Atmos Energy 2002 Annual Report Download - page 23

up to $66 million in additional annual revenues.
Fiscal 2003 will be what is called a test year, used by
regulators for rate-making calculations, in Texas,
Kansas and possibly other states.
During 2002, we reached agreement with the Louisiana
Public Service Commission regarding a tariff
rate stabilization adjustment for our Louisiana utility
operations. The agreement adds $15.8 million
annually to revenues in the first two years and $12.2
million annually thereafter. Equally important,
the tariff revisions lower our sensitivity to weather.
Weather normalization
Our operations are sensitive to weather conditions.
However, we have steadily lowered the effects that
weather can have on our customers and investors using
a number of methods. Our system had weather
normalization adjustments in rates covering 27 percent
of our utility customer base during 2002. With the
acquisition of Mississippi Valley Gas, that percentage
has increased to 38 percent.
If winter weather is abnormally warm – resulting
in lower than normal income, weather normaliza-
tion increases gas bills. It also reduces winter gas
bills if the weather turns extremely cold, which
usually generates above-normal income. Over time,
these weather normalization adjustments generally
balance out.
As we pursue this initiative in 2003, we will be assessing
new service guarantees, such as more flexible
scheduling to better accommodate customers’ needs.
We will be adding innovative e-commerce features
to our Web site to let customers start and stop service,
pay bills and get help, and we will be working to
better understand our customers’ needs through research.
Tariff adjustments
As a regulated utility, Atmos Energy is dedicated to
controlling costs paid by its customers. Our employees
do an extremely good job in this regard, as shown by
key industry measures like operation and maintenance
expense per customer.
However, some costs are beyond our control. This was
true of the societal costs of bad debts owed by
customers who could not pay for the record-high costs
of natural gas during the winter of 2000-2001.
Our employees worked with these customers and with
agencies that provide energy-assistance funds to
help lower the burden whenever possible. In addition,
we gained special approval in four states to recover
some of the extraordinary bad-debt expenses incurred.
Atmos Energy monitors its actual rates of return
compared with its authorized rates of return. In
jurisdictions where our actual return does not keep
up with our allowed return, we typically evaluate
the need for a rate filing. During 2002, we made
plans to file in a number of jurisdictions during
the next five years. We expect these filings will produce
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