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February 28, 2018 • EPE Related News

El Paso Times: El Paso Electric's profit increases to $98.3 million in 2017

Increased electric rates helped boost El Paso Electric's profit 1.5 percent in 2017 to $98.3 million, or an increase of $1.5 million, from 2016, the company reported Tuesday.

The utility's higher rates, which increased an overall 2 percent, were approved by state regulators in December, but took effect in July — adding an additional $8.8 million in rate revenues in the company's fourth quarter.

The company's profit increased 14 percent in the fourth quarter to $6.5 million, or an increase of just over $800,000.

"We had about half a year of the rate increase, which helped us a little bit," said Nathan Hirschi, the company's chief financial officer.

The company's rate of return on its investments was lower than allowed by state regulators under the company's old and new rates, Hirschi noted.

The company needs to be financially healthy to attract investors and to pay for the projected $1.3 billion in new projects planned for the next five years, which includes tentative plans for a new power plant to go into operation by 2023, Hirschi said.

El Paso Electric Chief Executive Officer Mary Kipp said the company's last three rate increases have allowed the company to get "a fair income" for the past three years.

More: Some El Paso Electric customers to get monthly refunds as utility returns $31M deductions

However, the company will lose much of the extra revenues from the recent rate increase because it has to refund millions of dollars in federal tax deductions to customers due to new federal corporate tax rates and due to an agreement made with city and state regulators in the most recent rate case, Kipp noted.

The company's electric sales increased 2.2 percent in 2017 to $625.7 million.

Those sales do not include wholesale, off-system sales, which increased 29 percent last year to $59 million.

The company had a $12.73 million profit from the off-system sales, of which it shared $11.05 million with customers through reduced fuel charges. Most of the off-system profits go to Texas customers as stipulated through rate regulations, Hirschi said.

Off-system sales are to utilities and others that are not part of the utility's regular customer base. 

A 1.7 percent increase in customers in 2017 helped boost electric sales, but sales would have been even stronger if it were not for an unusually mild fourth quarter, company officials reported.

The company had 415,602 customers in Texas and New Mexico at the end of last year. 

El Paso Electric's stock closed Tuesday at $49.05 per share, down $1.45 per share, on the New York Stock Exchange.

Source: http://www.elpasotimes.com/story/money/business/2018/02/28/earnings-report-el-paso-electric-profit-increases-2017/375187002/