EE Excelerate Energy Inc

El Paso Electric Company (NYSE:EE):

Overview

• For the third quarter of 2014, El Paso Electric Company ("EE" or the "Company") reported net income of $52.5 million, or $1.30 basic and diluted earnings per share. In the third quarter of 2013, EE reported net income of $50.6 million, or $1.26 basic and diluted earnings per share.
• For the nine months ended September 30, 2014, EE reported net income of $87.2 million, or $2.16 basic and diluted earnings per share. Net income for the nine months ended September 30, 2013 was $87.4 million, or $2.17 basic and diluted earnings per share.

“We were able to achieve several key milestones in our strategic plan for the future of El Paso Electric Company during the third quarter of 2014,” said Tom Shockley, Chief Executive Officer. “Mary Kipp was named President of the Company on September 16, 2014, which is a significant step in our succession plan. Furthermore, we are pleased with the progress of the construction of our Montana Power Station during the quarter. We now expect the first two units to be placed in commercial operation during the first quarter of 2015. Overall, net income for the quarter ended September 30, 2014 increased by approximately 3.8%, compared to the same quarter last year, and was consistent with our expectations.”

Earnings Summary

The table and explanations below present the major factors affecting 2014 net income relative to 2013 net income:

              Quarter Ended     Nine Months Ended Pre-Tax

Effect

   

After-Tax

NetIncome

   

BasicEPS

    Pre-TaxEffect    

After-TaxNetIncome

   

BasicEPS

September 30, 2013 $ 50,565 $ 1.26 $ 87,392 $ 2.17 Changes in: Income taxes 2,857 0.07 3,029 0.07 Allowance for funds used during construction $ 2,372 2,089 0.05 $ 4,071 3,609 0.09 Investment and interest income 287 281 — 3,368 2,715 0.07 Taxes other than income taxes 189 123 — (4,101 ) (2,665 ) (0.07 ) Palo Verde performance rewards, net — — — 2,143 1,393 0.04 Operations and maintenance at fossil-fuel generating plants (3,052 ) (1,984 ) (0.05 ) (3,799 ) (2,469 ) (0.06 ) Retail non-fuel base revenues (1,276 ) (830 ) (0.02 ) (6,952 ) (4,519 ) (0.11 ) Depreciation and amortization expense (269 ) (174 ) — (2,990 ) (1,944 ) (0.05 ) Other (451 ) (0.01 ) 646   0.01   September 30, 2014 $ 52,476   $ 1.30   $ 87,187   $ 2.16    

Third Quarter 2014

Income for the quarter ended September 30, 2014, when compared to the same period last year, was positively affected by:

• Income taxes, not reflected in other income items below, decreased primarily due to a domestic production activities deduction in 2014, whereas there was no such deduction in 2013.
• Increased allowance for funds used during construction ("AFUDC") due to higher balances of construction work in progress including the Montana Power Station.

Income for the quarter ended September 30, 2014, when compared to the same period last year, was negatively affected by:

• Increased operation and maintenance expense related to our fossil-fuel plants, primarily due to maintenance at the Rio Grande and Newman generating plants in 2014, with no comparable maintenance expense in the same period last year.
• Decreased retail non-fuel base revenues primarily due to a $3.0 million reduction in non-fuel base revenues from sales to public authorities, which reflects increased use of an interruptible rate at a military installation in our service territory, as well as other energy saving programs at military installations.

Other items impacting earnings included increased investment and interest income due to increased realized gains on equity investments in our Palo Verde decommissioning trust funds in 2014, and reduced taxes other than income taxes. These increases to income were partially offset by increased depreciation and amortization due to increased depreciable plant balances.

Year to Date

Income for the nine months ended September 30, 2014, when compared to the same period last year, was positively affected by:

• Increased AFUDC due to higher balances of construction work in progress, including the Montana Power Station.
• Income taxes not reflected in other income items below decreased primarily due to a domestic production activities deduction in 2014, whereas there was no such deduction in 2013.
• Increased investment and interest income primarily due to increased gains on the sales of equity investments in our Palo Verde decommissioning trust funds compared to the same period last year.
• 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 nine months ended September 30, 2014, when compared to the same period last year, was negatively affected by:

• Decreased retail non-fuel base revenues, primarily due to a $3.5 million reduction in non-fuel base revenues from sales to our residential customers, reflecting a 2.4% decrease in kWh sales due to milder weather in 2014, primarily in the first quarter, when compared to the same period last year and a $2.8 million reduction in non-fuel base revenues from sales to public authorities which reflects increased use of an interruptible rate at a military installation in our service territory as well as other energy saving programs at military installations.
• 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.
• Increased operation and maintenance expense related to our fossil-fuel plants, primarily due to maintenance at the Rio Grande and Newman generating plants in 2014, with no comparable maintenance expense in the same period last year.
• 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 $1.3 million, pre-tax, or 0.7% in the third quarter of 2014 compared to the same period in 2013. This decrease reflects a $3.0 million reduction in non-fuel base revenues from sales to public authorities, which is primarily due to increased use of an interruptible rate at a military installation in our service territory which is lower than the previous rate applied for those services, as well as energy savings from energy conservation and efficiency programs and use of solar distributed generation at military installations, and reduced sales to a local water utility primarily due to reduced ground water pumping in the third quarter of 2014. Cooling degree days decreased 2.0% for the third quarter of 2014, compared to the same quarter last year, and were 4.0% lower than the 10-year average. The decrease in retail non-fuel base revenues was partially offset by $1.3 million increase in non-fuel base revenues from sales to residential customers. KWh sales to residential customers increased by 1.6% due to a 1.3% increase in the average number of residential customers served. KWh sales to small commercial and industrial customers in the third quarter of 2014 increased 2.1%, compared to the same quarter in 2013, reflecting a 1.9% increase in the average number of customers served. Non-fuel base revenues and kWh sales are provided by customer class on page 10 of this release.

For the nine months ended September 30, 2014, retail non-fuel base revenues decreased $7.0 million, pre-tax, or 1.6%, compared to the same period in 2013. This decrease reflects milder weather in 2014, primarily in the first quarter, which impacted sales to residential, small commercial and industrial, and to a lesser extent public authority customers. Heating degree days decreased 26.6% for the nine months of 2014, compared to the same period last year, and were 17.0% below the 10-year average. Cooling degree days decreased 3.1%, compared to the same period last year, and were relatively unchanged from the 10-year average. Non-fuel base revenues from sales to residential customers decreased $3.5 million reflecting a decrease of 2.4% in kWh sales to residential customers despite a 1.3% increase in the average number of residential customers served. Non-fuel base revenues from sales to public authorities decreased $2.8 million, which reflects increased use of an interruptible rate at a military installation in our service territory, as well as other energy savings from energy conservation and efficiency programs and use of solar distributed generation at military installations, and reduced sales to a local water utility in the third quarter of 2014. Non-fuel base revenues from sales to small commercial and industrial customers increased slightly, when compared to the same period in 2013, due to a 2.0% increase in the average number of customers served partially offset by milder weather. KWh sales to large commercial and industrial customers decreased 2.2%, and non-fuel base revenues decreased 2.5% as several customers ceased operations. Non-fuel base revenues and kWh sales are provided by customer class on page 12 of this release.

Capital and Liquidity

We continue to maintain a strong capital structure to ensure access to capital markets at reasonable rates. At September 30, 2014, common stock equity represented 48.3% of our capitalization (common stock equity, long-term debt, current maturities of long-term debt, and short-term borrowings under the revolving credit facility (the "RCF")). At September 30, 2014, we had a balance of $13.4 million in cash and cash equivalents. We expect to issue long-term debt in the capital markets in late 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 nine months ended September 30, 2014 were $174.6 million compared to $184.9 million in the corresponding period in 2013. The primary factors affecting the decreased cash flow from operations were a decrease in deferred income taxes and an increase in accounts receivable due to the timing of certain non-trade receivables offset by a decrease 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 nine months ended September 30, 2014, the Company had a fuel under-recovery of $1.2 million compared to an under-recovery of fuel costs of $8.4 million during the nine months ended September 30, 2013. At September 30, 2014, we had a net fuel under-recovery balance of $7.4 million, including an under-recovery balance of $10.7 million in Texas and an over-recovery balance of $3.3 million in New Mexico. Effective with May 2014 billings, we increased our Texas fixed fuel factor by 6.9% to reflect increases in prices for natural gas.

During the nine months ended September 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 $189.3 million for the nine months ended September 30, 2014 and $165.3 million for the nine months ended September 30, 2013. Capital expenditures for 2014 are expected to be $306.0 million as we construct the Montana Power Station and related transmission facilities. Capital requirements for purchases of nuclear fuel were $28.8 million for the nine months ended September 30, 2014 and $19.9 million for the nine months ended September 30, 2013.

On September 30, 2014, we paid a quarterly cash dividend of $0.28 per share, or $11.3 million, to shareholders of record on September 15, 2014. We paid a total of $33.3 million in cash dividends during the nine months ended September 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 nine months ended September 30, 2014. As of September 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 (the "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 $127.5 million at September 30, 2014, of which $17.5 million had been borrowed under the RCF, and $110 million was borrowed through senior notes. Borrowings by the RGRT for nuclear fuel were $125.5 million as of September 30, 2013, of which $15.5 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 September 30, 2014, $72.0 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. No borrowings were outstanding at September 30, 2013 under the RCF for working capital and general corporate purposes.

2014 Earnings Guidance

We are narrowing our earnings guidance for 2014 to $2.20 to $2.35 per basic share from the previous range of $2.15 to $2.40 per basic share.

Conference Call

A conference call to discuss third quarter 2014 financial results is scheduled for 10:30 A.M. Eastern Time, on November 5, 2014. The dial-in number is 888-312-3048 with a conference ID number of 5393015. The international dial-in number is 719-325-2354. The conference leader will be Lisa Budtke, Assistant Treasurer. A replay will run through November 19, 2014 with a dial-in number of 888-203-1112 and a conference ID number of 5393015. 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 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.

  El Paso Electric CompanyStatements of OperationsQuarter Ended September 30, 2014 and 2013(In thousands except for per share data)(Unaudited)             2014 2013 Variance   Operating revenues, net of energy expenses: Base revenues $ 183,405 $ 184,687 $ (1,282 ) (a) Deregulated Palo Verde Unit 3 revenues 3,944 3,047 897 Other 7,702   8,264   (562 ) Operating Revenues Net of Energy Expenses 195,051 195,998 (947 )   Other operating expenses: Other operations and maintenance 54,417 51,519 2,898 Palo Verde operations and maintenance 20,489 20,014 475 Taxes other than income taxes 17,964 18,153 (189 ) Other income 1,389   1,561   (172 ) Earnings Before Interest, Taxes, Depreciation and Amortization 103,570 107,873 (4,303 ) (b)   Depreciation and amortization 20,685 20,416 269 Interest on long-term debt 14,617 14,623 (6 ) AFUDC and capitalized interest 7,308 4,968 2,340 Other interest expense 438   153   285   Income Before Income Taxes 75,138 77,649 (2,511 )   Income tax expense 22,662   27,084   (4,422 )   Net Income $ 52,476   $ 50,565   $ 1,911     Basic Earnings per Share $ 1.30   $ 1.26   $ 0.04     Diluted Earnings per Share $ 1.30   $ 1.26   $ 0.04     Dividends declared per share of common stock $ 0.28   $ 0.265   $ 0.015     Weighted average number of shares outstanding 40,214   40,132   82    

Weighted average number of shares and dilutive potential shares outstanding

42,065   40,132   1,933     (a) Base revenues exclude fuel recovered through New Mexico base rates of $22.4 million and $22.7 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.     El Paso Electric CompanyStatements of OperationsNine Months Ended September 30, 2014 and 2013(In thousands except for per share data)(Unaudited)     2014 2013 Variance   Operating revenues, net of energy expenses: Base revenues $ 438,613 $ 445,533 $ (6,920 ) (a) Deregulated Palo Verde Unit 3 revenues 11,903 9,260 2,643 Palo Verde performance rewards, net 2,220 — 2,220 Other 22,331   23,990   (1,659 ) Operating Revenues Net of Energy Expenses 475,067 478,783 (3,716 )   Other operating expenses: Other operations and maintenance 153,515 147,600 5,915 Palo Verde operations and maintenance 68,041 67,470 571 Taxes other than income taxes 48,883 44,782 4,101 Other income 8,642   2,524   6,118   Earnings Before Interest, Taxes, Depreciation and Amortization 213,270 221,455 (8,185 ) (b)   Depreciation and amortization 62,336 59,346 2,990 Interest on long-term debt 43,803 43,829 (26 ) AFUDC and capitalized interest 19,853 15,896 3,957 Other interest expense 899   456   443   Income Before Income Taxes 126,085 133,720 (7,635 )   Income tax expense 38,898   46,328   (7,430 )   Net Income $ 87,187   $ 87,392   $ (205 )   Basic Earnings per Share $ 2.16   $ 2.17   $ (0.01 )   Diluted Earnings per Share $ 2.16   $ 2.17   $ (0.01 )   Dividends declared per share of common stock $ 0.825   $ 0.78   $ 0.045     Weighted average number of shares outstanding 40,181   40,108   73    

Weighted average number of shares and dilutive potential shares outstanding

40,209   40,124   85     (a) Base revenues exclude fuel recovered through New Mexico base rates of $55.6 million and $57.2 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 CompanyCash Flow SummaryNine Months Ended September 30, 2014 and 2013(In thousands and Unaudited)                 2014 2013 Cash flows from operating activities: Net income $ 87,187 $ 87,392 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization of electric plant in service 62,336 59,346 Amortization of nuclear fuel 33,942 33,621 Deferred income taxes, net 35,990 45,479 Other (1,680 ) 4,396 Change in: Accounts receivable (47,331 ) (35,097 ) Net undercollection of fuel revenues (1,233 ) (8,362 ) Accounts payable 3,557 (3,729 ) Other 1,869   1,865   Net cash provided by operating activities 174,637   184,911     Cash flows from investing activities: Cash additions to utility property, plant and equipment (189,273 ) (165,303 ) Cash additions to nuclear fuel (28,772 ) (19,895 ) Decommissioning trust funds (6,988 ) (6,994 ) Other (2,805 ) (3,575 ) Net cash used for investing activities (227,838 ) (195,767 )   Cash flows from financing activities: Dividends paid (33,261 ) (31,379 ) Borrowings under the revolving credit facility, net 75,176 (6,664 ) Other (896 ) (210 ) Net cash provided by (used for) financing activities 41,019   (38,253 )   Net decrease in cash and cash equivalents (12,182 ) (49,109 )   Cash and cash equivalents at beginning of period 25,592   111,057     Cash and cash equivalents at end of period $ 13,410   $ 61,948       El Paso Electric CompanyQuarter Ended September 30, 2014 and 2013Sales and Revenues Statistics             Increase (Decrease) 2014 2013 Amount   Percentage

kWh sales (in thousands):

Retail: Residential 894,525 880,105 14,420 1.6 % Commercial and industrial, small 694,928 680,380 14,548 2.1 % Commercial and industrial, large 276,226 276,232 (6 ) — Public authorities 424,445   449,469   (25,024 ) (5.6 )% Total retail sales 2,290,124   2,286,186   3,938   0.2 % Wholesale: Sales for resale 19,211 20,173 (962 ) (4.8 )% Off-system sales 740,153   683,600   56,553   8.3 % Total wholesale sales 759,364   703,773   55,591   7.9 % Total kWh sales 3,049,488   2,989,959   59,529   2.0 %

Operating revenues (in thousands):

Non-fuel base revenues: Retail: Residential $ 81,296 $ 80,003 $ 1,293 1.6 % Commercial and industrial, small 61,143 60,259 884 1.5 % Commercial and industrial, large 11,929 12,426 (497 ) (4.0 )% Public authorities 28,266   31,222   (2,956 ) (9.5 )% Total retail non-fuel base revenues 182,634 183,910 (1,276 ) (0.7 )% Wholesale: Sales for resale 771   777   (6 ) (0.8 )% Total non-fuel base revenues 183,405   184,687   (1,282 ) (0.7 )% Fuel revenues: Recovered from customers during the period 54,405 42,962 11,443 26.6 % Over collection of fuel (a) (12,136 ) (577 ) (11,559 ) — New Mexico fuel in base rates 22,416   22,662   (246 ) (1.1 )% Total fuel revenues (b) 64,685   65,047   (362 ) (0.6 )% Off-system sales: Fuel cost 22,007 20,223 1,784 8.8 % Shared margins 5,126 4,007 1,119 27.9 % Retained margins 605   478   127   26.6 % Total off-system sales 27,738 24,708 3,030 12.3 % Other (c) 7,817   8,219   (402 ) (4.9 )% Total operating revenues $ 283,645   $ 282,661   $ 984   0.3 %   (a) 2014 includes a Department of Energy refund related to spent fuel storage of $8.3 million. (b) Includes deregulated Palo Verde Unit 3 revenues for the New Mexico jurisdiction of $3.9 million and $3.0 million, respectively. (c) Represents revenues with no related kWh sales.     El Paso Electric CompanyQuarter Ended September 30, 2014 and 2013Other Statistical Data                 Increase (Decrease) 2014 2013 Amount Percentage  

Average number of retail customers: (a)

Residential 353,075 348,557 4,518 1.3 % Commercial and industrial, small 39,730 38,971 759 1.9 % Commercial and industrial, large 49 51 (2 ) (3.9 )% Public authorities 5,112   5,009   103   2.1 % Total 397,966   392,588   5,378   1.4 %  

Number of retail customers (end of period): (a)

Residential 353,640 349,077 4,563 1.3 % Commercial and industrial, small 39,813 38,926 887 2.3 % Commercial and industrial, large 49 51 (2 ) (3.9 )% Public authorities 5,126   5,044   82   1.6 % Total 398,628   393,098   5,530   1.4 %  

Weather statistics: (b)

10-Yr Average Heating degree days — — 1 Cooling degree days 1,415 1,444 1,474  

Generation and purchased power (kWh, in thousands):

Increase (Decrease) 2014 2013 Amount Percentage   Palo Verde 1,370,091 1,369,267 824 0.1 % Four Corners 164,665 162,474 2,191 1.3 % Gas plants 1,289,419   1,235,419   54,000   4.4 % Total generation 2,824,175 2,767,160 57,015 2.1 % Purchased power: Photovoltaic 65,854 31,035 34,819 — Other 320,869   390,260   (69,391 ) (17.8 )% Total purchased power 386,723   421,295   (34,572 ) (8.2 )% Total available energy 3,210,898 3,188,455 22,443 0.7 % Line losses and Company use 161,410   198,496   (37,086 ) (18.7 )% Total kWh sold 3,049,488   2,989,959   59,529   2.0 %   Palo Verde capacity factor 99.8 %

99.7

%

0.1 %     (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 CompanyNine Months Ended September 30, 2014 and 2013Sales and Revenues Statistics                         Increase (Decrease) 2014 2013 Amount Percentage

kWh sales (in thousands):

Retail: Residential 2,087,558 2,138,436 (50,878 ) (2.4 )% Commercial and industrial, small 1,809,477 1,813,330 (3,853 ) (0.2 )% Commercial and industrial, large 794,891 813,099 (18,208 ) (2.2 )% Public authorities 1,202,403   1,245,801   (43,398 ) (3.5 )% Total retail sales 5,894,329   6,010,666   (116,337 ) (1.9 )% Wholesale: Sales for resale 51,931 52,313 (382 ) (0.7 )% Off-system sales 2,003,020   1,891,861   111,159   5.9 % Total wholesale sales 2,054,951   1,944,174   110,777   5.7 % Total kWh sales 7,949,280   7,954,840   (5,560 ) (0.1 )%

Operating revenues (in thousands):

Non-fuel base revenues: Retail: Residential $ 186,718 $ 190,242 $ (3,524 ) (1.9 )% Commercial and industrial, small 146,939 146,763 176 0.1 % Commercial and industrial, large 30,220 30,995 (775 ) (2.5 )% Public authorities 72,837   75,666   (2,829 ) (3.7 )% Total retail non-fuel base revenues 436,714 443,666 (6,952 ) (1.6 )% Wholesale: Sales for resale 1,899   1,867   32   1.7 % Total non-fuel base revenues 438,613   445,533   (6,920 ) (1.6 )%   Fuel revenues: Recovered from customers during the period 126,107 102,057 24,050 23.6 % Under collection of fuel (a) 1,223 8,369 (7,146 ) (85.4 )% New Mexico fuel in base rates 55,643   57,213   (1,570 ) (2.7 )% Total fuel revenues (b) 182,973   167,639   15,334   9.1 %   Off-system sales: Fuel cost 61,470 51,379 10,091 19.6 % Shared margins 14,515 10,254 4,261 41.6 % Retained margins 1,729   1,227   502   40.9 % Total off-system sales 77,714 62,860 14,854 23.6 % Other (c) 21,662   24,033   (2,371 ) (9.9 )% Total operating revenues $ 720,962   $ 700,065   $ 20,897   3.0 %   (a) 2014 includes a Department of Energy refund related to spent fuel storage of $8.3 million and $2.2 million related to Palo Verde performance rewards, net. (b) Includes deregulated Palo Verde Unit 3 revenues for the New Mexico jurisdiction of $11.9 million and $9.3 million, respectively. (c) Represents revenues with no related kWh sales.     El Paso Electric CompanyNine Months Ended September 30, 2014 and 2013Other Statistical Data       Increase (Decrease) 2014 2013 Amount   Percentage  

Average number of retail customers: (a)

Residential 351,813 347,357 4,456 1.3 % Commercial and industrial, small 39,477 38,704 773 2.0 % Commercial and industrial, large 49 50 (1 ) (2.0 )% Public authorities 5,090   4,980   110   2.2 % Total 396,429   391,091   5,338   1.4 %  

Number of retail customers (end of period): (a)

Residential 353,640 349,077 4,563 1.3 % Commercial and industrial, small 39,813 38,926 887 2.3 % Commercial and industrial, large 49 51 (2 ) (3.9 )% Public authorities 5,126   5,044   82   1.6 % Total 398,628   393,098   5,530   1.4 %  

Weather statistics: (b)

10-Yr Average Heating degree days 1,042 1,419 1,255 Cooling degree days 2,535 2,615 2,551          

Generation and purchased power (kWh, in thousands):

Increase (Decrease) 2014 2013 Amount Percentage   Palo Verde 3,926,066 3,922,200 3,866 0.1 % Four Corners 436,889 486,544 (49,655 ) (10.2 )% Gas plants 2,884,707   2,846,346   38,361   1.3 % Total generation 7,247,662 7,255,090 (7,428 ) (0.1 )% Purchased power: Photovoltaic 174,038 97,098 76,940 79.2 % Other 974,317   1,046,284   (71,967 ) (6.9 )% Total purchased power 1,148,355   1,143,382   4,973   0.4 % Total available energy 8,396,017 8,398,472 (2,455 ) — % Line losses and Company use 446,737   443,632   3,105   0.7 %

Total kWh sold

7,949,280   7,954,840   (5,560 ) (0.1 )% Palo Verde capacity factor 96.4% 96.2 %   0.2 %   (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 CompanyFinancial StatisticsAt September 30, 2014 and 2013(In thousands, except number of shares, book value per share, and ratios)     Balance Sheet 2014 2013   Cash and cash equivalents $ 13,410   $ 61,948     Common stock equity $ 1,015,857 $ 893,698 Long-term debt 984,688   999,598   Total capitalization $ 2,000,545   $ 1,893,296     Current maturities of long-term debt $ 15,000   $ —     Short-term borrowings under the revolving credit facility $ 89,528   $ 15,491     Number of shares - end of period 40,357,982   40,253,783     Book value per common share $ 25.17   $ 22.20     Common equity ratio (a) 48.3 % 46.8 % Debt ratio 51.7 % 53.2 %   (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.

El Paso Electric CompanyMedia Contact:Eddie Gutierrez, 915-543-5763eduardo.gutierrez@epelectric.comorInvestor Relations:Lisa Budtke, 915-543-5947lisa.budtke@epelectric.com