A coalition of 151 North Texas cities known as the Atmos Cities Steering Committee (ACSC) negotiated an agreement with the Mid-Tex Division of Atmos Energy Corp. that will reduce that company's latest residential rate increase request by more than 80% -- from a proposed $52 million to $10 million. The group said last week it has recommended approval of the settlement to its members.

Noting that the coalition fought back efforts by gas utilities to take away the cities' traditional role of original jurisdiction on utility rate cases during the most recent legislative session, ACSC Chairman Jay Doegey of the city of Arlington said the group's united efforts were able to resolve the latest rate increase for cents on the dollar.

"This outcome, which saves consumers more than $40 million annually from Atmos' original filing request, is dramatic evidence of the cities' ability to best represent the interests of their ratepayers," Doegey said.

The affected cities represent about 52% of the total number of residential customers in the Mid-Tex Division, Atmos said. The settlement agreement, which resolves all issues in the rate case filed by the Mid-Tex Division with the cities on Sept. 20, 2007, is subject to approval by each of the cities in the ACSC.

"We are pleased to reach a fair and reasonable agreement that allows us to continue the delivery of natural gas and recover the costs related to serving customers" said John Paris, Atmos Energy president of the Mid-Tex Division.

Highlights of the settlement include:

In early February Atmos will provide an update on the tentative settlement and the ongoing settlement discussions with the other cities served by the Mid-Tex Division. The company will also update its fiscal 2008 guidance at that time, it said.

The rate case started in 2005 when 90 North Texas cities began an inquiry into the rates charged by Atmos Mid-Tex after the company filed two surcharge requests in less than two years. Upon investigation, the cities said they uncovered questionable expensing and operating practices, including two years when there were no invoice data for expenses the company sought to pass on to consumers (see NGI, April 9, 2007).

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