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El Paso's city council votes to suspend El Paso's Electric proposed rate increase

City council will vote on approving new electric rates on June 22, 2021.Credit: (KFOX14/CBS4)
City council will vote on approving new electric rates on June 22, 2021.Credit: (KFOX14/CBS4)
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The El Paso City Council voted unanimously Tuesday to suspend the rate increase proposed by El Paso Electric for its Texas retail customers for 90 days from the effective date.

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.

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 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.

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By state statute, El Paso Electric 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 rate making.

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.

A spokesperson with El Paso Electric gave the following statement:

The suspension of rates is the first step in a rate case. This action allows for rates to be suspended for 90 days and that allows for municipalities to review the filing. El Paso Electric sees this time period as an opportunity to work collaboratively with the City of El Paso and all other parties on the filing. All Texas municipalities in our service area will be taking similar actions.

On June 1, 2021, El Paso Electric filed a Texas base rate application asking the PUC to consider almost $1 billion of investments the EPE has made into its generation, transmission, and distribution system.

The city of El Paso filed to intervene on June 11, 2021. The regulatory process can take anywhere from six months to a year to reach a final approved decision; the next step will be for the PUC to assign an Administrative Law Judge and establish a procedural schedule. As mentioned in the statement above, the action taken by the city today will not delay the process.

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