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Railroad Commission not making friends in Killeen

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Posted: Friday, March 24, 2006 12:00 pm | Updated: 3:16 pm, Wed Aug 15, 2012.

By Sarah Chacko

Killeen Daily Herald

After denying Atmos Energy Corp.'s rate increase late last year, Killeen officials have taken another stance in the rate wars with the Texas Railroad Commission.

Intervening in a lawsuit against the commission, the city is hoping to see the commission's rules changed.

Killeen, along with about 50 other Texas cities, disagrees with how the commission has been conducting the hearings in Atmos' appeal of its denied increases.

Last year, the city denied an increase in Atmos Mid-Tex Division's gas reliability infrastructure program (GRIP) surcharge, which is updated annually in between the five-year general rate cases.

Ramona Nye, spokeswoman for the Railroad Commission, said the GRIP is an incremental increase for capital expenses, not maintenance or salary.

Atmos appealed the denials to the Railroad Commission, which usually comes to a resolution that all parties can agree on, said Deputy City Attorney Traci Briggs.

But since the GRIP was created through state legislation in 2003, the cities that are part of the coalition against the increases the Atmos Cities Steering Committee have only been through the appeal process once and were not pleased with how things were conducted.

"Because we know how they operate and we don't think that's right, they need to file suit before the next hearings," Briggs said. "We need to get a court to say the way they operate hearings isn't in compliance with the law."

City Attorney Kathy Davis said instead of holding contested hearings, which are similar to a trial and at which the cities can participate, the commission conducts more informal administrative hearings.

"That's basically Atmos giving their thoughts and then the Railroad Commission making its decision based on that alone," she said.

According to a memo to the council from Davis, "contrary to the Gas Utility Regulatory Act which grants cities standing in all rate matters, the Railroad Commission has refused to permit city participation in the process, despite the fact that the cities' ordinances are being appealed."

The commission also allows consideration of 18 months of data when applicable statutes limit consideration to 12 months.

The commission, the state agency with regulatory authority over gas utilities, reviews the increases every five years and, if it finds that they are not justified, can issue refunds.

In their resolution last year, Killeen officials stated that while surcharges are imposed to "recover investment in new and replacement infrastructure designed to improve system safety and reliability, a substantial portion of the GRIP requests have been based upon ... cost-efficiency measures more likely to benefit shareholders than ratepayers."

Nye said the hearings were meant to simply provide an administrative review and approval.

"The intent was to streamline the process," she said.

A governing board within the Steering Committee is leading the lawsuit, which is pending in Travis County District Court, to have the commission's rules voided.

Davis said the city should incur no cost, regardless of the outcome.

The city's resolution to intervene in the suit was mainly to show support.

According to SNL Financial, Atmos Energy is the largest gas-only distributor in the United States, serving 3.1 million customers in 12 southern and midwestern states. About 1.4 million of the company's customers are part of its Mid-Tex Division.

Contact Sarah Chacko at schacko@kdhnews.com

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