Title
Consider approving Resolution No. 2026-123 approving a negotiated settlement between the Atmos Cities Steering Committee and Atmos Energy Corp., Mid-Tex Division, that adopts new natural gas rates for the City of Farmers Branch; and take appropriate action.
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REQUESTER:
Public Works Department
BACKGROUND:
The City, along with 181 other Mid-Texas cities served by Atmos Energy Corporation, Mid-Tex Division (“Atmos Mid-Tex” or “Company”), is a member of the Atmos Cities Steering Committee (“ACSC”). In 2007, ACSC and Atmos Mid-Tex settled a rate application filed by the Company pursuant to Section 104.301 of the Texas Utilities Code for an interim rate adjustment commonly referred to as a GRIP filing (arising out of the Gas Reliability Infrastructure Program legislation). That settlement created a substitute rate review process, referred to as the Rate Review Mechanism (“RRM”), as a substitute for future filings under the GRIP statute.
Since 2007, the original RRM Tariff has undergone several modifications. The most recent RRM Tariff was reflected in an ordinance adopted by ACSC members in 2018. On or about April 1, 2026, the Company filed a rate request pursuant to the RRM Tariff adopted by ACSC members. The Company claimed that its cost of service in a test year ending December 31, 2025, entitled it to additional system-wide revenues of $291.1 million. Application of the standards set forth in ACSC’s RRM Tariff reduces the Company’s request to $273.6 million. After reviewing the filing and conducting discovery, ACSC’s consultants concluded that the system-wide deficiency under the RRM regime should be $253.4 million, not the claimed $291.1 million. After several settlement meetings, the parties have agreed to settle the case for $260.5 million. This is a reduction of $30 million from the Company’s initial request. This includes payment of ACSC’s expenses. The Effective Date for new rates is October 1, 2026. ACSC members should take action to approve ...
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