Executives from the Texas-based utility, El Paso Electric, just announced that they will be asking the El Paso City Council and Texas state regulators for permission to raise their electric rates. According to the utility, they need to raise these rates in less than three months, meaning it won?t be long until area residents are faced with higher monthly electricity bills.
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While it is clear that the El Paso utility wants to raise their rates, there is no clear indication of how much exactly the rates will rise for customers in the area. However, it is estimated that the utility will ask the state of Texas to increase electric rates anywhere between 8 to 12 percent.
The only thing that Texas residents can do in an effort to determine what this rate increase will look like, is to look at the company?s recent actions. El Paso Electric recently filed their own separate claim in New Mexico. With this claim, the company asked state regulators for a $8.6 million rate increase, which translates to a 9 percent increase for residential customers.
However, this plan, while beneficial to the company only impacted residents in New Mexico, not those in Texas. According to a statement from the CEO of El Paso Electric, Tom Shockley, the company knows that residents do not want their rates to go up, but he states this increase is necessary to keep the utility ?healthy.?
For the utility, ?healthy? means being able to recover investments that it has made in the past. This primarily includes investments it had to make in power generation and infrastructure. This includes more than $206 million it recently spent on the first two generating units of a new natural-gas power station in El Paso. This effort was put in place to accommodate the rapid population growth in the area. According to reports, since 2009, the company has invested over $1 billion in this particular endeavor.
If approved, this effort will impact more than 306,000 customers throughout the utility?s coverage map and both businesses and residents that fall under the company?s jurisdiction would be impacted by the move. According to executives for the utility, they expect to file the rate increase to take effect in late July or early August.
Industrial electric rates are already higher in El Paso since the company subsidizes part of the the electricity costs of residential customers. At this point, it is unclear if El Paso Electric is planning on ending or decreasing this subsidization as part of their latest effort. Doing so would increase the impact on residential customers.
While the filing process is on the imminent horizon, it doesn?t mean that El Paso area residents will see an immediate rise in their monthly bills. The process of implementing new rates is a notoriously long process and residents shouldn?t expect to see the increase impacting their bills until next spring.
The company, who has seen a decline in profits since last year, is expecting some push back from residents. The organization even has a new CEO at the head of the company, looking to push this effort forward and make up for recent significant losses.
However, before the company can bounce back, they will need to endure the arduous base rate change process. Based on other rate cases from around the country, the effort will cost the companies millions, will take weeks in court and will require a great deal of paperwork as well as legal arguments and testimonies from expert witnesses.
If the case is approved, customers will only see an increase on the base rate in their electric bills, other charge such as fuel charges will not be impacted by this effort.
Original Story Published in El Paso Inc on May 18th, 2015.