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NYSE:EE 68.40 -0.01 -0.01% Volume: Learn more July 29, 2020
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El Paso Electric Announces Third Quarter Financial Results

November 04, 2008

Overview

  • For the third quarter 2008, EE reported net income of $33.1 million, or $0.74 basic and diluted earnings per share. In the third quarter of 2007, EE had net income of $36.1 million, or $0.79 basic and diluted earnings per share.
  • For the nine months ended September 30, 2008, EE reported net income of $66.8 million, or $1.49 and $1.48 basic and diluted earnings per share, respectively. Net income for the nine months ended September 30, 2007 was $60.8 million, or $1.33 and $1.32 basic and diluted earnings per share, respectively.


Earnings Summary




Third Quarter 2008


  • Higher retained margins on off-system sales as a result of a 66% increase in MWh sales along with slightly higher margins per MWh.
  • Higher proxy market prices for deregulated Palo Verde Unit 3 power sold to retail customers.
  • Increased revenues for transmission wheeling in 2008 largely due to wheeling power in southern New Mexico and Arizona.
  • Increased AFUDC (allowance for funds used during construction) due to higher balances of construction work in progress subject to AFUDC in 2008.


  • Lower retail non-fuel revenues of $3.6 million or 2.6% in 2008 due to a 3.3% decrease in kWh sales to retail customers. The decrease in kilowatt-hour sales was due to cooler than normal weather in the third quarter of 2008 compared to the same period in 2007. Cooling degree days in the third quarter of 2008 were 24% lower than in the third quarter of 2007.
  • Increased interest expense on long-term debt primarily due to the issuance of $150 million of 7.5% Senior Notes in June 2008 and to a smaller extent higher interest rates on auction rate pollution control bonds.
  • Lower interest and investment income primarily due to impairments of equity investments in our Palo Verde decommissioning trust funds.
  • Increased depreciation and amortization expense primarily due to higher depreciable plant balances.
Year to Date


  • Higher proxy market prices for deregulated Palo Verde Unit 3 power sold to retail customers.
  • Higher retail non-fuel base revenues in 2008 largely due to increased revenues from small commercial and industrial customers and other public authorities. Revenues from small commercial and industrial customers and other public authorities were primarily the result of increased kilowatt-hour sales to these customers of 2.7% and 5.2%, respectively.
  • Increased revenues for transmission wheeling in 2008 largely due to wheeling power in southern New Mexico and Arizona.
  • Increased AFUDC and capitalized interest due to higher balances of construction work in progress subject to AFUDC and nuclear fuel inventory subject to capitalized interest in 2008.
  • Higher retained margins on off-system sales as a result of increased sales and higher margins from off-system sales to a wholesale customer.


  • Increased Palo Verde non-fuel operations and maintenance expenses in 2008 due to higher maintenance costs at Palo Verde Unit 2 associated with refueling the unit, including some unscheduled preventive maintenance, and increased operating costs at all three units.
  • Increased interest expense on long-term debt primarily due to the issuance of $150 million of 7.5% Senior Notes in June 2008 and to a smaller extent higher interest rates on auction rate pollution control bonds.
  • Increased O&M costs at our fossil-fueled generating plants as planned major maintenance was performed at Four Corners Unit 5 and Newman Unit 3 in 2008. In 2007 no major maintenance was performed at our fossil-fueled generating units.
  • Lower interest and investment income due to impairments of equity investments in our Palo Verde decommissioning trust funds and a decrease in the fair value of our investments in auction rate securities.
  • Increased depreciation and amortization primarily due to increased depreciable plant balances.
Key Earnings Drivers


Retail Non-fuel Base Revenues





Palo Verde Operations




Off-system Sales










Capital and Liquidity












2008 Earnings Guidance


Conference Call
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Safe Harbor
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