On Tuesday, the El Paso City Council voted unanimously to suspend the rate increase proposed by El Paso Electric (EPE) for its Texas retail customers for 90 days from the effective date.
“Historically, the City has been a strong advocate for its residents and that advocacy has yielded positive results for EPE’s Texas service area customers,” said City Attorney Karla Nieman. “In the five rate cases filed by EPE since January 1994, through the City’s leadership in settlement discussions, Texas customers have attained nearly $155 million in savings, or an average $31 million per rate case.”
The suspension will be in effect until early October. Had the City not suspended the rate increase, the proposed increase would have gone into effect on July 6, 2021.
The suspension allows the City time to review the proposed rate change and prepare for a public hearing to determine if the proposed increase is fair, just and reasonable; while allowing the utility to be financially healthy and invest appropriately in its infrastructure to ensure safe and reliable service.
Through the Public Utility Regulatory Act, the City’s Municipal Code, and its franchise agreement with EPE, the City has the authority to set rates for EPE customers located within the City limits.
However, the Public Utility Commission of Texas (PUC) has appellate regulatory authority. In other words, any party to a rate proceeding before the City Council, including EPE, may appeal the City Council’s decision to the PUC.
Additionally, because EPE’s Texas service area includes customers outside of the City limits, EPE has simultaneously filed its rate case with the PUC. On June 11, the City intervened in that rate proceeding. The City, as a local regulator and intervenor in any ratemaking proceeding before the PUC, will represent the interests of itself and all residents within the City limits.
By State statute, EPE is required to file its comprehensive base rate case every four years. In this case, the filing was required to be made no later than mid-December 2021.
In its application, EPE cites the need to recover costs associated with over $953 million in investments made into its generation, transmission and distribution system, since its last base rate case filed in early 2017. To recover costs associated with these investments, EPE is proposing an annual net increase to its base rate of $41.8 million, or a 7.8 percent increase over its current base revenue.
According to EPE’s application, the overwhelming majority of the $41.8 million increase will be borne by residential customers, EPE’s largest customer class.
Under the proposed rate increase, the typical residential customer using an average of 686 kilowatt-hours of energy per month will see a monthly bill increase of $11.76, representing a nearly 13.4 percent increase over their current bill.
This proposed rate increase is in addition to the increases associated with the proposed Advanced Metering System filed on April 19, 2021, the Energy Efficiency Program filed on May 3, 2021, and the recent adjustments for fuel costs under collection made effective during the first billing cycle of May 2021.
Together, once fully implemented, these rate adjustments could result in an average monthly bill increase of approximately $20.
With the suspension of the rate case, City staff and the City Attorney’s Office, with the assistance of outside counsel, will: review the 6,000-page rate case filing; request additional information; and hire the necessary subject matter experts to analyze the complex calculations involved in ratemaking.
The anticipated timeline is as follows:
- July: Following review of the case, staff will return to City Council to provide a detailed overview of the rate case. The City will discuss key areas of concern and a strategy moving forward.
- October 2021: The City Council will set rates for customers within the City limits.
- November 2021: New rates will be effective.
- December 2021: The current PUC deadline to act on the rate request.
City officials add that the projected timeline is set by State statute; however, the dates maybe adjusted to a schedule agreed upon by all parties.