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NMPRC Issues Recommended Decision in El Paso Electric’s New Mexico Rate Case

February 25, 2016 By Cheryl Kaften

El Paso Electric Company (EPE) – a public utility that provides electricity to nearly 400,000 retail and wholesale customers in New Mexico and Texas – has announced that the Hearing Examiner assigned by the New Mexico Public Regulation Commission (NMPRC) to EPE’s rate filing (Case No. 15-00127-UT) issued a recommended decision in the case on February 16.

The recommendation, made by Hearing Examiner Elizabeth Hurst, would reduce the utility’s requested annual increase in non-fuel base rates by about ten percent – from $6.4 million to about $0.64 million (or $640,000).

EPE initially had asked for an annual increase in non-fuel base rates of approximately $8.6 million, or $7.1 percent, to cover the cost of its investments in power plants and transmission infrastructure. The utility said that, since it last had received a rate hike in 2009, it had invested about $1.3 billion in new operating assets.

Indeed, in June, in the utility’s first notice to customers, EPE had explained, “This revenue requirement reflects … an increase of $8.6 million in non-fuel base revenue over current non-fuel base revenue, or a 7.1 percent increase; and a decrease of $15.4 million in base fuel revenue, as compared to current base fuel revenue, or a 21.5 percent decrease. In total, including all charges, the $8.6 million is an overall system increase of 4.4 percent after accounting for fuel cost reductions.

At that time, EPE expected that the total bill impact of the proposed base rate changes for a residential customer using an average of 750 kilowatt hours (kWh) during a summer month would be 1.26 percent. EPE’s proposed increase in non-fuel base rates represented an increase of $8.37 per summer month, to be offset partially by reductions in the base fuel charge.

However, according to a report in the Albuquerque Journal, that first request generated broad opposition from interveners, including the New Mexico Attorney General’s Office, the city of Las Cruces, and Doña Ana County. They argued instead for granting less than a 1 percent hike, ranging from a low of $222,000 in new revenue proposed by the Attorney General to $690,000 recommended by the county.

Before hearings held in November, El Paso Electric did agree to reduce its revenue request to $6.4 million, but the other parties rejected that concession as insufficient.

“While we do not agree with some of the Hearing Examiner’s recommendations, we also recognize that this is just one more step in the process of establishing fair rates in New Mexico,” said El Paso Electric CEO Mary Kipp, adding, “The rate case involves some complex legal and accounting issues, and we look forward to presenting our position to the full New Mexico Commission.”

The commission’s rules allow 13 days from the issuance of the recommended decision for the filing of exceptions and eight days from the filing of exceptions for the filing of responses to exceptions. Given the issuance of the recommended decision on February 16, responses to exceptions will not be due until March 8. Under the current suspension period, the last open meeting at which the commission will have an opportunity to consider the recommended

The company also has a rate case pending in Texas.

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