Atmos seeking rate increase for natural gas customers

Atmos Energy is seeking a rate increase that it says would raise the monthly natural gas bill of the average residential customer by $2.70, or 5.6 percent, to $51.21.

The increase in the residential base rate, however, would be 13.6 percent.

Atmos spokesman Ray Granado said the base rate includes costs related to delivering gas to customers, such as pipeline maintenance and meter reading. It does not include the cost of the gas, which Atmos simply passes through to customers.

It would be the utility's first formal rate case since 2007.

David Park, Atmos vice president for rates and regulatory affairs, told the Star-Telegram that the utility needs the rate increase to cover costs for capital investments in gas-distribution infrastructure, such as adding and replacing pipelines. Atmos has made about $134 million in capital improvements in the past 14 months and $500 million since 2007, he said.

For Atmos, the rate hike "is about continuing to make investments in infrastructure to keep our system safe and reliable," Park said.

The rate increase would apply to 441 cities, including all of Atmos' North Texas customer cities except Dallas, which gets a separate rate review. City councils received the rate-increase proposal from the Dallas-based natural gas distributor Jan. 31, but many are suspending consideration until the Atmos Cities Steering Committee, which includes about 150 cities, can meet with Atmos officials.

That could postpone formal action by city councils until early June.

Geoffrey Gay, an Austin lawyer representing the cities, said they have not yet fully analyzed the rate proposal. But "most likely we are not going to be granting the company what they are asking for," he told the Star-Telegram.

Before any settlement is reached, "I'm assuming there will be a significant discussion taking place," Gay said.

Atmos has also proposed higher commercial rates but lower industrial rates.

The commercial rate hike would raise the average bill $5.35 a month, or 2.2 percent, Park said. The base rate increase would be 9.7 percent.

Industrial bills would be lowered 3.2 percent, or 14.2 percent of the base rate.

Gay said the cities steering group will closely examine why Atmos proposed raising residential rates while lowering industrial rates.

Park said Atmos recommended a lower industrial rate based on its study showing that the cost of providing service to industrial customers "is a little less than when their rates were last set."

Atmos' rate request would increase its annual revenue about $53.8 million: $46.6 million more from residential customers; $7.9 million more from commercial customers and $700,000 less from industrial customers.

For all customers combined, the rate increase would be 4.4 percent, or 11.9 percent of the base rate. About 1.2 million residential, 100,000 commercial and 700 industrial customers would be affected.

If the cities cannot reach an agreement with Atmos, the rate proposal would go to the Texas Railroad Commission.

"Our hope is that we'll be able to settle with the cities," Park said.

Jack Z. Smith, 817-390-7724

Twitter: @startelegram