EL PASO, Texas--(BUSINESS WIRE)--
El Paso Electric Company (NYSE:EE):
Overview
-
For the third quarter of 2016, El Paso Electric Company ("EE" or the
"Company") reported net income of $74.6 million, or $1.84 basic and
diluted earnings per share. In the third quarter of 2015, EE reported
net income of $56.7 million, or $1.40 basic and diluted earnings per
share.
-
For the nine months ended September 30, 2016, EE reported net income
of $91.1 million, or $2.25 basic and diluted earnings per share. Net
income for the nine months ended September 30, 2015 was $81.3 million,
or $2.01 basic and diluted earnings per share.
"The third quarter of 2016 was a pivotal quarter for the Company. We
completed our more than $1.4 billion construction program, as we put the
last unit of the Montana Power Station into commercial operation. We
also received rate relief in Texas and New Mexico for Montana Units 1
and 2 and other plant added in the first phase of that program," said
Mary Kipp, Chief Executive Officer. "The August 25, 2016 final order
from the Public Utility Commission of Texas approving an unopposed
settlement allowed us to retroactively recognize revenues back to
January 12, 2016. Also during the third quarter of 2016, we completed
the sale of Four Corners, which means the Company no longer owns any
coal-fired generation. Looking ahead, we anticipate filing new rate
cases in Texas and New Mexico in the first half of 2017, primarily for
the recovery of costs associated with the second phase of our
construction program, including Montana Units 3 and 4, which are helping
meet continued customer growth."
Earnings Summary
The table and explanations below present the major factors affecting
2016 net income relative to 2015 net income (in thousands except per
share data):
|
|
|
Quarter Ended
|
|
|
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Nine Months Ended
|
|
|
|
Pre-Tax Effect
|
|
|
After-Tax Effect
|
|
|
Basic EPS
|
|
|
|
Pre-Tax Effect
|
|
|
After-Tax Effect
|
|
|
Basic EPS
|
September 30, 2015
|
|
|
|
|
|
$
|
56,740
|
|
|
|
$
|
1.40
|
|
|
|
|
|
|
|
$
|
81,270
|
|
|
|
$
|
2.01
|
|
Changes in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail non-fuel base revenues
|
|
|
$
|
32,544
|
|
|
|
|
21,153
|
|
|
|
|
0.52
|
|
|
|
|
$
|
36,568
|
|
|
|
|
23,769
|
|
|
|
|
0.59
|
|
Depreciation and amortization
|
|
|
|
6,428
|
|
|
|
|
4,179
|
|
|
|
|
0.10
|
|
|
|
|
|
3,983
|
|
|
|
|
2,589
|
|
|
|
|
0.06
|
|
Other revenues
|
|
|
|
1,275
|
|
|
|
|
829
|
|
|
|
|
0.02
|
|
|
|
|
|
714
|
|
|
|
|
464
|
|
|
|
|
0.01
|
|
O&M at fossil-fuel generating plants
|
|
|
|
1,074
|
|
|
|
|
698
|
|
|
|
|
0.02
|
|
|
|
|
|
(2,029
|
)
|
|
|
|
(1,319
|
)
|
|
|
|
(0.03
|
)
|
Changes in the effective tax rate
|
|
|
|
|
|
|
(5,288
|
)
|
|
|
|
(0.13
|
)
|
|
|
|
|
|
|
|
(5,952
|
)
|
|
|
|
(0.15
|
)
|
Investment and interest income
|
|
|
|
(2,139
|
)
|
|
|
|
(1,719
|
)
|
|
|
|
(0.04
|
)
|
|
|
|
|
(2,271
|
)
|
|
|
|
(1,804
|
)
|
|
|
|
(0.04
|
)
|
Interest on long-term debt
|
|
|
|
(1,859
|
)
|
|
|
|
(1,209
|
)
|
|
|
|
(0.03
|
)
|
|
|
|
|
(3,778
|
)
|
|
|
|
(2,455
|
)
|
|
|
|
(0.06
|
)
|
Allowance for funds used during construction
|
|
|
|
(698
|
)
|
|
|
|
(619
|
)
|
|
|
|
(0.02
|
)
|
|
|
|
|
(3,751
|
)
|
|
|
|
(3,330
|
)
|
|
|
|
(0.08
|
)
|
Taxes other than income taxes
|
|
|
|
(912
|
)
|
|
|
|
(592
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
|
(1,453
|
)
|
|
|
|
(944
|
)
|
|
|
|
(0.02
|
)
|
Other
|
|
|
|
717
|
|
|
|
|
464
|
|
|
|
|
0.01
|
|
|
|
|
|
(1,807
|
)
|
|
|
|
(1,176
|
)
|
|
|
|
(0.04
|
)
|
September 30, 2016
|
|
|
|
|
|
$
|
74,636
|
|
|
|
$
|
1.84
|
|
|
|
|
|
|
|
$
|
91,112
|
|
|
|
$
|
2.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Effect of the Public Utility Commission of Texas ("PUCT")
Final Order
On August 25, 2016, the PUCT issued its final order in the Company's
rate case in Docket No. 44941 (the "PUCT Final Order") approving the
Joint Motion to Implement Uncontested Amended and Restated Stipulation
and Agreement (the "Unopposed Settlement") (See "2015
Texas Retail Case Filing" for a discussion of the PUCT Final Order).
Given the uncertainties regarding the ultimate resolution of the case,
the Company did not recognize the financial effects of the Unopposed
Settlement in the Company's Statement of Operations prior to the
issuance of the PUCT Final Order. The increase in net income resulting
from the PUCT Final Order was approximately $23.3 million or $0.58 per
basic earnings per share. Approximately $10.7 million, after tax, of
this impact relates to the period from July 1, 2016 through September
30, 2016 and approximately $12.6 million, after tax, relates to the
period from January 12, 2016 through June 30, 2016.
Regulatory Lag
The Company completed construction of Montana Power Station ("MPS")
Units 3 and 4 and placed them into service on May 3, 2016 and September
15, 2016, respectively. The placement of these assets into service are
having and will continue to have a negative impact on the Company's 2016
and 2017 financial results until new rates are effective due to the
regulatory lag associated with the recovery of related costs. The
primary impacts from these assets being placed in service include a
reduction in amounts capitalized for allowance for funds used during
construction ("AFUDC"), and increases in depreciation, operations and
maintenance ("O&M") expense, property taxes and interest cost. The
Company anticipates filing new rate cases in Texas and New Mexico in the
first half of 2017 to reflect MPS Units 3 and 4 in rate base.
Third Quarter 2016
Income for the quarter ended September 30, 2016, when compared to the
quarter ended September 30, 2015, was positively affected by (presented
on a pre-tax basis):
-
Increased retail non-fuel base revenues primarily due to the
recognition of $33.7 million related to the PUCT Final Order. The
components of the increase are: (i) $26.0 million related to interim
rate increases effective April 1, 2016; (ii) $4.8 million of relate
back revenues from January 12, 2016 through March 31, 2016; and (iii)
$2.9 million related to additional Four Corners costs. Approximately
$17.2 million of this impact relates to the period from January 12,
2016 through June 30, 2016, which includes $10.8 million related to
interim rate increases, $4.8 million of relate back revenues from
January 12, 2016 and $1.6 million related to Four Corners additional
costs. Approximately $16.5 million of this impact relates to the
period from July 1, 2016 through September 30, 2016, which includes
$15.2 million related to interim rate increases and $1.3 million
related to Four Corners additional costs.
-
Decreased depreciation and amortization primarily due to a $7.4
million reduction approved by the PUCT and $0.3 million reduction
approved by the New Mexico Public Regulation Commission ("NMPRC") in
their final orders. The decrease was partially offset by an increase
in depreciation due to an increase in plant, including MPS Units 3 and
4 which were placed in service in May and September 2016, respectively.
-
Increased other revenues primarily due to the recognition of
miscellaneous service charges of $1.1 million related to the PUCT
Final Order.
-
Decreased O&M expenses related to the Company's fossil-fuel generating
plants primarily due to the sale of the Company's interest in Four
Corners in July 2016. This decrease was partially offset by increased
O&M expenses primarily due to an outage at Newman Unit 4 beginning in
June 2016.
Income for the quarter ended September 30, 2016, when compared to the
quarter ended September 30, 2015, was negatively affected by (presented
on a pre-tax basis):
-
Increase in effective tax rate primarily due to the change to
normalize state income taxes in accordance with the PUCT's and NMPRC's
most recent rate cases and the loss of the domestic production
activities deduction.
-
Decreased investment and interest income primarily due to lower
realized gains on securities sold from the Company's Palo Verde
decommissioning trust in the third quarter of 2016 compared to the
third quarter of 2015. The Company experienced increased investment
and interest income due to the Company's efforts to further diversify
its Palo Verde decommissioning trust fund investments during the third
quarter of 2015.
-
Increased interest on long-term debt due to the $150 million senior
notes issued in March 2016.
-
Decreased AFUDC due to lower balances of construction work in progress
("CWIP"), primarily due to MPS Units 3 and 4 being placed in service
in May and September 2016, respectively, and a reduction in the AFUDC
rate effective January 2016 as a result of the PUCT Final Order.
-
Increased taxes other than income taxes primarily due to increased
billed revenues in Texas.
First Nine Months of 2016
Income for the nine months ended September 30, 2016, when compared to
the nine months ended September 30, 2015, was positively affected by
(presented on a pre-tax basis):
-
Increased retail non-fuel base revenues primarily due to the
recognition of $33.7 million related to the PUCT Final Order. The
components of the increase are: (i) $26.0 million related to interim
rate increases effective April 1, 2016; (ii) $4.8 million of relate
back revenues from January 12, 2016 through March 31, 2016; and (iii)
$2.9 million related to additional Four Corners costs.
-
Decreased depreciation and amortization primarily due to (i) a $7.4
million reduction approved by the PUCT and $0.3 million reduction
approved by the NMPRC in their final orders and (ii) the change in the
estimated useful life of certain intangible software assets. These
decreases were partially offset by increased depreciation and
amortization related to an increase in plant, primarily due to MPS
Units 1 and 2 and the Eastside Operations Center ("EOC") being placed
in service in March 2015 and MPS Units 3 and 4 being placed in service
in May and September 2016, respectively.
-
Increased other revenues primarily due to the recognition of
miscellaneous service charges of $1.1 million related to the PUCT
Final Order.
Income for the nine months ended September 30, 2016, when compared to
the nine months ended September 30, 2015, was negatively affected by
(presented on a pre-tax basis):
-
Increase in effective tax rate primarily due to the change to
normalize state income taxes in accordance with the PUCT's and NMPRC's
most recent rate cases and the loss of the domestic production
activities deduction.
-
Decreased AFUDC due to lower balances of CWIP, primarily due to MPS
Units 1 and 2 and the EOC being placed in service in March 2015,
partially offset by AFUDC earned on construction costs related to MPS
Units 3 and 4 in 2016 and a reduction in the AFUDC rate effective
January 2016 as a result of the PUCT Final Order.
-
Increased interest on long-term debt due to the $150 million senior
notes issued in March 2016.
-
Decreased investment and interest income primarily due to lower
realized gains on securities sold from the Company's Palo Verde
decommissioning trust in the nine months ended September 30, 2016
compared to the nine months ended September 30, 2015. The Company
experienced increased investment and interest income due to the
Company's efforts to further diversify its Palo Verde decommissioning
trust fund investments during the nine months ended September 30, 2015.
-
Increased O&M expenses related to our fossil-fuel generating plants,
primarily due to outages at Newman Unit 4 and Rio Grande Unit 7 and
other maintenance activities. These increases were partially offset by
a maintenance outage at Newman Unit 5 and Unit 2 in the nine months
ended September 30, 2015, with no comparable expense in the nine
months ended September 30, 2016.
-
Increased taxes other than income taxes primarily due to increased
property tax rates and valuations in Texas as a result of MPS Units 1
and 2 and the EOC being placed in service during the first quarter of
2015 and increased billed revenues in Texas. These increases were
partially offset by decreased property taxes in Arizona due to
decreased property values.
Retail Non-fuel Base Revenues
Excluding the $33.7 million PUCT Final Order impact, for the third
quarter of 2016, retail non-fuel base revenues decreased $1.2 million,
pre-tax or 0.6% compared to the third quarter of 2015. This decrease was
primarily due to decreased revenues from large commercial and industrial
customers of $1.9 million due to a 6.2% decrease in kWh sales, due
primarily to reduced demand by the steel manufacturing industry, and an
interruptible rate surcharge to a large customer in 2015. In addition,
the negative effect on overall kWh sales due to milder weather during
the third quarter of 2016 compared to the third quarter of 2015 more
than offset the positive effect on kWh sales due to customer growth of
1.5% and the increase in rates in New Mexico. This reduction was
partially offset by an increase of $0.9 million in revenues from small
commercial and industrial customers resulting from a 1.9% increase in
the average number of customers. Non-fuel base revenues and kWh sales
for the third quarter of 2016 and 2015 are provided by customer class on
page 12 of this release.
Excluding the $33.7 million PUCT Final Order impact, for the nine months
ended September 30, 2016, retail non-fuel base revenues increased $2.9
million, pre-tax or 0.6% compared to the nine months ended September 30,
2015. This increase was primarily due to increased revenues from
residential customers of $3.6 million due to a 1.6% increase in kWh
sales and increased revenues from small commercial and industrial
customers of $1.9 million due to a 0.7% increase in kWh sales. Increased
kWh sales from residential customers and small commercial and industrial
customers were driven by a 1.5% increase in the average number of
customers offset in part by milder weather during the nine months ended
September 30, 2016 compared to the nine months ended September 30, 2015.
Revenues decreased $2.5 million from large commercial and industrial
customers during the nine months ended September 30, 2016 compared to
the nine months ended September 30, 2015 due to a 4.1% decrease in kWh
sales, due primarily to reduced demand by the steel manufacturing
industry, and an interruptible rate surcharge to a large customer in
2015. Non-fuel base revenues and kWh sales for the nine months ended
September 30, 2016 and 2015 are provided by customer class on page 14 of
this release.
2015 Rate Cases
2015 Texas Retail Case Filing
On August 10, 2015, the Company filed with the City of El Paso, other
municipalities incorporated in its Texas service territory and the PUCT
in Docket No. 44941, a request for an annual increase in non-fuel base
revenues of approximately $71.5 million. On January 15, 2016, the
Company filed its rebuttal testimony modifying the requested increase to
$63.3 million.
On August 25, 2016, the PUCT issued the PUCT Final Order, as proposed,
approving the Unopposed Settlement that was filed with the PUCT on July
21, 2016. The PUCT Final Order provides for the following: (i) an annual
non-fuel rate increase of $37 million, lower annual depreciation expense
of approximately $8.5 million, a return on equity of 9.7% for AFUDC
purposes, and including substantially all new plant in service in rate
base, all as specified in the uncontested Stipulation and Agreement
filed with the PUCT; (ii) an additional annual non-fuel base rate
increase of $3.7 million related to Four Corners Generating Station
costs, which will be collected through a surcharge terminating on July
12, 2017; (iii) removing the separate treatment for residential
customers with solar systems; (iv) allowing the Company to recover $3.1
million in rate case expenses through a separate surcharge; and (v)
allowing the Company to recover revenues associated with the relate back
of rates to consumption on and after January 12, 2016 through March 31,
2016 (aggregating $4.8 million) through a separate surcharge. The costs
of serving residential customers with solar generation will be addressed
in a future proceeding.
Interim rates, associated with the annual non-fuel rate increase of $37
million, became effective on April 1, 2016. The additional surcharges
associated with the incremental Four Corners Generating Station costs,
rate case expenses and the relate back of rates to consumption on and
after January 12, 2016 through March 31, 2016 were implemented on
October 1, 2016.
A detail of the impacts of the PUCT Final Order on the quarter and nine
months ended September 30, 2016, is provided on page 17 of this release.
2015 New Mexico Rate Case Filing
On May 11, 2015, the Company filed with the NMPRC in Case No.
15-00127-UT, for an annual increase in non-fuel base rates of
approximately $8.6 million or 7.1%. Subsequently, the Company reduced
its requested increase in non-fuel base rates to approximately $6.4
million. On June 8, 2016, the NMPRC issued its final order approving an
annual increase in non-fuel base rates of approximately $1.1 million and
a decrease in the Company's allowed return on equity to 9.48%. The final
order concludes that all of the Company's new plant in service was
reasonable and necessary and therefore would be recoverable in rate
base. The Company's rates were approved by the NMPRC effective July 1,
2016 and implemented at such time.
Commercial Operation of Montana Power Station Unit 3 and Unit 4
The Company has completed construction of the MPS placing into service
Units 3 and 4 on May 3, 2016 and September 15, 2016, respectively, and
the related common facilities and transmission systems at a cost of
approximately $152.8 million for the two units. Similar to Units 1 and
2, each unit is an 88-MW simple cycle aero-derivative combustion
turbine, is powered by natural gas and has quick start capabilities
which allows the unit to go from off-line to full output in less than 10
minutes, thus increasing overall power grid stability. Each of the four
units will work in concert with the Company's renewable energy sources
and will generate enough energy to power more than 40,000 homes in the
Company's growing service territory.
Completion of the Sale of Four Corners
On February 17, 2015, the Company and Arizona Public Service Company
("APS") entered into an asset purchase agreement, providing for the
purchase by APS of the Company's interests in Units 4 and 5 of the Four
Corners Power Plant. On July 6, 2016, the closing of the transaction
occurred, after which the Company no longer owns any coal-fired
generation. No significant gain or loss was recorded upon the closing of
the sale.
Capital and Liquidity
In March 2016, we issued $150 million in aggregate principal amount of
5.00% Senior Notes due December 1, 2044 to repay outstanding short-term
borrowings on our Revolving Credit Facility ("RCF") used for working
capital and general corporate purposes, which may include funding
capital expenditures. We continue to maintain a strong capital structure
in which common stock equity represented 44.6% of our capitalization
(common stock equity, long-term debt, current maturities of long-term
debt and short-term borrowings under the RCF). At September 30, 2016, we
had a balance of $10.0 million in cash and cash equivalents. Based on
current projections, we believe that we will have adequate liquidity
through our current cash balances, cash from operations and available
borrowings under our RCF to meet all of our anticipated cash
requirements for the next 12 months including the upcoming maturities of
long term debt.
Cash flows from operations for the nine months ended September 30, 2016
were $176.8 million, compared to $176.4 million for the nine months
ended September 30, 2015. The primary factors affecting the change in
cash flows from operations were increases resulting from increased
revenues due to the PUCT and NMPRC rate orders and increases in accounts
payable, and deferred income taxes. Offsetting the increases in cash
flows were increases in net under-collection of fuel revenues, deferred
charges and credits and accounts receivable. A component of cash flows
from operations is the change in net over-collection and
under-collection of fuel revenues. The difference between fuel revenues
collected and fuel expense incurred is deferred to be either refunded
(over-recoveries) or surcharged (under-recoveries) to customers in the
future. During the nine months ended September 30, 2016, the Company had
a fuel under-recovery of $11.8 million compared to an over-recovery of
fuel costs of $10.9 million during the nine months ended September 30,
2015. At September 30, 2016, we had a net fuel under-recovery balance of
$7.7 million, including an under-recovery of $8.9 million in Texas and
an under-recovery of $0.1 million in the Federal Energy Regulatory
Commission ("FERC") jurisdiction, offset by an over-recovery of $1.3
million in New Mexico.
During the nine months ended September 30, 2016, our primary capital
requirements were for the construction and purchase of electric utility
plant, payment of common stock dividends, and purchases of nuclear fuel.
Capital requirements for new electric utility plant were $168.8 million
for the nine months ended September 30, 2016 and $211.5 million for the
nine months ended September 30, 2015. Capital expenditures for 2016 are
expected to be approximately $233 million. Capital requirements for
purchases of nuclear fuel were $29.9 million for the nine months ended
September 30, 2016, and $30.5 million for the nine months ended
September 30, 2015.
On September 30, 2016, we paid a quarterly cash dividend of $0.31 per
share, or $12.5 million, to shareholders of record as of the close of
business on September 14, 2016. We paid a total of $37.0 million in cash
dividends during the nine months ended September 30, 2016. At the
current dividend rate, we expect to pay cash dividends of approximately
$49.6 million during 2016.
No shares of common stock were repurchased during the nine months ended
September 30, 2016. As of September 30, 2016, a total of 393,816 shares
remain available for repurchase under the Company's currently authorized
stock repurchase program. The Company may in the future make purchases
of its common stock in open market transactions at prevailing prices and
may engage in private transactions where appropriate.
We maintain the RCF for working capital and general corporate purposes
and financing of nuclear fuel through the Rio Grande Resources Trust
(the "RGRT"). The RGRT, the trust through which we finance our portion
of nuclear fuel for Palo Verde, is consolidated in the Company's
financial statements. The RCF has a term ending January 14, 2019. The
maximum aggregate unsecured borrowing currently available under the RCF
is $300 million. We may increase the RCF by up to $100 million (up to a
total of $400 million) during the term of the agreement, upon the
satisfaction of certain conditions, more fully set forth in the
agreement, including obtaining commitments from lenders or third party
financial institutions. The total amount borrowed for nuclear fuel by
the RGRT, excluding debt issuance costs, was $131.2 million at September
30, 2016, of which $36.2 million had been borrowed under the RCF, and
$95.0 million was borrowed through the issuance of senior notes.
Borrowings by the RGRT for nuclear fuel, excluding debt issuance costs,
were $128.7 million as of September 30, 2015, of which $33.7 million had
been borrowed under the RCF and $95.0 million was borrowed through the
issuance of senior notes. Interest costs on borrowings to finance
nuclear fuel are accumulated by the RGRT and charged to us as fuel is
consumed and recovered through fuel recovery charges. At September 30,
2016, $19.0 million was outstanding under the RCF for working capital
and general corporate purposes, which may include funding capital
expenditures. At September 30, 2015, $85.0 million was outstanding under
the RCF for working capital and general corporate purposes. Total
aggregate borrowings under the RCF at September 30, 2016 were $55.2
million with an additional $244.3 million available to borrow.
We received approval from the NMPRC on October 7, 2015, and from the
FERC on October 19, 2015, to issue up to $310 million in new long-term
debt and to guarantee the issuance of up to $65 million of new debt by
the RGRT to finance future purchases of nuclear fuel and to refinance
existing nuclear fuel debt obligations. We also requested approval from
the FERC to continue to utilize our existing RCF without change from the
FERC's previously approved authorization. The FERC authorization is
effective from November 15, 2015 through November 15, 2017. The
approvals granted in these cases supersede prior approvals. Under this
authorization, on March 24, 2016, the Company issued $150 million in
aggregate principal amount of 5.00% Senior Notes due December 1, 2044.
The proceeds from the issuance of these senior notes, after deducting
the underwriters' commission, were $158.1 million. These proceeds
included accrued interest of $2.4 million and a $7.1 million premium
before expenses. The effective interest rate is approximately 4.77%. The
net proceeds from the sale of these senior notes were used to repay
outstanding short-term borrowings under the RCF. These senior notes
constitute an additional issuance of the Company's 5.00% Senior Notes
due 2044, of which $150 million was previously issued on December 1,
2014, for a total principal amount outstanding of $300 million.
2016 Earnings Guidance
We are adjusting and narrowing our earnings guidance for 2016 to a range
of $2.25 to $2.40 per basic share from the previous range of $2.20 to
$2.50 per basic share. The middle portion of guidance assumes normal
weather for the remainder of the year.
The Company's guidance assumes normal operating conditions for the
remainder of 2016. Other key factors and assumptions underlying the
guidance can be found in the third quarter 2016 earnings presentation
slides on the Company's website at http://www.epelectric.com.
Conference Call
A conference call to discuss the third quarter 2016 financial results is
scheduled for 10:30 A.M. Eastern Time, on November 2, 2016. The dial-in
number is 888-481-2844 with a conference ID number of 3100623. The
international dial-in number is 719-457-2604. The conference leader will
be Lisa Budtke, Director Treasury Services and Investor Relations. A
replay will run through November 16, 2016 with a dial-in number of
888-203-1112 and a conference ID number of 3100623. The replay
international dial-in number is 719-457-0820. The conference call and
presentation slides will be webcast live on the Company's website found
at http://www.epelectric.com.
A replay of the webcast will be available shortly after the call.
Safe Harbor
This news release includes statements that are forward-looking
statements made pursuant to the safe harbor provisions of the Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. This information may
involve risks and uncertainties that could cause actual results to
differ materially from such forward-looking statements. Additional
information concerning factors that could cause actual results to differ
materially from those expressed in forward-looking statements is
contained in EE's most recently filed periodic reports and in other
filings made by EE with the U.S. Securities and Exchange Commission (the
"SEC"), and include, but is not limited to: (i) increased prices for
fuel and purchased power and the possibility that regulators may not
permit EE to pass through all such increased costs to customers or to
recover previously incurred fuel costs in rates; (ii) full and timely
recovery of capital investments and operating costs through rates in
Texas and New Mexico; (iii) uncertainties and instability in the general
economy and the resulting impact on EE's sales and profitability; (iv)
changes in customers' demand for electricity as a result of energy
efficiency initiatives and emerging competing services and technologies,
including distributed generation; (v) unanticipated increased costs
associated with scheduled and unscheduled outages of generating plant;
(vi) unanticipated maintenance, repair, or replacement costs for
generation, transmission, or distribution facilities and the recovery of
proceeds from insurance policies providing coverage for such costs;
(vii) the size of our construction program and our ability to complete
construction on budget and on time; (viii) potential delays in our
construction schedule due to legal challenges or other reasons; (ix)
costs at Palo Verde; (x) deregulation and competition in the electric
utility industry; (xi) possible increased costs of compliance with
environmental or other laws, regulations and policies; (xii) possible
income tax and interest payments as a result of audit adjustments
proposed by the IRS or state taxing authorities; (xiii) uncertainties
and instability in the financial markets and the resulting impact on
EE's ability to access the capital and credit markets; (xiv) possible
physical or cyber attacks, intrusions or other catastrophic events; and
(xv) other factors of which we are currently unaware or deem immaterial.
EE's filings are available from the SEC or may be obtained through EE's
website, http://www.epelectric.com.
Any such forward-looking statement is qualified by reference to these
risks and factors. EE cautions that these risks and factors are not
exclusive. Management cautions against putting undue reliance on
forward-looking statements or projecting any future results based on
such statements or present or prior earnings levels. Forward-looking
statements speak only as of the date of this news release, and EE does
not undertake to update any forward-looking statement contained herein.
|
|
El Paso Electric Company
|
Statements of Operations
|
Quarter Ended September 30, 2016 and 2015
|
(In thousands except for per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Variance
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
$
|
323,225
|
|
|
|
$
|
289,713
|
|
|
|
$
|
33,512
|
|
Energy expenses:
|
|
|
|
|
|
|
|
|
|
Fuel
|
|
|
|
54,355
|
|
|
|
|
60,798
|
|
|
|
|
(6,443
|
)
|
Purchased and interchanged power
|
|
|
|
24,459
|
|
|
|
|
19,520
|
|
|
|
|
4,939
|
|
|
|
|
|
78,814
|
|
|
|
|
80,318
|
|
|
|
|
(1,504
|
)
|
Operating revenues net of energy expenses
|
|
|
|
244,411
|
|
|
|
|
209,395
|
|
|
|
|
35,016
|
|
Other operating expenses:
|
|
|
|
|
|
|
|
|
|
Other operations
|
|
|
|
64,373
|
|
|
|
|
65,360
|
|
|
|
|
(987
|
)
|
Maintenance
|
|
|
|
14,064
|
|
|
|
|
14,355
|
|
|
|
|
(291
|
)
|
Depreciation and amortization
|
|
|
|
15,952
|
|
|
|
|
22,380
|
|
|
|
|
(6,428
|
)
|
Taxes other than income taxes
|
|
|
|
20,165
|
|
|
|
|
19,253
|
|
|
|
|
912
|
|
|
|
|
|
114,554
|
|
|
|
|
121,348
|
|
|
|
|
(6,794
|
)
|
Operating income
|
|
|
|
129,857
|
|
|
|
|
88,047
|
|
|
|
|
41,810
|
|
Other income (deductions):
|
|
|
|
|
|
|
|
|
|
Allowance for equity funds used during construction
|
|
|
|
1,398
|
|
|
|
|
1,874
|
|
|
|
|
(476
|
)
|
Investment and interest income, net
|
|
|
|
3,773
|
|
|
|
|
5,912
|
|
|
|
|
(2,139
|
)
|
Miscellaneous non-operating income
|
|
|
|
272
|
|
|
|
|
850
|
|
|
|
|
(578
|
)
|
Miscellaneous non-operating deductions
|
|
|
|
(1,312
|
)
|
|
|
|
(1,015
|
)
|
|
|
|
(297
|
)
|
|
|
|
|
4,131
|
|
|
|
|
7,621
|
|
|
|
|
(3,490
|
)
|
Interest charges (credits):
|
|
|
|
|
|
|
|
|
|
Interest on long-term debt and revolving credit facility
|
|
|
|
18,324
|
|
|
|
|
16,465
|
|
|
|
|
1,859
|
|
Other interest
|
|
|
|
268
|
|
|
|
|
424
|
|
|
|
|
(156
|
)
|
Capitalized interest
|
|
|
|
(1,243
|
)
|
|
|
|
(1,208
|
)
|
|
|
|
(35
|
)
|
Allowance for borrowed funds used during construction
|
|
|
|
(1,131
|
)
|
|
|
|
(1,353
|
)
|
|
|
|
222
|
|
|
|
|
|
16,218
|
|
|
|
|
14,328
|
|
|
|
|
1,890
|
|
Income before income taxes
|
|
|
|
117,770
|
|
|
|
|
81,340
|
|
|
|
|
36,430
|
|
Income tax expense
|
|
|
|
43,134
|
|
|
|
|
24,600
|
|
|
|
|
18,534
|
|
Net income
|
|
|
$
|
74,636
|
|
|
|
$
|
56,740
|
|
|
|
$
|
17,896
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
$
|
1.84
|
|
|
|
$
|
1.40
|
|
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
|
$
|
1.84
|
|
|
|
$
|
1.40
|
|
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
|
|
$
|
0.310
|
|
|
|
$
|
0.295
|
|
|
|
$
|
0.015
|
|
Weighted average number of shares outstanding
|
|
|
|
40,364
|
|
|
|
|
40,289
|
|
|
|
|
75
|
|
Weighted average number of shares and dilutive potential shares
outstanding
|
|
|
|
40,426
|
|
|
|
|
40,330
|
|
|
|
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
El Paso Electric Company
|
Statements of Operations
|
Nine Months Ended September 30, 2016 and 2015
|
(In thousands except for per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Variance
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
$
|
698,899
|
|
|
|
$
|
672,967
|
|
|
|
$
|
25,932
|
|
Energy expenses
|
|
|
|
|
|
|
|
|
|
Fuel
|
|
|
|
131,817
|
|
|
|
|
148,340
|
|
|
|
|
(16,523
|
)
|
Purchased and interchanged power
|
|
|
|
47,715
|
|
|
|
|
42,437
|
|
|
|
|
5,278
|
|
|
|
|
|
179,532
|
|
|
|
|
190,777
|
|
|
|
|
(11,245
|
)
|
Operating revenues net of energy expenses
|
|
|
|
519,367
|
|
|
|
|
482,190
|
|
|
|
|
37,177
|
|
Other operating expenses:
|
|
|
|
|
|
|
|
|
|
Other operations
|
|
|
|
179,577
|
|
|
|
|
178,615
|
|
|
|
|
962
|
|
Maintenance
|
|
|
|
52,005
|
|
|
|
|
49,772
|
|
|
|
|
2,233
|
|
Depreciation and amortization
|
|
|
|
63,097
|
|
|
|
|
67,080
|
|
|
|
|
(3,983
|
)
|
Taxes other than income taxes
|
|
|
|
50,297
|
|
|
|
|
48,844
|
|
|
|
|
1,453
|
|
|
|
|
|
344,976
|
|
|
|
|
344,311
|
|
|
|
|
665
|
|
Operating income
|
|
|
|
174,391
|
|
|
|
|
137,879
|
|
|
|
|
36,512
|
|
Other income (deductions):
|
|
|
|
|
|
|
|
|
|
Allowance for equity funds used during construction
|
|
|
|
5,867
|
|
|
|
|
8,417
|
|
|
|
|
(2,550
|
)
|
Investment and interest income, net
|
|
|
|
10,293
|
|
|
|
|
12,564
|
|
|
|
|
(2,271
|
)
|
Miscellaneous non-operating income
|
|
|
|
1,073
|
|
|
|
|
1,537
|
|
|
|
|
(464
|
)
|
Miscellaneous non-operating deductions
|
|
|
|
(2,668
|
)
|
|
|
|
(2,777
|
)
|
|
|
|
109
|
|
|
|
|
|
14,565
|
|
|
|
|
19,741
|
|
|
|
|
(5,176
|
)
|
Interest charges (credits):
|
|
|
|
|
|
|
|
|
|
Interest on long-term debt and revolving credit facility
|
|
|
|
53,221
|
|
|
|
|
49,443
|
|
|
|
|
3,778
|
|
Other interest
|
|
|
|
1,102
|
|
|
|
|
941
|
|
|
|
|
161
|
|
Capitalized interest
|
|
|
|
(3,738
|
)
|
|
|
|
(3,758
|
)
|
|
|
|
20
|
|
Allowance for borrowed funds used during construction
|
|
|
|
(4,164
|
)
|
|
|
|
(5,365
|
)
|
|
|
|
1,201
|
|
|
|
|
|
46,421
|
|
|
|
|
41,261
|
|
|
|
|
5,160
|
|
Income before income taxes
|
|
|
|
142,535
|
|
|
|
|
116,359
|
|
|
|
|
26,176
|
|
Income tax expense
|
|
|
|
51,423
|
|
|
|
|
35,089
|
|
|
|
|
16,334
|
|
Net income
|
|
|
$
|
91,112
|
|
|
|
$
|
81,270
|
|
|
|
$
|
9,842
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
$
|
2.25
|
|
|
|
$
|
2.01
|
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
|
$
|
2.25
|
|
|
|
$
|
2.01
|
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
|
|
$
|
0.915
|
|
|
|
$
|
0.870
|
|
|
|
$
|
0.045
|
|
Weighted average number of shares outstanding
|
|
|
|
40,345
|
|
|
|
|
40,268
|
|
|
|
|
77
|
|
Weighted average number of shares and dilutive potential shares
outstanding
|
|
|
|
40,396
|
|
|
|
|
40,300
|
|
|
|
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
El Paso Electric Company
|
Cash Flow Summary
|
Nine Months Ended September 30, 2016 and 2015
|
(In thousands and Unaudited)
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income
|
|
|
$
|
91,112
|
|
|
|
$
|
81,270
|
|
Adjustments to reconcile net income to net cash provided by
operations:
|
|
|
|
|
|
|
Depreciation and amortization of electric plant in service
|
|
|
|
63,097
|
|
|
|
|
67,080
|
|
Amortization of nuclear fuel
|
|
|
|
33,088
|
|
|
|
|
32,864
|
|
Deferred income taxes, net
|
|
|
|
48,457
|
|
|
|
|
32,090
|
|
Net gains on sale of decommissioning trust funds
|
|
|
|
(5,570
|
)
|
|
|
|
(7,887
|
)
|
Other
|
|
|
|
6,561
|
|
|
|
|
4,656
|
|
Change in:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(46,371
|
)
|
|
|
|
(33,156
|
)
|
Net over-collection (under-collection) of fuel revenues
|
|
|
|
(11,766
|
)
|
|
|
|
10,934
|
|
Accounts payable
|
|
|
|
6,994
|
|
|
|
|
(14,397
|
)
|
Other
|
|
|
|
(8,822
|
)
|
|
|
|
2,976
|
|
Net cash provided by operating activities
|
|
|
|
176,780
|
|
|
|
|
176,430
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Cash additions to utility property, plant and equipment
|
|
|
|
(168,830
|
)
|
|
|
|
(211,516
|
)
|
Cash additions to nuclear fuel
|
|
|
|
(29,929
|
)
|
|
|
|
(30,483
|
)
|
Decommissioning trust funds
|
|
|
|
(6,298
|
)
|
|
|
|
(6,240
|
)
|
Other
|
|
|
|
(1,268
|
)
|
|
|
|
(9,106
|
)
|
Net cash used for investing activities
|
|
|
|
(206,325
|
)
|
|
|
|
(257,345
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Dividends paid
|
|
|
|
(37,021
|
)
|
|
|
|
(35,138
|
)
|
Borrowings under the revolving credit facility, net
|
|
|
|
(86,546
|
)
|
|
|
|
104,161
|
|
Payment on maturing RGRT senior notes
|
|
|
|
—
|
|
|
|
|
(15,000
|
)
|
Proceeds from issuance of senior notes
|
|
|
|
157,052
|
|
|
|
|
—
|
|
Other
|
|
|
|
(2,045
|
)
|
|
|
|
(1,039
|
)
|
Net cash provided by financing activities
|
|
|
|
31,440
|
|
|
|
|
52,984
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
1,895
|
|
|
|
|
(27,931
|
)
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
8,149
|
|
|
|
|
40,504
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
10,044
|
|
|
|
$
|
12,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
El Paso Electric Company
|
Quarter Ended September 30, 2016 and 2015
|
Sales and Revenues Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease)
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Amount
|
|
|
Percentage
|
kWh sales (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
|
990,989
|
|
|
|
1,000,997
|
|
|
|
|
(10,008
|
)
|
|
|
(1.0
|
)%
|
|
|
Commercial and industrial, small
|
|
|
|
715,678
|
|
|
|
718,897
|
|
|
|
|
(3,219
|
)
|
|
|
(0.4
|
)%
|
|
|
Commercial and industrial, large
|
|
|
|
253,591
|
|
|
|
270,240
|
|
|
|
|
(16,649
|
)
|
|
|
(6.2
|
)%
|
|
|
Public authorities
|
|
|
|
448,355
|
|
|
|
459,212
|
|
|
|
|
(10,857
|
)
|
|
|
(2.4
|
)%
|
|
|
Total retail sales
|
|
|
|
2,408,613
|
|
|
|
2,449,346
|
|
|
|
|
(40,733
|
)
|
|
|
(1.7
|
)%
|
|
|
Wholesale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales for resale
|
|
|
|
19,861
|
|
|
|
22,126
|
|
|
|
|
(2,265
|
)
|
|
|
(10.2
|
)%
|
|
|
Off-system sales
|
|
|
|
422,245
|
|
|
|
711,934
|
|
|
|
|
(289,689
|
)
|
|
|
(40.7
|
)%
|
|
|
Total wholesale sales
|
|
|
|
442,106
|
|
|
|
734,060
|
|
|
|
|
(291,954
|
)
|
|
|
(39.8
|
)%
|
|
|
Total kWh sales
|
|
|
|
2,850,719
|
|
|
|
3,183,406
|
|
|
|
|
(332,687
|
)
|
|
|
(10.5
|
)%
|
Operating revenues (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-fuel base revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
$
|
113,596
|
|
|
$
|
90,803
|
|
|
|
$
|
22,793
|
|
|
|
25.1
|
%
|
|
|
Commercial and industrial, small
|
|
|
|
67,810
|
|
|
|
62,966
|
|
|
|
|
4,844
|
|
|
|
7.7
|
%
|
|
|
Commercial and industrial, large
|
|
|
|
13,037
|
|
|
|
13,327
|
|
|
|
|
(290
|
)
|
|
|
(2.2
|
)%
|
|
|
Public authorities
|
|
|
|
34,785
|
|
|
|
29,588
|
|
|
|
|
5,197
|
|
|
|
17.6
|
%
|
|
|
Total retail non-fuel base revenues (a)
|
|
|
|
229,228
|
|
|
|
196,684
|
|
|
|
|
32,544
|
|
|
|
16.5
|
%
|
|
|
Wholesale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales for resale
|
|
|
|
791
|
|
|
|
936
|
|
|
|
|
(145
|
)
|
|
|
(15.5
|
)%
|
|
|
Total non-fuel base revenues
|
|
|
|
230,019
|
|
|
|
197,620
|
|
|
|
|
32,399
|
|
|
|
16.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovered from customers during the period
|
|
|
|
58,614
|
|
|
|
39,614
|
|
|
|
|
19,000
|
|
|
|
48.0
|
%
|
|
|
Under (over) collection of fuel
|
|
|
|
9,775
|
|
|
|
(101
|
)
|
|
|
|
9,876
|
|
|
|
—
|
|
|
|
New Mexico fuel in base rates
|
|
|
|
451
|
|
|
|
23,215
|
|
|
|
|
(22,764
|
)
|
|
|
(98.1
|
)%
|
|
|
Total fuel revenues (b)
|
|
|
|
68,840
|
|
|
|
62,728
|
|
|
|
|
6,112
|
|
|
|
9.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-system sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel cost
|
|
|
|
12,289
|
|
|
|
17,920
|
|
|
|
|
(5,631
|
)
|
|
|
(31.4
|
)%
|
|
|
Shared margins
|
|
|
|
273
|
|
|
|
2,446
|
|
|
|
|
(2,173
|
)
|
|
|
(88.8
|
)%
|
|
|
Retained margins
|
|
|
|
287
|
|
|
|
435
|
|
|
|
|
(148
|
)
|
|
|
(34.0
|
)%
|
|
|
Total off-system sales
|
|
|
|
12,849
|
|
|
|
20,801
|
|
|
|
|
(7,952
|
)
|
|
|
(38.2
|
)%
|
|
|
Other (c) (d)
|
|
|
|
11,517
|
|
|
|
8,564
|
|
|
|
|
2,953
|
|
|
|
34.5
|
%
|
|
|
Total operating revenues
|
|
|
$
|
323,225
|
|
|
$
|
289,713
|
|
|
|
$
|
33,512
|
|
|
|
11.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Includes $33.7 million increase resulting from the PUCT Final Order.
|
(b)
|
|
Includes deregulated Palo Verde Unit 3 revenues for the New Mexico
jurisdiction of $2.6 million and $2.5 million, respectively.
|
(c)
|
|
Represents revenues with no related kWh sales and includes $1.1
million increase resulting from the PUCT Final Order.
|
(d)
|
|
Includes energy efficiency bonus of $0.5 million in 2016.
|
|
|
|
|
El Paso Electric Company
|
Quarter Ended September 30, 2016 and 2015
|
Other Statistical Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease)
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Amount
|
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of retail customers: (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
|
362,992
|
|
|
|
|
357,913
|
|
|
|
|
5,079
|
|
|
|
1.4
|
%
|
|
|
Commercial and industrial, small
|
|
|
|
41,121
|
|
|
|
|
40,368
|
|
|
|
|
753
|
|
|
|
1.9
|
%
|
|
|
Commercial and industrial, large
|
|
|
|
49
|
|
|
|
|
49
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Public authorities
|
|
|
|
5,279
|
|
|
|
|
5,240
|
|
|
|
|
39
|
|
|
|
0.7
|
%
|
|
|
Total
|
|
|
|
409,441
|
|
|
|
|
403,570
|
|
|
|
|
5,871
|
|
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of retail customers (end of
period): (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
|
363,247
|
|
|
|
|
358,421
|
|
|
|
|
4,826
|
|
|
|
1.3
|
%
|
|
|
Commercial and industrial, small
|
|
|
|
41,162
|
|
|
|
|
40,385
|
|
|
|
|
777
|
|
|
|
1.9
|
%
|
|
|
Commercial and industrial, large
|
|
|
|
49
|
|
|
|
|
49
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Public authorities
|
|
|
|
5,264
|
|
|
|
|
5,232
|
|
|
|
|
32
|
|
|
|
0.6
|
%
|
|
|
Total
|
|
|
|
409,722
|
|
|
|
|
404,087
|
|
|
|
|
5,635
|
|
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weather statistics: (b)
|
|
|
|
|
|
|
|
|
10-Yr Average
|
|
|
|
|
|
Cooling degree days
|
|
|
|
1,596
|
|
|
|
|
1,732
|
|
|
|
|
1,533
|
|
|
|
|
|
|
Heating degree days
|
|
|
|
5
|
|
|
|
|
—
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Generation and purchased power (kWh, in
thousands):
|
|
|
|
|
|
|
|
|
Increase (Decrease)
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Amount
|
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palo Verde
|
|
|
|
1,312,350
|
|
|
|
|
1,374,274
|
|
|
|
|
(61,924
|
)
|
|
|
(4.5
|
)%
|
|
|
Four Corners (c)
|
|
|
|
12,109
|
|
|
|
|
162,771
|
|
|
|
|
(150,662
|
)
|
|
|
(92.6
|
)%
|
|
|
Gas plants
|
|
|
|
1,115,188
|
|
|
|
|
1,351,775
|
|
|
|
|
(236,587
|
)
|
|
|
(17.5
|
)%
|
|
|
Total generation
|
|
|
|
2,439,647
|
|
|
|
|
2,888,820
|
|
|
|
|
(449,173
|
)
|
|
|
(15.5
|
)%
|
|
|
Purchased power:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Photovoltaic
|
|
|
|
78,412
|
|
|
|
|
77,104
|
|
|
|
|
1,308
|
|
|
|
1.7
|
%
|
|
|
Other
|
|
|
|
514,456
|
|
|
|
|
421,571
|
|
|
|
|
92,885
|
|
|
|
22.0
|
%
|
|
|
Total purchased power
|
|
|
|
592,868
|
|
|
|
|
498,675
|
|
|
|
|
94,193
|
|
|
|
18.9
|
%
|
|
|
Total available energy
|
|
|
|
3,032,515
|
|
|
|
|
3,387,495
|
|
|
|
|
(354,980
|
)
|
|
|
(10.5
|
)%
|
|
|
Line losses and Company use
|
|
|
|
181,796
|
|
|
|
|
204,089
|
|
|
|
|
(22,293
|
)
|
|
|
(10.9
|
)%
|
|
|
Total kWh sold
|
|
|
|
2,850,719
|
|
|
|
|
3,183,406
|
|
|
|
|
(332,687
|
)
|
|
|
(10.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palo Verde capacity factor
|
|
|
|
95.4
|
%
|
|
|
|
100.1
|
%
|
|
|
|
(4.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palo Verde O&M expenses
|
|
|
$
|
21,123
|
|
|
|
$
|
22,016
|
|
|
|
$
|
(893
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
The number of retail customers is based on the number of service
locations.
|
(b)
|
|
A degree day is recorded for each degree that the average outdoor
temperature varies from a standard of 65 degrees Fahrenheit.
|
(c)
|
|
The Company closed on the sale of its interest in Four Corners on
July 6, 2016.
|
|
|
|
|
El Paso Electric Company
|
Nine Months Ended September 30, 2016 and 2015
|
Sales and Revenues Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease)
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Amount
|
|
|
Percentage
|
kWh sales (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
|
2,239,109
|
|
|
|
|
2,203,590
|
|
|
|
|
35,519
|
|
|
|
1.6
|
%
|
|
|
Commercial and industrial, small
|
|
|
|
1,849,618
|
|
|
|
|
1,835,931
|
|
|
|
|
13,687
|
|
|
|
0.7
|
%
|
|
|
Commercial and industrial, large
|
|
|
|
769,425
|
|
|
|
|
802,182
|
|
|
|
|
(32,757
|
)
|
|
|
(4.1
|
)%
|
|
|
Public authorities
|
|
|
|
1,199,867
|
|
|
|
|
1,222,187
|
|
|
|
|
(22,320
|
)
|
|
|
(1.8
|
)%
|
|
|
Total retail sales
|
|
|
|
6,058,019
|
|
|
|
|
6,063,890
|
|
|
|
|
(5,871
|
)
|
|
|
(0.1
|
)%
|
|
|
Wholesale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales for resale
|
|
|
|
52,370
|
|
|
|
|
54,575
|
|
|
|
|
(2,205
|
)
|
|
|
(4.0
|
)%
|
|
|
Off-system sales
|
|
|
|
1,451,719
|
|
|
|
|
1,913,215
|
|
|
|
|
(461,496
|
)
|
|
|
(24.1
|
)%
|
|
|
Total wholesale sales
|
|
|
|
1,504,089
|
|
|
|
|
1,967,790
|
|
|
|
|
(463,701
|
)
|
|
|
(23.6
|
)%
|
|
|
Total kWh sales
|
|
|
|
7,562,108
|
|
|
|
|
8,031,680
|
|
|
|
|
(469,572
|
)
|
|
|
(5.8
|
)%
|
Operating revenues (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-fuel base revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
$
|
224,018
|
|
|
|
$
|
197,165
|
|
|
|
$
|
26,853
|
|
|
|
13.6
|
%
|
|
|
Commercial and industrial, small
|
|
|
|
154,657
|
|
|
|
|
148,800
|
|
|
|
|
5,857
|
|
|
|
3.9
|
%
|
|
|
Commercial and industrial, large
|
|
|
|
30,619
|
|
|
|
|
31,455
|
|
|
|
|
(836
|
)
|
|
|
(2.7
|
)%
|
|
|
Public authorities
|
|
|
|
76,857
|
|
|
|
|
72,163
|
|
|
|
|
4,694
|
|
|
|
6.5
|
%
|
|
|
Total retail non-fuel base revenues (a)
|
|
|
|
486,151
|
|
|
|
|
449,583
|
|
|
|
|
36,568
|
|
|
|
8.1
|
%
|
|
|
Wholesale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales for resale
|
|
|
|
1,986
|
|
|
|
|
2,065
|
|
|
|
|
(79
|
)
|
|
|
(3.8
|
)%
|
|
|
Total non-fuel base revenues
|
|
|
|
488,137
|
|
|
|
|
451,648
|
|
|
|
|
36,489
|
|
|
|
8.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovered from customers during the period
|
|
|
|
107,367
|
|
|
|
|
102,985
|
|
|
|
|
4,382
|
|
|
|
4.3
|
%
|
|
|
Under (over) collection of fuel (b)
|
|
|
|
11,768
|
|
|
|
|
(10,933
|
)
|
|
|
|
22,701
|
|
|
|
—
|
|
|
|
New Mexico fuel in base rates
|
|
|
|
33,279
|
|
|
|
|
55,765
|
|
|
|
|
(22,486
|
)
|
|
|
(40.3
|
)%
|
|
|
Total fuel revenues (c)
|
|
|
|
152,414
|
|
|
|
|
147,817
|
|
|
|
|
4,597
|
|
|
|
3.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-system sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel cost
|
|
|
|
29,179
|
|
|
|
|
41,204
|
|
|
|
|
(12,025
|
)
|
|
|
(29.2
|
)%
|
|
|
Shared margins
|
|
|
|
3,680
|
|
|
|
|
8,698
|
|
|
|
|
(5,018
|
)
|
|
|
(57.7
|
)%
|
|
|
Retained margins
|
|
|
|
860
|
|
|
|
|
955
|
|
|
|
|
(95
|
)
|
|
|
(9.9
|
)%
|
|
|
Total off-system sales
|
|
|
|
33,719
|
|
|
|
|
50,857
|
|
|
|
|
(17,138
|
)
|
|
|
(33.7
|
)%
|
|
|
Other (d) (e)
|
|
|
|
24,629
|
|
|
|
|
22,645
|
|
|
|
|
1,984
|
|
|
|
8.8
|
%
|
|
|
Total operating revenues
|
|
|
$
|
698,899
|
|
|
|
$
|
672,967
|
|
|
|
$
|
25,932
|
|
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Includes $33.7 million increase resulting from the PUCT Final Order.
|
(b)
|
|
Includes Department of Energy refunds related to spent fuel storage
of $1.6 million and $5.8 million, respectively.
|
(c)
|
|
Includes deregulated Palo Verde Unit 3 revenues for the New Mexico
jurisdiction of $6.6 million and $7.5 million, respectively.
|
(d)
|
|
Represents revenues with no related kWh sales and includes $1.1
million increase resulting from the PUCT Final Order.
|
(e)
|
|
Includes energy efficiency bonus of $0.5 million in 2016.
|
|
|
|
|
El Paso Electric Company
|
Nine Months Ended September 30, 2016 and 2015
|
Other Statistical Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease)
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Amount
|
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of retail customers: (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
|
361,617
|
|
|
|
|
356,388
|
|
|
|
|
5,229
|
|
|
|
1.5
|
%
|
|
|
Commercial and industrial, small
|
|
|
|
40,830
|
|
|
|
|
40,207
|
|
|
|
|
623
|
|
|
|
1.5
|
%
|
|
|
Commercial and industrial, large
|
|
|
|
49
|
|
|
|
|
49
|
|
|
|
|
—
|
|
|
|
—
|
%
|
|
|
Public authorities
|
|
|
|
5,309
|
|
|
|
|
5,243
|
|
|
|
|
66
|
|
|
|
1.3
|
%
|
|
|
Total
|
|
|
|
407,805
|
|
|
|
|
401,887
|
|
|
|
|
5,918
|
|
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of retail customers (end of
period): (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
|
363,247
|
|
|
|
|
358,421
|
|
|
|
|
4,826
|
|
|
|
1.3
|
%
|
|
|
Commercial and industrial, small
|
|
|
|
41,162
|
|
|
|
|
40,385
|
|
|
|
|
777
|
|
|
|
1.9
|
%
|
|
|
Commercial and industrial, large
|
|
|
|
49
|
|
|
|
|
49
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Public authorities
|
|
|
|
5,264
|
|
|
|
|
5,232
|
|
|
|
|
32
|
|
|
|
0.6
|
%
|
|
|
Total
|
|
|
|
409,722
|
|
|
|
|
404,087
|
|
|
|
|
5,635
|
|
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weather statistics: (b)
|
|
|
|
|
|
|
|
|
10-Year Average
|
|
|
|
|
|
Cooling degree days
|
|
|
|
2,584
|
|
|
|
|
2,695
|
|
|
|
|
2,594
|
|
|
|
|
|
|
Heating degree days
|
|
|
|
1,134
|
|
|
|
|
1,206
|
|
|
|
|
1,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Generation and purchased power (kWh, in
thousands):
|
|
|
|
|
|
|
|
|
Increase (Decrease)
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Amount
|
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palo Verde
|
|
|
|
3,858,306
|
|
|
|
|
3,940,370
|
|
|
|
|
(82,064
|
)
|
|
|
(2.1
|
)%
|
|
|
Four Corners (c)
|
|
|
|
175,258
|
|
|
|
|
473,416
|
|
|
|
|
(298,158
|
)
|
|
|
(63.0
|
)%
|
|
|
Gas plants
|
|
|
|
2,785,057
|
|
|
|
|
3,046,330
|
|
|
|
|
(261,273
|
)
|
|
|
(8.6
|
)%
|
|
|
Total generation
|
|
|
|
6,818,621
|
|
|
|
|
7,460,116
|
|
|
|
|
(641,495
|
)
|
|
|
(8.6
|
)%
|
|
|
Purchased power:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Photovoltaic
|
|
|
|
234,941
|
|
|
|
|
223,818
|
|
|
|
|
11,123
|
|
|
|
5.0
|
%
|
|
|
Other
|
|
|
|
958,942
|
|
|
|
|
827,478
|
|
|
|
|
131,464
|
|
|
|
15.9
|
%
|
|
|
Total purchased power
|
|
|
|
1,193,883
|
|
|
|
|
1,051,296
|
|
|
|
|
142,587
|
|
|
|
13.6
|
%
|
|
|
Total available energy
|
|
|
|
8,012,504
|
|
|
|
|
8,511,412
|
|
|
|
|
(498,908
|
)
|
|
|
(5.9
|
)%
|
|
|
Line losses and Company use
|
|
|
|
450,396
|
|
|
|
|
479,732
|
|
|
|
|
(29,336
|
)
|
|
|
(6.1
|
)%
|
|
|
Total kWh sold
|
|
|
|
7,562,108
|
|
|
|
|
8,031,680
|
|
|
|
|
(469,572
|
)
|
|
|
(5.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palo Verde capacity factor
|
|
|
|
94.4
|
%
|
|
|
|
96.7
|
%
|
|
|
|
(2.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palo Verde O&M expenses
|
|
|
$
|
67,514
|
|
|
|
$
|
67,702
|
|
|
|
$
|
(188
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
The number of retail customers presented is based on the number of
service locations.
|
(b)
|
|
A degree day is recorded for each degree that the average outdoor
temperature varies from a standard of 65 degrees Fahrenheit.
|
(c)
|
|
The Company closed on the sale of its interest in Four Corners on
July 6, 2016.
|
|
|
|
|
El Paso Electric Company
|
Financial Statistics
|
At September 30, 2016 and 2015
|
(In thousands, except number of shares, book value per common
share, and ratios)
|
|
|
|
|
|
|
|
|
|
Balance Sheet
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
10,044
|
|
|
|
$
|
12,573
|
|
|
|
|
|
|
|
|
|
|
Common stock equity
|
|
|
$
|
1,075,075
|
|
|
|
$
|
1,020,795
|
|
Long-term debt (a)
|
|
|
|
1,195,397
|
|
|
|
|
1,122,465
|
|
|
|
Total capitalization
|
|
|
$
|
2,270,472
|
|
|
|
$
|
2,143,260
|
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
|
$
|
83,081
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings under the revolving credit facility
|
|
|
$
|
55,192
|
|
|
|
$
|
118,693
|
|
|
|
|
|
|
|
|
|
|
Number of shares - end of period
|
|
|
|
40,522,246
|
|
|
|
|
40,426,668
|
|
|
|
|
|
|
|
|
|
|
Book value per common share
|
|
|
$
|
26.53
|
|
|
|
$
|
25.25
|
|
|
|
|
|
|
|
|
|
|
Common equity ratio (b)
|
|
|
|
44.6
|
%
|
|
|
|
45.1
|
%
|
Debt ratio
|
|
|
|
55.4
|
%
|
|
|
|
54.9
|
%
|
|
|
|
|
|
|
|
|
|
(a)
|
|
In accordance with ASU 2015-03 (Subtopic 835-30), Interest -
Imputation of Interest, debt issuance costs related to a recognized
debt liability are presented in the balance sheet as a direct
deduction from the carrying amount of that debt liability. The
Company implemented ASU 2015-03 in the first quarter of 2016, and
retrospectively to all periods presented.
|
(b)
|
|
The capitalization component includes common stock equity, long-term
debt and the current maturities of long-term debt, and short-term
borrowings under the RCF.
|
|
|
|
|
El Paso Electric Company
|
Nine Months Ended September 30, 2016
|
PUCT Final Order
|
|
|
|
|
On August 25, 2016, the PUCT issued its final order in the Company's
rate case in Docket No. 44941 (the "PUCT Final Order"). See "2015
Texas Retail Case Filing" for a discussion of the PUCT Final
Order.
|
|
|
|
|
|
|
|
|
|
|
|
|
The increase (decrease) in earnings resulting from the PUCT Final
Order is categorized as follows and identified by the period to
which it relates:
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Category
|
|
|
Six Months Ended June 30, 2016
|
|
|
Three Months Ended September 30, 2016
|
|
|
Nine Months Ended September 30, 2016
|
Retail non-fuel base rate increase:
|
|
|
|
|
|
|
|
|
|
Relate Back
|
|
|
$
|
4,782
|
|
|
|
$
|
—
|
|
|
|
$
|
4,782
|
|
Interim Rates
|
|
|
|
10,874
|
|
|
|
|
15,138
|
|
|
|
|
26,012
|
|
Additional non-fuel base rate increase for Four Corners
|
|
|
|
1,575
|
|
|
|
|
1,328
|
|
|
|
|
2,903
|
|
Retail non-fuel base rate increase, total
|
|
|
$
|
17,231
|
|
|
|
$
|
16,466
|
|
|
|
$
|
33,697
|
|
Miscellaneous service revenues
|
|
|
|
753
|
|
|
|
|
390
|
|
|
|
|
1,143
|
|
Revenue taxes
|
|
|
|
(455
|
)
|
|
|
|
(643
|
)
|
|
|
|
(1,098
|
)
|
Depreciation
|
|
|
|
5,001
|
|
|
|
|
2,412
|
|
|
|
|
7,413
|
|
Rate case expense
|
|
|
|
—
|
|
|
|
|
(600
|
)
|
|
|
|
(600
|
)
|
AFUDC
|
|
|
|
(193
|
)
|
|
|
|
(72
|
)
|
|
|
|
(265
|
)
|
Pre-tax increase
|
|
|
$
|
22,337
|
|
|
|
$
|
17,953
|
|
|
|
$
|
40,290
|
|
Income tax expense (a)
|
|
|
|
9,781
|
|
|
|
|
7,221
|
|
|
|
|
17,002
|
|
After-tax increase
|
|
|
$
|
12,556
|
|
|
|
$
|
10,732
|
|
|
|
$
|
23,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
In the third quarter of 2016, the Company changed its accounting for
state income taxes from the flow-through method to the normalization
method in accordance with the Company's regulators in its most
recent final orders from the PUCT and the NMPRC. The impact of the
change was additional deferred income tax expense of $2.8 million
for the three months ended September 30, 2016.
|

View source version on businesswire.com: http://www.businesswire.com/news/home/20161102005448/en/
El Paso Electric Company
Media:
Eddie Gutierrez,
915-543-5763
eduardo.gutierrez@epelectric.com
or
Investor
Relations:
Lisa Budtke, 915-543-5947
lisa.budtke@epelectric.com
Source: El Paso Electric Company
News Provided by Acquire Media