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City, Atmos agree to deal

October 11, 2012

The city of Big Spring — led by a group of West Texas cities working together — has finally reached an agreement with Atmos Energy regarding the company's requested rate increase, an agreement that should keep local customer's gas bill at the same rate as previous years.

The city, along with the steering committee representing many cities in Atmos Energy's West Texas Division, began negotiations earlier this year when the company requested a rate increase, according to City Finance Director Peggy Walker.

“Atmos filed for a rate increase back in February. Our city, along with all of the other cities in the West Texas Division, suspended the effective date, giving us a chance to review it,” Walker said. “Later, we came back and denied (the rate increase) and said they were over-earning and went into negotiations. Typically, these negotiations are with a group of cities fighting with an energy company and that, in itself, can be tough enough.

“In this case there were actually three factors because there was a group of cities, which Big Spring was part of, the energy company and then Lubbock and Amarillo. They (Lubbock and Amarillo) were a separate entity within these negotiations because they had already established rates for their citizens, which were considerably lower than anyone else in West Texas. They fought tooth and nail to maintain those low rates. It was a very difficult process. I don't know how many meetings we had, conference calls, e-mails and communications back and forth.”

According to Walker, Atmos was requesting a rate increase estimated at $11.6 million. Despite the breakdown in negotiations — which ultimately led to the matter going before the Texas Railroad Commission — Walker said Tuesday night an agreement has been reached.

“We have reached a negotiation,” Walker said. “Atmos did not get the amount of money they were requesting and we agreed on a much lower amount. All of that rate increase, that additional revenue, will be absorbed by the residents of Lubbock and Amarillo. They brought that right up to the agreement they presented to the Railroad Commission and they presented testimony and pleadings at the commission. However, it was a unanimous agreement that has been approved.

“Our citizens basically will see no increase with some slight variations based on service charges. Base rates will go up, which was approved by the Railroad Commission, however, the commodity charge has gone down considerably. When you add those two together, your gas bill should be fairly identical to what it's been in the past.”

Also during Tuesday's meeting, the council voted unanimously to approve first reading of a franchise agreement between the municipality and Atmos.

“Our current agreement with Atmos Energy expires at the end of this month. This is simply a renewal of that agreement,” Walker told the council. “The terms are identical ... It allows Atmos to use the city's right-of-ways, alleys, easements and streets in order to provide service to our citizens. In exchange for their use of our right-of-way they pay 3.5 percent of their gross receipts.

“Obviously, that charge is passed along to all of their customers. This franchise agreement also allows the city the right to increase the franchise fee every five years, with the knowledge if we do, in fact, increase the franchise fee it is immediately passed along to their customers, our citizens. Currently, we get about $170,000 annually from that franchise agreement.”

Also during the meeting, the council approved:

• First reading of resolutions amanding and authorizing representatives empowered to transmit and withdraw funds from TexPool and TexSTAR.
• Emergency reading of a resolution adopting a citizen complaint procedure and citizen participation plan as part of the Texas Community Development Block Grant Program application.
• Award contract for engineering services as part of the Texas Department of Agriculture Grant Application for water system improvements.
• Approval of an agreement between the city and Parkhill, Smith & Cooper Inc. for professional services for the 2013 water distribution systems improvement project.

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