El Paso Electric Requests $42.5M in Rates, Plus Distributed Generation with Demand Charges

On February 13, El Paso Electric filed (Docket No. 46831) with the Public Utility Commission of Texas (PUCT) to request an increase in non-fuel base revenues of approximately $42.5 million, or 8.71 percent over its adjusted test year base rate revenues. .

Under the proposed rates, a residential customer using 635 kWh per month would see an average bill increase of $8.25 when new rates are implemented.

The new rates will relate back for consumption on and after July 18, which is the 155th day after the filing of the rate case. The difference in rates that would have been billed will be surcharged or refunded to customers after the PUCT’s final order.

The utility also requested authority to interconnect distributed generation and to pay for it with a demand charge to participating customers.

Power Plant Costs

“As we’ve previously indicated, the 2017 rate case is needed to recover the costs to complete the [gas-fired] Montana Power Station  and other investments to meet our customers’ growing needs. We’ve worked hard to modernize our aging local generation fleet and promote solar and other clean energy technologies our customers want,” said El Paso Electric CEO Mary Kipp. “We spend a lot of time planning how to best meet the demands created by the continued growth of our region and these latest investments will benefit our customers well into the future.”

Since March 31, 2015, the end of the test year in the company’s 2015 Texas Rate Case, the utility has invested about $444.3 million in new plants. Approximately $151.3 million was invested in MPS Units 3 and 4 and the related common plant to keep pace with load growth and to maintain reliable service for customers.

According to El Paso Electric, “These new units enhance operational flexibility due to their quick-start and cycling capabilities, as well as the ability to quickly respond to load variations. This last capability is critical as the company and its customers expand the amount of renewable resources connected to the grid locally.”

The utility said that the remainder of the investment comprises:

  • $139.8 million in new transmission and distribution facilities,
  • $59.4 million of Palo Verde Nuclear Generating Station plant,
  • $50.3 million in existing local generation, and
  • $43.5 million in general and intangible and other plant.

Distributed Generation Planned      

Similar to its 2015 rate case, the El Paso Electric again is proposing the creation of a Residential Distributed Generation (DG) rate class for residential customers with DG facilities, such as private rooftop solar panels, “in order to reflect the unique service characteristics and cost of service for this group of customers.”

In a statement released by El Paso Electric, the utility stated, “Consistent with its treatment of other rate groups, the company is proposing to assign the full cost of service to the new rate group, and is also proposing to implement a new rate structure including a monthly demand charge to recover the cost of grid-related services.

“It is important to establish a fair rate structure that reflects the cost to serve each customer class,” said Kipp. “As technologies evolve and our customers’ needs change, we must also evolve to provide programs and rate structures that allow us to provide safe and reliable service at a price that is fair to all our customers.”

In a simultaneous process, the company filed the rate case with the City of El Paso, municipalities in its Texas service territory, and the PUCT. The PUCT will refer the case to the Texas State Office of Administrative Hearings, which will then appoint an administrative law judge to adjudicate the case.

The cities and towns in the company’s Texas service territory maintain their right to regulate this rate case process and make a decision on rates within their city limits. Their decisions can be appealed to the PUCT, which has appellate jurisdiction over the cities’ and towns’ decisions and original jurisdiction in the unincorporated areas of the Company’s Texas service territory. Any municipality can participate in the proceeding before the PUCT as an intervening party in Austin.

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