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El Paso Electric Announces Fourth Quarter and Annual Financial Results

February 23, 2010

Overview

  • For the fourth quarter 2009, EE reported net income of $8.0 million, or $0.18 basic and diluted earnings per share. In the fourth quarter of 2008, EE reported net income of $10.8 million, or $0.24 basic and diluted earnings per share.
  • For the twelve months ended December 31, 2009, EE reported net income of $66.9 million, or $1.50 basic and diluted earnings per share. Net income for the twelve months ended December 31, 2008 was $77.6 million, or $1.73 and $1.72 basic and diluted earnings per share, respectively.


Earnings Summary




Fourth Quarter 2009



  • Higher retail non-fuel base revenues in 2009 primarily due to a 6.6% increase in kWh sales to residential customers, a 17.5% increase in kWh sales to large commercial and industrial customers, and a 1.7% increase in kWh sales to public authorities.
  • Decreased interest expense on long-term debt primarily as the result of lower interest rates on pollution control bonds. In the fourth quarter of 2008, two series of pollution control bonds incurred higher interest rates in weekly auctions. These bonds were refinanced in March 2009 at a fixed 7.25% interest rate.
  • Increased transmission wheeling revenues due to a $2.5 million, pre-tax, reversal in 2008 of Tucson Electric Power wheeling revenues pursuant to the November 13, 2008 FERC initial decision with no comparable activity in 2009.

  • Decreased revenues from retail sales of deregulated Palo Verde Unit 3 power due to lower proxy market prices in the fourth quarter of 2009 compared to the same period in 2008.
  • Increased Palo Verde O&M due to increased operating costs at all three units and increased employee benefit expense due to higher postretirement benefit costs in the fourth quarter of 2009 when compared to the same period last year.
  • Increased administrative and general expense due to increased accruals for employee incentive compensation and increased pension and benefits expenses reflecting a lower discount rate used to determine postretirement benefit costs.
  • Lower retained margins on off-system sales as a result of a 37.4% decline in megawatt-hours (MWh) sold partially offset by reduced energy costs which resulted in higher margins per MWh in the fourth quarter of 2009 compared to the fourth quarter of 2008.
Full Year 2009


  • Higher retail non-fuel base revenues in 2009 primarily due to a 6.0% increase in kWh sales to residential customers and a 2.3% increase in kWh sales to public authorities partially offset by a 7.1% decrease in kWh sales to large commercial and industrial customers.
  • Increased transmission wheeling revenues due to a $2.5 million, pre-tax, reversal in 2008 of Tucson Electric Power wheeling revenues pursuant to the November 13, 2008 FERC initial decision with no comparable activity in 2009.

  • Lower retained margins on off-system sales primarily as a result of reduced margins per MWh due to lower market power prices and a 14.6% decline in MWh sales.
  • Decreased revenues from retail sales of deregulated Palo Verde Unit 3 power due to lower proxy market prices and lower sales as a result of a planned refueling outage in April and May 2009.
  • Increased administrative and general expense due to increased accruals for employee incentive compensation and increased pension and benefits expenses reflecting a lower discount rate used to determine postretirement benefit costs.
  • Increased Palo Verde O&M due to increased employee benefit expense due to higher postretirement benefit costs and increased operating costs in 2009 when compared to the same period last year. These increases were offset by decreased maintenance costs in 2009.
  • Increased interest expense on long-term debt as a result of the June 2008 issuance of $150 million of 7.5% Senior Notes partially offset by lower interest rates on the revolving credit facility used to finance nuclear fuel.
Retail Non-fuel Base Revenues




Palo Verde Operations


Off-system Sales









Capital and Liquidity












2010 Earnings Guidance


Conference Call
Off-system Sales http://www.epelectric.com

Safe Harbor
Off-system Sales http://www.epelectric.com
Categories: Press Releases
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