El Paso Electric (NYSE:EE):
Overview
- For the fourth quarter of 2011, EE
reported net income of $5.5 million, or $0.14 basic and $0.13
diluted earnings per share, respectively. In the fourth quarter of
2010, EE reported net income of $7.5 million, or $0.18 and $0.17
basic and diluted earnings per share, respectively.
- For the twelve months ended December
31, 2011, EE reported net income of $103.5 million, or $2.49 and
$2.48 basic and diluted earnings per share, respectively. Net
income for the twelve months ended December 31, 2010 was $100.6
million, or $2.32 and $2.31 basic and diluted earnings per share,
respectively and income before extraordinary item for the same
period was $90.3 million, or $2.08 and $2.07 basic and diluted
earnings per share, respectively.
“We were pleased with our earnings for the twelve months ended
December 31, 2011. Revenues from retail customers increased 6.3%
primarily resulting from the hotter than normal summer weather our
service territory experienced this year and the continued growth in
the number of customers served,” said David W. Stevens, Chief
Executive Officer. “Fourth quarter 2011 earnings declined relative
to fourth quarter 2010 earnings largely as the result of increased
maintenance at our local generating plants and a reduction of
capitalized carrying charges due to placing Newman 5, Phase II in
service earlier in the year.”
Earnings Summary
The table and explanations below present the major factors
affecting 2011 net income relative to 2010 income before the
extraordinary item in 2010.
Quarter Ended Twelve Months Ended
Pre-TaxEffect
After-TaxIncome
BasicEPS
Pre-TaxEffect
After-TaxIncome
BasicEPS
December 31, 2010 $ 7,466 $ 0.18 $ 90,317 $ 2.08 Changes in: Retail
non-fuel base revenue $ 2,120 1,336 0.03 $ 33,647 21,198 0.51
Transmission revenues 354
223
− 5,075 3,197 0.08 Operations and maintenance at
fossilfuel generating plants (3,652 ) (2,301 ) (0.06 ) (5,913 )
(3,725 ) (0.09 ) AFUDC (2,460 ) (2,087 ) (0.05 ) (4,478 ) (3,804 )
(0.09 ) Customer care expense (1,545 ) (973 ) (0.02 ) (3,284 )
(2,069 ) (0.05 )
Transmission and distribution
operationsand maintenance expense
(416 ) (262 ) (0.01 ) (3,117 ) (1,964 ) (0.05 ) Retained off-system
sales margins (158 ) (100 )
− (6,247 ) (3,935 ) (0.10 )
Elimination of Medicare Part D taxbenefit
− −
− − 4,787 0.11 Other
2,151
0.06 (463 )
(0.01 ) Total changes
(2,013 )
(0.05 )
13,222
0.31 December 31, 2011
$
5,453 0.13
$ 103,539
2.39
Change in weighted average
number of shares
0.01
0.10
December 31, 2011
$ 0.14
$ 2.49
Fourth Quarter 2011
Earnings for the quarter ended December 31, 2011 when compared
to the same period last year were positively affected by:
- Increased retail non-fuel base revenues
due to a 2.5% increase in kWh sales to retail customers reflecting
increased sales primarily to our large commercial and industrial
customers as compared to the same period in 2010 and 1.3% growth in
the average number of retail customers served.
Earnings for the quarter ended December 31, 2011 when compared
to the same period last year was negatively affected by:
- Increased planned maintenance outages
at our local fossil fuel generating plants and freeze protection
upgrades.
- Decreased allowance for funds used
during construction (“AFUDC”) primarily due to lower balances of
construction work in progress subject to AFUDC.
- Increased customer care expense
primarily due to an increase in uncollectible customer accounts and
increased costs for customer-related activities.
Year to Date
Earnings for the twelve months ended December 31, 2011, when
compared to the same period last year, were positively affected
by:
- Increased retail non-fuel base revenues
due to a 3.1% increase in kWh sales to retail customers reflecting
hotter summer weather when we have higher non-fuel base summer
rates and 1.4% growth in the average number of retail customers
served in 2011 as compared to the same period in 2010. During the
twelve months ended December 31, 2011, cooling degree days were 14%
above the same period in 2010 and 30% above the 30-year
average.
- Lower income taxes in 2011 due to a
one-time charge to income tax expense in 2010 to recognize a change
in tax law enacted in the Patient Protection and Affordable Care
Act to eliminate the tax benefit related to the Medicare Part D
subsidies.
- A decrease in the weighted average
number of shares outstanding as a result of our common stock
repurchase program resulting in an increase in basic earnings per
share of $0.10.
- Increased transmission revenues
primarily due to a settlement agreement with Tucson Electric Power
Company resolving a transmission dispute that resulted in one-time
income of $3.9 million, pre-tax and annual revenue of $1.1 million
per year.
Earnings for the twelve months ended December 31, 2011, when
compared to the same period last year were negatively affected
by:
- Decreased off-system sales margins
primarily due to lower average market prices for power and an
increase in sharing of off-system sales margins with customers from
25% to 90% effective in July 2010.
- Decreased AFUDC primarily due to lower
balances of construction work in progress subject to AFUDC.
- Increased maintenance at our local
gas-fired generating plants largely as a result of weather-related
damage during severe winter weather in February 2011 and freeze
protection upgrades.
- Increased customer care expense
primarily due to increased costs for customer-related activities,
an increase in uncollectible customer accounts, and an increase in
payroll costs.
- Increased transmission and distribution
operations and maintenance expense primarily due to increased
wheeling expense, a reliability study for the North American
Electric Reliability Corporation, and an increase in payroll
costs.
Retail Non-fuel Base Revenues
Retail non-fuel base revenues increased by $2.1 million,
pre-tax, or 1.8% in the fourth quarter of 2011, compared to the
same period in 2010 primarily due to: (i) a $0.8 million increase
in revenues from large commercial and industrial customers
reflecting a 6.8% increase in kWh sales; (ii) a $0.8 million
increase in revenues from small commercial and industrial customers
reflecting a 4.0% increase in the average number of customers
served; (iii) a $0.5 million increase in revenues from residential
customers reflecting a 1.1% growth in the average number of
customers served. Revenues from other public authorities remained
relatively unchanged in the fourth quarter of 2011 compared to the
same period last year. Non-fuel base revenues and kilowatt-hour
sales are provided by customer class on page 10 of the Release.
For the twelve months ended December 31, 2011, retail non-fuel
base revenues increased by $33.6 million, pre-tax, or 6.3%
compared to the same period in 2010 primarily due to a 3.1%
increase in kWh sales to retail customers, reflecting hotter summer
weather when we have higher non-fuel base summer rates, and 1.4%
growth in the average number of retail customers served. During the
twelve months ended December 31, 2011, cooling degree days were 14%
above the same period in 2010 and 30% above the 30-year average.
KWh sales to residential customers and small commercial and
industrial customers increased 5.0% and 2.5%, respectively, during
the twelve months ended December 31, 2011, compared to the same
period last year. Sales to other public authorities increased due
to increased sales to Fort Bliss at higher non-fuel base rates.
Non-fuel base revenues and kilowatt-hour sales are provided by
customer class on page 12 of the Release.
Off-system Sales
We make off-system sales in the wholesale power markets when
competitively priced excess power is available from our generating
plants and purchased power contracts. Off-system sales margins were
negatively affected by lower costs of natural gas that impact the
average market prices in the wholesale power markets. Off-system
sales margins were also negatively impacted by power purchases
required for system reliability during extremely cold weather in
February 2011. The Company shared 25% of off-system sales margins
with customers and retained 75% of off-system sales margins through
June 30, 2010 pursuant to rate agreements in prior years. Effective
July 1, 2010, we share 90% of off-system sales margins with
customers and retain 10% of off-system sales margins. Retained
margins from off-system sales decreased approximately $0.2 million
and $6.2 million for the three and twelve months ended December 31,
2011, respectively, compared to the corresponding periods in
2010.
Palo Verde License Extension
On April 21, 2011, the Nuclear Regulatory Commission granted
extensions in the operating licenses for all three units at Palo
Verde. The operating licenses for Units 1, 2 and 3 will now expire
in 2045, 2046, and 2047, respectively. For the second, third and
fourth quarters of 2011 combined, the extension of the operating
licenses reduced depreciation and amortization expense by
approximately $8.2 million and reduced the accretion expense on the
Palo Verde asset retirement obligation by approximately $3.1
million.
Rate Matters
We filed a request with the Public Utility Commission of Texas
(the “PUCT”) (Docket No. 40094), the City of El Paso, and other
Texas cities on February 1, 2012 for a $26.3 million increase in
rates charged to customers in Texas. The rate filing was made in
response to a resolution adopted by the El Paso City Council
requiring us to show cause why our base rates for customers in El
Paso city limits should not be reduced. The City of El Paso has
until August 4, 2012 to make a determination regarding our base
rates in the city. The rate filing used a historical test year
ended September 30, 2011, adjusted for known and measurable items,
and a return on equity of 10.6%. The filing at the PUCT also
includes a request to reconcile $356.5 million of fuel expense for
the period July 1, 2009 through September 30, 2011.
On November 15, 2011, the El Paso City Council adopted a
resolution that established current rates as temporary rates for
our customers residing within the city limits of El Paso. Temporary
rates will be effective from November 15, 2011 until a final
determination in the rate case is rendered by the PUCT.
While cities in Texas have jurisdiction over rates within their
city limits, the PUCT has appellate authority over city rate
decisions on a “de novo” basis. Therefore, the ultimate authority
to set our Texas electric rates is vested in the PUCT. The Company
cannot predict the outcome of this proceeding. If the rate case
results in the implementation of lower rates, then the resulting
lower rates would have a negative impact on our revenues, net
income, and cash from operations.
Capital and Liquidity
We continue to maintain a strong capital structure to ensure
access to capital markets at reasonable rates. At December 31,
2011, common stock equity represented 46.3% of our capitalization
(common stock equity, long-term debt and the current maturities of
long-term debt, and short-term borrowings under the revolving
credit facility). At December 31, 2011, we had a balance of
$8.2 million in cash and cash equivalents.
Cash flows from operations for the twelve months ended December
31, 2011 were $251.5 million compared to $239.4 million in the
corresponding period in 2010. The increase in cash flows from
operations reflects the increase in net income before a non-cash
extraordinary gain in 2010. Cash flows were also impacted by an
increase in deferred income taxes and an increase in accounts
payable, offset by the timing of collection of fuel revenues to
recover actual fuel expenses in 2011 compared to 2010. The
difference between fuel revenues collected and fuel expense
incurred is deferred to be either refunded (over-recoveries) or
surcharged (under-recoveries) to customers in the future. During
the twelve months ended December 31, 2011, the Company had an
under-recovery of fuel costs, net of refunds, of $26.0 million as
compared to an over-recovery, net of refunds, of $1.0 million
during the twelve months ended December 31, 2010. At December 31,
2011, we had a net fuel under-recovery balance of $7.0 million,
including an under-recovery balance of $9.1 million in Texas
partially offset by an over-recovery balance of $2.1 million in New
Mexico.
During the twelve months ended December 31, 2011, our primary
capital requirements were for the construction and purchase of
electric utility plant, the repurchase of common stock, purchases
of nuclear fuel, and payment of common stock dividends. Capital
requirements for new electric plant were $178.0 million for
the twelve months ended December 31, 2011 and
$170.0 million for the twelve months ended December 31,
2010.
On March 21, 2011, the Board of Directors authorized repurchases
of up to 2.5 million additional shares of the Company’s outstanding
common stock (the “2011 Plan”). During the twelve months ended
December 31, 2011, we repurchased 2,782,455 shares of common
stock in the open market at an aggregate cost of $86.5 million,
including 280,389 shares repurchased in the fourth quarter at an
aggregate cost of $9.2 million as authorized under both our
previously authorized plan and under the 2011 Plan. As of December
31, 2011, 393,816 shares remain available for repurchase under the
2011 Plan. The Company may repurchase shares in the open market
from time to time.
We maintain a $200 million revolving credit facility for working
capital and general corporate purposes and the financing of nuclear
fuel through the Rio Grande Resources Trust (“RGRT”). RGRT is the
trust through which we finance our portion of nuclear fuel for Palo
Verde and is consolidated in the Company’s financial statements. In
November 2011, we refinanced and extended our $200 million
revolving credit facility, which includes an option, subject to
lenders’ approval, to expand the size to $300 million. The amended
facility reduces our borrowing costs and extends the maturity from
September 2014 to September 2016. The total amount borrowed for
nuclear fuel by RGRT was $123.4 million at December 31, 2011, of
which $13.4 million had been borrowed under the revolving credit
facility and $110 million was borrowed through senior notes. At
December 31, 2010, the total amount borrowed for nuclear fuel by
RGRT was $114.7 million of which $4.7 million was borrowed under
the revolving credit facility and $110 million was borrowed through
senior notes. Interest costs on borrowings to finance nuclear fuel
are accumulated by RGRT and charged to us as fuel is consumed and
recovered from customers through fuel recovery charges. At December
31, 2011, $20.0 million was outstanding under the revolving credit
facility for working capital and general corporate purposes.
On December 30, 2011, we paid $8.8 million of quarterly
dividends to shareholders. We have paid a total of $27.2 million in
cash dividends during the twelve months ended December 31, 2011. On
January 26, 2012, our Board of Directors declared a quarterly cash
dividend of $0.22 per share payable on March 30, 2012 to
shareholders of record on March 15, 2012. At the current payout
rate, we would expect to pay total cash dividends of approximately
$35.2 million during 2012. The Board of Directors plans to review
the Company’s dividend policy annually, in conjunction with the
annual shareholders meeting held in the second quarter of each
year. Our current expectation is that our payout ratio will trend
upward from its current level, with a payout ratio of approximately
45% being the anticipated target for 2012.
We believe we have adequate liquidity through our current cash
balances, cash from operations, and our revolving credit facility
to meet all of our anticipated cash requirements for the next
twelve months. In addition, we anticipate issuing long-term debt in
the capital markets to finance capital requirements in 2012. In
October 2011, we received approval from the New Mexico Public
Regulation Commission and the Federal Energy Regulatory Commission
to incrementally issue up to $300 million of long-term debt as and
when needed. Obtaining the ability to issue up to $300 million of
new long-term debt, from time to time, provides us with the
flexibility to access the debt capital markets when needed and when
conditions are favorable.
2012 Earnings Guidance
We are providing earnings guidance for 2012 within a range of
$2.15 to $2.55 per basic share excluding any impacts of the Texas
rate case filed on February 1, 2012.
Conference Call
A conference call to discuss fourth quarter 2011 earnings is
scheduled for 10:30 a.m. Eastern Time, February 22, 2012. The
dial-in number is 800-598-5161 with a conference ID of 6676054. The
conference leader will be Steven P. Busser, Vice President –
Treasurer of EE. A replay will run through March 7, 2012 with a
dial-in number of 888-203-1112 and a conference ID of 6676054. The
conference call and presentation slides will be webcast live on
EE’s website found at http://www.epelectric.com. A replay of the
webcast will be available shortly after the call.
Safe Harbor
This news release includes statements that may constitute
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
This information may involve risks and uncertainties that could
cause actual results to differ materially from such forward-looking
statements. Factors that could cause or contribute to such
differences include, but are not limited to: (i) our rates in Texas
following the rate case filed on February 1, 2012 pursuant to the
El Paso City Council’s resolution ordering EE to show cause why our
base rates for El Paso customers should not be lower; (ii)
increased prices for fuel and purchased power and the possibility
that regulators may not permit EE to pass through all such
increased costs to customers or to recover previously incurred fuel
costs in rates; (iii) recovery of capital investments and
operating costs through rates in Texas and New Mexico; (iv)
uncertainties and instability in the general economy and the
resulting impact on EE’s sales and profitability; (v) unanticipated
increased costs associated with scheduled and unscheduled outages;
(vi) the size of our construction program and our ability to
complete construction on budget and on time; (vii) costs at
Palo Verde; (viii) deregulation and competition in the
electric utility industry; (ix) possible increased costs of
compliance with environmental or other laws, regulations and
policies; (x) possible income tax and interest payments as a
result of audit adjustments proposed by the IRS;
(xi) uncertainties and instability in the financial markets
and the resulting impact on EE's ability to access the capital and
credit markets; and (xii) other factors detailed by EE in its
public filings with the Securities and Exchange Commission. EE’s
filings are available from the Securities and Exchange Commission
or may be obtained through EE’s website, http://www.epelectric.com.
Any such forward-looking statement is qualified by reference to
these risks and factors. EE cautions that these risks and factors
are not exclusive. EE does not undertake to update any
forward-looking statement that may be made from time to time by or
on behalf of EE except as required by law.
El Paso Electric Company and Subsidiary Consolidated
Statements of Operations Quarter Ended December 31, 2011 and
2010 (In thousands except for per share data)
(Unaudited)
2011 2010 Variance Operating revenues, net of energy
expenses: Base revenues $ 119,486 $ 117,389 $ 2,097
(a)
Off-system sales margins, net of sharing 137 295 (158 ) Deregulated
Palo Verde Unit 3 revenues 3,176 2,863 313 Other 7,935
5,819 2,116
Operating Revenues Net of
Energy Expenses 130,734 126,366 4,368
Other operating expenses: Other operations and maintenance
52,094 47,458 4,636 Palo Verde operations and maintenance 29,660
30,798 (1,138 ) Taxes other than income taxes 12,430 13,451 (1,021
) Other income (deductions) 446 1,065 (619 )
Earnings Before Interest, Taxes, Depreciation and
Amortization 36,996 35,724 1,272
(b)
Depreciation and amortization 20,556 20,875 (319 ) Interest
on long-term debt 13,520 13,448 72 AFUDC and capitalized interest
4,044 6,396 (2,352 ) Other interest expense 212 141
71
Income Before Income Taxes 6,752
7,656 (904 ) Income tax expense
1,299 190 1,109
Net Income
$ 5,453 $ 7,466 $ (2,013
) Basic Earnings per Share $
0.14 $ 0.18 $ (0.04 )
Diluted Earnings per Share $ 0.13
$ 0.17 $ (0.04 )
Dividends declared per share of common stock $
0.22 $ - $ 0.22
Weighted average number of shares outstanding 39,957
42,415 (2,458 ) Weighted average number of shares and
dilutive potential shares outstanding 40,210 42,669
(2,459 ) (a) Base revenues exclude fuel
recovered through New Mexico base rates of $16.3 million and $16.0
million, respectively. (b) EBITDA is a non-GAAP financial measure
and is not a substitute for net income or other measures of
financial performance in accordance with GAAP.
El Paso
Electric Company and Subsidiary Consolidated Statements of
Operations Twelve Months Ended December 31, 2011 and
2010 (In thousands except for per share data)
(Unaudited)
2011 2010 Variance Operating revenues, net of energy
expenses: Base revenues $ 572,078 $ 538,252 $ 33,826 (a) Off-system
sales margins, net of sharing (560 ) 5,687 (6,247 ) Deregulated
Palo Verde Unit 3 revenues 14,820 16,103 (1,283 ) Other
33,019 25,464 7,555 (b)
Operating
Revenues Net of Energy Expenses 619,357 585,506
33,851 Other operating expenses: Other operations and
maintenance 192,155 180,522 11,633 Palo Verde operations and
maintenance 99,507 100,522 (1,015 ) Taxes other than income taxes
55,561 54,489 1,072 Other income (deductions) 3,362
3,477 (115 )
Earnings Before Interest, Taxes,
Depreciation and Amortization 275,496
253,450 22,046 (c) Depreciation and
amortization 81,331 81,011 320 Interest on long-term debt 54,115
50,826 3,289 AFUDC and capitalized interest 18,186 19,974 (1,788 )
Other interest expense 989 254 735
Income Before Income Taxes and Extraordinary Item
157,247 141,333 15,914 Income tax
expense 53,708 51,016 2,692 (d)
Income Before Extraordinary Item 103,539 90,317
13,222 Extraordinary gain related to Texas regulatory
assets, net of income tax expense of $5,769
-
10,286 (10,286 )
Net Income $
103,539 $ 100,603 $ 2,936
Basic Earnings per Share: Income before
extraordinary item
$ 2.49 $ 2.08
$ 0.41 Extraordinary gain related to Texas regulatory
assets, net of tax
- 0.24
(0.24 ) Net Income
$ 2.49
$ 2.32 $ 0.17 Diluted
Earnings per Share: Income before extraordinary item
$
2.48 $ 2.07 $ 0.41 Extraordinary
gain related to Texas regulatory assets, net of tax
-
0.24 (0.24 ) Net Income
$ 2.48 $ 2.31 $
0.17 Dividends declared per share of common
stock $ 0.66 $ - $
0.66 Weighted average number of shares
outstanding 41,350 43,130 (1,780 )
Weighted average number of shares and dilutive potential
shares outstanding 41,587 43,294 (1,707
) (a) Base revenues exclude fuel recovered through New
Mexico base rates of $73.5 million and $71.9 million, respectively.
(b) 2011 includes a one-time $3.9 million settlement of a
transmission dispute with Tucson Electric Power Company. (c) EBITDA
is a non-GAAP financial measure and is not a substitute for net
income or other measures of financial performance in accordance
with GAAP. (d) Income tax expense for the twelve months ended
December 31, 2010 includes a charge of $4.8 million related to the
Patient Protection and Affordable Care Act which eliminated the tax
benefit associated with the Medicare Part D subsidies beginning in
2013.
El Paso Electric Company and Subsidiary
Cash Flow Summary Twelve Months Ended December 31, 2011
and 2010 (In thousands and Unaudited)
2011 2010 Cash flows from
operating activities: Net income $ 103,539 $ 100,603
Adjustments to reconcile net income to net cash provided by
operations: Depreciation and amortization of electric plant in
service 81,331 81,011 Extraordinary gain on Texas regulatory
assets, net of tax - (10,286 ) Deferred income taxes, net 45,688
27,456 Other 49,768 36,359 Change in working capital items: Net
recovery (deferral) of fuel revenues (26,001 ) 958 Accounts
receivable (4,663 ) (1,303 ) Accounts payable 4,401 (9,634 ) Other
(2,546 ) 14,186
Net cash provided by
operating activities 251,517
239,350 Cash flows from investing
activities: Cash additions to utility property, plant and
equipment (178,041 ) (169,966 ) Cash additions to nuclear fuel
(39,551 ) (34,277 ) Decommissioning trust funds (12,515 ) (11,536 )
Other (7,298 ) (8,872 )
Net cash used for
investing activities (237,405 )
(224,651 ) Cash flows from financing
activities: Repurchase of common stock (86,508 ) (33,726 )
Dividends paid (27,223 ) - Borrowings under the revolving credit
facility 28,675 (102,294 ) Proceeds from issuance of long-term
private placement notes - 110,000 Other (32 ) (1,285
)
Net cash used for financing activities
(85,088 ) (27,305 )
Net decrease in cash and cash equivalents (70,976
) (12,606 ) Cash and cash
equivalents at beginning of period 79,184
91,790 Cash and cash equivalents at
end of period $ 8,208 $
79,184 El Paso Electric Company and
Subsidiary Quarter Ended December 31, 2011 and 2010
Sales and Revenues Statistics
Increase (Decrease) 2011
2010 Amount Percentage
MWh
sales:
Retail: Residential 555,143 550,164 4,979 0.9 % Commercial and
industrial, small 536,137 533,313 2,824 0.5 % Commercial and
industrial, large 278,491 260,860 17,631 6.8 % Sales to public
authorities 378,968 362,167
16,801 4.6 % Total retail sales 1,748,739
1,706,504 42,235 2.5 % Wholesale: Sales
for resale 10,611 10,103 508 5.0 % Off-system sales 524,838
658,966 (134,128 ) (20.4 %) Total
wholesale sales 535,449 669,069
(133,620 ) (20.0 %) Total MWh sales 2,284,188
2,375,573 (91,385 ) (3.8 %)
Operating
revenues (in thousands):
Non-fuel base revenues: Retail: Residential $ 47,710 $ 47,216 $ 494
1.0 % Commercial and industrial, small 40,890 40,096 794 2.0 %
Commercial and industrial, large 10,704 9,897 807 8.2 % Sales to
public authorities 19,782 19,757
25 0.1 % Total retail non-fuel base revenues 119,086 116,966
2,120 1.8 % Wholesale:
Sales for resale
400 423 (23 ) (5.4 %) Total
non-fuel base revenues 119,486 117,389 2,097 1.8 % Fuel
revenues (a):
Recovered from customers during the period
(b)
35,959 34,707 1,252 3.6 % Under (over) collection of fuel (3,607 )
(13,613 ) 10,006 (73.5 %) New Mexico fuel in base rates
16,303 15,982 321 2.0 % Total
fuel revenues 48,655 37,076 11,579 31.2 % Off-system sales:
Fuel cost 13,959 17,874 (3,915 ) (21.9 %) Shared margins 1,161
2,514 (1,353 ) (53.8 %) Retained margins 137
295 (158 ) (53.6 %) Total off-system sales 15,257
20,683 (5,426 ) (26.2 %) Other 8,265
6,196 2,069 33.4 % Total operating revenues $
191,663 $ 181,344 $ 10,319 5.7 %
Average number of
retail customers:
Residential 337,498 333,844 3,654 1.1 % Commercial and industrial,
small 38,154 36,704 1,450 4.0 % Commercial and industrial, large 50
49 1 2.0 % Sales to public authorities 4,477
4,720 (243 ) (5.1 %) Total 380,179
375,317 4,862 1.3 %
Number of retail
customers (end of period):
Residential 337,659 334,729 2,930 0.9 % Commercial and industrial,
small 37,942 37,202 740 2.0 % Commercial and industrial, large 49
50 (1 ) (2.0 %) Sales to public authorities 4,596
4,841 (245 ) (5.1 %) Total 380,246
376,822 3,424 0.9 %
Weather
statistics
30 Yr Average
Heating degree days 1,097 795 1,049 Cooling degree days 138 131 93
(a)
Includes deregulated Palo Verde Unit 3
revenues for the New Mexico jurisdiction of $3.2 million and $2.9
million, respectively.
(b) Excludes $11.5 million refund in 2010 related to prior periods
Texas deferred fuel revenues.
El Paso Electric Company and Subsidiary Quarter Ended
December 31, 2011 and 2010 Generation and Purchased Power
Statistics
Increase (Decrease)
2011
2010 Amount Percentage Generation and
purchased power (MWh): Palo Verde 1,107,404 1,177,149 (69,745 )
(5.9 %) Four Corners 161,325 188,904 (27,579 ) (14.6 %) Gas plants
682,962 613,654 69,308 11.3 % Total generation
1,951,691 1,979,707 (28,016 ) (1.4 %) Purchased power 435,515
496,248 (60,733 ) (12.2 %) Total available energy
2,387,206 2,475,955 (88,749 ) (3.6 %) Line losses and Company use
103,018 100,382 2,636 2.6 % Total MWh sold
2,284,188 2,375,573 (91,385 ) (3.8 %) Palo
Verde capacity factor 80.6 % 85.8 % (5.2 %) Four Corners capacity
factor 71.7 % 83.3 % (11.6 %)
El Paso Electric
Company and Subsidiary Twelve Months Ended December 31, 2011
and 2010 Sales and Revenues Statistics
Increase (Decrease)
2011 2010 Amount Percentage
MWh
sales:
Retail: Residential 2,633,390 2,508,834 124,556 5.0 % Commercial
and industrial, small 2,352,218 2,295,537 56,681 2.5 % Commercial
and industrial, large 1,096,040 1,087,413 8,627 0.8 % Sales to
public authorities 1,579,565 1,542,389
37,176 2.4 % Total retail sales 7,661,213
7,434,173 227,040 3.1 % Wholesale: Sales for
resale 62,656 53,637 9,019 16.8 % Off-system sales 2,687,631
2,822,732 (135,101 ) (4.8 %) Total wholesale
sales 2,750,287 2,876,369 (126,082 )
(4.4 %) Total MWh sales 10,411,500 10,310,542
100,958 1.0 %
Operating
revenues (in thousands):
Non-fuel base revenues: Retail: Residential $ 234,086 $ 217,615 $
16,471 7.6 % Commercial and industrial, small 196,093 188,390 7,703
4.1 % Commercial and industrial, large 45,407 43,844 1,563 3.6 %
Sales to public authorities 94,370 86,460
7,910 9.1 % Total retail non-fuel base revenues
569,956 536,309 33,647 6.3 % Wholesale: Sales for resale
2,122 1,943 179 9.2 % Total non-fuel
base revenues 572,078 538,252 33,826 6.3 % Fuel revenues
(a):
Recovered from customers during the period
(b)
145,130 170,588 (25,458 ) (14.9 %) Under (over) collection of fuel
13,917 (35,408 ) 49,325 - New Mexico fuel in base rates 73,454
71,876 1,578 2.2 % Total fuel revenues
232,501 207,056 25,445 12.3 % Off-system sales: Fuel cost
74,736 93,516 (18,780 ) (20.1 %) Shared margins 3,883 6,114 (2,231
) (36.5 %) Retained margins (560 ) 5,687
(6,247 ) - Total off-system sales 78,059 105,317 (27,258 )
(25.9 %) Other (c) 35,375 26,626
8,749 32.9 % Total operating revenues $ 918,013 $
877,251 $ 40,762 4.6 %
Average number of
retail customers:
Residential 336,219 331,869 4,350 1.3 % Commercial and industrial,
small 37,652 36,536 1,116 3.1 % Commercial and industrial, large 50
49 1 2.0 % Sales to public authorities 4,626
4,701 (75 ) (1.6 %) Total 378,547
373,155 5,392 1.4 %
Number of retail
customers (end of period):
Residential 337,659 334,729 2,930 0.9 % Commercial and industrial,
small 37,942 37,202 740 2.0 % Commercial and industrial, large 49
50 (1 ) (2.0 %) Sales to public authorities 4,596
4,841 (245 ) (5.1 %) Total 380,246
376,822 3,424 0.9 %
Weather
statistics
30 Yr Average Heating degree days 2,402 2,273
2,426 Cooling degree days 3,135 2,738 2,410 (a)
Includes deregulated Palo Verde Unit 3
revenues for the New Mexico jurisdiction of $14.8 million and $16.1
million, respectively.
(b)
Excludes $12.0 million and $34.8 million
of refunds in 2011 and 2010, respectively, related to prior periods
Texas deferred fuel revenues.
(c) 2011 includes a one-time $3.9 million settlement of a
transmission dispute with Tucson Electric Power Company.
El Paso Electric Company &
Subsidiary Twelve Months Ended December 31, 2011 and
2010 Generation and Purchased Power Statistics
Increase (Decrease) 2011
2010 Amount Percentage Generation and
purchased power (MWh): Palo Verde 4,942,055 4,925,313 16,742 0.3 %
Four Corners 647,932 650,236 (2,304 ) (0.4 %) Gas plants (a)
3,346,789 2,890,110 456,679 15.8 % Total
generation 8,936,776 8,465,659 471,117 5.6 % Purchased power
2,112,596 2,420,869 (308,273 ) (12.7 %) Total
available energy 11,049,372 10,886,528 162,844 1.5 % Line losses
and Company use 637,872 575,986 61,886 10.7 %
Total MWh sold 10,411,500 10,310,542 100,958
1.0 % Palo Verde capacity factor 90.7 % 90.4 % 0.3 % Four
Corners capacity factor 75.6 % 72.1 % 3.5 %
(a) 2011 includes 193,460 MWhs for
pre-commercial testing of Newman Unit 5 Phase II.
El Paso Electric Company and Subsidiary
Financial Statistics At December 31, 2011 and 2010
(In thousands, except number of shares, book value per share,
and ratios)
Balance Sheet 2011 2010 Cash and cash
equivalents $ 8,208 $ 79,184 Common stock
equity $ 760,251 $ 810,375 Long-term debt 816,497
849,745 Total capitalization $ 1,576,748 $
1,660,120 Current maturities of long-term debt
$ 33,300 $ - Short-term borrowings under the
revolving credit facility $ 33,379 $ 4,704
Number of shares - end of period 39,959,154
42,571,065 Book value per common share $ 19.03
$ 19.04 Common equity ratio 46.3 % 48.7 % Debt ratio
53.7 % 51.3 %
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