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Helping Atmos Energy Corporation develop and negotiate an alternative ratemaking mechanism in Georgia

Background

Atmos Energy, like many of its peers, was challenged to earn its authorized rate of return with a volumetric-dependent rate design in the face of a decline in distribution revenues on a per-customer basis. Contemplating the need to find alternatives to making periodic, large and expensive rate filings, Atmos turned to MCR for help.

Solution

MCR worked with Atmos to develop an alternative form of ratemaking that provides for annual rate adjustments based on projected earnings during a future period using a form of formula rates and an element of decoupling through a true-up mechanism. We then participated in negotiations with the staff of the Georgia Public Service Commission (PSC) to produce the Georgia Rate Adjustment Mechanism (GRAM).

Results

GRAM was approved by the Commission and implemented in Georgia. This new alternative form of rate regulation allows the client to earn its authorized rate of return while eliminating the need to file annual rate cases. GRAM combines some of the best features of recent regulatory alternatives and has implications for emerging national trends in alternative ratemaking.