City Protests El Paso Electric Proposed Rate Increase

The City of El Paso on Monday intervened in El Paso Electric’s rate increase application, a move that was widely expected and will allow the city to scrutinize the utility’s request to hike  household power bills by more than $22 per month.

El Paso Electric submitted the rate change application to the Public Utility Commission of Texas late last month. El Paso Electric in recent years has spent $1.55 billion on capital investments such as a new gas-fired power plant unit, upgraded distribution and transmission wires and various repairs at its power plants, among other investments detailed in the utility’s 5,000-page rate application. In Texas, a monopoly utility makes money by investing in capital assets, and then at least every four years the utility conducts a rate review and asks for approval from regulators to lift rates to recoup the invested money from customers, plus an authorized profit margin.

El Paso Electric argues it needs to collect $85 million of additional revenue annually to recover cash the utility has spent since 2021 plus a 10.7% rate of return.

Also intervening in the rate filing are Freeport McMoRan, which operates a copper refinery in El Paso, business advocacy group Texas Industrial Energy Consumers and the University of Texas at El Paso. Over the coming months, intervenors will likely hire utility experts and present testimony to the PUC to make their case that El Paso Electric’s proposed rate increase is too big or unnecessary.

The utility is seeking to boost average household electric bills by more than 23% – far more than the proposed increase on commercial or industrial customers. That means the city, which is acting on behalf of residential ratepayers, may have conflicting interests with different intervenors who are advocating in favor of other customers, such as businesses. It will likely be a year or more before the PUC approves the rate hike and customers start seeing higher bills.