New Mexico PRC Approves Rate Increase in EPE Rate Case

June 8, 2016

On June 8, 2016, the New Mexico Public Regulation Commission (the “NMPRC”) voted to approve an approximate $1.1 million increase in non-fuel base rates in EPE (NYSE: EE) pending New Mexico rate case (Case No. 15-00127-UT).  On May 11, 2015, EPE filed with the NMPRC for an annual increase in non-fuel base rates of approximately $8.6 million or 7.1%.  Subsequently, we reduced our requested increase in non-fuel base rates to approximately $6.4 million.  On February 16, 2016, the Hearing Examiner assigned to the case issued to the NMPRC a Recommended Decision proposing an annual increase in non-fuel base rates of approximately $640 thousand and a return on equity of 9.60%.  The June 8 decision by the NMPRC deviated from the Hearing Examiner’s Recommended Decision by lowering the return on equity to 9.48% and providing a reduction to the rate base offset related to the pension and other post-employment benefit liability.  We currently anticipate new non-fuel base rates in New Mexico will become effective in the third quarter of 2016.

“Although we are disappointed and disagree with the outcome of the New Mexico rate case, in particular the return on equity, we remain committed to providing all of our customers with safe, reliable and cost-effective energy,” said Mary Kipp, CEO. “We will continue to take the necessary steps to ensure that our Company maintains financial strength and stability while still meeting the growing and changing needs of our customers."

As we continue to serve our growing service territory and bring additional generating units into commercial operation, we anticipate filing a new rate case in New Mexico in early 2017.  The next rate case will be necessary to seek recovery of the costs associated with new generating units, transmission and distribution infrastructure, as well as request a fair return on equity.

El Paso Electric is a regional electric utility providing generation, transmission and distribution service to approximately 400,000 retail and wholesale customers in a 10,000 square mile area of the Rio Grande valley in west Texas and southern New Mexico.  El Paso Electric has a net dependable generating capability of 2,098 MW.