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Res 07-59 Denying Atmos Energy Annual Gas Reliability Infrastructure Program Rate IncreaseRESOLUTION NO. 07-59 A RESOLUTION OF THE TOWN OF WESTLAKE, 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; SUPPORTING STATUTORY REFORM OF THE TEXAS GRIP STATUTE, FINDING THAT THE MEETING AT WHICH THIS RESOLUTION IS PASSED IS OPEN TO THE PUBLIC; AND PROVIDING FOR NOTICE OF THIS RESOLUTION TO ATMOS ENERGY CORP., MID-TEX DIVISION AND THE TOWN'S LEGISLATIVE DELEGATION. WHEREAS, the Town of Westlake, Texas ("Town") is a gas utility customer of Atmos Energy Corp., Mid -Tex Division ("Atmos Mid -Tex" or "the Company"), and a regulatory authority with an interest in the rates and charges of Atmos Mid -Tex; and WHEREAS, Atmos Mid -Tex made filings with the Town and the Railroad Commission of Texas ("Railroad Commission") on or about May 31, 2007, proposing to implement interim rate adjustments ("GRIP rate increases"), pursuant to Texas Utilities Code § 104.301, on all customers served by Atmos Mid -Tex, effective July 30, 2007; and WHEREAS, the Gas Reliability Infrastructure Program (GRIP) statute approved in the 2003 Regular Session of the 78th Legislature changes 100 years of Texas law and allows a natural gas utility to implement annual surcharges for increases in investment without having to account for the offsetting decreases in costs or increases in revenue experienced by the utility; and WHEREAS, Texas is the only state out of the twelve states served by Atmos that has a GRIP statute that allows for piecemeal recovery for any change to invested capital; and WHEREAS, Atmos has implemented four GRIP surcharges and collected more than $20 million in GRIP surcharges from customers since the utility acquired the TXU Gas system in 2004; WHEREAS, the Town supports the statutory reform of the GRIP statute to ensure fairness to ratepayers and to eliminate piecemeal recovery for any change to invested capital; and WHEREAS, Atmos Mid -Tex was recently granted a rate increase as a result of its filing in GUD No. 9670, in which the Final Order was only signed on March 29, 2007; and WHEREAS, in GUD No. 9670, it was determined that Atmos Mid -Tex had inappropriately included certain expenditures in its prior GRIP rate increases for rate years 2003, 2004, and 2005; and WHEREAS, the Town, as a regulatory authority, suspended the July 30, 2007, effective date to examine this latest GRIP filing to determine its compliance with the Texas Utilities Code and Railroad Commission final order in the most recent Atmos Mid -Tex rate case; and 25571021res070807kpd 2006 GRIP denial 1 WHEREAS, the Town has joined with other cities to review the Company's filing, said coalition being known as Atmos Cities Steering Committee ("ACSC"); WHEREAS, the consultant hired by Steering Committee has reviewed the GRIP surcharge application and has issued a final report finding that the Company has included millions of dollars of expenses in the current GRIP surcharge that are inconsistent with the Texas Utilities Code and Railroad Commission final order in the most recent Atmos Mid -Tex rate case and not related to ensuring the safety and reliability of the system; WHEREAS, counsel for the Steering Committee, upon review of the Company's filing and the consultant's report, recommends finding that the Company's proposal is unjustified and unreasonable; and WHEREAS, ratepayers of Atmos Mid -Tex, including the Town and its residents, will be adversely impacted by the proposed GRIP rate increases. NOW, THEREFORE, BE IT RESOLVED BY THE 130ARD OF ALDERMEN OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1. That the Company's GRIP rate increase request is found to be unreasonable and inconsistent with the Texas Utilities Code and Railroad Commission final order in GUD 9670, Atmos Mid -Tex most recent rate case, and is therefore denied in all respects. SECTION 2. This Resolution shall become effective immediately from and after its passage, as the law and charter in such cases provide. SECTION 3. That the Town hereby advocates statutory reform of the Texas GRIP statute to ensure fairness to ratepayers and to eliminate piecemeal recovery for any change to invested recovery. SECTION 4. That the Town calls upon its state representatives and senator to support legislation in the 81St Regular Session of the Texas Legislature that would reform the Texas GRIP statute to ensure fairness for ratepayers and eliminate piecemeal recovery for any changes to invested capital. SECTION 5. 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 that public notice of the time, place and purpose of said meeting was given as required. 25571021res070807kpd 2006 GRIP denial 2 SECTION 6. A copy of this Resolution, constituting final action on the Company's application, be forwarded to the following: Charles R. Yarbrough, II Atmos Energy Corporation 5420 LBJ Freeway, Suite 1800 Dallas, Texas 75240 Lloyd Gosselink Blevins Rochelle & Townsend c/o Geoffrey Gay P.O. Box 1725 Austin, Texas 78767-1725. SECTION 7. A copy of the resolution shall be sent to the elected lawmakers representing the Town's interests in the Texas House and Senate. DULY PASSED and approved by the Board of Aldermen of the Town of Westlake, Texas, on this the 27TH day of August 2007. APPROVED: Scott Bradley, Mayor ATTEST: K' Sutter, TRMC, Town Secretary Trent O. Petty, To anager APPROVED AS TO FORM: L. anton L o ttorney 25571021res070807kpd 2006 GRIP denial 3