Dec 10 – McClatchy-Tribune Regional News – Vic Kolenc El Paso Times, Texas

For the first time in 15 years, El Paso Electric wants to increase electric rates in the El Paso area beginning in July to pay for increased costs.

The company said the increase would be 9.6 percent, or $5.77 a month, for the average El Paso-area residential customer, if increased profit sharing with customers is included.

The company on Wednesday filed its rate request with the Public Utility Commission of Texas.

El Paso Electric CEO David Stevens said the increase is needed to pay for increased costs, including the first phase of the expansion of the Newman power plant in Northeast El Paso.

“It’s been 15 years since we increased rates, and we decreased rates in 1999 by $15.4 million,” an average 8 percent decrease for residential customers, Stevens said. “Our capital budget is almost triple what it was five years ago. … We’re putting a lot of investment into the system so customers can rely on us.”

The company in the summer of 2011 will look again at the possibility of requesting another rate increase to recover costs for phase two of the Newman power plant expansion, Stevens said.

El Paso Mayor John Cook said the city will “look very carefully” at the company’s request. The city’s rate case consultants will study the request, along with city staff, he said, and they will make a recommendation to the City Council on whether the city should accept or contest the request.

The city also could reach an agreement with the utility on a different rate

increase amount, Cook said.

The mayor said he’d like the City Council to re-form the city’s disbanded Public Utility Regulation Board to analyze the request.

Yvonne Corkran, 44, who lives in far East El Paso with her husband and two children, said El Paso Electric’s request comes at a bad time because of the recession.

“We feel the crunch even though we both work,” Corkran said. “The cost of living is crazy right now. … They (El Paso Electric) have to pay for growth, but 9 percent (increase) sounds like a lot, especially now.”

The company is seeking a rate increase of $51.6 million, or an increase of 9.3 percent for all customers. That would bring an 11 percent, or $6.69 a month, increase for the average El Paso residential customer, according to the company’s filing with state regulators.

However, a projected $12.3 million in reduced annual fuel charges to customers tied to increased profit sharing lowers the rate increase to an average 9.6 percent for residential customers, the company reported.

The average increase for small commercial customers would be 6 percent, with the reduced fuel charges included; for medium commercial customers, an average 5.3 percent; and for large commercial and industrial customers, an average 4.4 percent.

In 2006, El Paso Electric agreed to increase the amount of profits shared with customers for off-system electric sales from 25 percent to 90 percent beginning July 2010. Those profits reduce fuel charges to customers.

The net rate increase request, with the reduced fuel charges included, is $38.5 million, or an increase of 6.9 percent for all classes of customers, the company reported.

Cook said he isn’t satisfied El Paso Electric knows exactly how much the increase will affect customers’ bills.

The company “threw out an average $5 to $6 (per month) increase” during a briefing, Cook said. But “they didn’t want to be held to that number” because they weren’t sure what would happen with the fuel reduction amount, he said.

Stevens said the estimated $12.3 million annual reduction in fuel charges tied to profit sharing is “not 100 percent predictable.” It could be a larger or smaller amount. “But based on the last five years, it’s a lower than average number,” he said.

Stevens said he hopes El Paso Electric can come to an agreement with the city on a rate increase, so the agreement can be taken to the Public Utility Commission. Chances are good the commission would approve such an agreement, and that could reduce the time needed for the rate case, he said. If the case is contested, he said, it is likely to take seven months or more before a decision comes from the commission.

El Paso Electric reported in its request that the rate case will cost the company $5.9 million in fees for consultants and lawyers. It wants to recover those costs in the new rates.

The company in May filed for a rate increase for its New Mexico customers, but because of decreased fuel costs, customers’ bills will decrease even if the rate increase is approved for this summer, the company reported.

Vic Kolenc may be reached at vkolenc@elpasotimes.com; 546-6421.

For more information: www.epelectric.com

Rate timeline

–El Paso Electric Wednesday filed a request with the Public Utility Commission of Texas to increase El Paso-area rates.

–The company wants the new rates to take effect July 1. A rate freeze ends June 30.

–Mayor John Cook said the city has 90 days to decide whether it should accept or contest the proposed increase.

–If the case is contested, it is likely to take at least seven months before the state commission decides on the case, said El Paso Electric CEO David Stevens.