May 4, 2018 • EPE Related News
El Paso Times: El Paso Electric loses $7M in first quarter
El Paso Electric lost $7 million in the first quarter of the year, the company reported Thursday.
It lost money mostly due to two things.
The first is an accounting change, which required it to report a $3.8 million paper loss on its share in the Palo Verde nuclear power plant investment trust fund.
The other was setting aside $4.1 million for part of the El Paso-area customer refunds tied to a changes in federal corporate income tax laws, said Nathan Hirschi, company chief financial officer. The refunds began being paid April 1 to El Paso-area customers.
"This is the third year in a row with a first-quarter loss. Our business is seasonal and having a loss is the first quarter is not that unusual," Hirschi said.
The utility lost $4 million in first quarter 2017.
Hot weather profits
The company makes most of its money in warm-weather months when its customers are using air conditioning systems.
The utility had a profit of $98.3 million for all of 2017.
Accounting changes that took effect in January, require the utility to report paper losses or profits on its share of the Palo Verde investment trust, which is aimed at having money available to pay costs to decommission, or close, the nuclear plant after its operating license expires in 2045, Hirschi said.
The company now has $284 million worth of investments in the Palo Verde fund, which has 52 percent of investments in the stock market, and the rest in various bonds, he said.
Previously the company only had to report actual profits or losses in the Palo Verde fund when stocks or bonds were sold, he said. Now, it has to report quarterly value changes in the portfolio that are only changes on paper. This provides more transparency for the company's investments, but also produces more volatility in its quarterly earnings reports, he said.
Tax-related refunds
The utility expects to pay $26.6 million in income tax-related refunds to its Texas customers over a 12-month period, and $4.9 million in refunds to its New Mexico customers, Hirschi said.
The Texas tax refunds began April 1 on an interim basis until the Texas Public Utility Commission, the city of El Paso, and other cities in its West Texas operating area, give final approval to the refund amount. That approval is expected soon, Hirschi said.
The New Mexico Public Regulation Commission on April 25 approved the utility's plan to pay $4.9 million in tax refunds over 12 months to Las Cruces-area customers, beginning May. 1.
El Paso Electric agreed in its last rate case settlement to pass through the company's tax savings, tied to the Jan. 1 reduction in federal corporate income taxes, with monthly bill refunds to customers.
Despite a January-March quarter with warmer temperatures than usual, which means customers had to use furnaces less often, El Paso Electric saw its residential electric sales increase 3.9 percent from the previous year to $53.3 million, it reported.
Most of the increase was due to a 1.6 percent increase in residential customers, which grew to 372,040 customers at the end of March, it reported.
Total electric sales, not including so-called off-system sales, increased only 0.3 percent to $111.3 million. Sales declined at an El Paso copper refinery, and at Fort Bliss, which caused overall sales to be lower in the quarter compared to a year ago, Hirschi said. He did not know why electric use declined at the refinery and at Fort Bliss.
Off-system sales, which are electric sales to wholesale customers on the open market, increased 62.4 percent to $23.1 million because the utility had excess power to sell in a good market in the quarter, Hirschi said.
Most of the off-system sales' profits go to Texas customers through reduced fuel charges on electric bills as stipulated through rate regulations.
The utility's stock, traded under the symbol EE, closed Thursday at $54.25 per share, up $3.40 per share, on the New York Stock Exchange.
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