El Paso Electric and City of El Paso Agree in Principle on Terms of Settlement for Texas Rate Case Docket No. 44941
February 29 2016 - 12:05PM
Business Wire
El Paso Electric Company (EPE) (NYSE: EE) announced that earlier
today the City of El Paso approved in principle settlement terms
for EPE’s rate case pending before the Public Utility Commission of
Texas (PUCT). Attorneys for a majority of the parties in the case
have indicated they intend to support or do not intend to oppose
the proposed settlement. Four parties in the case have indicated
they intend to oppose the settlement. If approved by the PUCT, the
settlement would resolve all issues in the case except for the
contested revenue requirement issue regarding the Four Corners
Generating Station.
Key terms of the proposed settlement include: (i) an annual
non-fuel base rate increase of $37 million; (ii) the potential for
an additional base rate increase of $8 million related to Four
Corners costs (as a result of severing and separately litigating
this item from the main rate case); (iii) lower annual depreciation
expense as recommended by the City of El Paso of approximately $8.5
million; (iv) a return on equity of 9.7% for AFUDC purposes; and
(v) a determination that substantially all new plant in service was
reasonable and necessary and therefore would be included in rate
base. The proposed settlement is subject to documentation and
formal agreement by the settling parties as well as approval by the
PUCT.
Once the settling parties have agreed formally to the terms and
executed the final documentation, the settlement documents will be
filed with the PUCT for approval. It is anticipated that a brief
hearing may occur before the Administrative Law Judges on the case
who would issue a proposal for decision on the settlement for
consideration by the PUCT.
“Any time the parties to a rate case can find terms that fairly
reflect their competing interests, I think it is better for
everyone involved to settle rather than face lengthy and costly
litigation,” said Mary Kipp, El Paso Electric’s Chief Executive
Officer. "I am satisfied with the terms of the proposed settlement
and feel that the interests of our customers, our community, our
shareholders, other stakeholders and the intervening parties have
been recognized. Perhaps more importantly, I have been pleased with
the regulatory process and the way in which so many parties have
worked together to reach terms that will allow El Paso Electric to
continue to meet the needs of our growing customer base with safe,
clean, reliable and affordable electricity."
On August 10, 2015, EPE filed a request for an increase in
non-fuel base revenues of approximately $71.5 million with the City
of El Paso, other incorporated municipalities in its Texas service
territory and the PUCT. When EPE filed its rebuttal testimony on
January 15, 2016, it modified the requested increase to $63.3
million.
El Paso Electric is a regional electric utility providing
generation, transmission and distribution service to approximately
400,000 retail and wholesale customers in a 10,000 square mile area
of the Rio Grande valley in west Texas and southern New Mexico. El
Paso Electric has a net dependable generating capability of 2,055
MW.
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 (the “Securities Act”), and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
This information often involves 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) a breakdown in
settlement discussions with the parties in EPE’s Texas rate case;
(ii) EPE’s inability to reach 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. EPE's filings are available from the Securities and
Exchange Commission or may be obtained through EPE's website,
http://www.epelectric.com. Although El Paso Electric 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. EPE does not
undertake to update any forward-looking statement that may be made
from time to time by or on behalf of EPE except as required by
law.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160229006553/en/
El Paso Electric CompanyPublic RelationsEddie Gutierrez,
915-543-5763eduardo.gutierrez@epelectric.comorInvestor
RelationsLisa Budtke,
915-543-5947lisa.budtke@epelectric.comorRichard Gonzalez,
915-543-2236richard.gonzalez@epelectric.com
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