Press Release

October 3, 2007

Atmos Energy Seeks $6.45 Million Rate Increase from Residential and Commercial Customers

On September 14, 2007, Atmos Energy filed an application with the Kansas Corporation Commission to increase consumer rates. While the Atmos application purports to request increased revenues amounting to $4.98 million annually, a closer reading of the application reveals that Atmos is proposing to increase rates for residential and commercial customers by $6.45 million annually.

Atmos claims that at the proposed rate level, the bill for the average residential customer will increase $46.75 annually—a 19.3% increase over current rates. The bill for the average commercial customer will increase $118 annually, a 14.9% increase over current rates. Rates could increase further if the KCC approves several additional surcharges that Atmos has proposed.

In its application, Atmos claims that increased wages, medical expenses, material and supply costs, as well as increased investment in utility plants are driving the need for additional funds. At current rate levels, the company claims that its overall return on rate base is 6.26%, which, according to the company, is too low to continue to render reasonable, sufficient and efficient service to customers.

Atmos is proposing a Customer Utilization Adjustment (CUA) surcharge to guarantee that the company's profit margins do not fall further. Atmos claims that high natural gas prices have caused consumers to conserve energy and to use less natural gas, cutting into Atmos's profit margins. Under the CUA, if consumers continue to reduce energy consumption, Atmos will put a surcharge on consumer bills to make up for Atmos's revenue losses. Atmos is also seeking to put additional separate surcharges on consumer bills for Gas System Reliability, and for Atmos's proposed Advanced Metering Infrastructure. If approved, these surcharges will increase rates even further.

Atmos's last rate increase was granted in January 2004. Atmos Energy serves 123,750 customers in Kansas. It provides natural gas service to 106 communities in 33 counties, including the Kansas City area communities of Olathe, Bonner Springs, DeSoto, Overland Park, Shawnee, and Lenexa; the southeast Kansas communities of Independence, Coffeyville and Yates Center; Council Grove and Herrington in central Kansas; Anthony and South Haven near Wichita; Ness City in northwest Kansas; and Ulysses and Johnson City in southwest Kansas.

CURB is reviewing the application. The Kansas Corporation Commission must make a decision by the middle of May of 2008. Consumers can access the application at the KCC website under Docket Number 08-ATMG-280-RTS: http://kcc.ks.gov/docket/cal.cgi?docket=08-ATMG-280-RTS.