Title
Discuss and consider action regarding interpretation of Atmos Energy (natural gas) franchise agreement terms concerning the definition of Gross Revenues.
Summary
Mr. Randy Hartford of Atmos Energy (Atmos), explains in the attached letter that Atmos discontinued including franchise fees in their calculations of gross revenues for determining the amount of franchise fee payments starting January 1, 2009, because they determined that Atmos was not required by their franchise agreements to pay franchise fees on franchise fees. Since that time, Atmos has been approached by several cities stating they had interpreted the definition of gross revenues to include franchise fees. Therefore, Atmos is asking the City of Pflugerville how it would like gross revenues to be interpreted and giving the City until March 31, 2011, to make its election on the following questions. Any action taken by the City of Pflugerville is revenue neutral to Atmos as any increase to the franchise fee will be passed along to the customer.
There are two parts to the election. First, does the City of Pflugerville wish to have Atmos begin to charge the 4% franchise fee on the franchise fee revenue already being paid to them? If this option is chosen, the estimated amount of additional annual revenue of $10,000 - $12,000 will be charged to each individual customer. This increase will be shown as an increase to the existing franchise amount shown on the monthly bill. For an average residential user, the amount will increase by approximately $.34 - from approximately $3.10 to $3.44 each month. The second part of the election asks if the City of Pflugerville would like to receive this annual revenue for the time period of January 1, 2009 to now. Again, the amount paid by Atmos will be reflected on their customers' monthly bills.
The second group of options shown as Franchise Fees on Value of Gas Transported concerns large users of natural gas that only use Atmos lines for transporta...
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