ATMOS ENERGY RATE CASE

Cedar Park, Leander agree to alternate Atmos Energy rate increase

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After some negotiation, both cities of Cedar Park and Leander have accepted an alternate rate increase from Atmos Energy that reduces the burden of proposed new rates but increases consumption charges on residential customers.

The City of Leander is one of 50 Central Texas cities, including Cedar Park, served by a consortium known as the Atmos Texas Municipalities. In June, Atmos filed a notice that it intended to increase rates by about 7.3 percent, with residential customers seeing the largest percentage increase while commercial and industrial customers would have seen decreases.

Both Cedar Park and Leander pushed back against the proposal, suspending the effective date for the increase to allow ATM’s legal counsel and rate experts time for an in-depth review of the proposed rates. 

Previously, both cities were paying rates of $18.35 for residential with a consumption charge of $0.13734, $41.95 for commercial with a consumption charge of $0.08746 and $752.00 for industrial and transportation with a consumption charge of $0.3172. Atmos proposed rates of $20.21 for residential with a $0.15701 consumption charge, $41.85 for commercial with a $0.07729 consumption charge and no change to the industrial and transportation rate but a decrease in the consumption charge by $0.782. 

After a review period, both cities recently accepted the following adjusted rates: $17.89 for residential customers with an increase in consumption charge to $0.16052, $37.85 for commercial customers with an increase in consumption charge to $0.10081 and $619.85 for industrial and transportation customers with an increase in consumption charge to $0.3655. 

“On a system-wide basis, Atmos’s proposed increase would (have been) the equivalent of about $46.0 million; this equates to an increase in annual revenue of about 7.3 percent. Atmos proposed an effective date of July 6, 2018 for its change in rates,” according to Leander documents.

After their review, the special counsel and group of experts recommended that the ATM cities approve a much smaller increase in Atmos Energy’s annual revenue, which represents an increase of about 2 percent in annual revenue.  

“The biggest change from our consultant's original position was the result of Atmos providing additional information sufficient to satisfy our objections questions surrounding the company's proposed treatment of its accumulated and excess federal tax liabilities,” explained City of Leander Finance Director Robert Powers.

Atmos initially proposed increasing rates by 11.15 percent for residential customers while decreasing rates on commercial customers by 4.22 percent and industrial customers by 12.39 percent. 

“I thought the Atmos rate proposal was unfair to residential customers,” said Mayor Pro Tem Michelle Stephenson. “It was an increase at 11-plus percent, while giving commercial, industrial and transportation (customers) sizable decreases.”

Previously, the average residential customer’s bill would have been increased by 11 percent or $1.90 while bills for commercial, industrial and transportation customers would have been lowered. 

Additionally, the consortium’s special counsel recommended that the ATM cities approve a surcharge to recover costs of about $116,000 associated with disputing the rate increase.

Even though the Leander City Council approved these alternate rates, which will officially take effect on Oct. 4, the Railroad Commission has final jurisdiction and could possibly change the rates even after the negotiation.

Leander Council Member Christine Sederquist said that these negotiations between Atmos and ATM happen frequently.

“Leander is in a consortium with a few other cities in Central Texas and we're opposing the rate increase as a group,” Sederquist said. “That means that the matter will go in front of the Railroad Commission and probably get mediated to some middle ground.”

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