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El Paso Electric Files Unopposed Settlement in Texas Rate Case

July 27, 2016 By Cheryl Kaften

El Paso Electric (EPE) filed an unopposed settlement agreement on July 21 (Docket No.44941) for its rate case pending before the Public Utility Commission of Texas (PUCT).

If approved by the PUCT, the unopposed settlement would resolve EPE’s rate case, including the revenue requirement for the Four Corners Generating Station, in which EPE owns a 7 percent interest.

The pact does not include the utility’s proposed solar panel surcharge, which will be considered at a later date.

Background

Originally, the utility had asked for a $69.2 million base rate increase and a $2.3 million step-up in miscellaneous revenues – claiming that the increase in base rates was necessary in order to recover “certain operations and maintenance (O&M) expenses associated with the utility’s ownership share in [two] Four Corners coal-fired generating units,” according to the testimony of city consultant Scott Norwood; as well as capital investments in other plants and transmission lines.

Instead, the city of El Paso recommended a lesser overall increase in rates of $41.7 million – comprising a $39.4 million increase in base rates, and a $2.3 million increase in miscellaneous revenues. That amount would reduce the utility’s proposed revenues by $46.8 million or 67 percent.

In addition, the city asked the commission to reject El Paso Electric’s proposal to introduce an extra rate class for new rooftop solar customers – effectively raising fixed charges for them by $12, which represents one-third more than the $8 paid by other classes of ratepayers.

Indeed, the El Paso Electric rate request was unanimously denied in its entirety, with no small degree of vehemence, by the El Paso City Council on December 8.

Resolution

The new agreement includes the following disbursements:

  • An annual non-fuel base rate increase of $37 million;
  • An additional annual non-fuel base rate increase of $3.7 million related to Four Corners Generating Station operating costs;
  • Recovery of most rate base case costs.

The average bill will probably go up $2 or $3 for the next 24 months and it will be on [customers’ bills] as a surcharge and it will be itemized to legal expenses on the equipment,” El Paso Electric spokesperson Eddie Gutierrez told local news outlet KFOX14.

“While we did not anticipate some of the delays that occurred following the filing of the first proposed settlement in March, we are pleased to have been able to reach a resolution,” said El Paso Electric CEO Mary Kipp. ”

The settlement documents were filed with Administrative Law Judges assigned to oversee EPE’s Texas rate case, who have been asked to return the settled case to the PUCT for approval.

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