by Larry Lemmons
Today the City of Amarillo has forged a new relationship with natural gas provider Atmos Energy. The City Commission has approved a $500,000 interim revenue increase in the rates for the sale of natural gas service.
That means about $1.50 per month increase for the average summertime customer. Natural gas prices have been going down recently, however, so the increase may not be that high.
The City also approved a rate review mechanism. Both the city and Atmos agree that utility rate making negotiations every few years can be contentious. The costs of these battles always get passed onto the consumer. Sometimes the cost of the battle is more than the proposed rate hike.
Atmos energy has similar deals with more than 500 cities in Texas.
Basically it works like this:
If the company does well and makes profits above a predetermined limit...as an incentive...they keep a portion of that profit.
Gary Gregory, Division President of Atmos Energy says, "There's an incentive in the plan for us to run our company very well. To keep our costs low. if we keep our costs low there's an opportunity for us to earn a little more than our allowed rate of return. However, we don't get to keep all that money. We have to give 80% of that back to our customers. We keep 20%."
It works the other way, too. If Atmos does not do as well, if they fall below a predetermined limit, they can't pass all the loss onto the consumer. They must eat twenty percent of the loss.