Approval of a negotiated settlement between the Atmos Cities Steering Committee and Atmos Energy Corp., Mid-Tex Division regarding the company's 2026 Rate Review Mechanism filing and adopting tariffs reflecting rate adjustments consistent with the negotiated settlement

Staff Report & Agenda Item Details

<strong data-pasted="true"><em>Second Reading and Public Hearing</em></strong><br><br>There were no speakers regarding this item at the September 1, 2026, City Council Meeting.<br><br><strong><em>First Reading and Public Hearing</em></strong><br><br>The City, along with 181 other Mid-Texas Cities Served by Atmos Energy Corporation, Mid-Tex Division, is a member of the Steering Committee of Cities Served by Atmos (ACSC). In 2007, the Cities 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). The settlement created a substitute rate review process, referred to as Rate Review Mechanism (“RRM”), as a substitute for future filings under the GRIP statute. The Legislature’s GRIP process allowed gas utilities to receive annual rate increases associated with capital investments. The RRM process has proven to result in a more efficient and less costly (both from a consumer rate impact perspective and from a ratemaking perspective) than the GRIP process. Since 2007, there have been several modifications to the original RRM Tariff with the most recent being adopted in 2018.<br><br><strong>2026 RRM Filing</strong><br>April of 2026, Atmos filed a rate request pursuant to the RRM Tariff adopted by ACSC members. Atmos claimed 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 required Atmos to reduce its request to $273.6 million. ACSC’s consultants concluded the system-wide deficiency under the RRM regime should be $253.4 million instead of the claimed $291.1 million. After the Company reviewed ACSC’s consultants’ report, ACSC’s Executive Committee and the Company negotiated a settlement whereby the Company would receive an increase of $260.5 million, a reduction of $30 million compared to the Company's original request.

This motion is scored as RESTRAINS_GOVERNMENT (Impact Weight: 6.9/10). Under the Bastiat Liberty Watchdog Index, voting YES on measures that cap or reduce ad valorem tax burdens, expand taxpayer exemptions, retire debt early, enforce competitive bidding caps, or remove regulatory/zoning barriers to private property rights earns a positive Pro-Liberty score.