September 16, 2008
All Commissioners
Georgia Public Service Commission
244 Washington Street, SW
Atlanta, Georgia 30334
Re:
In the Matter of the Petition of Atmos Energy Corporation, Georgia
Division, for Approval of Adjustment of its Rates and Revised Tariff;
GPSC Docket No. 27163
Dear Commissioners:
This letter is filed on behalf of the Georgia Traditional Manufacturers Association (“GTMA”) in
response to the recommendation of the Commission’s Advisory Staff in the above-referenced
docket. The Advisory Staff recommends a rate increase of approximately $3,243,483,
somewhere between the Adversary Staff’s final position of $2,494,774 and the final request of
Atmos Energy Corporation (“Atmos”) of $5,483,607.
However, the Advisory Staff does not address the issue of how this rate increase should be
allocated among classes, meaning its recommendation reverts to the recommendation of the
Adversary Staff to raise rates disproportionately on certain classes including the “Large Volume
Other” class. As unequivocally demonstrated in the hearings, the Adversary Staff’s position is
tied to the results of a class cost of service study (“CCOS”) that even Atmos admits is unreliable
and improperly allocates excessive costs of mains to large volume classes.
The results of using a disproportionate allocation are truly staggering. Using the $3,243,483
figure proposed by Advisory Staff, and the Adversary Staff’s disproportionate allocation, GTMA
estimates the increases to the classes would be:
Residential
General Service
Large Volume Firm
Large Volume Other
Other
$1,511,803
$867,800
$137,054
$704,366
$22,460
13.26%
33.63%
18.72%
38.11%
35.85%
Total
$3,243,483
19.51%
The Hurt Building - 50 Hurt Plaza - Suite 985 Atlanta, Georgia 30303 - 404-688-0555 - Fax 404-584-0720 - www.gtma.org
In other words, Advisory Staff’s recommendation would increase distribution rates to the Large
Volume Other class by more than 38% -- nearly twice the amount of the system average
increase. The only basis for this disproportionate treatment that has been offered is the CCOS,
which is not reflective of reality as shown by the testimony of Atmos witnesses in the hearings.
The Adversary Staff has relied on the importance of precedent for its positions in this docket,
continually asking the Commission to follow the methodologies and policies that were approved
in the last Atmos rate case, Docket No. 20938. However, one of the key precedents from that
docket was the Commission did not set rates based on the CCOS, ordering that the revenue
increase “shall be allocated evenly among all classes based on base rate revenues under
current rates . . . .” Order on Reconsideration and Final Order, GPSC Docket No. 20298-U, p.
56 (February 2, 2006).
GTMA simply asks that the Commission follow its decision in Docket No. 20298-U and allocate
the rate increase evenly among all classes based on base rate revenues. Using the Advisory
Staff’s recommended rate increase, this adherence to precedent would result in the following
allocation:
Residential
General Service
Large Volume Firm
Large Volume Other
Other
$2,224,172
$503,538
$142,869
$360,679
$12,226
19.51%
19.51%
19.51%
19.51%
19.51%
Total
$3,243,483
19.51%
This allocation would provide a fairer distribution to all classes. Any disproportionate allocation
in a rate case should be backed up by reliable evidence, not a CCOS that has been changed to
incorrectly shift revenue responsibility to customer classes not causing the underlying costs.
On September 12, 2008, Atmos filed a letter with the Commission to address several issues
raised about the CCOS. The letter speaks for itself, but is instructive that Atmos concluded that
a CCOS is rarely relied upon exclusively in establishing rates and further stated that “the
Company would also support a rate design that would proportionately allocate the revenue
requirement across all classes of customers.”
In that spirit, GTMA reiterates its request that an amendment be offered to correct the obvious
inequity of allocating excessive rate increases on large volume customers under the unsupported
pretense that they are somehow being subsidized by residential consumers. We ask that the
Commission adopt a simple amendment:
Consistent with the Commission’s decision in Docket No. 20298U, the increase in revenue requirements approved by the
Commission in this case shall be spread evenly among all classes
according to base rate revenues so that each customer class
receives the same percentage increase.
Sincerely,
Charles B. Jones, III
CBJ:eh
cc:
Reece McAlister, GPSC Executive Secretary (for filing)
All Parties in Docket No. 27163 (via electronic mail and regular mail)
Mr. Roy Bowen