El Paso Electric : TX Fuel Charge Increase Approved, Rate Cases to be Filed in 2017

January 4, 2017

Texas - On January 3, 2017, the proposed increase to the fixed fuel charge for El Paso Electric's (EPE) Texas customers was approved. Customers will begin to see the increased fuel charge in bills starting as early as this week. The adjusted fuel charge will increase the average residential bill by $3.55 per month. The reason for the increase of natural gas prices and for continuing natural gas price increase is due to increasing demand, flat production of gas and decreasing stock of gas storage. EPE is permitted by the Public Utility Commission of Texas to only recover its actual fuel-related expenses and is not allowed to earn a profit on these costs.

2017 Rate Cases

In addition, EPE has provided notice to the cities within its Texas service territory advising them of EPE's intent to file an application to change rates this year. EPE anticipates filing a rate increase proposal in Texas in the first quarter of 2017 and in early spring in New Mexico.

The details of each filing are still in development and the proposed impacts and proposals will be available once the rate increase proposal is filed publicly.

These proposals to increase rates are necessary to recover investments EPE has made to replace old equipment and build new generation like the Montana Power Station units 3 and 4 that became operational earlier this year. Our new generation replaces equipment as old as 57 years with generation that is 35 percent more efficient. EPE must continue making these investments to continue supporting the economic and population growth the region continues to experience.

In addition to recovering costs for investments, the costs of serving residential customers with private solar panels on their homes will be addressed again in these rate case filings.

Investments

Since 2009, EPE has invested $1.4 billion in new infrastructure, generating equipment and assets to meet the growing energy needs of our region. In the next five years, EPE plans to invest an additional $1 billion in new generation, transmission and distribution projects to continue meeting the growing trend.

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Fuel Charge Background - December 2, 2016

Texas -El Paso Electric (EPE) filed with the Public Utility Commission of Texas (PUCT) to increase its existing Texas fuel charge to more accurately reflect the current cost, and forecasted rising cost, of fuel. If approved by the PUCT, the new fuel charge would go into effect on January 1, 2017 increasing the average residential customer bill by $3.55 per month.

The fuel charge is the cost of the fuel used to generate electricity which EPE incurs in supplying electric power to customers. EPE adjusts fuel factors periodically. Currently, EPE's fuel costs have been increasing and these costs are exceeding the amount that is being collected through EPE's current fuel charge. The last adjustment occurred in April 2015 when the fuel charge was decreased by $3.74 based on an average customer bill.

EPE is permitted by the PUCT to only recover its actual fuel-related expenses and is not allowed to earn a profit on these costs.

EPE will continue to monitor market indicators and adjust accordingly.