ORD 2008-09TOWN OF TROPHY CLUB
ORDINANCE NO. 2008-09
AN ORDINANCE OF THE TOWN COUNCIL OF THE TOWN OF
TROPHY CLUB, 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 AGREEMENT; 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; PROVIDING FOR THE REPEAL OF
INCONSISTENT ORDINANCES; PROVIDING FOR
SEVERABILITY; DECLARING AN EFFECTIVE
DATE AND REQUIRING ENGROSSMENT AND ENROLLMENT IN
ACCORDANCE WITH THE TOWN CHARTER; AND REQUIRING
DELIVERY OF THIS RESOLUTION TO THE COMPANY AND
LEGAL COUNSEL.
WHEREAS, the Town of Trophy Club ('Town") 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 Town 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 Town on or
about September 20, 2007 to increase its system -wide, annual revenue
requirement, by approximately $51.9 million; and
WHEREAS, the Town 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
1)
WHEREAS, Atmos and ATM have entered into a Settlement Agreement
resolving all disputes regarding 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
Town; and
WHEREAS, in order for Town to examine the Settlement Agreement, it
has reestablished its original jurisdiction over the rates of Atmos by issuing a
Show Cause against Atmos; and
WHEREAS, the Town 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 Sectign 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 Town 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
charges 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 Town 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;
3
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 Town representatives in order to improve communication
and cooperation; and
WHEREAS, the Settlement Agreement provides a mechanism for the
Town 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
WHEREAS, the Town 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 Town has examined the Settlement Agreement and its
attached tariffs, 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, BE IT ORDAINED BY THE TOWN COUNCIL OF
THE TOWN OF TROPHY CLUB THAT:
Section 1. That the statements set out in the preamble to this
Ordinance are hereby in all things approved and adopted.
Section 2. Pursuant to Utilities Code Section 104.151, the Town finds
that the existing rates, terms and conditions of Atmos are unreasonable and
determines that such rates, terms and conditions should be changed.
Section 3. The Town 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.
4
Section 4. The Town Council finds that the new tariffs, which are
attached hereto and incorporated herein as Attachment B, are just and
reasonable and are hereby adopted.
Section 5. To the extent any ordinance previously adopted by the
Council is inconsistent with this Ordinance, it is hereby repealed. If any section,
article, paragraph, sentence, clause, phrase or word in this Ordinance or
application thereof to any person or circumstance is held invalid or
unconstitutional by a Court of competent jurisdiction, such holding shall not affect
the validity of the remaining portions of this Ordinance, and the Town Council
hereby declares it would have passed such remaining portions of this Ordinance
despite such invalidity, which remaining portions shall remain in full force and
effect.
Section 6. 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.
O
Section 7. This Ordinance shall become effective from and after its
passage with rates authorized by the Attached Tariffs to be effective in
accordance with the terms of the Settlement Agreement. The Town Secretary of
the Town of Trophy Club is hereby directed to engross and enroll this Ordinance
in the ordinance records of the Town and as required by Charter.
Section 8. A copy of this Ordinance shall be sent to Atmos Mid -Tex,
care 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.
Section 9. This Ordinance shall take effect from and after its date of
passage in accordance with law.
PASSED and APPROVED by the Town Council of the Town of Trophy
Club, Texas on this 3'd day of March 2008.
Mayor, Nick Sanders
Town of Trophy Club, Texas
ATTEST:
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`F
1-fown Secretary," i i cl
Town of Trophy Club, Texas �x
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APPROVED AS TO FORM:
Town Attorney,
Town of Trophy Club, Texas
m
WHEREAS, this settlement agreement is entered into and by Atmos Energy Corp's
Mid -Tex Division and Atmos Texas Municipalities ("ATM") whose members include the Cities
of'Austin, Balch Springs, Bandera, Bartlett, Belton, Blooming Grove, Bryan, Cameron, Cedar
Park, Clifton; Commerce, Copperas Cove, Corsicana, Denton, Electra, Fredericksburg,
Gatesville, Georgetown, Goldthwaite, Gianbury, Greenville, Groesbeck, Hamilton, Henrietta,
Hickory Creek, Hico, Hillsboro, Hutto, Kerens, Lampasas, Leander, Lometa, 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
WHEREAS, ATM has hired experts and lawyers to analyze the rates and riders
proposed by Atmos Energy Corp 's, Mid -Tex Division ("Atmos" or "Company") in GUD
Docket No. 9762; and
WHEREAS, the Settlement Agreement resolves all issues between Atmos and ATM
("the 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 the 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 appeal
between the ATM Cities and Atmos:
Settlement Terns
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 Agreement and
implement the rates, terms and conditions reflected in the tariffs 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
SETTLEMENT AGREEMENT
GAS UTILITIES DOCKET NO. 9762 (AND CONSOLIDAIED CASES)
FEBRUARY 11, 2008
ordinance or resolution to implement for the ATM city the rates, terms, and
conditions reflected in the tariffs attached to this Settlement Agreement-
2.
greement
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 streamline the regulatory review process, Atmos and ATM have
agreed to undertake a new mechanism for reviewing the Company's cost of'scrvice
on an annual basis. The new mechanism is known 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 associated changes in gross revenue related taxes.
4.. Atmos and ATM agree that the Rider RRM shall be implemented annually over a
three-year trial 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 notifying
ATM City within eighteen months from the date the notification is received by the
Company, The last effective rates under the Rider RRM shall remain in effect for
the notifying ATM City until such time as new rates are established for that city in a
general rate case. In 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_
5, Atmos agrees that effective with the implementation of the first RRM rate
adjustment, Atmos shall file with the ATM Cities a revised Rate R -Residential Sales
Tariff to reduce the customer charge per bill from $10.69 per month to $7.00 per
month and to increase the volumetric portion of the rate (shown as $1.271 in Exhibit
A) to the appropriate level to reflect the reduction in customer charge from. $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 first RRM
adjustment, Atmos shall file with the ATM Cities a revised Rate C- Commercial
Sales Tariff to reduce the customer charge per bill from $20.28 to $1150 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 from the RRM implementation.
The fust RRM rate adjustment shall occur October 1, 2008- Atmos and the ATM
Cities agree that following the initial RRM adjustment any subsequent
implementation of RRM adjustments shall be supported as described in the Rider
RRM, and shall limit changes to residential and commercial customer charge to no
more than 20%. Further, the parties agree that any approved adjustment in excess of
the 20% limitation on the residential and commercial customer charge shall be
recovered through the volumetric portion of the rate.
SETTLEIVIENI AGREEMENT
GAS UTILITIES DOCKET NO. 9762 (AND CONSOLIDATED CASES)
FEi3RUARY 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
con'esponding Rate Effective Period:
• Amounts incurred for travel, meals or entertainment of employee spouses..
• Amounts for au'travel that exceed published commercial coach air fares.
• Amounts incurred 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.
With respect to the RRM Atmos further agrees to pay all reasonable and necessary
expenses of each entity having original jurisdiction that are incurred to review the
Company's annual RRM filings. Atmos further agrees that in calculating the
proposed rate for any Rate Effective Period, the Company shall not include: (1) any
external legal, expert; or consultant costs to prepare and/or provide supportive
information related to its filing; or (2) reimbursements to original jurisdiction
entities.
8.. Notwithstanding paragraph 7 of this Settlement Agreement, Atmos and ATM agree
that in the event of an appeal of an original jurisdiction entity's decision regarding a
proposed RRM adjustment, recovery of rate case expenses shall be determined
according to Chapters 10.3 and 104, TEx. UTE.. CODE ANN.. Further, in the event of
such appeal(s), Atmos shall recover any reimbursement made to the original
jurisdiction entity through a surcharge to all customer rates that are subject to the
Commission's jurisdiction in that proceeding or proceedings that might be joined
therewith, regardless of whether such reimbursements are made during 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 during the same year. Therefore,
Atmos agrees that if, as determined by the ATM Cities, the annual RRM adjustment
agreed to between Atmos and an RRM-implementing city is more beneficial to the
ATM Cities, Atmos 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 pursuant to Rider RRM.
11. Atmos and the ATM Cities further agree that the express terms of the Rider RRM
are supplemental to the filing, notice, regulatory review, or appellate procedural
process of the ratemaldng 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 parties will follow the provisions of such statute If the
statute allows discretion on behalf' of the municipal regulatory authority, the ATM
SETTLEMENT AGREEMENI
GAS UTILITIES DOCKETNO.9762 (AND CONSOLIDAIED CASES)
FEBRUARY 11, 2008
Cities agree that they shall exercise such discretion in such a way as to implement
the provisions of'the RRM tariff. If'Atmos 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,
UIII . CODE ANN.. § 104301 while the Rider RRM is in place, and any such filings
pending at the time the RRM is approved will be trued -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 regarding 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 of the ATM Cities' right to
initiate a show cause proceeding or the Company's right to Ede a Statement of Intent
under the provisions of the 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 TBx. U11L. CODE
§104301.
13 Atmos and the ATM Cities agree that the gas cost portion of uncollectible expense
shall be recovered through the Company's Rider 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 fust RRM
rate adjustment is expected to occur October 1, 2008 In calculating the rate for the
first Rate Effective Period, the Company shall utilize 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 from the base rate calculation..
14 Atmos and the AIM Cities further agree that expense associated with lost and
unaccountable gas shall, based on an annual period, be recoverable through 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.7une 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 rate component providing the
remainder $1 million of funding.. All customer -supplied funds will, prion to the
commencement of the program, be used toward program implementation efforts
SETTLEMENT AGREEMENT
GAS UTILITIES DOCKET NO. 9762 (AND CONSOLIDAIED CASES)
FEBRUARY 11, 2008
and, upon implementation, be applied directly 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• agree 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 Commission.
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 arising out of the
September 20, 2007 Statement of Intent or GUD No. 9672 (consolidated cases) or
any associated appeals of GUD No. 9672. Therefore, Atmos agrees that if'the 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 more favorable rates, revenues, terms and
conditions, or benefits shall additionally accrue to the ATM Cities. Similarly, ifthe
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 accrue 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 toto, If there is a subsequent settlement agreement arising 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 settlement agreement
in toto,
19. Atmos and the ATM Cities agree that all reasonable rate case expenses directly
incurred by Atmos in connection with the September 20, 2007 Statement of Intent
filed on behalf' of its Mid -Tex Division through February 29, 2008, as well as all
expenses reimbursed to the ATM Cities for such cases shall be recoverable through
a surcharge to all customer rates within the ATM Cities. The amount to be
recovered through the surcharge 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 a thirty-six month
period beginning in April of 2008, or as soon thereafter as approved by the last
SETTLEMENI AGREEMENI
GAS UTILITIES DOCKET NO. 9762 (AND CONSOLIDAIED CASES)
FEERUARY11,2008
ATM City. Atmos further agrees that it will continue to reimburse ATM Cities for
the rate case expenses incurred 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 15, 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 electronic basis, rather than by paper copy.. Electronic
Filings shall fulfill the requirements of TEX. UIIL� CODE §104.103. The appropriate
ATM Cities representative shall provide a list of the ATM Cities to Atmos by March
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. Atmos 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
quarterly meetings with the ATM Cities to provide information, answer questions,
and receive input from the ATM Cities regarding capital projects in the Mid -Tex
service territory.. As part of the quarterly meetings, Atmos will update the ATM
Cities of its activities in 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 parties, the level of
project detail supplied by Atmos at such meetings shall be similar to the project
spreadsheets on GRIP projects attached to the prefiled direct 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 attachea to this Settlement
Agreement as Exhibit A.
23 The Signatories agree that the terms of the Settlement Agreement are interdependent
and indivisible, and that if any ATM city enters an order that is inconsistent 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 entry into the Settlement Agreement or its
subsequent withdrawal.. If any ATM city rejects this Settlement Agreement, then
this Settlement Agreement shall be void ab initio and counsel for the ATM Cities
shall thereafter only take such actions as are in accordance with the Texas
Disciplinary Rules of Professional 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 franchise 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
SEI ILEMENI AGREEMENT
GAS UTILITIES DOCKETNO.9762 (AND CONSOLIDATED CASES)
FE ERUARY 11, 2008
term is defined in the applicable fianchise. The terms of this paragraph shall
supersede any and all language currently contained in the applicable franchise, as
amended or extended, granting 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
term is defined in the applicable franchise) from the prior year or the prior quarter,
depending on the franchise terms, based upon the gross revenue for the prior year or
quarter, respectively. The payment that is made during the current year or quarter is
for the privilege of gas operations dining that time period. This interpretation
applies to.ali payments made or to be made under the franchise agreement. Each
city shall adopt the Amendment in a manner that is consistent with their charter 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, 2608.. 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 Rider FF.
25. In exchange for ATM's dismissal or non -suit of the suits 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 Agreement is
entered. Such payment shall be recovered through the surcharge 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
beginning with the implementation of the first annual Rate Review Mechanism
("RRM") adjustment, which is expected to occur on October 1, 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 -1 -GN -06-000337 (Consolidated), Atmos Cities Steering Committee v.
71e Railroad Commission of Texas, In the 345th District Court, Travis County,
Texas, This case includes the following cases:
a. Cause No. D -1 -GN -502179 — Atmos Texas Municipalities v The Railroad
Commission of Texas, In the 25& District Court, Travis County, Texas..**
b Cause No. D -1 -GV -06-000057 — Cities of Caldwell, Celina, Copperas Cove,
Corsicana, Crowley, Denton, Fredericksburg, Frost, Gatesville,
Goldthwaite, Greenville, Groesback, Hamilton, Hickory Creek, Hillsboro,
SETILEMENT AGREEMENI
GAS UTILTIIES DOCKET NO. 9762 (AND CONSOLIDAIED CASES)
FEBRUARY 11, 2008
Lexington, Llano, Longview, Mart,
Whitney ("Cities) x The Railroad
District Court, Travis County, Texas.
Mexia, Somerville, Thorndale, and
Commission of'Texas, In the 35.30
c. Cause No. D -1 -GV -06-000061 — City of Ranger ("City') v. The Railroad
Commission of Texas, In the 2000' District Court, Travis County, Texas.
d.. Cause No. D -1 -GV -06-000076 — City ofMeGregor (`City') v. The Railroad
Commission of Texas, In the 1260' District Court, Travis County, Texas.
e. Cause No.. D -1 -GV -06-000077 — City of West ("City') v The Railroad
Commission of'Texas, In the 20001 District Court, Travis County, Texas.
f. Cause No. D -1 -GV -06-000078 — Cities of Balch Springs, Belton, Clifton,
Commerce, Dublin, Electra, Lampasas, Lometa, Pflugerville, San Saba and
Seymour (`Cities') v. The Railroad Commission of Texas, In the 2018'
District Court, Travis County, Texas.
g. Cause No. D -1 -GV -06-000079 — Cities of Burnet, Coleman and Round Rack
("Cities') v. The Railroad Commission of Texas, In the 25001 District Court,
Travis County, Texas.
In. Cause No.. D -1 -GV -06-000106 — City of Kemp ('City') v. The Railroad
Commission of Texas, In the 9801 District Court, Travis County, Texas.
i. Cause No. D -1 -GV -06-001095 —The Cities of Balch Springs, Belton, Burnet,
Clifton, Coleman, Copperas Cove, Corsicana, Denton, Dublin,
Fredericksburg, Frost, Gatesville, Goldthwaite, Granbury, Grandview,
Greenville, Groesbeck; Hillsboro, Lampasas, Leander, Llano, Lometa,
Longview, Mexia, Pflugerville, Ranger; Riesel, Round Rock San Saba,
Somerville, Trinidad and Whitney ('Atmos Texas Municipalities" or
'ATM) v.. The Railroad Commission of'Texas, In the 126th District Court,
Travis County.
j.. Cause No. D -1 -GV -06-000578 —Atmos Texas Municipalities v. The Texas
Railroad Commission of Texas, In the 201st District Court, Travis County,
Texas,.**
k. Cause Number: 03 -06 -00580 -CV; Atmos Energy Corporation, as successor by
merger to TXU Gas Company, Allied Coalition of Cities, and City of Dallas v.
Raihnad Commission of Texas; In the Third District Court of Appeals at Austin,
Texas.
"Non -suit or Dismissal will occur only with respect to the defendant, Atmos Energy,
Corp., Mid -Tex division.
SETILEMENIAGREEMENT
GAS UTILITIES DOCKET NO. 9762 (AND CONSOLIDAIED CASES)
FEBRUARY 11, 2008
27. The Signatories agree that all negotiations, discussions and conferences related to
the Settlement Agreement are 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 during the course of settlement negotiations may be used for any
purpose other than as necessary 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 propose of settling the issues set forth herein and for no other purposes,
and, except to the extent the Settlement Agreement governs a Signatory's rights and
obligations for future periods, this Settlement Agreement 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 may be filed with facsimile signatures.
SErILEMENT AGREEMENT -
GAS UTILITIES DOCKETNO.9762 (AND CONSOLIDATED CASES)
FEBRUARY 11, 2018
Agreed to this W� ay of February, 2008
ATMOS ENERGY CORP.., MID -SEX DNISION
el
1�
By: ''9
To A. Paris
idem Mid -Te c Division
10
SETILEMENI-AGREEMENI
GAS UTILHIES DOCKET NO 9162 (AND CONSOLIDAIEO CASES)
FEBRUARY 11, �0� - -
Agreed to this day of Febivaiy 2008
ATTORNEY FOR AIMOS IEXAS MUNICIPALITIES,
WHOSE MEMBERS INCLUDE THE CITIES OF
AUSTIN, BALCH SPRINGS, BANDERA, BARTLETT,
BELTON, BLOOMING 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, PFLUGERVILLLE, RANGER,
RICE, RIESEL, , ROGERS, ROUND ROCK, SAN
ANGELO, SANGER, SOMERVILLE, STAR HARBOR,
TRINIDAD, TROPHYUB, AND WHITNEY
By:
Bo *
* Subject to approval by ATM City Cbilncils
11