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Atmos Requests Record Rate Hike

Atmos wants city residents to pay for upgrades to its dangerous pipeline network.
Atmos wants city residents to pay for upgrades to its dangerous pipeline network.
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Dallas' natural gas provider, Atmos, is requesting an $18 million rate hike. It's the biggest yet and comes on the heels of a protracted pricing dispute with the city.

Atmos claims the rate increase is necessary to fund the replacement of the city's aging pipeline network. It will raise consumer bills by around $5.50.

"We've accelerated the pace of pipe replacement. We have more crews in a lot of different neighborhoods throughout the city. We've replaced more miles of steel, more miles of cast iron," said Chris Felan, Atmos' vice president of rates and regulatory affairs for the Dallas region.

Atmos has been investing heavily in pipeline replacement in recent years, driven by pressure from ratepayers and policymakers to improve its safety record.

After an explosion killed a 12-year-old girl in northwest Dallas, Atmos turned off the gas to nearly 3,000 homes while it upgraded the area's steel pipes to plastic. The girl's family sued. Meanwhile, the utility refused to disclose the locations of other outdated pipelines, citing "security risks."

Last year, Gov. Greg Abbott signed legislation that would require gas utilities to replace all of their cast-iron pipes by 2022.

Accordingly, the utility's annual investment in infrastructure upgrades in the region increased over 50% last year, to $700 million. Of that, $200 million was spent within the city.

But the City Council has not been pleased about footing the bill. Atmos, one of the nation's largest natural gas utilities, is publicly traded and headquartered in Dallas. Over the last five years, its stock price has doubled.

"They're trying to catch up from the last 40 years of neglect, and until they get their infrastructure in the city of Dallas up to the current standard, I don't think they should be paying dividends," councilman Lee Kleinman said.

Meanwhile, negotiations between the utility and the city of Dallas over rate increases have become increasingly contentious.

Last year, after Atmos requested a $10 million hike, the city lawyered up and appealed to the state regulatory board. The sides ended up settling at around $8 million.

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The Texas Railroad Commission, the state's oil and gas regulatory agency, is notoriously business friendly. Kleinman chafes at its authority to make the final decision in rate disputes.

"[Atmos has] a big say in what happens in the Legislature and in the governor's office, a much bigger voice than all the municipalities together could ever put together," he said.

Although Atmos has won significant rate hikes in past years, residents may not have noticed. Gas prices — which make up the bulk of the bill — have been decreasing, offsetting the rising cost to maintain the infrastructure.

Editor's note: This article previously misstated the way Texas Railroad Commission members are selected. Commissioners are elected.

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