost (Section (b)) Is determined by multiplying the Pipeline Cost Factor PCF) by the Customer's monthly volume. For Customers regeiving service under Rate R and Rate C, monthly volume will be calculated on an Mcf beefs.. For Customers receiving service under Rate I and Rate T, monthly volume will be calculated on an MMBtu basis and the quantities will be adjusted es necessary to recover actual costs a) Gas Cost Method of Calculation The monthly gas cost adjustment fs calculated by the application of a Gas Cost Recovery Factor (GCRF), as determined with the following formula: GCRF =Estimated Gas Cost Factor (EGCF) + Recenclllation Factor (RF) + Taxes (TXS) + Adjustments ADJ) EGCF = Estimated cost of gas, Incuding lost and unaccounted for gas atbibuted to residential, commercial, and indusNial sales, and any reconciliation balance of unreCOVered gas costs, divided by the estimated total residential, commercial, and industrial sales. RF = Calcuieted by dividing the dlffetence between the Actual Gas Cost Incurred, Inclusive of Interest, over the preceding twelve-month period ended June 30 and the Acual Gas Cast Billed aver that same twelve-month per'wd by the estimated total residential, wmmercial, and industrial sales for the succeeding OGOber through June billing months. Actual Gas Cost Incurred =The sum of the costs booked in Atmos Energy Corp.., Mid-Tex Division account numbers 81X1 through 813 and 858 of the NARUC Unkortn System of Accounts, Including the net Impact of injecting and withdrawing gas from storage. Also includes a credit or debk for any out-of•period adjustments or unusual or nonrecurting costs lypicalty considered gascostsandacredkforamountsreceivedasImbalanceFeesorCurtailmentOverpullFees. Actual Gas Cost Billed =EGCF mukiplied by the monthly volumes billed to Residential, Commercial and Industrial Sales customers, less the total amount of gas cost datertnined to have been uncollectible and written off which remain unpaid for each month of the reconciliation perdd. EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID-TEX DMStON RIDER:Rider GCR -Gas Cost Recovery APPLICABLE TO:Entire System REVISION: DATE: EFFECTNE DATE:PAGE: 2 OF 3 October 1, 2008 Any amount remaining in the reconciliation balance after the conclusion of the period of amortization will be maintained in the recencillatton balance and included In fhe collection of the next RF. Atmas Energy shall file annual reports with the Commission, providing by month the following amounts: Gas Cost Written Off. Margin Written Off, Tax and Other Written Off, Total Written Off, Gas Cost Collected and Margin Collected TXS =Any statutorily imposed assessments or taxes applicable to the purchase of gas divided bytheestimatedtotalresldentlal, commercial, and industrial sales ADJ =Any surcharge or refund ordered by a regulatory authority, inclusive of Interest, divided by the estimated total resldentlal, commercial, end industrial sales. b) Pipeline Cost Method of Calculation Eadt month, a Pipeline Cost Factor (PCF) is calculated separately for each Pipeline Cost Rate Class . listed below. The formula for the PCF is: PCF = PP / S, where: PP = (P - A) x D, where: P =Estimated monthly cost of pipeline service calculated pursuant to Rate CGS D =Pipeline service allocation factor for the rate class es approved In ttie Company's most recant rate case, as follows: Pl aline Cost Rata Class Allocation Factor D Rate R - Residential Service 634783 Rate C -Commercial Service 302805 Rate I - Industda! Service and Rate T -Trans ortation Service 062412 A =Adjustment applied In the curcent month to cored for the dffference between the actual and es8mated pipeline cost revenue of the second preceding month, calculated by the formula: A = R - (C - A2), where: R =Actual revenue received from the application of the PP component in the second precedingmonth., C =Actual pipeline crosts for the second preceding month.. A2 =The adjustment (A) applied to the PP component in the second preceding month.. S =Estimated Mcf or MMBtu for the rate lass for the curent billing month.. The PCF is calculated to the nearest 0.0001 cent EXHIBR A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., rte.. ~~~~~...~ RIDER:Rider GCR • Gas Cost Recovery APPLICABLE TO:Entire System REVISION: DATE: EFFECTIVE DATE:PAGE: 3 OF 3 October 1, 2008 The Pipeline Cost to be billed Is determined by multiplying the Mcf or MMBtu used 6y the appropriate PCF. The Pipeline Cost is determined to the nearest whole cent TARIFF FOR GAS 3ERVICE EXHIBIT A ATMOS ENERGY CORP,., MID-TEX DIVISION RIDER:Rider CEE -Conservation & Energy Efficiency APPLICABLE TO:Entire System REVISION: DATE: EFFECTIVE DATE:PAGE:1 OF 1 RIDER CEE - Conservation & Enerav Efflclencv Purpose Atmos Energy Mid-Tex is proposing to Institute a complete Conservation & Energy Efficiency programwhichwillofferassistancetoqualifiedcustomersegmentsinreducingenergyconsumptionandlowering energy utility bills. The proposal Is one where Atmos Energy shareholders will fund a percentage of the allowable expenses incurred annually, with a customer rate component providing the remainder of the funding., Fdlowing is ahigh-level, concept summary of the proposal. Atmos Energy Mid-Tex Division proposes to work with the communities it serves to develop the details of a new tariff and programsaddressingconservationandenergyefflciericy. Synoosis: Voucher system to provide free energy savings materials and supplies to qualifying customers of Atmos Mid-Tex.. Qualified Customers will receive up to two hundred dollars ($200.00) worth of caulking,weather-stripping, sheathing, sealing, water heater blankets, and like materials, other energy savingdevicessuchasdock-thermostats, set-back devices ("covered Items") from approved suppliers /retailers.. Company will undertake efforts to enlist support from community groups, including its own EmployeeActionProgram, to assist wstomers wRh Installation. If it is determined that professional Installation capabilities are necessary, the parties will agree on labor assistance amounts.. Eli ibi' Low Income -Low-income rate-payers that qualify for heating bill assistance through LIHFI~P agencies and all agencies that distribute Atmos "Share. the Warmth° funds.. Agencies that allocateassistancefundsdenotecustomeresLowIncome, a status that lasts for one year.Senior Ckizen -Primary accountholder can request eligibility through ATM call center or web-site. Customer provides primary SSN which Is verified through Social Security Administration. And account holder that is or turns 65 years old in that year becomes eligible. Fundinc Initial program funding will be at two million dollars ($2,000,000). Atmas Energy shareholders willcontributeonemilliondollars ($1,000;000..00) to this initiative annually with ratepayers providing one million dollars ($1,000,000..00) per year. It Is proposed that the program operate on an October 1 throughSeptember30year, with benefits being capped at the two million dollar level for the initial program period. Administration: A third-party administretdr will coordinate qualificedon of customers, voudier distribution, subsequentveriflcatbnandreimbursementofeligibleexpendituresandgeneralprogramadministretion. Programadministrationexpenseswillbefundedfromtheannualapprovedbudget. Program audits will be concluded and the results provided to any interested party within 120 days of theendofeachprogramyeartodetermineeffectiveness. EXNISR A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID-TEX DIVISION RIDER:RiderWNA-WeatherNOrmaliZationAdjustment APPLICABLE TO:Entire System REVISION: DATE: EFFECTIVE DATE:PAGE: 1 OF 3 November 1, 2008 RIDER WNA-Weather Normallzatlon Adiustment Provisions for Adiustrnent the base rate per' Mcf' (1,000,000 Btu) Cor gas service set forth in any Rate Schedules utilized by the cities of'the Mid-Iex Division service area for determining notxnalized winter period revenues shall be adjusted by an amount hereinafter described, which amount is referred to as the "Weather Normalization Adjustment." The Weather Nrntnalization Adjustment shall apply to all temperature sensitive residential, and commercial bills based on meters read during the revenue months of'November through April. Computation ofWeather Normalization Adiustment The Weather Nortnalizatioa Adjustment F actor shall be computed to the nearestone-hundredth cent per Mcf by the following fottrnila: HSFi x (NDD-ADD) ) WNAFi Ri BLi + (HSFi x ADD) ) Where any pazticulaz Rate Schedule or billing classification within any such pazticulaz Rate Schedule drat contains more than one Billing classification WNAF{ = Weather Normalization Adjustment Factor for the i~ mte schedule or classification expressed in cents per Mcf Ri base rate of'tettgrerature sensitive sales for the ith schedule m classification approved by the entity exercising original jurisdiction. HSF i = heat sensitive factor for the i~ schedule or classification calculated as the slope ofthe lineaz regressian of average sales per bill (Mcf) and actual heating degree days by month for the test year by schedule of classification and weather station as part of'the RRM filing,. NDD = billing cycle normal heating degree days calculated as the sirttple ten-year average of actual heating degree days. ADD = billing cycle actual heating degree days.. Bli = base load sales for the i~ schedule or classification calculated as the y-intercept of dte linear regression of'average sales per bill (Mcf) and actual heating degree days by month for the test yeaz by schedule or classification TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID•TEX DNISION RIDER:Rider WNA- Weather Normalizatlon AdJustment APPLICABLE TO:Entire System REVISION: DATE: EFFECTNE DATE:PAGE: 2 OF 3 November 1, 2008 and weather station as part ofthe RRM filing the Weather Normalization Adjustment for the jth customer in ith rate schedule is computed as: WNA; = WNAF; x qU Where qq is the relevant sales quantity for the jth customer in ith rate schedule. Filings with Entities Exercising Orieinal Jurisdiction As part of its azmual RRM filing the Company will file (a) a copy ofeach computation of'the Weather Normalization Adjustment Factor, (b) a schedule showing the effective date of'each such Weather Normalization Adjustment, (c) a schedule showing the factors ofvalues used in calculatingsuchWeatherNormalizationAdjustmentand (d) a random sample and audit of thirty (30) actual customer bills, with customer information deleted, for each rate schedule or classification to which the WNA was applied in the preceding 12 month period.. To the extent that source data is needed to audit the WNA application, such data will be provided by the Company as part of the annual RRM tiling. If'the RRM is discontinued, as provided in the Rider RRM tariff; the information required herein to be filed with the entities exercising original jurisdiction shall be filed on Match 1 ofeach yeaz.. Base Use/Heat Sensitivity (HS Factors Residential Commercial Base use HSF Base use F1SF Weather Siririon Mcf Mcf/FTT1T) MrF a,r..artrnn Abilene 1.14 0131 8.11 V.0631v Austin 1.31 0136 18.05 0669 Dallas 1.57 0185 18.08 0925 Waco 1,20 0138 10.97 0606 Wichita Falls 1.27 0147 11.58 0581 EXHIBIT A TARIFF FOR GAS SERVICE ATMO3 ENERGY CORP., MID-TEX DIVISION RIDER:Rider WNA-Weather Normalization Adjustment APPLICABLE TO:Entire System REVISION: DATE: EFFECTIVE DATE:PAGE: 3 OF 3 November 7, 2008 Sample WNAF~ Calculation: 1533 perMcf' = 12267 x Where i = Ri = HSFi = NDD = ADD = Bli = 0131 x (30.17) ) 1..14 + (.0131 x 17) ) Residential Single Block Rate Schedule 1.226'7 per MCF (Rate R -Final (hda GUD No. 9670) 0131 (Residential -Abilene Area) 30 HDD (Simple ten=year average of Actual FIDD for Abileae Area - 9/15/06 10!14/06) 17 HDD (Actual HDD for' Abilene Area - 9/15/06 -10/14/06) 1.14 Mcf' (Residential -Abilene Area) EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP.., MID-IEX DNISION RIDER:Rider RRM -Rate Review Mechanism APPLICABLE TO:Entire Mid-Tex Division REVISION DATE: EFFECTNE DATE:.PAGE: 1 of 10 RIDER RRM-RATE REVIEW MECHANISM se: Ihis atecbanism is designed to provide amoral earnings transparency All rate calculations under this tariff' shall be made on a system wide basis. 1£ through the implementation of the provisions of this mechanism, it is determined that rates should be decreased or iacteesed, thw rates will be adjusted accordmgly in the manner set forth herein.. The rote adjustments implemented under this mechanism will reflect annual changes in the Company's cost of service end rote base. This adjustment will be authorized for an btitiai Impkaxaffition Period. With the conclusion of the fmal tale adjustment, if any, for the Initial Implementation Period, each entity having original jurisdiction may revoke, amend, or approve Subsequem Itaplenrenffition Period(s) for, the mechanism. Definitions a) the Annual Evaluatlon Date shall be the date the Company will make its annual Sling under this mechanism. The Annual Evaluation Date shall be no later than Mazch 1, of each year, This filing shall be effective in electronic fomr where practicable. the initial filing shall be made the Isar of March 31, 2008 or upon approval of this tariff b) Aadited Financial Data shall mean the Company's books and records related to the Company's Mid- Tex operating area and shared services operntions Audited Financial Dafa shall not require the schedules and information provided under this tariff to undergo a separate financial audit by an outside auditing film similar to the Company's affiual financislaudik. c) the Evaluatloa Period is defined as the twelve month period ending December 31, of each calendar yeaz. The initial Evaluation Peiod shall be calendar yam 2007 d) the Rete Effective Period is defined as the earlier of the twelve month period for which rotes determined under this mechanism will be is effect or subsequent rotes are implemented e) Per• Connection Baeis is defned as the existing average number of Mid-I ex active meters to customers during the Evaluation Period. f) Inttlal Implementation Period is defined as the three (3) yeaz period commencing with the Company'sfilingorderthismxhanismforthecalendaryear2007, effectivc October 1, 2008, and shall c6nclude with the implementation of rote adjustments, ifany, for Ure third Rate Effective Period.. g) Sabsequwt Intplementatlon Period is defined as any flux (3) year period after the conchtsion of'the Ini[ialImplemenffitionPeriod b) Final Order is defined es the most recent order establishing the Company's latest effective rotes for the area in which the mechanism is implemented, and shall include municipal rate ordinances and resolutions.. EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP, MID-TEX DNISION RIDER:Rider RRM -Rate Review Mechanism APPLICABLE TO:Entire Mid-Tex Division REVISION DATE: EFFECTIVE DATE:PAGE: 2 of 10 hate Review Mechanism the Company shall ffie with each regulatory authority having original jurisdiction over the Company's rates the schedules specified below for the Evaluation Period, with the filing to be made by the Armual Evaluation Date following the end of the Evaluation Period. The schedules, which will be based upon the Company's Audited Financial Data, sa adjusted, and provided in the same format ere Atmos' rate filing with municipalities on September 20, 2007, will include the following: a) Company's 13 month average actual gross plant in service, accumulated depreciatioq accn~itated deferred income taxes, iavealory, working capiml, and -other rate base components for the Evaluation Period, A 13 month average will be used for these items for the true up calculation; Evaluation Period ending balances for these items will be used for the calculation of rates for the Rate Effective Period The ratemaking treatments, principles, fmdmgs and adjustments included in the Final Order will apply Regulatory adjustments due [o prior regulatory rate base adjustment disallowances will be maintained, Cash working capital will be calculated using the lead/lag days approved in the Final Order. Accumulated defernd income taxes (ADfI) will be calculated using the methodology used in the Final Order. The RRM Schedules & Information section of this tariff identifies those ADIT components [o be included m the calculation ofrate base for both the Evaluation Period and Rate Effective Period calculations.. b) The Company's depreciation expense, operating and ma+a+P^~^ce expense, and taxes other than income taxes booked is the period will be used for the We-up calculation purposes. Depreciation rates booked in the period will be those approved in the Final Order, or the rote most recently approved. All calculation methodologies will be those approved in the Final Order except when noted err included in this tariff or is the most recent order addressing the methodology. - ffi additioq the Company shall exclude from operating and maintenance expense the discretionazy costa to be disallowed from Rider RRM filings listed is the RRM Schedules and Lifomiativn section of this tariff . c) Rehm on Egidty (ROE) shall be maintained at 9 6%. d) Cost of debt will reflect actual cost fns the Evaluation Period. A l3 month average cost of debt sad capital stmcture will be used for the true up calculation; Evaluation Period ending balances for cost of debt and capital suucturo will be used for the calculation of rotes for the Rate Effective Period, Capital strucnne will be the actual Evaluation Period ratio of long-term debt and equity, with percentage equity sot to exceed die percentage established in the Final Order in G U.D.. No, 9670 (48 1% equity), based on the calculation methodology outcomes used above. e) All applicable accounting adjustments along with all supporting work papers. Such adjustments may include: EXIiIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP, MID-TEX DIVLSION RIDER Rider RRM -Rate Review Mechanism APPLICABLE TO:Entire Mid-Tex Division REVISION DATE: EFFECTIVE DATE:PAGE: 3 of 10 I) Pro-forma adjustments to update and annualize costs and revenue billing deterrrdrraats for the Rate Effective Period. 2) Pro-forma or other adjustments required to properly account for atypical, unusual, or nonrecurring events recorded during the Evaluation Period, t) Shared Services allocation factors shall be recalculated each year based on fhe latest componentfactorsusedduringtheEvaluationPerind, but the methodology used will be that approved in the Final Order.. Calculation of Rate Adiustment a) The Company shall ~ provide additional schedules indicating the following revenue deficiency/sufficiency calculations using the methodology accepted in the Final Order, a 13 monthaveragewillbeusedforthespecifieditemsforthetrueupcalculation, Evaluation Period endingbalanceswillbeusedforthecalculationofrotesfortheRateEffectivePeriod. These schedules shall identify the rote adjustments necessary for both a tore-up of revenue for the Evaluation Period and the setting of prospective rates fm' the Ra[e Effective Period. The net result of these rate adjustments ahaE be reflected in the proposed new rotes to be established for the Rate Effective Period. In calculating the required rate adjust~nt4, such edjustmeats will be made pro-ratably to the customer charge and usage charge based upon actual revenue generated, as adjustedundertheCompany's approved Weather Nmrnalization Adjustment (WNA) Rider Provided, however, that neither the Residential nor the Commercial customer charges may increase more than 20% per year b) If' Coarpaay's earnings druing the Evaluation Period exceed 9..6°/, return on common equity, the Coarpany shall calculate a decrease to rotes to reduce the revenue required to achieve a return on equity of 9.6%for the Evaluation Period. If'Corrrpaay's earnings during the Evaluation Period aze below 9.6% rohun oa common equity, the Company shall calculate an increase in rates to collect the additional revenue requited to increase its return oa equity for the Evaluation Period to 9 6%..In order to avoid double-counting of huo-up revenues, any true-up revenue booked during the Evaluation Period that is related to prior periods will be removed in determining both the prospective rates for the Rate Effective Period and the truo-up increase o: decrease related m tbe currem Evaluation Period. Ilre RRM Schedule & Lil'ormatioa section of this tariffprovides anexamplecalculation. After the prospective rates for the Rate Effective Period are calculated, the truo-up element shall be added to or deducted from those rates in order [o determine the rates that shall thereafter be recovered c) The Company may also adjust rates for the Rate Effative Period to include recovery of anyknownandmeasurablechangestooperatingandmaintenancecostsincluding, bnt not limited to,all payroll and corttpensation expense, all beceflt expense, all pension expense, insurance costs,materials and supplies, bad debt costs, all medical expense, transportation and 6uIlding and lease costs for the Rate Effective Period Provided, however, that adjustments may only be made for costs that are reasonable sad necessary. Additionally, utiEty plant and rate base for the Rate EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP, MID-TEX DMSION RIDER:Rider RRM -Rate Review Mechanism APPLICABLE TO:Entire Mid-Tex Division REVISION DATE: EFFECTIVE DATE:PAGE: 4 of 10 Effectve Period well be established by using the Evaluation Period ending balances, includingassociatedchangesindepreciationandamorOZationexpenseandtaxes. ffi calculating the Company's known and measurable changes for prospective F.RM adjustment purposes, the following limitations will apply, oa a Per Concectian Basis Operating and Maintenance expenses per connectien for the Rate Effective Period cannot increase more than 5% per yeaz without specific identification and justifiwtioa. Anyproposedadjustmentabove5% per yeaz, is subject to the provisions of the Evaluation Procedure of this tariff Such procedures provide that the regulatory authority will review the proposed adjustment and that the Company and regulatory authority will work collaboratively to seek agreement on the proposed adjust~ats to the Company'sschedulesandproposedrates. Justifrration for such expenditures over the cap shall include en eveW or combination of events beyond the control of the Company. The beginning adjusted Operation and Maintenance expense pet connection for the 2007 RRM Evaluation period will be limited to not exceed $151 million divided by the connections for the period The increase in adjusted Operation and Maintenance expenses per connection for the 2008 Rate Effective Period and subsequent Rate Effective periods cannot exceed 5% per year, without specific identification and justification The RRM Schedule & htformation section of this tariff provides an example calcuhition ofthe 5% limit 2.. Net pleat investrneat per connection for the Rate Effective Period cannot increase more than 5% per yeaz without specific idetnification end justification. Any proposedadjustretemabove5% per year, is subject to the provisions of the Evaluation Procedures of this tariff. Such procedures provide that tht regulatory authority will review the proposed adjustment and that the Company and regulatory authority will work wllaboraflvely seek agreement on the proposed adjustments to the Company's schedules and proposed rates. However, m performing a cap test to verify compliance, Companyshallexcludeanychangesisnetplantinvestmentassociatedwithfederal, state, or local mandates related to safety, compliance, or road moves. The 2007 true up calculation shall be made using the net plant investment of $1,243,607,206. The initial 2008 prospective rate wrll be set using net plant ]inrihd to not excad [$1,243,607,206 divided by average active melees far the 13 months ended June 30 2007] daces 1 025 times the average active meters for calendar year 2007.. Subsequent filittg calculations of net plantinvestmentwillbemadeusingthesamemethodusedintheCompany's September 20,2007 Statement of Intern with the following exceptions: 1) A 13 atonth average will beusedfornetplantinthetrueupcalculationand2) Evaluation Period ending balances will be used for net plant in the calculation of rotes for the Rah Effective Period the rate increase limitations set forth in this taziff~ shall not preclude the Company fromrecoveringanyexcludednetplantcostsduringasubsequentEvaluationPeriodinwhichOce5% lindtation for net plant investment is not reached or in a subsequent Statement ofIntentcaseTotheextentthattheCompanyseekstorecoveranyexcludednetplantcostsduringasubsequemEvaluationPeriodiswhichthe5% limitation for net plantinvestmentisnotreachedminasubsequentStatementofIntentcase, the Company shall EXHIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID-TEX DIVISION RIDER:Rider RRM -Rate Review Mechanism APPLICABLE TO:Entire Mid-Tex Division REVISION DATE: EFFECTIVE DATE:PAGE: 5 of 10 identify these costs as a specific line item in the schedule accorvpanying the RRM rate adjustment Sling. the regulatory authority may disallow any net plant investment that is not shown to be prudently iacu[red. Approval by the regulatory authority of net plant investment puranni In the provisions of this tariff shall constitute a finding that such net plant investment wes prudenly incurred. Such finding of prvdence shall not be subject to further review in a subsequent Evaluation Period or Statetaeat of Lrteat lrling.. d) the Company also shall provide a schedule demonshating the `proof of revenues" relied upon to calculate the proposed rate for the Rate Effective Period.. The proposed rates shall conform as closely as is pmctfcable to the revenue allocation principles approved in the Final Order. Attestation A sworn statement shall be filed by the Company's Chief Officer in Charge of Mid-Iex Operation affirming that the filed schedules are in wtapliance with the provisions of'this mechanism and are tnre and correct to the best ofhis/her knowledge, information and belief No testiatony shall be filed, Evaluation Procedures the regulatory authority having original jurisdiction over the Company's rates shall have no less than ninety (90) days to review the Company's filed schedules and work papers The Corrgtany will be prepared to provide all supplemental information as may be requested to ensure adegnte review by the relevant regulatory authority.. The Company shall not unilaterally impose any limits upon the provision of supplemental infmmatlon and such information shall be provided within ten (10) working days of the original request. The regulatory authority may propose any adjustments it determines to be required to bring the schedules into compliance with the above provisions. Outing and following the ninety (90) dayreview period and a thirty (30) day response period, the Companyandtheregulatoryauthoritywillworkcollaborativelyandseekagreementon, the proposed adjustments to the Company's schedule and proposed rates. If agreement has been reached by the Coayrany and the regulatory authority, the regulatory authority shall authorize an increase ar decrease to Ote Company's rotes so as to achieve the revenue levels indicated for the Rate Effective Period If, at the end of the thirty (30)day response period, the Company and the reguhrtary authority have not reached agreement on the proposed adjustments, the Company shall have the right to appeal the regulatory authority's action m unction to the Railroad Commission of Texas Upon the filing of any appeal, the Company shall have the right to implenreat the proposed RRM rate adjustment, subject to refund. If approved 6y the entity exercising original jurisdiction, the rates established pursuant to the Rate Review Mechanism for rho first Rate Effective Period shall be effective on Oetober 1, 2008. Thereafter, rates established pursuant to the Rate Review Mechanism for subsequent Rate Effective Periods, ifapproved as provided herein, shall be effective oa July IS of each year Reconsideration end A~txal EXFIIBIT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID-TEX DIVLSION RIDER:Rider RRM -Rate Review Mechanism APPLICABLE TO:Entire Mid-Tex Division REVISION DATE: EFFECTIVE DATE:PAGE: 6 of 10 Orders issued pursuant to this mechanism are mtea>aldng orders and shalt be subject to appeal under Sections 302.001(b) and 103 021, et seq ; of the Texas Utilities Code (Vernon 2007). once Notice of'the annual Rate Review Mechanism filing shall be provided pursuant to Section L04 103, Ilnt.. Ulu.. Cone ANN, ao later than forty-five (45) days after the Company makes its annual filing pursuant to this tariff. The notice to customers shall include the following iafoaffition: a) a description ofthe proposed revision of'mtes and schedules; b) the effect the proposed revision of retes is expected to have oa the rates applicable to each customer class and on an average bID for each affected customer; c) the service area or areas in which the propoud mte adjustment would apply; d) the date the proposed rate adjusmtem was filed with the regulatory authority; and e) the Company's address, telephone number and website where information concerning the proposed mte adjustment maybe obtained. RRM Schedules and Informatlog Accumulated Deferzed Inwme Iax ("ADII'~ Item Ia Be Reeog>L+~Pdm Rate Base r iIbefollowinglistidentifiesthouADIIcomponentstohincludedisthecalculationofratebaseforboth . the Evaluation Period and Rate Effective Period calculations: Mid-Iax: Gas Plant in Service Insurance Acciuals Benefit Accruals Deferred Expense Projects Allowance for Doubtful Aaounts Customer Advances UNICAP Section 263A Costs (which shall be removed from Atari Mid-Tex when these costs ere tmnsfemd lb Atmos Pipeline Iexas) RegulatoryAsset -Mid Tex Regulatory Liability -Mid-Tex Other Plant ~ - EXHIBTf A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID-TEX DNISION RIDER:Rider RRM - Rale Review Mechanism APPLICABLE TO:Entire Mid-Tex Division REVISION DATE: EFFECTNE DATE:PAGE: 7 of 10 Accumulated Deferred Income Iax ("ADIII Items 7o Be Reco~ d i_ Rat Base (continued) SSU - Customer Support: Gas Plant m Service SSU -General O[IIce: Gas Plant in Service Lssnrance Accmals BenCfifs Ac«va19 Deferred Expense Projects Prepaid Expenses Regulatory Liability - Atmos 109 FAS 115 Adjustment Treasury Lock Adjustment Revenue Agent Report Canyforward~Adjustments 1990.1985 Tex Net Operating Loss Credit CazryfmwardsStateBonusDepreciation R & D Credi[ Valuation Allowance Other Plant I)iscretiomrv Costs to Be Disallo - fiom Rider R7N linos the following types of'employce reimbtnsed expenses and directty incurred costs are to be reraoved from ell expense and rate base amounts included within Rider RRM filings for the Evaluation Period and for the Rate Effective Period: Amounts incurred for have], meals or entertainment of'employee spouses A~ums for air travel that exceed,publiehedcoramercial coach air fazes Amounts iacuned for hotel rooms exceeding $250 per night inclusive of'taxes and fees assessed on such rooms. Amounts for alcoholic beverages. Amounts paid for admission to entertainment, sports, art or cultural ~ events, and all event sponsorship costs Amounts for social club dues or fees. EXHIBTI' A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID-TEX DNISION RIDER:Rider RRM -Rate Review Mechanism APPLICABLE TO:Entire Mid-Tex Division REVISION DATE: EFFECTNE DATE:PAGE: 8 of 10 Exarrgtle Calculation A -Revenue for RRM I'mo-tlp Portion of'Rate POR IL LUSIRAIION PURPOSES ONLY. AMOUNI S ARE HYPOIHETICAL, AND DO NOI CORRESPOND WITH OTHER EXAIvIPLE SCHEDULES'` Ptt Dooks Revenue, excluding Irve-Up Revenue from prior Evaluation Periods Per-Books Itue-Up Revenue based on 2007 Evaluation Period [l] Per-Hooka Irue-Up Revrnue basal on 2008 Evaluation.Period (1] Per-Hooks Truo-Up Revenue based on 2009 Evaluation Period [ 1 ] Iotal Per-Books Revenue Add / (Subtract): Revemte from Riders GCR, FF, & 7AX Surcharges for Rate Case Cost Recovery Irue-Up Revenue for 2007 Evaluation Period [ I ] Irue-Up Revenue frn 2008 Evaluation Period [i] Remove out-of-period and unusual items Realized Revenue for Irue-Up Calculation Calendar Calendar Calendar Calrndar Calrndar 2001 2008 2009 2010 2011 150,000 $156,000 5157;700 5158,200 $158;700 800 1,200 364) (546) 234 351 150,000 $156,800 $158,536 $157,888 $159,051 110,000) (111,000) (112,000) 200) (200) .(200) 800) (1,200) 364 39,800 44,800 45,500 Revenue Requiretrtent at 9 6% ROE [2]41,800 43,890 46,085 True-Up Increase (Decrease), subject to Revenuo- Related Iax Cuoas-up $ 2,000 $ (910) $ SSS 1] For illustration proposes, example assumes 40Y° of'the total calculated truo-up is collected in the following calendar year, Each true-up is subject to a proofofwEection or retwd after the collectionhefundperiod, and any residual amount will be refwded rn w1leMed in the subaequrnt period. 2] Since realized revenue for the true-up calculation excludes Riders OCR. FF, and IAX, as well as surchages for rate case cost recovery, the revenue requirement for purposes of the trve-up calculation also excludes all wrresponding expenses for the Evaluation Period.. EXFIIBTT A TARIFF FOR GAS SERVICE ATMOS ENERGY CORP., MID-TEX DIVISION RIDER:Rider RRM -Rate Review Mechanism APPLICABLE TO:Entire Mid-Tex Division REVISION DATE: EFFECTIVE DATE:PAGE: 9 of 10 Example Calculation B -Revenue for RRM Prospective Portion ofRate FOR ILLUSTRAIION PURPOSES ONLY. AMOUNIS ARE HYPOIHEIICAL, AND DO NOI CORRESPOND WIIH 07HER EXAMPLE SCHEDULES' Oct 2008 -Sept July 15, 2009 - July 15, 2010 - 2009 July 14, 2010 July 14, 2011 Rate Effective Period Revenue Rico-Out at Cwrent Rates l] $ 60,000 $ 65,000 $ 68,000 Remove Irue-Up Portion of Revenue [2] Revenue at Curnnt Rates for Rate Effective Period Deficiency Calculation 2,500) 1,100 60,000 62,500 69,100 Revenue Requirement for Rate Effective Period 65,000 68,250 71,663 Rate Effective Period Revenue Increase / (Decrease) before Irve-Up, subject to Revanue Iax Gross-Up [3] $ ~ 5,000 $ ~ 5,750 $ 2,563 1 ] To be calculated using pro•forma armualized billing detemunants, ea provided for in this tatifT; pricedoutatthecuttrntratesatthetimeofthedeficiencycalculation.. 2] Io be calculated using profmma annualized billing detertmnanta, as provided for in this tariff, pricedoutattheportionofcurrentrotesatthetimeofthedeficiencycalculationintendedtotrueup.prior Evaluation Period(s) 3] Ihis represents tire prosputive deficiatey portion of'the RRM adjustment the truFUp adjustment,demonsnated in Example Calculation A, will be combined with this adjusmtent to determine the total adjustment for the Rate Effective Period. TARIFF FOR GAS SERVICE EXHIBIT A ATMOS ENERGY CORP.., MID-TEX DNISION RIDEER:Rider RRM -Rate Review Mechanism APPLICABLE TO:Entire Mid-Tex Division REVISION DATE: . EFFECTNE DATE:PAGE: 10 of 10 Exar~rle Calculation C - Operation & Maintenance Expense Cap Iest All Amounts are Hypothetical, and do not correspond with other exaagde calculations++ Evelulatbn Pedod (Calendar VeSC Benchmark O&M Per Camectlan Qncreasetl 5%ennualty) Gas SaMCe Connections [1] Me~dmum 08M PJloxetl 44Z 144@ i~ S 97.23 $ 702,09 E 107.19 1,653,000 1560,000 1,567,000 S 151,000,000 E 159,260,400 6 167,966,730 7 ] For ilhlstration ptnposes only, Gas Service Connecfioas are estimated for 2007 and are assumed toincrease7,000 camections per year Therefore, 'Maximum O&M Allowed' is estimated for 2008 and 2009: Actual Gas Service Connections for 2007 will be used to calculate the 2007 O.@M per Connection, For each subsequentEvaluation Period, the poor period O&M per Connection will be increased by 5°.6, andthenmultipliedbytheactualGasServiceConnxHonsforthesameperiodtoderivethe 'Maximum O&M Allowed'. Q N m O u~ a W W F v W H ZO qQ Q 2 y. J W w a O( V8~w~ m ~ W OVf ~ m W W z~~ 9 N m m a~~a ggam,,gg,,a~Ep oo~Oryo,~i 5 S a O m o m 00 0 OiG ~t~ Gr r L O G O N O L v av Q E i V 8. N 1~ In N O A O b w w w w w w w w w w ttpp rem ^w ry~nN~n mm~ u°3. mc~i ° wmf01~ M 1~ f001 N~ N ~~N I~ ' W!~ {~{~0~W OfOh 1~ O W m ~O Opy~ .-gqaot~tVV omaN~ a o~ ~N~y~n~~ ~9f~N~ ~m N W W I~N N r ' O ^G m N a w w w w w w w w w w n~~ vm~w~ iq .~-~m ~3i~ ~~~im 8 opf~ ~epp ~~pp C ~+ {~ m m W cC ya Oryryl V ~ t0 W OCmm at0 <1yy~ < OY boy NOD r tri ONt6 O m N tO+f ~ V .m ~ N Y r ~ W ~ N~ a w w w w w w N M w w ~~ yr~pF m ~ ° W ~ S m 9 3 ~¢ ~Kap C m ~~^~ a88 ~~LL ~ a ~~ ~~~~ ~~ a a~~ VE'~ SSS~ ~f~~ ~U~y~ C SE E€E ~~~~ Ka ggK fii ~C7LL~ d~ c~~cY~ g?~~ $~S~ ~¢a~saa N17<N Dhtp W O~N"^f0'CO W N NNNN ~ NN N Ercata ATMOS ENERGY CORPS, MID-TEX DIVISION SUMMARY PROOF OF REVENUE AT PROPOSED RATES TEST YEAR ENDING JUNE 30, 2007 Rate R 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Rate Characteristics: Customer Charge Consumption Charge ($/Mcf) Rider GCR Part A Rider GCR Part B Billing Units (1 ): Bilis Total MCF Present Revenue WP J-4 Page 1 of 3 Reference c) 10..69 CCs 1.2710 ccS 7..5520 Schedule H , 0..5990 schedwe I 17,144,647 WP J-11 76,798,906 wP J-t t Customer Charge 183,276,276 Consumption Charge 97,611,410 Base Revenue 280,887,686 Rider GCR Part A 579,988,302 Rider GCR Part B 46,003,459 Subtotal 906,879,447 Revenue Related Taxes 52,686,332 Total Proposed Revenue- Rate R 959,565,779 Note 1: See Billing Determinants Study for details Errata ATMOS ENERGY CORP., MID-TEX DIVISION SUMMARY PROOF OF REVENUE AT PROPOSED RATES TEST YEAR ENDING JUNE 30, 2007 Descrlptlon . Total Rate C 1 Rate Characteristics: WP_J-4 Page 2 of 3 Reference 2 Customer Charge 20.28 ccs 3 4 Consumption Charge ($1Mcf)0.7104 ccs 5 6 Rider GCR Part A 7.5520 scneduie H 7 Rider GCR Part B 0.5001 seneduie i 8 9 Billing Units (1 ): 10 Bills 1,471,279 WP J-12 11 Total MCF 49,665,131 WP J-12 12 13 Present Revenue: 14 Customer Charge 29,837,538 15 Consumption Charge 35,282,109 16 Base Revenue 65,119,847 17 Rider GCR Part A 375,072,987 18 Rider GCR Part B 24,837,930 19 Subtotal 465,030,564 20 Revenue Related Taxes 27,016,551 21 22 TotalProposed Revenue- Rate C 492,047,115 23 24 Note 1: See Billing Determinants Study for details r Errata W P_J-4 Page 3 of 3 ATMOS ENERGY CORP., MID-TEX DIVISION SUMMARY PROOF OF REVENUE AT PROPOSED RATES TEST YEAR ENDING JUNE 30, 2007 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 i6 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 a) (b) --- ~C). Rate I &T Rate Characteristics: Customer Charge $344.75 ccs Block 1 ($/MMBTU)0.2200 CCS Block 2 ($/MMBTU)0.1600 ccs Block 3 ($/MMBTU)0.0493 cCS Rider GCR Part A 7.5520 schedule H Rider GCR Part B 0.2804 scneduie i Consumption Characteristics: Block 1 (First 1,500 MMBTU)0.21691 t~). Block 2 (Next 3,500 MMBTU)0,24651 t~) Block 3 (Over 5,000 MMBTU)0.53657 t~) Billing Units (11: BIIIS 11,542 WP J-13 Block 1 9,694,939 wP J-93 Block 2 11,018,084 WP J-13 Block 3 23,982,442 WP J-1 3 Total MMBTU 44,695,485 Sales Volumes 2,858,579 WP J-1 3 Present Revenue: Customer Charge Block 1 Black 2 Block 3 Base Revenue Rider GCR Part A Rider GCR Part B Subtotal Revenue Related Taxes Total Proposed Revenue- Rate 18T 3,979,105 2,132,887 1,762,893 1,182,334 9,057,219 21,082,128 12,534,050 42,673,397 2,479,166 45,152,563 Note 1: See Billing Deterrnlnants Study for details.