Item 3- 2025 Atmos Energy Rate Case Update & Gas Utility Policy Discussion

Resource Management Commission – June 17, 2025

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2025 Atmos Energy Rate Case Update & Gas Utility Policy Discussion Marija Norton| City Controller Alfred R. Herrera| Herrera Law & Associates, PLLC Item 32025 Atmos Energy Rate Case Timeline Nov 18, 2024: Rate case filed with Railroad Commission of Texas (RRC). Discovery begins. Dec 16, 2024: Rate case filed with Atmos Texas Municipalities (ATM). Dec 18, 2024: Errata to update filing, if necessary. Dec 23, 2024: Proposed effective date for RRC rate case. Jan 20, 2025: Proposed effective date for ATM rate case. Jan 21, 2025: Settlement conference. Jan 30, 2025: Proposed effective date for City of Austin only. City of Austin adopts denial resolution. Feb 3, 2025: Discovery ends on Atmos Mid-Tex direct case. Feb 13, 2025: Intervenor testimony due. Feb 19, 2025: Settlement conference. Feb 20, 2025: Staff testimony due. Feb 25, 2025: Discovery ends on intervenor & staff testimony. Feb 28, 2025: Rebuttal testimony due. Mar 7, 2025: Discovery ends on rebuttal testimony. Mar 10, 2025: Trial briefs & prehearing conference. Mar 11-12, 2025: Hearing on the merits. Mar 19, 2025: Initial briefs. Mar 26, 2025: Reply briefs. Apr 25, 2025: Proposal for Decision (PFD) issued. Apr 30, 2025: Settlement reached. May 1, 2025: Exceptions to PFD. May 7, 2025: Replies to exceptions. May 13, 2025: Commission conference. May 22, 2025: Initial statutory deadline – extended to June 18, 2025 Jun 17, 2025: Expected date for RRC consideration of settlement. 2 2025 Atmos Energy Rate Case Settlement Overview 3 2025 Atmos Energy Rate Case Settlement Overview Customer Class Current Atmos As-File Proposed Rates ATM Proposed Rates Settlement Rates ATM Cities: Residential Customer Charge Consumption Charge Commercial Customer Charge Consumption Charge Industrial & Transportation Customer Charge Consumption Charge - Tier 1 Consumption Charge - Tier 2 Consumption Charge - Tier 3 $ $ 47.91 0.14846 $ $ 47.91 0.37584 $ $ 20.00 0.98029 $ $ 25.00 0.78025 $ $ 136.68 0.09165 $ $ 136.68 0.09165 $ $ 145.00 0.16276 $ $ 140.00 0.26133 $ $ $ $ 2,492.04 0.3312 0.2425 0.0520 $ $ $ $ 2,492.04 0.3312 0.2425 0.0520 $ $ $ $ 2,462.00 0.7954 0.5824 0.1249 $ $ $ $ 2,100.00 1.0479 0.7672 0.1645 4 2025 Atmos Energy Rate Case Settlement Overview Cost of Capital Return on Equity Cost of Long Term Debt Capital Structure - Equity Capital Capital Structure - Debt Capital Rate of Return Current - Last Authorized 9.80% 5.20% 60.18% 39.82% 7.97% Atmos As-File Proposed 10.50% 4.15%% 60.97% 39.03% 8.23% ATM Proposed 9.25% 4.15% 52.13% 48% 6.87% Settlement 9.80% 4.15% 60.97% 39.03% 7.59% 5 2025 Atmos Energy Rate Case Settlement Overview BILL IMPACT - AT CURRENT RATES BILL IMPACT AT ATMOS PROPOSED RATES CURRENT CUST CURRENT CONSUM CHRG $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 CHRG $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 CURRENT BASE-RATE BILL $47.91 $49.39 $50.88 $52.36 $53.85 $55.33 $56.82 $58.30 $59.79 $61.27 $62.76 $64.24 $65.73 $67.21 $68.69 $70.18 $71.66 $73.15 $74.63 $76.12 $77.60 Monthly Usage (CCF) 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 ATMOS PROPOSED CUST CHARGE $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 $ 47.91 ATMOS PROPOSED CONSUM CHARGE 0.37584 $ $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 $ 0.37584 ATMOS PROPOSED BASE RATE BILL $47.91 $51.67 $55.43 $59.19 $62.94 $66.70 $70.46 $74.22 $77.98 $81.74 $85.49 $89.25 $93.01 $96.77 $100.53 $104.29 $108.04 $111.80 $115.56 $119.32 $123.08 Dollar Change Percent Change $0.00 $2.27 $4.55 $6.82 $9.10 $11.37 $13.64 $15.92 $18.19 $20.46 $22.74 $25.01 $27.29 $29.56 $31.83 $34.11 $36.38 $38.65 $40.93 $43.20 $45.48 0.00% 4.60% 8.94% 13.03% 16.89% 20.55% 24.01% 27.30% 30.43% 33.40% 36.23% 38.93% 41.51% 43.98% 46.34% 48.60% 50.77% 52.84% 54.84% 56.76% 58.60% 6 2025 Atmos Energy Rate Case Settlement Overview BILL IMPACT - AT CURRENT RATES BILL IMPACT AT SETTLEMENT RATES CURRENT CUST CURRENT CONSUM CHRG $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 47.91 CHRG $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 0.14846 CURRENT BASE-RATE BILL $47.91 $49.39 $50.88 $52.36 $53.85 $55.33 $56.82 $58.30 $59.79 $61.27 $62.76 $64.24 $65.73 $67.21 $68.69 $70.18 $71.66 $73.15 $74.63 $76.12 $77.60 Monthly Usage (CCF) 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 SETTLEMENT CUST CHARGE $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 SETTLEMENT CONSUM CHARGE $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 $ 0.78025 SETTLEMENT BASE RATE BILL $25.00 $32.80 $40.61 $48.41 $56.21 $64.01 $71.82 $79.62 $87.42 $95.22 $103.03 $110.83 $118.63 $126.43 $134.24 $142.04 $149.84 $157.64 $165.45 $173.25 $181.05 Dollar Change Percent Change -$22.91 -$16.59 -$10.27 -$3.96 $2.36 $8.68 $15.00 $21.32 $27.63 $33.95 $40.27 $46.59 $52.90 $59.22 $65.54 $71.86 $78.18 $84.49 $90.81 $97.13 $103.45 -47.82% -33.59% -20.19% -7.56% 4.39% 15.69% 26.40% 36.56% 46.22% 55.41% 64.17% 72.52% 80.49% 88.12% 95.41% 102.39% 109.09% 115.51% 121.68% 127.61% 133.31% 92 21 39 Avg Usage: Dec '23 - Feb ' 24 Avg Usage: All Other Months: Jul '23 - Nov '23 & Mar '24 - Jun '24 Annual Average Usage 7 Important Dates – Franchise Agreements Texas Gas Service CenterPoint Energy Expires May 14, 2028 Expires Dec. 24, 2037 Expires Oct. 15, 2026 Expires Feb. 22, 2035 Atmos Energy SiEnergy 8 FY2024 Gas Utility Franchise Fee Collections Company Atmos Energy CenterPoint Energy SiEnergy Texas Gas Service FY2024 Franchise Fees Paid to City of Austin $ $ $ $ $ 690,690.56 94,766.69 10,036.11 8,648,694.10 9,444,187.46 Total 9 Current City of Austin Gas Utility Franchises Current Agreements https://www.austintexas.gov/department/utility-complaints-and-right-way-resources Purpose & Scope • Grants non-exclusive rights to: • Construct, operate, and maintain natural gas infrastructure. • Use City rights-of-way, streets, alleys, bridges, public grounds. Term & Duration • 10-year initial term, with additional 10-year renewal period. Financial Agreement • Franchise Fee: 5% of gross revenues for operations within City of Austin limits. • Paid quarterly to City of Austin. • Recoverable through rates. 10 Current City of Austin Gas Utility Franchises Operational Responsibilities • Must comply with City codes and permitting requirements. • Shall not discriminate against applicants for service. • Maintain property and equipment in good order and condition consistent with the needs of the service to be rendered. • Support the conservation of natural gas by designing, implementing, monitoring, and evaluating conservation programs. • Actively seek to provide the best mix of gas supply at the lowest prices consistent with its duty to provide safe and reliable service to customers. • Maintain adequate supply of natural gas to meet requirements of customers within the City of Austin. 11 Current City of Austin Gas Utility Franchises City of Austin Oversight • Franchise fees subject to inspection/audit by the City. Expense of franchise audits & reviews paid by company and recoverable through rates. • City Council can request a management audit of the company’s operations in the City. Costs of such audit to be paid by the company and recoverable through rates. • Receive report of gas supply activities relating to Austin. • Receive annual audited statements of the company. Purchase • Outlines steps for City of Austin to purchase the system. 12 TGS Franchise Agreement Renewal Timing Financial Services Department & Law kick off meeting. Franchise amendment recommendations due from AE, AW, DSD, & TPW. New TGS franchise agreement is approved. 2 June 2025 July 2026 Oct. 2026 25 Apr. 2025 30 June 2025 Sep. 2026 Kick-off meeting with key departments – AE, AW, DSD, TPW. Finalize franchise agreement for Council submission. Requires three Council readings before it is approved. Current TGS franchise agreement expires. 13 Gas Utility Policy Considerations • Resource Management Commission to develop/propose priorities to use in future franchise and rate case negotiations. • Priorities should be generic, instead of specific. • Priorities to be shared with City Council for approval through a resolution. City staff and outside counsel will use the approved resolution as a guide in future negotiations. • RMC priority recommendations should be approved by Council no later than November 2025 for consideration in current franchise negotiations. 14 THANK YOU!! City of Austin FINANCIAL SERVICES DEPARTMENT