El Paso Electric Files 2017 Texas Rate Case

February 13, 2017

Completion of Major Infrastructure Upgrades Basis for New Rate Change Proposal for El Paso Electric Customers in Texas 

TEXAS – Since March 2015, El Paso Electric (EPE) has invested approximately $444.3 million in new generation, distribution and transmission facilities and upgrades to existing local and remote generation infrastructure. Due to the completion of these major capital infrastructure investments, EPE filed a proposal today with the Public Utility Commission of Texas (PUCT), the City of El Paso and the other incorporated cities within its Texas service territory to change rates to reflect these investments in Texas.

New investments since 2015; Final Portion of Power Plant Completed

EPE’s Montana Power Station (MPS) Unit 3 was placed in service in May 2016 and MPS Unit 4 in September 2016, alongside associated transmission and further infrastructure improvements. Overall, El Paso Electric invested approximately $151.3 million in MPS Units 3 and 4 and related facilities and are not currently reflected in rates. MPS was built to keep pace with the continual load growth and to maintain reliable service for customers.  These new units are already enhancing operational flexibility due to their quick-start capabilities and their ability to quickly respond to sudden changes in customers’ energy demand.  The latter is critical as EPE and its customers expand the amount of solar energy connected to the grid locally. As a result of the completion of the Montana Power Station and other upgrades, EPE has filed an increase for non-fuel base revenues of approximately $42.5 million.

“We spend a lot of time planning how to best meet the demands created by the continued growth of our region, and these latest investments will benefit our customers well into the future,” said Mary Kipp, El Paso Electric CEO.

As the region continues to see economic and population growth, EPE must support this growth with reliable and efficient electricity. The investments made are helping to meet the increased demand that is being placed on the power grid. This past summer, EPE experienced a record peak that was 5.5 percent higher than the peak established in 2015 by more than 90 megawatts. Since 2005, customer growth has increased by more than 20 percent and peak demand has grown by more than 37 percent when compared to 2016.

No subsidies proposed for all customers

In this rate case, EPE is proposing to eliminate subsidies between all customer classes by bringing all customers to their full cost of service. A cost of service study is used to determine the costs associated in serving each type of customer class. In addition, EPE is proposing to create a new customer class for private rooftop solar customers in Texas.

“It is important to establish a fair rate structure that reflects the cost to serve each customer class. As technologies progress and our customers’ needs change, we must also evolve to provide programs and rate structures that allow us to provide safe and reliable service at a price that is fair to all our customers,” Kipp added.

Rate case timeline takes up to one year

The rate case process can take anywhere from six months to one year until a final resolution is reached. Intervenors will take part in this process to ensure that their interests and the interests of those they represent are fully represented. The City of El Paso and the incorporated cities in our service territory along with the PUCT will hear EPE’s rate case in a simultaneous process.

Residential average monthly bill impact: $7.24 in the winter / $9.27 in the summer

Under the proposed rates, the average monthly residential bill increase in the summer would be $9.27 and the average monthly residential bill increase in the winter would be $7.24. If approved, rates are anticipated to be implemented in late 2017 or early 2018.

Private Rooftop Solar average monthly bill impact: $14.09 per month

Consistent with its treatment of other rate groups, EPE is proposing to assign Residential DG Service, the new rate group for private solar customers, to its full cost of service. EPE is proposing to implement a new rate structure, including a monthly demand charge, to recover the cost of grid-related services that are currently incorporated in the kilowatt hour charge in a bill. EPE is proposing to recover these costs through other mechanisms like the demand charge and time-of-use charges. Under the proposed rates, a residential customer with private rooftop solar panels will see an average bill increase of $14.09 per month. As of September 2016, approximately 1,800 residential customers in Texas have private rooftop solar. Bill impacts and percentage changes do not reflect credits provided to customers with private solar under Net Energy Metering. EPE has met with several interested parties since the 2015 rate case and conversations will continue throughout this rate case process. EPE is also proposing a new rate structure for small commercial customers with private solar identical to that proposed for residential customers.

Small commercial customers: Proposing a 2.8% rate decrease (Small General Service Rate)

Under this rate proposal, EPE is recommending to decrease rates for customers in this rate class by less than 3%.  This customer class has historically subsidized other customer groups and the cost of service study reflects a reduction to small commercial customers.

Rate 41 (City/County Service) Update Impact

EPE is proposing to keep this rate, currently closed to new customers. Approximately 900 customers, including some schools and city and county facilities, are currently served under Rate 41.  Since this rate class has continued to be subsidized by other customer classes, EPE is eliminating this subsidy by proposing to redesign rates and align these customers with their actual cost of service. EPE’s commercial services department will be working with each customer to analyze costs and impacts in order to determine if the customer’s costs would be better reflected within another rate class, such as General Service.