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9.11.
Regular City Council Meeting
Meeting Date:
05/11/2021
Information
Agenda Item
Resolution - City Manager:
Consider a resolution approving the Notice of Intent to Reduce Rates from Atmos Energy Corporation within the incorporated area of Lubbock.
Item Summary
Effective January 1, 2018, the Tax Cuts and Jobs Act of 2017 ("the Act") reduced the federal corporate tax rate from 35% to 21%. That tax rate reduction reduced the value of the deferred taxes used to reduce rate base in the recent Amarillo, Lubbock, Dalhart and Channing ("ALDC") Settlement Agreement. Internal Revenue Service regulations require Atmos Energy Corp.'s West Texas Division (the "West Texas Division") to reduce its rates on a normalized basis in order to provide cost of service customers with the benefit of the reduction in the value of the deferred taxes. The reduction in the value of the deferred taxes is commonly referred to as "Excess Deferred Taxes". Atmos Energy is pleased to provide this notice of intent to reduce rates charged to Residential, Commercial, Industrial, Public Authority and Transportation customers within your city via the Rider SUR - Surcharges Tariff. The effective date for this monthly rate adjustment is June 1, 2021.
The rates, terms and conditions reflected in the Rider SUR - Surcharges tariff attached to this correspondence as Exhibit A will be effective for bills rendered on or after June 1, 2021. Exhibit A demonstrates that this refund will be allocated back to the West Texas Division Incorporated Area of Lubbock customers by class. The rate will be in effect for approximately 60 months until all Excess Deferred Tax Amortization amounts are refunded to the applicable customer classes or until the next Statement of Intent filing with the City of Lubbock. This tariff applies to services on Atmos Energy's system within the City's original jurisdiction and is being filed pursuant to Section 104.111 of the Gas Utility Regulatory Act ("GURA"), which provides for administrative approval of a decrease in rates proposed by the Company without regard to the cost of service standard prescribed by Section 104.051. By utilizing this provision of GURA, the Company is able to pass on the savings associated with the federal corporate tax reduction to its customers without having to file a comprehensive statement of intent rate proceeding under Subchapter C of GURA.
Exhibit B details the calculation of the Excess Deferred Income Tax Amortization and refund rate by customer class.
As shown in Exhibit C to this correspondence, the rates, terms and conditions reflected in the attached tariff will, upon taking effect, decrease the amount of revenues Atmos Energy annually recovers from customers within the city with whom this filing is being made by approximately $2.0 million.
Fiscal Impact
Please see Exhibit A attached. The rate reduction is to be in effect for 5 years.
Staff/Board Recommending
W. Jarrett Atkinson, City Manager
Attachments
Resolution - Atmos EDITA
Atmos Exhibits A & B
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