2006-181
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ORDINANCE NO. 2()Ob-/~ /
AN ORDINANCE OF THE CITY OF DENTON, TEXAS, SUSPENDING THE EFFECTIVE
DATE OF ATMOS ENERGY CORPORATION, MlD-TEX DIVISION'S REQUESTED RATE
CHANGES AS SET FORTH IN THEIR STATEMENT OF INTENT FILED WITH THE CITY
SECRETARY ON MAY 31, 2006 FOR NINETY DAYS TO PERMIT THE CITY TIME TO
STUDY THE REQUEST AND ESTABLISH REASONABLE RATES; TO REQUIRE THE
REIMBURSEMENT OF MUNICIPAL RATE CASE EXPENSES; RATIFYING AND
REAFFIRMING THE PARTICIPATION IN THE ATM COALITION AND THE HIRING OF
RATE CASE CONSULTANTS AND AUTHORIZING THEIR PARTICIPATION IN
PROCEEDINGS BEFORE THE CITY AND THE RAILROAD COMMISSION; FINDING
THAT THE MEETING COMPLIED WITH THE OPEN MEETINGS ACT; MAKING OTHER
FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN
EFFECTIVE DATE.
WHEREAS, on May 2, 2006, the City Council passed Resolution No. R2006-016
ordering Atmos Energy Mid-Tex Division to Show Cause regarding the reasonableness of its
existing natural gas distribution rates within the City, requiring it to submit a rate filing package
based on a test year ending December 3 I, 2005 consistent with the Rate Filing Package and
Public Notice Ordinances of the City of Denton and other cities, joining the Atmos Texas
Municipalities ("ATM"), authorizing the hiring of consultants and attorneys and requiring
reimbursement of reasonable rate case expenses; and
WHEREAS, on or about May 31, 2006, Atmos Energy Corporation, Mid-Tex Division,
hereinafter referred to as Atmos Energy, filed with the City of Denton, Texas, ("City") a
Statement of Intent to Change Rates to increase its rates on a system-wide basis by more than
$60 million and also substantially changing its rate design for residential customers so that the
more gas that is used the cheaper the ralc; and
WHEREAS, on May 3 I, 2006 Almos Energy also filed a Statement of Intent to Increase
Rates at the Railroad Commission of Texas; and
WHEREAS, the City has joined with other local regulatory authorities to form ATM; and
WHEREAS, the rate filing is thousands of pages in length with more than a half dozen
technical experts; and
WHEREAS, the rate request by Atmos Energy is the first of its kind filed by Atmos since
its merger with TXU Gas and is novel and complex requiring specialized expertise of lawyers
and experts who specialize in ratemaking proceedings initiated by public utilities; and
WHEREAS, it will be difficult if not impossible for the City to complete its review of
and make a final decision on Atmos Energy's filing of May 31, 2006 on or before July 19, 2006;
and
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S:\Our Documents\Ordinanccs\06\Atmos Show Cause.doc
WHEREAS, the City needs at least 100 days to analyze and study the rate requests filed
by Atmos Energy and before it is ready to adopt a final decision as a local regulatory authority
with regard to Atmos Energy's filing; and
WHEREAS, the Gas Utility Regulatory Act grants local regulating authorities the right to
suspend the effective dale of proposed rate changes; and
WHEREAS, the Gas Utility Regulatory Act provides that municipalities shall be
reimbursed for their reasonable rate case expenses by the regulated utility; and
WHEREAS, A TM has been active in rate proceedings filed at the Railroad Commission
by Atmos; and
WHEREAS, the City Council believes it is reasonable for the City to cooperate with
other cities in a review of Atmos Energy's rate application and that the City should join with
other cities participating in A TM as a Steering Committee in order to coordinate the hiring and
direction of legal counsel and consultants working on behalf of A TM and the City; NOW,
THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The findings set out in the preamble to this Ordinance are hereby in all
things approved and adopted.
SECTION 2. The effective date of the tariff changes submitted by Atmos Energy on or
about May 3 I, 2006 with the City is hereby suspended for ninety days from the scheduled
effective date of July 19, 2006 or at least until October 17, 2006 and for such additional time as
the parties may agree upon in order to permit adequale time for the proper review of Atmos
Energy's Statement ofIntent and to establish reasonable rates.
SECTION 3. The statutory timeline may be further extended if Atmos Energy does not
provide timely and meaningful public notice of its request to increase rates or if its rate filing
package is materially deficient.
SECTION 4. Resolution No. R2006-016 authorizing Denton to join with other cities in a
coalition of cities known as the ATM, approving the employment of outside counsel, required
Atmos Energy to show cause regarding the reasonableness of Atmos Energy's existing natural
gas rates, and authorizing other action is hereby ratified and reaffirmed. The ATM Steering
Committee is authorized to hire, direct, and guide the lawyers and consultants who are
representing said cities, negotiate with Atmos, make recommendations to the City regarding
reasonable rates and to direct any necessary litigation associated with an appeal of any rate
ordinance and the rate case filed at the Railroad Commission.
SECTION 5. The City, in coordination with the ATM Steering Committee, shall review
the invoices of its consultants for reasonableness before submitting such invoices for
reimbursement pursuant to Section 103.022 of the Gas Utility Regulatory Act.
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SECTION 6. That the City's reasonable rate case expenses shall be reimbursed by
Atmos Energy.
SECTION 7. That the City Secretary is directed to send a true and correct copy of this
Ordinance to Mr. Richard Reis, Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1800,
Dallas, Texas 75240 and to Mr. Jim Boyle, Special Counsel for the ATM cities, by fax to
512.474.2507.
SECTION 8. The meeting at which this Ordinance was approved was in all things
conducted in strict compliance with the Texas Open Meetings Act, Texas Government Code
Chapter 551.
SECTION 9. This Ordinance shall be effective immediately upon passage.
PASSED AND APPROVED BY the Governing Body of the City of Denton, Texas, at
a regular meeting of the City Council on this the 20lh day of June, 2006.
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ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPROV AS TO LEGAL FORM:
EDWIN M. SNYDER, CITY ATTORNEY
BY:
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