City Hall

Strange Bedfellows: City Council Foes Unite To Fight Atmos Over Rising Gas Costs

Atmos Energy's Dallas headquarters
Atmos Energy's Dallas headquarters Google Streetview
Over the last four years, Atmos Energy, the company that provides natural gas to residents of the city of Dallas, has come to the city for more than $18 million in rate increases. On Monday they asked for another $7.8 million from the city, an amount they say represents a discount.

Council members on the committee, however, sent a strong signal that that the city is not going to pay this time, and is ready for a legal showdown with the company at the Texas Railroad Commission in Austin. The Railroad Commission settles fights between cities and public utilities.

"Typical when we file for that amount, that is what we feel like we're entitled to," Chris Felan, vice president of rates and regulatory affairs for Atmos said during the meeting with the Dallas City Council's Budget Finance and Audit Committee.

Atmos originally asked for $10.7 million but agreed with city staff to pay $7.8 million. If Dallas rejects the deal, Felan added, Atmos will file in Austin for the full $10.8 million.

Council members Philip Kingston and Lee Kleinman, frequently at odds on the council, agreed that Atmos is asking too much from taxpayers at either number.

If the city agrees to a $7.8 million increase in their contract with the energy company, Dallas residents gas bills would go up an estimated $2.46 a month. A $10.7 million increase would add $3.25 to residents' monthly charges.

"In every conceivable way, 2017 will be the most expensive year to live in the city of Dallas for its taxpayers and fee payers," Kingston said. "That's going to be the case in 2018 also, almost certainly. We've got to look for reasonable ways to hold that down."

Kingston argued with Felan that Atmos was asking for an increase in fees far bigger than regulations allow. "Many people who follow this industry have indicated that they believe Atmos is over-collecting relative to its need for a reasonable return to investors and that has been the case for many years now," Kingston said. "I hold that opinion. Atmos is definitely making above market returns for investors."

"It seems like we're negotiating against ourselves." - Dallas Council Member Lee Kleinman

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Kleinman pointed to 2008, when the city filed a rate case with the Railroad Commission, as what the city should be doing.

"It was our most successful year in beating back the amount that Atmos wanted," he said. "They asked for $9.1 million and the case came out to $1.6 million, so they only got 18 percent of what they asked for. Our job as a council and staff is to get the lowest rates possible for our citizens... It seems like we're negotiating against ourselves."

After a committee vote endorsing the city's pursuing a case against Atmos with the Railroad Commission, the proposed settlement moves to the full council for debate on May 24.
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Stephen Young has written about Dallas news for the Observer since 2014. He's a Dallas native and a graduate of the University of North Texas.
Contact: Stephen Young

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