ORD 2006-16TOWN OF TROPHY CLUB, TEXAS
ORDINANCE NO. 2006 -16
AN ORDINANCE OF THE TOWN OF TROPHY CLUB, TEXAS, DENYING THE
REQUEST OF ATMOS ENERGY CORP., MID-TEX DIVISION, FOR AN
ANNUAL GAS RELIABILITY INFRASTRUCTURE PROGRAM (GRIP) RATE
INCREASE IN THIS MUNICIPALITY, AS A PART OF THE COMPANY'S
STATEWIDE GAS UTILITY DISTRIBUTION SYSTEM; APPROVING
COOPERATION WITH OTHER CITIES WITHIN THE ATMOS ENERGY
CORP., MID-TEX DIVISION DISTRIBUTION SYSTEM AS PART OF THE
ATMOS CITIES STEERING COMMITTEE (ACSC); AUTHORIZING ACSC TO
IIIRE LEGAL AND CONSULTING SERVICES AND TO NEGOTIATE WITH
THE COMPANY AND DIRECT ANY NECESSARY LITIGATION;
AUTHORIZING INTERVENTION AS PART OF ACSC IN ANY APPEAL OF
THE CITY'S ACTION TO THE RAILROAD COMMISSION; PROVIDING A
REQUIREMENT FOR A PROMPT REIMBURSEMENT OF COSTS INCURRED
BY THE TOWN; FINDING THAT THE MEETING AT WHICH THIS
ORDINANCE IS PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW;
AND PROVIDING FOR NOTICE OF THIS ORDINANCE TO ATMOS ENERGY
CORP., MID-TEX DIVISION.
WHEREAS, on or about March 30, 2006, Atmos Energy Corp., Mid -Tex Division, (the
"Company") filed with the Town a request for an annual gas reliability infrastructure program ("GRIP")
rate increase for customers on the Company's statewide gas utility system to be effective May 30, 2006;
and
WHEREAS, the Town has exclusive original jurisdiction to evaluate the Company's request as it
pertains to the distribution facilities located within the City, pursuant to Texas Utilities Code §§ 102.001(b)
and 103.001; and
WHEREAS, it is reasonable for the Town to cooperate with other cities in a coalition of cities in
opposition to the Company's filing at the Railroad Commission ("Commission"), said coalition being
known as Atmos Cities Steering Committee ("ACSC"), in any appeal of the cities' actions to the
Commission; and
WHEREAS, the Gas Utility Regulatory Act ("GURA") grants local regulatory authorities the
right to intervene in rate proceedings filed at the Railroad Commission; and
WHEREAS, the Texas Utilities Code § 103.022 provides that costs incurred by the City in
ratemaking activities are to be reimbursed by the regulated utility; and
WHEREAS, counsel for ACSC, upon review of the Company's filing and upon consultation with
various consultants, recommends finding that the Company's proposal is unjustified and unreasonable; and
WHEREAS, the Company has publicly stated that it will receive substantial profit in 2005 and
that its expenses are substantially below those on which the GUD No. 9400 rates it is charging were based;
and
WHEREAS, the Company's GRIP request fails to account for growth in numbers of customers,
thereby undercounting the revenues it will receive from its proposed GRIP rate increase; and
WHEREAS, the Company's GRIP request fails to recognize that GUD No. 9400 rates included
profit based on TXU Corporation's capital structure rather than Atmos Energy Corp.'s current capital
structure, which justifies a lower rate of return; and
WHEREAS, under the provisions of $ 104.301 of GURA, the interim rate adjustment is subject to
true -up in a general rate case filed within five years of the effective date of the interim rate surcharge; and
WHEREAS, the Company has, on May 31, 2006, filed a Statement of Intent to increase its
distribution rates on a system -wide basis, using calendar year ending December 31, 2005, as its test
year; and
WIIEREAS, the capital investment made by Atmos during 2005 will be reviewed in the
Statement of Intent filing, malting the 2005 GRIP filing superfluous, duplicative, and unnecessary;
NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF
TROPHY CLUB, TEXAS:
SECTION 1. That the Company's GRIP rate increase request is found to be unreasonable,
superfluous, duplicative, and unnecessary, and is therefore denied in all respects.
SECTION 2. That the Town is authorized to cooperate with other Cities within the
Company's Distribution System that have formed ACSC to hire and direct legal counsel and consultants,
negotiate with the Company, make recommendations to the Town regarding reasonable rates, and to direct
any necessary litigation associated with an appeal of a rate ordinance and the rate case filed at the
Commission.
SECTION 3. That the costs incurred by the Town in reviewing the Company's GRIP request
shall be promptly reimbursed by the Company.
SECTION 4. That the Town is authorized to intervene in any appeal of the Town's action
tiled at the Commission and any related litigation, and to participate in any such appeal or litigation
as a member of ACSC.
SECTION 5. This Ordinance shall become effective immediately from and after its
passage, as the law and charter in such cases provide.
SECTION 6. That it is hereby officially found and determined that the meeting at which
this Ordinance is passed is open to the public as required by law and that public notice of the time,
place and purpose of said meeting was given as required.
SECTION 7. A copy of this ordinance, constituting final action on the Company's
application, be forwarded to the following:
Richard T. Reis
Atmos Energy Corporation
5420 LBJ Freeway, Suite 1800
Dallas, Texas 75240
Lloyd Gosselink Blevins Rochelle & Townsend
do Geoffrey Gay
P.O. Box 1725
Austin, Texas 78767-1725.
PASSED AND APPROVED by the Town Council of the Town of Trophy Club, Texas, this 19°i
day of June, 2006.=�(�7,/ /t1^
Mayor
Town of Trophy Club, Texas
ATTEST:
Town Secretary
Town of Trophy Club, Texas
[SEAL]
Cha;
Town Attorney
Town of Trophy Club, Texas