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Res 12-18 Denying Atmos Energy Rate ChangeRESOLUTION NO. 12-18 RESOLUTION OF THE TOWN OF WESTLAKE DENYING ATMOS ENERGY CORP., MID-TEX DIVISION'S ("ATMOS MID-TEX") REQUESTED RATE CHANGE; REQUIRING THE COMPANY TO REIMBURSE THE TOWN'S REASONABLE RATEMAKING EXPENSES; FINDING THAT THE MEETING AT WHICH THIS RESOLUTION IS PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW; REQUIRING NOTICE OF THIS RESOLUTION TO THE COMPANY AND ACSC'S LEGAL COUNSEL WHEREAS, the Town of Westlake, Texas ("Town") is a gas utility customer of Atmos Energy Corp., Mid -Tex Division ("Atmos Mid -Tex" or "Company"), and is a regulatory authority under the Gas Utility Regulatory Act ("GURA") and under Chapter 104, §104.001 et seq. of LURA, has exclusive original jurisdiction over Atmos Mid-Tex's rates, operations, and services within the City; and WHEREAS, the Town is a member of the Atmos Cities Steering Committee ("ACSC"), a coalition of over 150 similarly situated cities served by the Company that have joined together to facilitate the review and response to natural gas issues affecting rates charged in the Atmos Mid -Tex Division; and WHEREAS, pursuant to the terms of the agreement settling the Company's 2007 Statement of Intent to increase rates, ACSC and the Company worked collectively to develop a Rate Review Mechanism ("RRM") tariff that allows for an expedited rate review process controlled in a three-year experiment by ACSC as a substitute to the current GRIP process instituted by the Legislature; and WHEREAS, ACSC and the Company agreed to extend the RRM process in reaching a settlement in 2010 on the third RRM filing; and WHEREAS, in 2011, ACSC and the Company engaged in good faith negotiations regarding the continuation of the RRM process, but were unable to come to ultimate agreement; and WHEREAS, on or about January 31, 2012, the Company filed a Statement of Intent with the cities retaining original jurisdiction within its Mid -Tex service division to increase rates by approximately $49 million; and WHEREAS, Atmos Mid -Tex proposed March 6, 2012, as the effective date for its requested increase in rates; and WHEREAS, the Town suspended the effective date of Atmos Mid-Tex's proposed rate increase for the maximum period allowed by law and thus extended the Town's jurisdiction until June 4, 2012; and Resolution 12-18 Page 1 of 2 WHEREAS, on April 25, 2012, the Company extended the effective date for its proposed rates by one week, which similarly extended the Town's jurisdiction until June 11, 2012; and WHEREAS, the ACSC Executive Committee hired and directed legal counsel and consultants to prepare a common response to the Company's requested rate increase and to negotiate with the Company and direct any necessary litigation; and WHEREAS, ACSC's consultants conducted a review of the Company's requested rate increase and found justification that the Company's rates should be decreased; and WHEREAS, ACSC and the Company have engaged in settlement discussions but will be unable according to Company representations to reach settlement in sufficient time for cities to act before June 11, 2012; and WHEREAS, failure by ACSC members to take action before June 11, 2012 would allow the Company the right to impose its full request on residents of said ACSC members; and WHEREAS, the ACSC Settlement Committee recommends denial of the Company's proposed rate increase in order to continue settlement discussions pending the Company's appeal of cities' denials to the Railroad Commission of Texas; and WHEREAS, the GURA § 103.022 provides that costs incurred by cities in ratemaking activities are to be reimbursed by the regulated utility. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: That the rates proposed by Atmos Mid -Tex to be recovered through its gas rates charged to customers located within the Town limits, are hereby found to be unreasonable and shall be denied. SECTION 2: That the Company shall continue to charge its existing rates to customers within the City and that said existing rates are reasonable. SECTION 3: That the Town's reasonable rate case expenses shall be reimbursed by the Company. SECTION 4: That it is hereby officially found and determined that the meeting at which this Resolution is passed is open to the public as required by law and the public notice of the time, place, and purpose of said meeting was given as required. Resolution 12-18 Paget of 2 SECTION 5: A copy of this Resolution shall be sent to Atmos Mid -Tex, care of David Park, Vice President Rates & Regulatory Affairs, at Atmos Energy Corporation, Mid -Tex Division, 5420 LBJ Freeway, Suite 1862, Dallas, Texas 75240, and to Geoffrey Gay, General Counsel to ACSC, at Lloyd Gosselink Rochelle & Townsend, P.C., P.O. Box 1725, Austin., Texas 78767- 1725. PASSED AND APPROVED ON THIS 7" DAY OF MAY, 2012. ATTEST: Kelly Edward Town Secretary ,'pAOF :m AS Laufa Wheat, Mayor Thomas E. Brymer, own Manager Resolution 12-18 Page 1 of 2