City staff recommends approving negotiated settlement in Atmos Energy rate‑review filing; council members press on affordability and service

City staff and outside consultants told the Richardson City Council the Atmos Energy Rate Review Mechanism (RRM) filing submitted in April produced a negotiated settlement that reduces the utility’s initial filing from about $245 million in requested annual revenue to just over $205 million, and staff recommended the council adopt that settlement during the RRM review process.

Why it matters: The settlement, if approved, would change Atmos billed rates for customers in Richardson and surrounding MidTex service territory; staff said the average residential customer would see about a 9.3% increase in their bill (roughly $8 per month based on average usage) and the average commercial customer about 6.6% (roughly $26 per month). Council members raised sharp questions about affordability, the split of the increase between fixed customer charges and volumetric consumption charges, and the limits of the city’s options if officials reject the settlement.

What staff reported - Todd Gastorf, Richardson’s director of finance, said Atmos’ April filing requested roughly $245 million to recover 2024 capital investments across MidTex. Staff and the Atmos steering committee and consultants negotiated a settlement reducing the request by more than 16% to approximately $205 million. - Gastorf said Atmos invested about $1.4 billion across the MidTex region in the prior year; Richardson‑specific capital investment during the last calendar year was roughly $17.6 million and $42.6 million since 2020. - The settlement alters both the fixed customer charge (a roughly 3% increase in the monthly customer charge shown in the settlement) and the volumetric (consumption) charge. Gastorf said the negotiated settlement represents a reasonable tradeoff between recovering needed capital and limiting rate impacts.

How the process works - Richardson participates in an Atmos City steering committee that represents many Texas cities and hires attorneys and rate experts to review large utility filings and negotiate settlements on member cities’ behalf. - Gastorf told the council the Gas Reliability Infrastructure Program (GRIP) statute gives Atmos a statutory route to recover capital; because GRIP filings offer limited city challenge rights, the steering‑committee RRM negotiation provides cities a practical channel to influence rates and secure reductions. If the council rejects a negotiated settlement, Gastorf said Atmos could implement higher GRIP rates or proceed to a contested Railroad Commission (or other regulator) proceeding, which would carry legal costs and uncertain outcomes.

Company presentation and technical details - Clayton Childs, Atmos Energy’s MidTex manager of public affairs, described the utility’s safety and modernization programs and said Atmos invests roughly $2 billion annually across its footprint and logged $1.4 billion in MidTex investments for the referenced year. Childs said Atmos uses leak‑detection technology, increased training at its Charles K. Vaughn training center in Plano and other tools to monitor pipeline safety and operations. Childs said Atmos serves roughly 27,000 customers and operates about 394 miles of pipeline within Richardson and noted advanced mobile leak detection and other monitoring systems.

Council concerns Council members probed why the residential volumetric (consumption) charge shows a much larger percentage increase than commercial consumption and asked for supporting details and the consultants’ analysis. Several council members expressed frustration about year‑after‑year increases from utilities while noting the practical limits of what a single city can accomplish. Councilmember Barrios said the pattern of repeated annual increases felt like “getting your cake and eating it too” — raising concerns about costs versus the service residents receive during peak weather events.

Next steps - Gastorf told the council staff recommends adopting the negotiated settlement as fair and reasonable and that a resolution to adopt the settlement was on the council’s agenda for consideration; if approved the settlement rates would be effective October 1. - Council discussion and a formal vote will determine whether the city adopts the settlement or pursues other options; Gastorf and the steering‑committee attorneys said contesting a filing independently would shift legal and consulting costs onto the city.

Selected quote “The attorneys, consultants, as well as city staff, in reviewing the filing, believe that the negotiated settlement is fair, reasonable, and we recommend approving that settlement,” Todd Gastorf said.

Context and constraints The RRM/GRIP interaction is governed by state statute and regulatory practice; Gastorf advised that limitations in the GRIP statutory process are why cities participate in joint steering‑committee negotiations. Councilmembers asked staff to provide more detail from the steering‑committee consultants showing how the settlement numbers affect residential versus commercial customers, and staff said it would follow up with that analysis.

Ending Council members said they would review the supporting consultant analysis before voting; the staff recommendation preserves a negotiated reduction from the initial filing but leaves affordability concerns and next‑year projections unresolved.