Briefing: Atmos Energy settles 2025 rate case with ATM coalition; Austin residential customers to see base‑rate decrease

City staff and outside counsel provided a high‑level briefing to the Resource Management Commission on Atmos Energy’s 2025 rate case and a related discussion with the utility’s Mid‑Tex division.

Freddie Herrera of Hera Law and Associates, who represented the ATM (Texas Municipalities) coalition for about 50 cities, described the procedural timeline and the settlement outcomes. “The city will have … 125 days to make a decision,” Herrera said, explaining the local jurisdictional timeline relative to the Railroad Commission. Herrera said Atmos initially sought approximately $16 million in additional revenue for the ATM cities but the settlement reduced the increase to roughly $4 million. He emphasized that a central driver was the negotiated return on equity: “Atmos was seeking a return on equity of 10.65%… where we landed was a return on equity of 9.8.”

Herrera and Atmos’ representatives explained the rate design tradeoffs. Under Atmos’ initial proposal, the company proposed to place most of the increase on residential customers. The settlement altered that allocation: Herrera said residential customers under the settlement will see an approximate decrease in base rates (about 7.5% for an average user, per the settlement presentation), while commercial customers face higher percentage increases. “At the end of the day, Atmos walked out of the door with an increase of about a little over $4,000,000 for the ATM cities,” Herrera said.

Atmos Energy representatives described system scale, public‑facing programs and capital spending drivers. Kelly Biegler, vice president of public affairs at Atmos Energy, said the Austin system (part of Atmos’ Mid‑Tex division) serves just over 11,000 customers inside Austin, operates roughly 120 miles of pipeline in the city and provided $226,000 in charitable giving in fiscal 2024. “Safety drives everything that we do,” Biegler said, noting pipeline modernization investments and community safety outreach.

Shelley Bass, in Atmos’ regulatory/legal group, described Atmos’ customer assistance and efficiency programs—rebates, free energy kits, and a “Keeping the Warmth” program for low‑income customers delivered in partnership with local agencies. Bass said program budgets and decatherm savings were reported in Atmos’ annual program report and claimed carbon reductions tied to those programs.

Atmos’ capital explanation: Atmos’ Chris Phelan described division‑wide capital investment growth in Mid‑Tex and said roughly 85% of recent capital spending is safety‑and‑reliability‑related, including replacement of higher‑relative‑risk pipe materials required by state pipeline‑safety rules. Phelan also described line extension policies and growth pressures from substantial customer and economic growth within the Mid‑Tex footprint.

Winter‑storm costs and securitization: Staff and Atmos briefed the commission on post‑2021 legislative and regulatory actions. Phelan said the company participates in statutory and regulatory recovery mechanisms for extraordinary gas costs and described a uniform securitization component embedded in customer gas‑cost recovery rates for the winter‑storm period.

What commissioners asked: Commissioners raised questions on the settlement’s applicability across the ATM coalition, on customer‑class impacts, and on program funding and assistance in case of reduced federal LIHEAP funding. Herrera confirmed the settlement covers the ATM coalition members negotiated as a group. Commissioners also pressed Atmos on program detail and asked for further data on charitable and low‑income assistance distributions in the Austin area; Atmos said it would provide a breakdown on charitable giving and local assistance partners.

Context and next steps: City staff (Maria Norton) and Atmos representatives said the franchise and rate work are distinct processes—the rate settlement is complete while franchise agreements are on a separate timetable. Staff described an internal timeline for franchise negotiation and requested RMC priority recommendations be approved by council no later than November for inclusion in franchise discussions; commissioners discussed public engagement and requested staff explore broader public hearings and earlier visibility into the franchise negotiation framework.

Speakers included Freddie Herrera (Hera Law and Associates), Kelly Biegler (Atmos Energy, Vice President, Public Affairs), Shelley/Shelly Bass (Atmos regulatory/legal), Chris Phelan (Atmos rates and regulatory), and Maria Norton (city staff).