Investing in Safety from the Ground Up
From pipe replacement projects to state-of-the-art technology and training,
we are investing in safety. Everywhere.
DALLAS (September 2018). The communities we serve are where our customers and our
employees call home, send kids to school, shop, play ballgames, live life. Communities are why
we provide safe, reliable delivery of natural gas.

We all want the same thing. The
safe delivery of natural gas to the
communities where we live, work,
and raise our families.

Our employees wake up every day resolutely
dedicated to our mission to keep people safe.
Natural gas incidents are uncommon but they
do occur, and we believe one is too many.
When someone in our community gets hurt, it is
deeply personal to us. We grieve.

We’re investing in safety from the ground up. Our Mid-Tex system covers over 32,000 miles
of underground pipelines. You could
walk 10,000 steps every day for more
than 17 years before you covered our
entire Mid-Tex system.
Since 2005, we have increased our
rate of spending every year to
modernize this system. Today, our
capital spending is the highest in the
state and is among the highest of our
peers in the nation. Even so, it will
take time to modernize infrastructure
that was put in place over four generations.

We started this modernization in
earnest the year we bought the system
by investing in capital improvements
(including replacing aging pipelines and
installing equipment that improves the
safety and reliability of our system).

 As a regulated utility, Texas law limits our
profits to what we have spent on our system in
the past. And we are reinvesting profits back
into the system. Since 2005, we have spent
almost 4 times more  $3 billion  than our
profits earned on our system. And, over the next
five years, we plan to invest at least $3 billion
more.

Capital Spending and Profits
(in $MMs)

CapEx

Profits

$3,000

Current customer rates cover only about 50%60% of our capital spending needs. We sell
$800
stock to investors and issue bonds to creditors to
cover the rest. As an investor-owned utility, we
can only attract these necessary resources if we
are financially healthy and operate in a regulatory environment that permits a sustained level of
capital investment in pipe replacement. Even so, we limit the dividends we pay to investors so
we can spend as much capital as possible on our system.
We work every day to keep the public, our employees, and our system safe.
Our damage prevention program proactively provides information to contractors or excavators
so that they can take steps to avoid damaging pipes and causing a release of natural gas.
We properly odorize the natural gas so that people can readily detect the presence of natural
gas and immediately leave the area.
We monitor our system for leaks. Day in and day out, we survey and monitor our natural gas
system for leaks using the most advanced technology available. When a leak is detected, it is
graded by trained technicians using state and federal guidelines to determine its risk, which
dictates its timeline for repair. The more significant the leak, the sooner we repair it. We take
immediate action to eliminate hazardous leaks.
We maintain close relationships with first responders and operate a 24-hour emergency
hotline so anyone who suspects a leak can reach us quickly.
We opened our industry leading training center in 2011 where employees received more than
65,000 hours of hands-on technical training in 2017.

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 Why not replace all the oldest pipe first? Like roads, bridges, and other infrastructure, natural
gas infrastructure ultimately must be replaced. Although we’d like to replace all older pipelines
immediately, just like with replacing older roads and bridges, replacing pipe takes time and
resources. That’s why we determine a schedule for replacement by using a risk-based
prioritization model approved by the Railroad Commission of Texas (RRC) that considers many
factors, including the pipe’s age, location, material, leak history, environmental factors and more.
Our experience confirms that the age of the pipe involved is not the greatest threat to our system.
The greatest threat to our system is third party damage. Approximately 70% of Mid-Tex’s
hazardous leaks are caused by excavation damage. Nearly 75% of
our reported incidents, including some serious incidents involving
fatalities, involved third party damage or other outside forces. That’s
why we educate contractors, landscapers, and homeowners to call
811 before digging starts as required by law.
Excavators must also notify us if they damage our line, even if the damage does not result in
an immediately obvious leak. We have reported serious incidents where people were injured or
killed because a third party damaged our system but didn’t disclose it.
We are accountable to state and federal
regulators. If gas released from our pipeline (not
a customer-owned gas line) may have fueled an
incident that results in a death, hospitalization,
property damage of $50,000 or more, or
significant gas loss, we file reports with the
Department of Transportation’s Pipeline and
Hazardous Materials Safety Administration
(PHMSA) and the RRC. The RRC will conduct
an investigation of reportable incidents, issue
findings, and provide a Pipeline Safety
Evaluation Report that may include alleged
violations.
These investigations and reports are publicly
available on the RRC’s website.

RRC Policy. “Improved safety” is the
“desired outcome of any enforcement
action. Encouraging operators to take
appropriate voluntary corrective action and
future protect actions once a violation has
occurred is an affective component of the
enforcement process. Deterrence of
violations through penalty assessments is
also a necessary and effective component of
the enforcement process. A rule-based
penalty guideline to evaluate and rank
pipeline safety-related violations is consent
with the central goal of the Commission’s
enforcement efforts to promote
compliance.”
16 Texas Administrative Code § 8.135

The RRC’s enforcement action policy is to
improve safety and promote compliance. In these investigations, we have the chance to show
that we complied with the safety regulations or that the incident was beyond our control. For

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 matters within our control, we take appropriate voluntary corrective action. The RRC’s Safety
Division reviews the response and any correction plan and determines whether the response
resolves the allegations. If not resolved, the matter may be referred to the RRC’s Enforcement
Section. As in most judicial and administrative proceedings, cases typically settle, but, if not, it
will proceed to a hearing for resolution.
Nearly every day of the year, the RRC is present on our system to ensure compliance with
federal and state pipeline safety standards. The RRC not only enforces federal regulations but
has established intrastate pipeline safety rules that are among the most stringent in the country.
From 2011 to 2017, the RRC conducted nearly 1,100 safety audits on our Mid-Tex system. Each
audit includes a handful of auditors reviewing reams of information and making field inspections
over multiple days or weeks to hold us accountable to following the rules.
In nearly half of those audits, the RRC’s extensive document review and field inspections
resulted in a finding of no alleged violations of safety regulations.
Over that time period, the RRC has increased the frequency of its audits and thus the scrutiny of
our system, and yet the number of audits resulting in no findings of alleged violations has
increased significantly.

Audit Summary
250

Number of Audits

200
150
100
50
0

2011

2012
Total Audits

2013

2014

Audits with Violations

4

2015

2016
No Violations

2017

 In those 1,100 safety audits, records show that the RRC’s auditors identified approximately
1,700 potential compliance issues, or an average of about 1.6 alleged violations per audit. As
the benefits of our extensive training and infrastructure replacement programs have materialized,
that average dropped from about 3 per audit in 2013 to 0.6 per audit in 2017.
By category, the alleged violations include atmospheric corrosion, cathodic protection, leaks,
right-of-way, and miscellaneous matters. Nearly half of the alleged violations fall into the
miscellaneous category that captures items such as records management or documentation issues
and maintenance issues like meters identified as being in need of painting or repositioning,
vegetation growth around pipes, etc. About 15% relate to maintenance of above-ground
equipment to prevent corrosion.
Only about seven percent of those alleged violations were related to leaks. And the number of
alleged violations related to leaks has fallen consistently over that time period, from 37 in
2011 to only 3 in 2017.
The RRC’s rigorous enforcement process improves safety by ensuring the compliance of our
procedures, practices, and training and thus making us better every day at safely operating our
system.
Our experience confirms that our
communities are safer when customers
know how to safely use the natural gas we
deliver to their homes. That’s why we’re
continually educating the public about how
to detect leaks and prevent accidents. We provide information to the public, emergency
responders, excavators, and customers about
the hazards of unintentional releases of natural
gas. And, we use our state-of-the-art training
facility located in Plano, Texas to teach natural
gas safety to community officials, fire
departments and other first responders.

Partner with us.

Do not assume someone else will report the
leak. We want you to call 911 and us any time
you think that you might detect a gas leak 
we’ll respond with the same urgency every time
at no cost to you. We’d rather get a thousand
calls where there is no presence of a gas leak than to miss the one chance to eliminate a
hazardous condition when you’re not sure what you smell, see, or hear. Be safe. Act fast. Call.

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 Everyone should use all of their senses—smell, listen, or look—to check for signs of a leak. If
you ever smell gas or otherwise detects leaking natural gas, leave the area immediately and call
911 and Atmos Energy at 1-866-322-8667.

About Atmos Energy
Atmos Energy Corporation, headquartered in Dallas, is the country's largest, fully-regulated,
natural-gas-only distributor, serving over three million natural gas distribution customers in over
1,400 communities in eight states. Atmos Energy also manages company-owned natural gas
pipeline and storage assets, including one of the largest intrastate natural gas pipeline systems in
Texas.

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