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Asked for Cut, Atmos Seeks Higher Rate

Posted on: Friday, 2 June 2006, 00:00 CDT

By R.A. Dyer, Fort Worth Star-Telegram, Texas

Jun. 1--AUSTIN -- North Texas customers of Atmos Energy could see their natural gas bills go up by about $4 per month under a rate request filed Wednesday by the utility.

If approved, the increase would affect about 1.4 million customers in the company's Mid-Tex Division service territory, including those in Tarrant County.

It comes in response to ongoing efforts by North Texas municipalities to force rate reductions of about $2.59 per average customer.

"It basically boils down to the direct costs of operating and customer service so we can continue to provide service that is safe and reliable," spokesman Ray Granado said of the company's proposal.

If approved, the adjustment would increase the company's revenue by about $60 million annually.

By contrast, North Texas municipalities have claimed the company is overcharging by about $35 million annually.

"The rates need to be reduced," said Geoffrey Gay, an attorney representing Fort Worth and other North Texas municipalities in utility matters.

"Current rates are based on [a previous] cost structure, and a different cost of capital, and there are savings that Atmos has indicated to the financial markets that ought to be reflected in rates."

The increase would affect customers in about 440 North Texas municipalities, as well as those living in unincorporated areas. Atmos presented its proposed rate increase Wednesday to representatives of North Texas cities and to the state's chief regulatory agency in gas utility matters, the Texas Railroad Commission. The commission has 185 days to issue a final order, and the rates cannot take effect before then.

The company said the new rate includes a revenue-stabilization adjustment, which should reduce fluctuations in customer bills. If approved, it would authorize a return on investment for Atmos of 8.86 percent; currently the company's return on investment is 8.25 percent.

Atmos, the state's largest gas utility, serves about 1.5 million residential customers in Texas.

The company has annual revenue of about $910 million, according to an analysis by city consultants.

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R.A. Dyer, 512-476-4294 rdyer@star-telegram.com

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Copyright (c) 2006, Fort Worth Star-Telegram, Texas

Distributed by Knight Ridder/Tribune Business News.

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NYSE:ATO, NASDAQ-NMS:MOSY,

Source: Fort Worth Star-Telegram (Fort Worth, Texas)

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