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Could Dallas Have Gotten A Better Atmos Deal By Appealing?

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DALLAS (CBSDFW.COM) – Everyday life is about to get more expensive in Dallas. Wednesday the city council approved a natural gas rate hike. Atmos Energy wanted $9 million, but the city negotiated it down to $6 million.

The deal works out to about $2 more for each home – each month. So what happens to cities that take their fight all the way to the state?

The City of Dallas negotiated with Atmos and got the company to significantly lower its initial rate hike amount. Some city council members even wanted to keep fighting, opposing the increases altogether.

CBS 11 News looked at state records.

Councilmember Bill Callahan asked, “When I see Atmos making record profits and record net income, why do they need the extra money?”

While the Dallas City Council wasn’t eager to raise the price of natural gas, most councilmembers believed the deal they struck was likely the best they’d get.

Councilmember Philip Kingston admitted, “Our city staff fears that if we turn Atmos down and Atmos takes it to the Railroad Commission…that the Railroad Commission is pro-utility and that we’ll end up with a much higher utility increase than we would otherwise get.”

More than 150 other Texas cities, including Fort Worth, Carrollton and Cleburne, refused to approve the rate hike and have vowed to appeal to the Railroad Commission of Texas — the state agency that regulates the natural gas industry.

The CBS 11 I-Team checked state records and discovered that in the last 10 years cities have challenged rate hikes by Atmos five times. Each time, the commission approved the company’s request to raise rates. But the increases were never by as much as Atmos wanted.

In 2010 the Railroad Commission cut a proposed increase by $22 million. In 2014 the agency cut the requested increase amount by $24 million. In both cases, Atmos ended up charging customers about 5-percent less than it initially proposed.

Atmos says it needs the extra money for improvements to infrastructure. But council member Philip Kingston believes the profitable company should be the one to eat the costs – not the taxpayers.

“I’m not telling my taxpayers, my voters, ‘Hey I raised your gas rates when you’re already paying too much.’”

So did Dallas get a better deal by negotiating than it would have by appealing? There’s no way to know for sure – yet.

Some people worried the state would allow Atmos to charge customers the full price it first proposed. And based on history, that seems unlikely.

(©2014 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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