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Atmos Performance Based Ratemaking Plan Review, #01-00704 and #02-00850

Atmos Energy Corporation Performance Based Ratemaking Plan Review, #01-00704 and #02-00850

Atmos Energy Corporation is engaged in the business of transporting, distributing and selling natural gas in several Tennessee counties and is regulated by the Tennessee Regulatory Authority (TRA).

An alternative ratemaking method relies on incentive motivation for gas utilities to hold down the price of natural gas. Atmos operates under one such performance based ratemaking (PBR) plan. When Atmos makes gas purchases below certain benchmarks tied to market averages, Atmos is allowed to keep a portion of the savings realized from the natural gas purchases that fall below the applicable benchmark. The Atmos share of the savings amounts to a bonus above and beyond normal profits set in a rate case as “just and reasonable” rates.

In 2000, Atmos employed an interpretation of the PBR plan that was not approved by the TRA, substituting a new benchmark for the TRA-approved method. The new benchmark resulted in a substantially higher savings.

On March 14, 2006, the TRA hearing officer ruled against Atmos on all matters. Atmos appealed the order to the panel of directors. On May 13, 2008, the panel of directors (Kyle, Hargett and Jones) denied the appeal of Atmos in TRA Docket No. 01-00704 and set the request of Atmos for an alternate approach to the PBR in TRA Docket No. 02-00850 for hearing to receive additional proof. After additional discovery and filing of additional proof, Atmos agreed to dismiss the matter with prejudice on August 26, 2008.

As a result of the Consumer Advocate’s participation in this matter, the customers of Atmos saved approximately $4.1 million in surcharges for the period of 2000-2006 and an estimated $807,000 annually thereafter, which would have resulted had Atmos prevailed in TRA Docket No. 01-00704. The annual savings to Atmos customers with the retirement of the alternate tariff proposed by Atmos in TRA Docket No. 02-00850 are included in the $807,000 estimate.

Tennessee Regulatory Authority Filings

This list includes only significant filings and is not intended to be a complete record of the matter.