During Tuesday morning’s meeting, the Brownwood City Council approved on first reading a negotiated settlement between the Atmos Energy Corp., Mid-Tex Division regarding the company’s 2025 and 2026 Rate Review Mechanism filings requested rate increase.

The City, along with 181 other Mid-Texas cities served by Atmos Energy Corporation, Mid-Tex Division is a member of the Atmos Cities Steering Committee. In 2007, the Steering Committee and Atmos Mid-Tex settled a rate application filed by the Company pursuant to Section 104.301 of the Texas Utilities Code for an interim rate adjustment commonly referred to as a GRIP filing (arising out of the Gas Reliability Infrastructure Program legislation). That settlement created a substitute rate review process, referred to as Rate Review Mechanism as a substitute for future filings under the GRIP statute.

Since 2007, there have been several modifications to the original Rate Review Mechanism Tariff. The most recent iteration of an Rate Review Mechanism Tariff was reflected in an ordinance adopted by Steering Committee members in 2018. On or about April 1, 2025, the Company filed a rate request pursuant to the Rate Review Mechanism Tariff adopted by ACSC members. The Company claimed that its cost-of-service in a test year ending December 31, 2024, entitled it to additional system-wide revenues of $245.2 million.

Application of the standards set forth in the Steering Committee’s Rate Review Mechanism Tariff reduces the Company’s request to $225.6 million, $163.5 million of which would be applicable to Steering Committee members. After reviewing the filing and conducting discovery, the Steering Committee’s consultants concluded that the systemwide deficiency under the Rate Review Mechanism regime should be $185.6 million instead of the claimed $245.2 million. After several settlement meetings, the parties have agreed to settle the case for $205.6 million. This is a reduction of $20 million to the Company’s initial request. This includes payment of the Steering Committee’s expenses.

The Effective Date for new rates is October 1, 2025, and the Council will have to vote again on second and final/reading before that date to officially approve the ordinance.

City Attorney Pat Chesser told the Council, “The impact of the settlement on the average residential rate in Brownwood is an increase of $7.83 on a monthly basis or a 9.27% increase. The increase for the average commercial usage will be $25.73 or a 6.56% increase.”

Mayor Stephen Haynes said, “It’s one of those situations where I don’t love the increase, but I also understand it’s been well vetted within respective City groups.”