El Paso Electric and City of El Paso Agree in Principle on Terms of Settlement for Texas Rate Case Docket No. 46831
September 19 2017 - 6:22PM
Business Wire
El Paso Electric Company (EPE) (NYSE: EE) today announced that
the City of El Paso approved, in principle, the settlement terms
for EPE's rate case pending in Docket No. 46831 before the Public
Utility Commission of Texas (PUCT). No party in the case has
indicated that it intends to oppose the proposed settlement.
Key terms of the proposed settlement include: (i) an annual
non-fuel base rate increase of $14.5 million; (ii) a return on
equity of 9.65%; (iii) a determination that all new plant in
service was prudent and used and useful and therefore is included
in rate base; and (iv) allowing EPE to recover reasonable rate case
expenses, subject to Commission Staff’s review and currently
estimated to be approximately $3.0 million, through a separate
surcharge over a three year period.
The settlement also establishes baseline revenue requirements
for transmission and distribution investment costs. The
establishment of such baseline revenue requirements will allow EPE
to file an application with the PUCT to adjust its rates to recover
the incremental costs for these investments periodically, with the
first such filing to be made no earlier than January 1, 2019. Texas
regulations allow a utility to recover its incremental investment
in transmission and distribution infrastructure not included in the
Company’s last general rate case proceeding before the PUCT. The
investment is recovered through separate mechanisms known as a
Transmission Cost Recovery Factor or Distribution Cost Recovery
Factor after a baseline of the level of investment and associated
cost has been established in a general rate proceeding.
The settlement also includes a minimum monthly charge of $30.00
for residential customers with distributed generation, such as
private rooftop solar. This charge is to recover the cost of grid
and customer-related services. This new monthly charge is only
applicable to customers that apply for interconnection after the
date of the issued final PUCT order in the rate case (Final Order).
The parties also agreed not to establish a separate rate class for
customers with private rooftop solar at this time.
Additionally, the proposed settlement allows for the annual
recovery of $2.1 million of nuclear decommissioning funding and
establishes annual depreciation expense that is approximately $1.9
million lower than the annual amount requested by EPE in its
initial filing.
Once the parties have agreed formally to the terms of the
settlement and executed the final documentation, the settlement
documents will be filed with the Administrative Law Judges, along
with a request that they return the case to the PUCT for approval.
A Final Order is anticipated to be issued in the fourth quarter of
2017. Regardless of when the Final Order is issued, the new rates
will relate back to consumption on or after July 18, 2017.
"A rate case is a complex process with many intervening parties
and interests represented," said Mary Kipp, El Paso Electric’s
President and Chief Executive Officer. "I am pleased the
regulatory process allows the opportunity for all involved parties
to work together and to collaboratively find solutions that are in
the best interests of our customers, community, and other
stakeholders. We continue to remain committed to meeting the
growing energy needs of our community in a smart, environmentally
responsible, and cost-effective way.”
On February 13, 2017, EPE filed a request for an increase in
annual non-fuel base revenues of approximately $42.5 million with
the City of El Paso, other incorporated municipalities in its Texas
service territory and the PUCT. EPE filed a motion to sever the
estimated rate case expenses into a separate hearing on May 30,
2017, and modified the requested increase to $39.2 million. The
actual level of rate case expenses approved for recovery is subject
to PUCT Staff review, which is expected to be completed prior to
the issuance of a Final Order by the PUCT.
El Paso Electric Company is a regional electric utility
providing generation, transmission and distribution service to
approximately 416,000 retail and wholesale customers in a 10,000
square mile area of the Rio Grande valley in west Texas and
southern New Mexico.
Safe Harbor
This news release includes statements that may constitute
forward-looking statements made pursuant to the safe harbor
provisions within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Forward-looking statements often involve risks
and uncertainties that could cause actual results to differ
materially from such forward-looking statements. Risks and factors
that could cause or contribute to such differences include, but are
not limited to: (i) a breakdown in settlement discussions with the
parties in EPE’s Texas rate case; (ii) EPE’s inability to reach
final agreement with the intervenors in EPE’s Texas rate case;
(iii) increased prices for fuel and purchased power and the
possibility that regulators may not permit EPE to pass through all
such increased costs to customers or to recover previously incurred
fuel costs in rates; (iv) full and timely recovery of capital
investments and operating costs through rates in Texas and New
Mexico; and (v) other factors detailed by EPE in its public filings
with the Securities and Exchange Commission (SEC). EPE's filings
are available from the SEC or may be obtained through EPE's
website, http://www.epelectric.com. Although EPE believes that the
expectations reflected in such forward-looking statements are
reasonable, no assurances can be given that these expectations will
prove to be correct. Any such forward-looking statement is
qualified by reference to these risks and factors. EPE cautions
that these risks and factors are not exclusive. The forward-looking
statements are subject to and involve risks, uncertainties and
assumptions and you should not place undue reliance on these
forward-looking statements. EPE does not undertake to update or
revise any forward-looking statement that may be made from time to
time by or on behalf of EPE except as required by law. If EPE does
update one or more forward-looking statements, there should be no
inference that EPE will make additional updates with respect to
these or other forward-looking statements.
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version on businesswire.com: http://www.businesswire.com/news/home/20170919006696/en/
El Paso Electric CompanyPublic Relations:Eddie Gutierrez,
915-543-5763eduardo.gutierrez@epelectric.comorInvestor
Relations:Lisa Budtke,
915-543-5947lisa.budtke@epelectric.comorRichard Gonzalez,
915-543-2236richard.gonzalez@epelectric.com
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