UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
August 6, 2014
El Paso Electric Company
(Exact name of registrant as specified in its charter)
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Texas | 001-14206 | 74-0607870 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
| | |
Stanton Tower, 100 North Stanton, El Paso, Texas | | 79901 |
(Address of principal executive offices) | | (Zip Code) |
(915) 543-5711
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 6, 2014, the Company announced its financial results for the quarter ended June 30, 2014. A copy of the press release containing the announcement and a copy of the presentation at the Company's 2nd Quarter 2014 Earnings Conference Call is included as Exhibit 99.01 and Exhibit 99.02 to this Current Report and is incorporated herein by reference. The Company does not intend for this exhibit to be incorporated by reference into future filings under the Securities Exchange Act of 1934.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
99.01 Earnings Press Release, dated August 6, 2014
99.02 Presentation at the 2nd Quarter 2014 Earnings Conference Call
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
EL PASO ELECTRIC COMPANY
(Registrant)
By: /s/ NATHAN T. HIRSCHI
Name: Nathan T. Hirschi
Title: Senior Vice President - Chief Financial Officer
Dated: August 6, 2014
EXHIBIT INDEX
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Exhibit Number | Description of Exhibit | |
99.01 | Earnings Press Release, dated August 6, 2014 | |
99.02 | Presentation at the 2nd Quarter 2014 Earnings Conference Call | |
Exhibit 99.01 |
| | |
| | News Release |
For Immediate Release | |
Date: August 6, 2014 | | |
El Paso Electric Announces Second Quarter Financial Results
Overview
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• | For the second quarter of 2014, El Paso Electric Company ("EE" or the "Company") reported net income of $30.1 million, or $0.75 basic and diluted earnings per share. In the second quarter of 2013, EE reported net income of $29.2 million, or $0.73 and $0.72 basic and diluted earnings per share, respectively. |
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• | For the six months ended June 30, 2014, EE reported net income of $34.7 million, or $0.86 basic and diluted earnings per share. Net income for the six months ended June 30, 2013 was $36.8 million, or $0.92 basic and diluted earnings per share. |
“El Paso Electric achieved several significant milestones in the second quarter of 2014. First, we began construction of our new Montana Power Station Units 1 and 2; second, we reached a new native system peak of 1,766 MW on June 4, 2014, and continue to see growth in the number of customers we serve; and, finally, we successfully settled our 2013 Texas fuel reconciliation case. This settlement covers $545.3 million of fuel and purchased power expenses incurred during the 45-month period of July 1, 2009 through March 31, 2013,” said Tom Shockley, Chief Executive Officer. “Our earnings for the second quarter of 2014 were slightly ahead of the corresponding quarter of 2013 and include Palo Verde performance rewards realized after settling the Texas fuel reconciliation proceeding which added $0.04 earnings per share in our most recent quarter.”
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| Page 1 of 14 | |
| El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960 | |
Earnings Summary
The table and explanations below present the major factors affecting 2014 net income relative to 2013 net income:
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| | | | Quarter Ended | | Six Months Ended |
| | | | Pre-Tax Effect | | After-Tax Net Income | | Basic EPS | | Pre-Tax
Effect | | After-Tax
Net Income | | Basic EPS |
June 30, 2013 | | | $ | 29,193 |
| | $ | 0.73 |
| | | | $ | 36,827 |
| | $ | 0.92 |
|
Changes in: | | | | | | | | | | | |
| Palo Verde performance rewards, net | $ | 2,143 |
| | 1,415 |
| | 0.04 |
| | $ | 2,143 |
| | 1,415 |
| | 0.04 |
|
| Allowance for funds used during construction | 1,395 |
| | 1,242 |
| | 0.03 |
| | 1,699 |
| | 1,525 |
| | 0.04 |
|
| Miscellaneous income and deductions | 1,624 |
| | 1,072 |
| | 0.03 |
| | 3,192 |
| | 2,107 |
| | 0.05 |
|
| Investment and interest income | 71 |
| | 27 |
| | — |
| | 3,081 |
| | 2,436 |
| | 0.06 |
|
| Taxes other than income taxes | (1,710 | ) | | (1,128 | ) | | (0.03 | ) | | (4,290 | ) | | (2,831 | ) | | (0.07 | ) |
| Depreciation and amortization | (1,521 | ) | | (1,005 | ) | | (0.03 | ) | | (2,721 | ) | | (1,796 | ) | | (0.05 | ) |
| Retail non-fuel base revenues | (883 | ) | | (583 | ) | | (0.02 | ) | | (5,676 | ) | | (3,746 | ) | | (0.09 | ) |
| Other | | | (137 | ) | | — |
| | | | (1,226 | ) | | (0.04 | ) |
June 30, 2014 | | | $ | 30,096 |
| | $ | 0.75 |
| | | | $ | 34,711 |
| | $ | 0.86 |
|
Second Quarter 2014
Income for the quarter ended June 30, 2014, when compared to the same period last year, was positively affected by:
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• | Recognition of Palo Verde performance rewards associated with the 2009 to 2012 performance periods, net of disallowed fuel and purchased power costs related to the resolution of the Texas fuel reconciliation proceeding designated as PUCT Docket No. 41852. |
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• | Increased allowance for funds used during construction ("AFUDC") due to higher balances of construction work in progress subject to AFUDC. |
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• | Increased miscellaneous income and deductions, primarily due to gains recognized on the sale of assets in 2014 with no comparable activity in the same period of 2013, and decreased donations. |
Income for the quarter ended June 30, 2014, when compared to the same period last year, was negatively affected by:
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• | Increased taxes other than income taxes primarily due to higher property taxes. |
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• | Increased depreciation and amortization due to increased depreciable plant balances including Rio Grande Unit 9, which began commercial operation on May 13, 2013. |
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• | Decreased retail non-fuel base revenues primarily due to a $0.8 million reduction in non-fuel base revenues from sales to our residential customers reflecting a 1.5% decrease in kWh sales due to milder weather in the second quarter of 2014 compared to the same period last year. |
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| El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960 | |
Year to Date
Income for the six months ended June 30, 2014, when compared to the same period last year, was positively affected by:
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• | Increased investment and interest income primarily due to net realized gains on equity investments in our Palo Verde decommissioning trust funds compared to the same period last year. |
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• | Increased miscellaneous income and deductions, primarily due to the gains recognized on the sale of assets in 2014 with no comparable activity in the same period last year, and decreased donations. |
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• | Increased AFUDC due to higher balances of construction work in progress subject to AFUDC. |
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• | Recognition of Palo Verde performance rewards associated with the 2009 to 2012 performance periods, net of disallowed fuel and purchased power costs related to the resolution of the Texas fuel reconciliation proceeding designated as PUCT Docket No. 41852. |
Income for the six months ended June 30, 2014, when compared to the same period last year, was negatively affected by:
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• | Decreased retail non-fuel base revenues primarily due to a $4.8 million reduction in non-fuel base revenues from sales to our residential customers reflecting a 5.2% decrease in kWh sales due to milder weather in 2014, particularly in the first quarter of 2014, when compared to the same period last year. |
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• | Increased taxes other than income taxes primarily due to higher property taxes including a one-time adjustment to the 2013 Arizona property tax rate recorded during the first quarter of 2014. |
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• | Increased depreciation and amortization due to increased depreciable plant balances including Rio Grande Unit 9, which began commercial operation on May 13, 2013. |
Retail Non-fuel Base Revenues
Retail non-fuel base revenues decreased $0.9 million, pre-tax, or 0.6% in the second quarter of 2014 compared to the same period in 2013. This decrease reflects milder weather in the second quarter of 2014, which impacted sales to residential, small commercial, and to a lesser extent public authority customers. Cooling degree days decreased 3.8% for the second quarter of 2014 compared to the same quarter last year but remained higher than the 10-year average by 4.2%. KWh sales to residential customers decreased by 1.5%, despite a 1.3% increase in the average number of residential customers served. KWh sales to small commercial and industrial customers in the second quarter of 2014 decreased 1.7% compared to the same quarter in 2013, despite a 1.9% increase in the average number of customers served. Retail non-fuel base revenues from sales to public authorities increased slightly, primarily due to demand charges, despite a 0.5% decrease in kWh sales to public authorities compared to the same quarter in 2013. Retail non-fuel base revenues and kWh sales to large commercial and industrial customers were relatively unchanged for the quarter. Non-fuel base revenues and kWh sales are provided by customer class on page 10 of this release.
For the six months ended June 30, 2014, retail non-fuel base revenues decreased $5.7 million, pre-tax, or 2.2% compared to the same period in 2013. This decrease reflects milder weather in the first six months of 2014, which impacted sales to residential, small commercial, and to a lesser extent public authority customers. Heating degree days decreased 26.6% for the six months of 2014 compared to the same period last year and were 17.0% below the 10-year average. Cooling degree days decreased 4.4% compared to the same period last year but remained higher than the 10-year average by 4.0%. KWh sales to residential customers decreased by 5.2% despite a 1.3% increase in the average number of residential customers served. KWh sales to small commercial and industrial customers decreased 1.6% compared to the same period in 2013, despite a 2.0% increase in the average number of customers served. KWh sales to large commercial and industrial customers decreased 3.4% and non-fuel base revenues decreased 1.5%. While kWh sales to public authorities in the six months of 2014 decreased approximately 2.3% compared to the same period in 2013, non-fuel base revenues increased slightly
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| El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960 | |
due to demand charges. Non-fuel base revenues and kWh sales are provided by customer class on page 12 of this release.
Texas Fuel Reconciliation Proceeding
On July 11, 2014, the PUCT approved a settlement in the Texas fuel reconciliation proceeding designated as PUCT Docket No. 41852. The settlement provides for the reconciliation of fuel and purchased power costs incurred from July 1, 2009 through March 31, 2013. The quarter ended June 30, 2014 financial results includes a $2.1 million, pre-tax increase to income reflecting the settlement of the Texas fuel reconciliation proceeding. This amount includes Palo Verde performance rewards associated with the 2009 to 2012 performance periods net of disallowed fuel and purchased power costs as determined by the PUCT.
Quarterly Cash Dividend
On May 29, 2014, the Board of Directors approved an increase to the quarterly cash dividend to $0.28 per share of common stock from our previous quarterly rate of $0.265 per share. This represents an increase in the annualized cash dividend from $1.06 to $1.12 per share. The dividend increase commenced with the June 30, 2014 payments. On July 24, 2014, the Board of Directors declared a quarterly cash dividend of $0.28 per share payable on September 30, 2014 to shareholders of record on September 15, 2014.
Capital and Liquidity
We continue to maintain a strong capital structure to ensure access to capital markets at reasonable rates. At June 30, 2014, common stock equity represented 47.0% of our capitalization (common stock equity, long-term debt, and short-term borrowings under the revolving credit facility (the "RCF")). At June 30, 2014, we had a balance of $12.7 million in cash and cash equivalents. We expect to issue long-term debt in the capital markets in 2014 or early 2015 to repay short-term borrowings and finance capital requirements. Based on current projections, we believe that we will have adequate liquidity through the issuance of long-term debt, our current cash balances, cash from operations, and available borrowings under the RCF to meet all of our anticipated cash requirements for the next twelve months.
Cash flows from operations for the six months ended June 30, 2014 were $57.0 million compared to $51.4 million in the corresponding period in 2013. The primary factors affecting the increased cash flow were the funding of $17.9 million for employee pension and other post-retirement benefit plans in the first six months of 2013 compared to $6.9 million in the first six months of 2014, and a decrease in accounts receivable due to the timing of customer payments. These increases in cash flows from operations were partially offset by an increase in the under-collection of fuel revenues. 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 six months ended June 30, 2014, the Company had a fuel under-recovery of $13.4 million compared to an under-recovery of fuel costs of $8.9 million during the six months ended June 30, 2013. At June 30, 2014, we had a net fuel under-recovery balance of $19.6 million, including an under-recovery balance of $17.2 million in Texas, $2.3 million in New Mexico, and $0.1 million for our FERC customer. On April 15, 2014, we filed a request to increase our Texas fixed fuel factor by 6.9% to reflect increases in prices for natural gas. This increase received final approval on May 28, 2014 and was effective with May 2014 billings.
During the six months ended June 30, 2014, our primary capital requirements were for the construction and purchase of electric utility plant, payment of common stock dividends, and purchases of nuclear fuel. Capital requirements for new electric plant were $106.0 million for the six months ended June 30, 2014 and $110.3 million for the six months ended June 30, 2013. Capital expenditures for 2014 are expected to be $316 million as we construct the Montana Power Station and related transmission facilities. Capital requirements for purchases
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| El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960 | |
of nuclear fuel were $17.7 million for the six months ended June 30, 2014 and $16.9 million for the six months ended June 30, 2013.
On June 30, 2014, we paid a quarterly cash dividend of $0.28 per share, or $11.3 million to shareholders of record on June 13, 2014. We paid a total of $22.0 million in cash dividends during the six months ended June 30, 2014. At the current dividend rate, we expect to pay cash dividends of approximately $44.6 million during 2014.
No shares of common stock were repurchased during the six months ended June 30, 2014. As of June 30, 2014, a total of 393,816 shares remain available for repurchase under the currently authorized stock repurchase program. The Company may repurchase shares in the open market from time to time.
We maintain the RCF for working capital and general corporate purposes and financing of nuclear fuel through the Rio Grande Resources Trust ("RGRT"). The RGRT, the trust through which we finance our portion of nuclear fuel for Palo Verde, is consolidated in the Company's financial statements. The RCF has a term ending January 14, 2019. The aggregate unsecured borrowing available under the RCF is $300 million. We may increase the RCF by up to $100 million (up to a total of $400 million) during the term of the agreement, upon the satisfaction of certain conditions, more fully set forth in the agreement, including obtaining commitments from lenders or third party financial institutions. The amounts we borrow under the RCF may be used for working capital and general corporate purposes. The total amount borrowed for nuclear fuel by the RGRT was $126.8 million at June 30, 2014 of which $16.8 million had been borrowed under the RCF and $110 million was borrowed through senior notes. Borrowings by the RGRT for nuclear fuel were $130.3 million as of June 30, 2013, of which $20.3 million had been borrowed under the RCF and $110 million was borrowed through senior notes. Interest costs on borrowings to finance nuclear fuel are accumulated by the RGRT and charged to us as fuel is consumed and recovered through fuel recovery charges. At June 30, 2014, $81.0 million was outstanding under the RCF for working capital and general corporate purposes and we expect to refinance the working capital and general corporate borrowings on the RCF with long-term debt in late 2014 or early 2015. At June 30, 2013, $6.0 million was outstanding under the RCF for working capital or general corporate purposes.
2014 Earnings Guidance
We are narrowing our earnings guidance for 2014 to $2.15 to $2.40 per basic share from the previous range of $2.10 to $2.50.
Conference Call
A conference call to discuss second quarter 2014 financial results is scheduled for 10:30 A.M. Eastern Daylight Time, on August 6, 2014. The dial-in number is 888-401-4669 with a conference ID number of 6099953. The international dial-in number is 719-785-1753. The conference leader will be John Boomer, Vice President, Treasurer. A replay will run through August 20, 2014 with a dial-in number of 888-203-1112 and a conference ID number of 6099953. The replay international dial-in number is 719-457-0820. The conference call and presentation slides will be webcast live on the Company'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) increased prices for fuel and purchased power and the possibility that regulators may not permit EE to pass through all such increased costs
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| El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960 | |
to customers or to recover previously incurred fuel costs in rates; (ii) recovery of capital investments and operating costs through rates in Texas and New Mexico; (iii) uncertainties and instability in the general economy and the resulting impact on EE's sales and profitability; (iv) changes in customers' demand for electricity as a result of energy efficiency initiatives and emerging competing services and technologies; (v) unanticipated increased costs associated with scheduled and unscheduled outages of generating plant; (vi) the size of our construction program and our ability to complete construction on budget; (vii) potential delays in our construction schedule due to legal challenges or other reasons; (viii) costs at Palo Verde; (ix) deregulation and competition in the electric utility industry; (x) possible increased costs of compliance with environmental or other laws, regulations and policies; (xi) possible income tax and interest payments as a result of audit adjustments proposed by the IRS or state taxing authorities; (xii) uncertainties and instability in the financial markets and the resulting impact on EE's ability to access the capital and credit markets; and (xiii) 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.
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Media Contacts | |
Eddie Gutierrez | |
915.543.5763 | |
eduardo.gutierrez@epelectric.com | |
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El Paso Electric Investor Relations | |
John Boomer | |
915.543.4347 | |
john.boomer@epelectric.com | |
| |
Lisa Budtke | |
915.543.5947 | |
lisa.budtke@epelectric.com | |
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| Page 6 of 14 | |
| El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960 | |
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El Paso Electric Company |
Statements of Operations |
Quarter Ended June 30, 2014 and 2013 |
(In thousands except for per share data) |
(Unaudited) |
| | | | | | | |
| | 2014 | | 2013 | | Variance | |
| | | | | | | |
Operating revenues, net of energy expenses: | | | | | | |
| Base revenues | $ | 151,061 |
| | $ | 151,966 |
| | $ | (905 | ) | (a) |
| Deregulated Palo Verde Unit 3 revenues | 3,551 |
| | 3,177 |
| | 374 |
|
|
| Palo Verde performance rewards, net | 2,220 |
| | — |
| | 2,220 |
| |
| Other | 7,169 |
| | 7,628 |
| | (459 | ) |
|
Operating Revenues Net of Energy Expenses | 164,001 |
| | 162,771 |
| | 1,230 |
|
|
| | | | | | | |
Other operating expenses: | | | | | | |
| Other operations and maintenance | 50,034 |
| | 49,843 |
| | 191 |
|
|
| Palo Verde operations and maintenance | 26,196 |
| | 25,175 |
| | 1,021 |
|
|
Taxes other than income taxes | 15,557 |
| | 13,847 |
| | 1,710 |
|
|
Other income | 1,914 |
| | 202 |
| | 1,712 |
|
|
Earnings Before Interest, Taxes, Depreciation and Amortization | 74,128 |
| | 74,108 |
| | 20 |
| (b) |
| | | | | | | |
Depreciation and amortization | 21,083 |
| | 19,562 |
| | 1,521 |
|
|
Interest on long-term debt | 14,607 |
| | 14,610 |
| | (3 | ) |
|
AFUDC and capitalized interest | 6,709 |
| | 5,340 |
| | 1,369 |
|
|
Other interest expense | 288 |
| | 154 |
| | 134 |
|
|
Income Before Income Taxes | 44,859 |
| | 45,122 |
| | (263 | ) |
|
| | | | | | | |
Income tax expense | 14,763 |
| | 15,929 |
| | (1,166 | ) |
|
| | | | | | | |
Net Income | $ | 30,096 |
| | $ | 29,193 |
| | $ | 903 |
|
|
| | | | | | | |
Basic Earnings per Share | $ | 0.75 |
| | $ | 0.73 |
| | $ | 0.02 |
|
|
| | | | | | | |
Diluted Earnings per Share | $ | 0.75 |
| | $ | 0.72 |
| | $ | 0.03 |
|
|
| | | | | | | |
Dividends declared per share of common stock | $ | 0.28 |
| | $ | 0.265 |
| | $ | 0.015 |
|
|
| | | | | | | |
Weighted average number of shares outstanding | 40,181 |
| | 40,112 |
| | 69 |
|
|
| | | | | | | |
Weighted average number of shares and dilutive | | | | | | |
| potential shares outstanding | 40,212 |
| | 40,160 |
| | 52 |
|
|
| | | | | | | |
(a) | Base revenues exclude fuel recovered through New Mexico base rates of $17.1 million and $17.6 million, respectively. |
(b) | Earnings before interest, taxes, depreciation and amortization ("EBITDA") is a non-generally accepted accounting principles ("GAAP") financial measure and is not a substitute for net income or other measures of financial performance in accordance with GAAP. |
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El Paso Electric Company |
Statements of Operations |
Six Months Ended June 30, 2014 and 2013 |
(In thousands except for per share data) |
(Unaudited) |
| | | | | | | |
| | 2014 | | 2013 | | Variance | |
| | | | | | | |
Operating revenues, net of energy expenses: | | | | | | |
| Base revenues | $ | 255,208 |
| | $ | 260,846 |
| | $ | (5,638 | ) | (a) |
| Deregulated Palo Verde Unit 3 revenues | 7,959 |
| | 6,213 |
| | 1,746 |
| |
| Palo Verde performance rewards, net | 2,220 |
| | — |
| | 2,220 |
| |
| Other | 14,629 |
| | 15,726 |
| | (1,097 | ) | |
Operating Revenues Net of Energy Expenses | 280,016 |
| | 282,785 |
| | (2,769 | ) | |
| | | | | | | |
Other operating expenses: | | | | | | |
| Other operations and maintenance | 99,098 |
| | 96,081 |
| | 3,017 |
| |
| Palo Verde operations and maintenance | 47,552 |
| | 47,456 |
| | 96 |
| |
Taxes other than income taxes | 30,919 |
| | 26,629 |
| | 4,290 |
| |
Other income | 7,253 |
| | 963 |
| | 6,290 |
| |
Earnings Before Interest, Taxes, Depreciation and Amortization | 109,700 |
| | 113,582 |
| | (3,882 | ) | (b) |
| | | | | | | |
Depreciation and amortization | 41,651 |
| | 38,930 |
| | 2,721 |
| |
Interest on long-term debt | 29,186 |
| | 29,206 |
| | (20 | ) | |
AFUDC and capitalized interest | 12,545 |
| | 10,928 |
| | 1,617 |
| |
Other interest expense | 461 |
| | 303 |
| | 158 |
| |
Income Before Income Taxes | 50,947 |
| | 56,071 |
| | (5,124 | ) | |
| | | | | | | |
Income tax expense | 16,236 |
| | 19,244 |
| | (3,008 | ) | |
| | | | | | | |
Net Income | $ | 34,711 |
| | $ | 36,827 |
| | $ | (2,116 | ) | |
| | | | | | | |
Basic Earnings per Share | $ | 0.86 |
| | $ | 0.92 |
| | $ | (0.06 | ) | |
| | | | | | | |
Diluted Earnings per Share | $ | 0.86 |
| | $ | 0.92 |
| | $ | (0.06 | ) | |
| | | | | | | |
Dividends declared per share of common stock | $ | 0.545 |
| | $ | 0.515 |
| | $ | 0.03 |
| |
| | | | | | | |
Weighted average number of shares outstanding | 40,165 |
| | 40,095 |
| | 70 |
| |
| | | | | | | |
Weighted average number of shares and dilutive | | | | | | |
| potential shares outstanding | 40,181 |
| | 40,119 |
| | 62 |
| |
| | | | | | | |
(a) | Base revenues exclude fuel recovered through New Mexico base rates of $33.2 million and $34.6 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 |
Cash Flow Summary |
Six Months Ended June 30, 2014 and 2013 |
(In thousands and Unaudited) |
| | | | | | | |
| | | | 2014 | | 2013 | |
Cash flows from operating activities: | | | | |
| Net income | $ | 34,711 |
| | $ | 36,827 |
| |
| Adjustments to reconcile net income to net cash provided by operations: | | | | |
| | Depreciation and amortization of electric plant in service | 41,651 |
| | 38,930 |
| |
| | Amortization of nuclear fuel
| 21,877 |
| | 21,897 |
| |
| | Deferred income taxes, net | 15,141 |
| | 16,888 |
| |
| | Other | (2,336 | ) | | 2,993 |
| |
| Change in: | | | | |
| | Accounts receivable | (33,585 | ) | | (43,626 | ) | |
| | Net undercollection of fuel revenues | (13,369 | ) | | (8,940 | ) | |
| | Accounts payable | 1,983 |
| | 2,733 |
| |
| | Other (a) | (9,102 | ) | | (16,315 | ) | |
| | | Net cash provided by operating activities | 56,971 |
| | 51,387 |
| |
| | | | | | | |
Cash flows from investing activities: | | | | |
| Cash additions to utility property, plant and equipment | (105,999 | ) | | (110,279 | ) | |
| Cash additions to nuclear fuel | (17,690 | ) | | (16,879 | ) | |
| Decommissioning trust funds | (4,550 | ) | | (4,552 | ) | |
| Other | (2,151 | ) | | (2,331 | ) | |
| | | Net cash used for investing activities | (130,390 | ) | | (134,041 | ) | |
| | | | | | | |
Cash flows from financing activities: | | | | |
| Dividends paid | (21,969 | ) | | (20,714 | ) | |
| Borrowings under the revolving credit facility, net | 83,420 |
| | 4,164 |
| |
| Other | (928 | ) | | (207 | ) | |
| | | Net cash provided by (used for) financing activities | 60,523 |
| | (16,757 | ) | |
| | | | | | | |
Net decrease in cash and cash equivalents | (12,896 | ) | | (99,411 | ) | |
| | | | | | | |
Cash and cash equivalents at beginning of period | 25,592 |
| | 111,057 |
| |
| | | | | | | |
Cash and cash equivalents at end of period | $ | 12,696 |
| | $ | 11,646 |
| |
| | | | | | | |
(a) | Includes funding of $6.9 million for employee pension and other post-retirement benefit plans for the six months ended June 30, 2014, compared to funding of $17.9 million for the six months ended June 30, 2013. |
|
| | | | | | | | | | | | | | | | | | | | |
El Paso Electric Company |
Quarter Ended June 30, 2014 and 2013 |
Sales and Revenues Statistics |
| | | | | | | | | | | |
| | | | | | | | | | Increase (Decrease) | |
| | | | | | 2014 | | 2013 | | Amount | | Percentage | |
kWh sales (in thousands): | | | | | | | | |
| Retail: | | | | | | | | |
| | Residential | 650,003 |
| | 659,825 |
| | (9,822 | ) | | (1.5 | )% | |
| | Commercial and industrial, small | 620,630 |
| | 631,246 |
| | (10,616 | ) | | (1.7 | )% | |
| | Commercial and industrial, large | 292,113 |
| | 292,282 |
| | (169 | ) | | (0.1 | )% | |
| | Public authorities | 434,930 |
| | 437,248 |
| | (2,318 | ) | | (0.5 | )% | |
| | | Total retail sales | 1,997,676 |
| | 2,020,601 |
| | (22,925 | ) | | (1.1 | )% | |
| Wholesale: | | | | | | | | |
| | Sales for resale | 20,328 |
| | 20,141 |
| | 187 |
| | 0.9 | % | |
| | Off-system sales | 565,853 |
| | 532,334 |
| | 33,519 |
| | 6.3 | % | |
| | | Total wholesale sales | 586,181 |
| | 552,475 |
| | 33,706 |
| | 6.1 | % | |
| | | | Total kWh sales | 2,583,857 |
| | 2,573,076 |
| | 10,781 |
| | 0.4 | % | |
Operating revenues (in thousands): | | | | | | | | |
| Non-fuel base revenues: | | | | | | | | |
| | Retail: | | | | | | | | |
| | | Residential | $ | 59,828 |
| | $ | 60,631 |
| | $ | (803 | ) | | (1.3 | )% | |
| | | Commercial and industrial, small | 53,675 |
| | 53,729 |
| | (54 | ) | | (0.1 | )% | |
| | | Commercial and industrial, large | 9,963 |
| | 10,021 |
| | (58 | ) | | (0.6 | )% | |
| | | Public authorities | 26,915 |
| | 26,883 |
| | 32 |
| | 0.1 | % | |
| | | | Total retail non-fuel base revenues | 150,381 |
| | 151,264 |
| | (883 | ) | | (0.6 | )% | |
| | Wholesale: | | | | | | | | |
| | | Sales for resale | 680 |
| | 702 |
| | (22 | ) | | (3.1 | )% | |
| | | | Total non-fuel base revenues | 151,061 |
| | 151,966 |
| | (905 | ) | | (0.6 | )% | |
| Fuel revenues: | | | | | | | | |
| | Recovered from customers during the period | 40,529 |
| | 32,368 |
| | 8,161 |
| | 25.2 | % | |
| | Under collection of fuel (a) | 15,369 |
| | 12,788 |
| | 2,581 |
| | 20.2 | % | |
| | New Mexico fuel in base rates | 17,132 |
| | 17,642 |
| | (510 | ) | | (2.9 | )% | |
| | | Total fuel revenues (b) | 73,030 |
| | 62,798 |
| | 10,232 |
| | 16.3 | % | |
| Off-system sales: | | | | | | | | |
| | Fuel cost | 18,000 |
| | 14,993 |
| | 3,007 |
| | 20.1 | % | |
| | Shared margins | 2,645 |
| | 2,246 |
| | 399 |
| | 17.8 | % | |
| | Retained margins | 322 |
| | 273 |
| | 49 |
| | 17.9 | % | |
| | | Total off-system sales | 20,967 |
| | 17,512 |
| | 3,455 |
| | 19.7 | % | |
| Other (c) | 6,743 |
| | 7,838 |
| | (1,095 | ) | | (14.0 | )% | |
| | | Total operating revenues | $ | 251,801 |
| | $ | 240,114 |
| | $ | 11,687 |
| | 4.9 | % | |
| | | | | | | | | | | | | |
(a) | 2014 includes $2.2 million related to Palo Verde performance rewards, net. |
(b) | Includes deregulated Palo Verde Unit 3 revenues for the New Mexico jurisdiction of $3.6 million and $3.2 million, respectively. |
(c) | Represents revenues with no related kWh sales. |
|
| | | | | | | | | | | | | |
El Paso Electric Company |
Quarter Ended June 30, 2014 and 2013 |
Other Statistical Data |
| | | | | | | | | |
| | | | | Increase (Decrease) |
| | | 2014 | | 2013 | | Amount | | Percentage |
| | | | | | | | | |
Average number of retail customers: (a) | | | | | | | |
| Residential | 352,035 |
| | 347,360 |
| | 4,675 |
| | 1.3 | % |
| Commercial and industrial, small | 39,482 |
| | 38,739 |
| | 743 |
| | 1.9 | % |
| Commercial and industrial, large | 49 |
| | 49 |
| | — |
| | — |
|
| Public authorities | 5,108 |
| | 4,978 |
| | 130 |
| | 2.6 | % |
| | Total | 396,674 |
| | 391,126 |
| | 5,548 |
| | 1.4 | % |
| | | | | | | | | |
Number of retail customers (end of period): (a) | | | | | | | |
| Residential | 352,340 |
| | 347,866 |
| | 4,474 |
| | 1.3 | % |
| Commercial and industrial, small | 39,557 |
| | 38,801 |
| | 756 |
| | 1.9 | % |
| Commercial and industrial, large | 49 |
| | 49 |
| | — |
| | — |
|
| Public authorities | 5,079 |
| | 5,012 |
| | 67 |
| | 1.3 | % |
| | Total | 397,025 |
| | 391,728 |
| | 5,297 |
| | 1.4 | % |
| | | | | | | | | |
Weather statistics: (b) | | | | | 10-Yr Average | | |
| Heating degree days | 84 |
| | 81 |
| | 69 |
| | |
| Cooling degree days | 1,095 |
| | 1,138 |
| | 1,051 |
| | |
| | | | | | | | | |
Generation and purchased power (kWh, in thousands): | | | | | Increase (Decrease) |
| | | 2014 | | 2013 | | Amount | | Percentage |
| | | | | | | | | |
| Palo Verde | 1,191,898 |
| | 1,219,051 |
| | (27,153 | ) | | (2.2 | )% |
| Four Corners | 137,988 |
| | 140,027 |
| | (2,039 | ) | | (1.5 | )% |
| Gas plants | 1,027,544 |
| | 1,001,564 |
| | 25,980 |
| | 2.6 | % |
| | Total generation | 2,357,430 |
| | 2,360,642 |
| | (3,212 | ) | | (0.1 | )% |
| Purchased power: | | | | | | | |
| | Photovoltaic | 79,385 |
| | 38,363 |
| | 41,022 |
| | — |
|
| | Other | 321,504 |
| | 335,019 |
| | (13,515 | ) | | (4.0 | )% |
| | Total purchased power | 400,889 |
| | 373,382 |
| | 27,507 |
| | 7.4 | % |
| | Total available energy | 2,758,319 |
| | 2,734,024 |
| | 24,295 |
| | 0.9 | % |
| Line losses and Company use | 174,462 |
| | 160,948 |
| | 13,514 |
| | 8.4 | % |
| | Total kWh sold | 2,583,857 |
| | 2,573,076 |
| | 10,781 |
| | 0.4 | % |
| | | | | | | | | |
|
| | | | | | | | | | | | |
| Palo Verde capacity factor | 87.8 | % | | 89.6 | % | | (1.8 | )% | | |
| |
(a) | The number of retail customers is based on the number of service locations. |
| | | | | | | | | |
(b) | A degree day is recorded for each degree that the average outdoor temperature varies from a standard of 65 degrees Fahrenheit. |
|
| | | | | | | | | | | | | | | | | | | | |
El Paso Electric Company |
Six Months Ended June 30, 2014 and 2013 |
Sales and Revenues Statistics |
| | | | | | | | | | | | | |
| | | | | | | | | | Increase (Decrease) | |
| | | | | | 2014 | | 2013 | | Amount | | Percentage | |
kWh sales (in thousands): | | | | | | | | |
| Retail: | | | | | | | | |
| | Residential | 1,193,033 |
| | 1,258,331 |
| | (65,298 | ) | | (5.2 | )% | |
| | Commercial and industrial, small | 1,114,549 |
| | 1,132,950 |
| | (18,401 | ) | | (1.6 | )% | |
| | Commercial and industrial, large | 518,665 |
| | 536,867 |
| | (18,202 | ) | | (3.4 | )% | |
| | Public authorities | 777,958 |
| | 796,332 |
| | (18,374 | ) | | (2.3 | )% | |
| | | Total retail sales | 3,604,205 |
| | 3,724,480 |
| | (120,275 | ) | | (3.2 | )% | |
| Wholesale: | | | | | | | | |
| | Sales for resale | 32,720 |
| | 32,140 |
| | 580 |
| | 1.8 | % | |
| | Off-system sales | 1,262,867 |
| | 1,208,261 |
| | 54,606 |
| | 4.5 | % | |
| | | Total wholesale sales | 1,295,587 |
| | 1,240,401 |
| | 55,186 |
| | 4.4 | % | |
| | | | Total kWh sales | 4,899,792 |
| | 4,964,881 |
| | (65,089 | ) | | (1.3 | )% | |
Operating revenues (in thousands): | | | | | | | | |
| Non-fuel base revenues: | | | | | | | | |
| | Retail: | | | | | | | | |
| | | Residential | $ | 105,422 |
| | $ | 110,239 |
| | $ | (4,817 | ) | | (4.4 | )% | |
| | | Commercial and industrial, small | 85,796 |
| | 86,504 |
| | (708 | ) | | (0.8 | )% | |
| | | Commercial and industrial, large | 18,291 |
| | 18,569 |
| | (278 | ) | | (1.5 | )% | |
| | | Public authorities | 44,571 |
| | 44,444 |
| | 127 |
| | 0.3 | % | |
| | | | Total retail non-fuel base revenues | 254,080 |
| | 259,756 |
| | (5,676 | ) | | (2.2 | )% | |
| | Wholesale: | | | | | | | | |
| | | Sales for resale | 1,128 |
| | 1,090 |
| | 38 |
| | 3.5 | % | |
| | | | Total non-fuel base revenues | 255,208 |
| | 260,846 |
| | (5,638 | ) | | (2.2 | )% | |
| | | | | | | | | | | | | |
| Fuel revenues: | | | | | | | | |
| | Recovered from customers during the period | 71,702 |
| | 59,095 |
| | 12,607 |
| | 21.3 | % | |
| | Under collection of fuel (a) | 13,359 |
| | 8,946 |
| | 4,413 |
| | 49.3 | % | |
| | New Mexico fuel in base rates | 33,227 |
| | 34,551 |
| | (1,324 | ) | | (3.8 | )% | |
| | | Total fuel revenues (b) | 118,288 |
| | 102,592 |
| | 15,696 |
| | 15.3 | % | |
| | | | | | | | | | | | | |
| Off-system sales: | | | | | | | | |
| | Fuel cost | 39,463 |
| | 31,156 |
| | 8,307 |
| | 26.7 | % | |
| | Shared margins | 9,389 |
| | 6,247 |
| | 3,142 |
| | 50.3 | % | |
| | Retained margins | 1,124 |
| | 749 |
| | 375 |
| | 50.1 | % | |
| | | Total off-system sales | 49,976 |
| | 38,152 |
| | 11,824 |
| | 31.0 | % | |
| Other (c) | 13,845 |
| | 15,814 |
| | (1,969 | ) | | (12.5 | )% | |
| | | Total operating revenues | $ | 437,317 |
| | $ | 417,404 |
| | $ | 19,913 |
| | 4.8 | % | |
| | | | | | | | | | | | | |
(a) | 2014 includes $2.2 million related to Palo Verde performance rewards, net. |
(b) | Includes deregulated Palo Verde Unit 3 revenues for the New Mexico jurisdiction of $8.0 million and $6.2 million, respectively. |
(c) | Represents revenues with no related kWh sales. |
|
| | | | | | | | | | | | | |
El Paso Electric Company |
Six Months Ended June 30, 2014 and 2013 |
Other Statistical Data |
| | | | | | | |
| | | | | Increase (Decrease) |
| | | 2014 | | 2013 | | Amount | | Percentage |
| | | | | | | | | |
Average number of retail customers: (a) | | | | | | | |
| Residential | 351,183 |
| | 346,757 |
| | 4,426 |
| | 1.3 | % |
| Commercial and industrial, small | 39,350 |
| | 38,571 |
| | 779 |
| | 2.0 | % |
| Commercial and industrial, large | 50 |
| | 49 |
| | 1 |
| | 2.0 | % |
| Public authorities | 5,078 |
| | 4,966 |
| | 112 |
| | 2.3 | % |
| | Total | 395,661 |
| | 390,343 |
| | 5,318 |
| | 1.4 | % |
| | | | | | | | | |
Number of retail customers (end of period): (a) | | | | | | | |
| Residential | 352,340 |
| | 347,866 |
| | 4,474 |
| | 1.3 | % |
| Commercial and industrial, small | 39,557 |
| | 38,801 |
| | 756 |
| | 1.9 | % |
| Commercial and industrial, large | 49 |
| | 49 |
| | — |
| | — |
|
| Public authorities | 5,079 |
| | 5,012 |
| | 67 |
| | 1.3 | % |
| | Total | 397,025 |
| | 391,728 |
| | 5,297 |
| | 1.4 | % |
| | | | | | | | | |
Weather statistics: (b) | | | | | 10-Yr Average | | |
| Heating degree days | 1,042 |
| | 1,419 |
| | 1,255 |
| | |
| Cooling degree days | 1,120 |
| | 1,171 |
| | 1,077 |
| | |
| | | | | | | | | |
Generation and purchased power (kWh, in thousands): | | | | | Increase (Decrease) |
| | | 2014 | | 2013 | | Amount | | Percentage |
| | | | | | | | | |
| Palo Verde | 2,555,975 |
| | 2,552,933 |
| | 3,042 |
| | 0.1 | % |
| Four Corners | 272,224 |
| | 324,070 |
| | (51,846 | ) | | (16.0 | )% |
| Gas plants | 1,595,288 |
| | 1,610,927 |
| | (15,639 | ) | | (1.0 | )% |
| | Total generation | 4,423,487 |
| | 4,487,930 |
| | (64,443 | ) | | (1.4 | )% |
| Purchased power: | | | | | | | |
| Photovoltaic | 108,184 |
| | 66,063 |
| | 42,121 |
| | 63.8 | % |
| Other | 653,448 |
| | 656,024 |
| | (2,576 | ) | | (0.4 | )% |
| | Total purchased power | 761,632 |
| | 722,087 |
| | 39,545 |
| | 5.5 | % |
| | Total available energy | 5,185,119 |
| | 5,210,017 |
| | (24,898 | ) | | (0.5 | )% |
| Line losses and Company use | 285,327 |
| | 245,136 |
| | 40,191 |
| | 16.4 | % |
| Total kWh sold | 4,899,792 |
| | 4,964,881 |
| | (65,089 | ) | | (1.3 | )% |
|
| | | | | | | | | | | | |
| Palo Verde capacity factor | 94.6 | % | | 94.5 | % | | 0.1 | % | | |
| | | | | | | | | |
(a) | The number of retail customers presented is based on the number of service locations. |
| | | | | | | | | |
(b) | A degree day is recorded for each degree that the average outdoor temperature varies from a standard of 65 degrees Fahrenheit. |
|
| | | | | | | | | |
El Paso Electric Company |
Financial Statistics |
At June 30, 2014 and 2013 |
(In thousands, except number of shares, book value per share, and ratios) |
| | | | | |
Balance Sheet | | 2014 | | 2013 |
| | | | | |
Cash and cash equivalents | | $ | 12,696 |
| | $ | 11,646 |
|
| | | | | |
Common stock equity | | $ | 973,828 |
| | $ | 848,427 |
|
Long-term debt | | 999,665 |
| | 999,576 |
|
| Total capitalization | | $ | 1,973,493 |
| | $ | 1,848,003 |
|
| | | | | |
Short-term borrowings under the revolving credit facility | | $ | 97,772 |
| | $ | 26,319 |
|
| | | | | |
Number of shares - end of period | | 40,352,024 |
| | 40,250,257 |
|
| | | | | |
Book value per common share | | $ | 24.13 |
| | $ | 21.08 |
|
| | | | | |
Common equity ratio (a) | | 47.0 | % | | 45.3 | % |
Debt ratio | | 53.0 | % | | 54.7 | % |
| | | | | |
(a) | The capitalization component includes common stock equity, long-term debt and the current maturities of long-term debt, and short-term borrowings under the RCF. |
| | | | | |
Safe Harbor Statement 2 This presentation 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: 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 Recovery of capital investments and operating costs through rates in Texas and New Mexico Uncertainties and instability in the general economy and the resulting impact on EE’s sales and profitability Changes in customers’ demand for electricity as a result of energy efficiency initiatives and emerging competing services and technologies Unanticipated increased costs associated with scheduled and unscheduled outages of generating plant The size of our construction program and our ability to complete construction on budget Potential delays in our construction schedule due to legal challenges or other reasons Costs at Palo Verde Deregulation and competition in the electric utility industry Possible increased costs of compliance with environmental or other laws, regulations and policies Possible income tax and interest payments as a result of audit adjustments proposed by the IRS or state taxing authorities Uncertainties and instability in the financial markets and the resulting impact on EE’s ability to access the capital and credit markets 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 August 6, 2014
Vision Mission Began construction on Montana Power Station (MPS) Units 1 & 2 Set a new Native Peak record of 1,766 MW on June 4, 2014 Successfully settled 2013 Texas fuel reconciliation case Board of Directors approved a 5.7% increase in the quarterly cash dividend on May 29, 2014 EE’s quarterly cash dividend has grown by 27% to $0.28 per share from 2Q 2011, when the quarterly dividend was re-initiated On July 24, 2014, the Board declared a quarterly cash dividend of $0.28 per share payable on September 30, 2014, to shareholders of record on September 15, 2014 Macho Springs Solar Facility became commercially operational doubling EE’s utility solar portfolio By the end of the year, EE’s utility solar generation will expand to 6% of dedicated generation resources 2nd Quarter Highlights 3 August 6, 2014
Montana Power Station Update 4 Construction began on MPS Units 1 & 2 in late May 2014; commercial operation anticipated by the summer peak of 2015 Received final order in New Mexico approving the CCN’s for MPS Units 3 & 4 on June 11, 2014 and final approval in Texas on July 11, 2014 Once complete, the four state of the art LMS-100 units at MPS will add 352 MW of efficient, clean burning natural gas power August 6, 2014
MPS Transmission Lines and Distribution Operation Center Update 5 EE filed three CCN applications with the PUCT for transmission lines required for the MPS The PUCT issued a final order approving the MPS to Caliente line (Docket No. 41360) on March 10, 2014 The MPS In & Out and MPS to Montwood applications were recommended for approval and a final order is expected on August 7, 2014 (Docket No.’s 41359 & 41809) August 6, 2014 The Eastside Distribution Operation Center is under construction and is expected to be completed by early 2015
Five Year Cash Capital Expenditures 6 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 2014E 2015E 2016E 2017E 2018E EE Estimated Costs Generation Transmission Distribution General $316mm $256mm $249mm $209mm $233mm ($000’s) August 6, 2014
1/2014 1/2015 1/2016 1/2014 1/2015 1/2016 Probable Rate Case Timelines 7 New Mexico December 2014 Historical Test Year End for NM Rate Case May 2015 File NM Rate Case (Includes MPS 1 & 2 in rate base)1 April 2016 NM Rate Increase effective June 2015 MPS Units 1 & 2 begin commercial operation a Texas a June 2015 Historical Test Year End for TX Rate Case November 2015 File TX Rate Case (Includes MPS 1 & 2 in rate base) July 2016 TX Rate Increase effective (1) NM Rate Case filing would use a historical test year end of December 2014 and, via a “post test year adjustment”, include MPS Units 1 & 2 in requested rate base August 6, 2014 March 2015 Historical Test Year End for TX Rate Case August 2015 File TX Rate Case (Includes MPS 1 & 2 in rate base) April 2016 TX Rate Increase effective If MPS Units 1&2 go into service in April or May 2015 If MPS Units 1&2 go into service by March 31, 2015; timeline accelerates by 3 months
Projected Rate Base and CWIP 8 Pro forma Rate Base Balances for Future Rate Case Filings ($000) (1) Includes Palo Verde Unit 3 rate base of approximately $36mm for each pro-forma filing (2) Beginning rate base is December 31, 2013 and year end balances exclude CWIP (3) Represents a pro-forma rate base amount that EE would use in rate filings for the test year MPS 1 & 2 MPS 3 MPS 4 Beginning Rate Base (1)(2) $1,530 $1,922 $2,058 Plant Additions: MPS Transmission and Substations 38 3 1 New East Side Facility 40 - - Other 305 153 210 New Generating Units: Montana Common Plant 42 - - Montana Unit 1 80 - - Montana Unit 2 79 - - Montana Unit 3 - 87 - Montana Unit 4 - - 84 Total 584 243 295 Depreciation Expense (178) (99) (105) Chang in Deferred Income Taxes & Other (14) (8) (8) Total Rate Base (3) $1,922 $2,058 $2,240 2015 2016 2017 Ending CWIP Balances ($ in millions) $328 $316 $244 August 6, 2014
Vision Mission 2nd Quarter 2014 net income of $30.1 million or $0.75 per share, compared to 2nd Quarter 2013 net income of $29.2 million or $0.73 per basic share YTD 2014 net income of $34.7 million or $0.86 per share, compared to YTD 2013 net income of $36.8 million or $0.92 per share 2014 Financial Results 9 August 6, 2014
Vision Mission 2nd Quarter Key Earnings Drivers 10 Basic EPS Description June 30, 2013 0.73$ Changes In: Palo Verde performance rewards, net 0.04 Increased due to rewards associated with 2009 to 2012 performance periods, net of disallowed fuel & purchased power costs related to Texas fuel reconciliation proceeding Allowance for funds used during construction 0.03 Increased due to higher construction balances including MPS Miscellaneous income and deductions 0.03 Increased primarily due to gains recognized on the sale of assets in 2014 and decreased donations Taxes other than income taxes (0.03) Increased primarily due to higher property taxes Depreciation and amortization (0.03) Increased due to higher depreciable plant balances including Rio Grande Unit 9 Retail no -fuel base revenue (0.02) Decreased mainly due to milder weather in second quarter of 2014 compared to same period in 2013 June 30, 2014 0.75$ August 6, 2014
Vision Mission Changes in Retail Revenues and Sales 11 Non-Fuel Base Revenue (000's) Percent Change MWH Percent Change Residential 105,422$ (4.4%) 1,193,033 (5.2%) C&I Small 85,796 (0.8%) 1,114,549 (1.6%) C&I Large 18,291 (1.5%) 518,665 (3.4%) Public Authorities 44,571 0.3% 777,958 (2.3%) Total Retail 254,080$ (2.2%) 3,604,205 (3.2%) Heating Degree Days 1,042 (26.6%) Cooling Degree Days 1,120 (4.4%) Average Retail Customers 395,661 1.4% June YTD 2014 Compared to June YTD 2013 August 6, 2014
Vision Mission Changes in Retail Revenues and Sales 12 Non-Fuel Base Revenue (000's) Percent Change MWH Percent Change Residential 59,828$ (1.3%) 650,003 (1.5%) C&I Small 53,675 (0.1%) 620,630 (1.7%) C&I Large 9,963 (0.6%) 292,113 (0.1%) Public Authorities 26,915 0.1% 434,930 (0.5%) Total Retail 150,381$ (0.6%) 1,997,676 (1.1%) Heating Degree Days 84 3.7% Cooling Degree Days 1,095 (3.8%) Average Retail Customers 396,674 1.4% Q2 2014 Compared to Q2 2013 August 6, 2014
Historical Weather Analysis August 6, 2014 13 1,178 1,138 1,095 900 1,000 1,100 1,200 2012 2013 2014 Q2 CDDs CDD's 10-Year Average Mild weather has had a significant impact on 2014 YTD revenues 1Q 2014 HDD’s were 958 compared to 1,338 HDD’s observed in 1Q 2013, which represents a 28.4% reduction 2Q 2014 CDD’s were 1,095 compared to 1,138 CDD’s observed in 2Q 2013, which represents a 3.8% reduction 1,159 1,338 958 900 1,100 1,300 1,500 2012 2013 2014 Q1 HDDs HDD's 10-Year Average 10-Year HDD Average 1,186 10-Year CDD Average 1,051
Historical Weather Analysis 1,291 1,040 1,375 1,274 1,112 1,478 1,305 1,209 1,419 1,042 944 1,162 857 1,032 1,050 1,004 1,210 1,215 1,171 1,120 750 1,250 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 June YTD Degree Days HDD CDD 10 Year HDD Avg 10 Year CDD Avg 10-Yr HDD Average – 1,255 10-Yr CDD Average – 1,077 August 6, 2014 14
Native System Peak Load Growth 15 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1,308 1,332 1,376 1,428 1,508 1,524 1,571 1,616 1,714 1,688 1,750 1,766 Native System Peak, MW Set new Native System Peak on June 4, 2014 (at the time of peak the contribution from solar was approximately 89 MW) August 6, 2014
Vision Mission Customer & Population Growth 16 August 6, 2014 100,000 300,000 500,000 700,000 900,000 1,100,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 EP & Dona Ana Pop 902,591 917,294 938,496 953,431 970,785 992,160 1,009,880 1,031,203 1,042,552 1,041,178 EE Res Customers 296,435 304,031 311,923 317,091 322,618 328,553 334,729 339,860 345,567 349,629 El Paso & Dona Ana County Population & EE Residential Customer Growth EP & Dona Ana Pop EE Res Customers CAGR 1.6% CAGR 1.9% Source: U.S. Bureau of Census and Real Estate Center at Texas A&M University
Vision Mission We are narrowing our earnings guidance range for 2014 to $2.15 - $2.40 per share from $2.10 - $2.50 2014 Earnings Guidance 17 August 6, 2014
Vision Mission Expect to issue long-term debt in late 2014 or early 2015 EE has expended $106mm for additions to utility plant for the six months ended June 30, 2014 Capital expenditures for utility plant in 2014 are anticipated to be approximately $316mm EE made $22mm in dividend payments for the six months ended June 30, 2014 At June 30, 2014, EE had liquidity of $215mm including a cash balance of $13mm and unused capacity under the revolving credit facility Capital Requirements and Liquidity 18 August 6, 2014
Q & A 19 August 6, 2014
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