El Paso Electric Wants To Skip City Step To Get Backing For Solar Energy Investment

El Paso Electric wants to skip the process of justifying their rate hike to the state and city, in order to ensure getting back a more than $200 million investment in solar energy.

The El Paso City Council has been asking the electric company, a monopoly utility, to add solar energy to the their portfolio. The company has now agreed to do so, but under one condition: skipping the process of a rate case and instead determining rate hikes based on the cost of generating energy.

Currently, if EPE wants to raise rates, they have to justify their decision to the city and the state in a rate case. In the latest rate case, EPE wanted a $50 million increase. A state board only granted them $17 million.

The electric company is willing to produce 50 megawatts of solar energy, at a cost of about $200 million. That’s part of the company’s planned $500 million in energy investments. In order to recover the money for their shareholders and investors, El Paso Electric wants the city to approve a legislative effort to allow EPE to determine rate hikes on the costs of generating energy, not a rate case.

Critics of the move include Western Refining, one of the electric company’s biggest clients. “This is a proposed legislation to enable a local utility to arbitrarily raise rates on their citizens without government or regulatory oversight”, Western Refining’s Gary Hansen told the council on Tuesday.

EPE’s Senior Vice President said justifying solar energy costs in a rate case would be difficult and costly, and perhaps would not even be approved. “Because we’re such a small company, we need to make sure there’s some kind of recovery mechanism”, he said on Tuesday.

The city heard from EPE, who’s employees say they surveyed a portion of their customers, and discovered rate-payers don’t mind paying a little more every month if the company invests in solar energy. Council also head from the city’s outside attorney who handles rate cases, Norman Gordon.

Gordon advised the city that the electric company’s proposal to skip the rate case was not a prudent move. “(It’s not advisable)because you’re only looking at one piece of the puzzle that makes up what the utilities costs are and you’re not looking at some of those things that might decrease costs or offset some of the increased generation costs”, he said.

Some city council members, like Representative Susie Byrd aren’t yet completely opposed to the company’s request. “I’m not convinced these aren’t hurdles we can’t overcome”, she said.

Council voted unanimously to continue negotiations with El Paso Electric. They want the company to skip the rate case process when they’re trying to recover their investment in solar energy, and nothing else. But the electric company insists they need to skip the rate case to recover all of their energy investments, even those that are not solar.

“We believe that by doing it this way, that saves our customers about 4 and a half million dollars because that’s what the cost is of a rate case”, said Richard Fleager, EPE’s Senior Vice President.

Fleager also said that under their proposal, the city could at any time, ask for a rate case, if they thought EPE’s request were unreasonable. Gordon said that while the city can do that, it’s a timely process that can take up to two years, under EPE’s proposal.

Some, like former County Judge Anthony Cobos, are glad EPE is finally committing to solar energy. He asked city council not to table the issue, even reminding City Rep. Beto O’Rourke of his father’s vision of solar energy. “Your father was a pioneer when he was county judge, this was over 20 years ago, he installed solar panels on top of the county jail downtown”, he said.

Council voted on three things on Tuesday: 1. To continue negotiations 2. To show EPE how much of their investment they may be able to get back using a deferred tax structure program. Only Rep. Ann Morgan Lilly voted against this. 3. To support construction of 50 megawatts of solar energy and find ways to make it happen. The mayor had to break the tie in this vote. Voting for the move were Susie Byrd, Emma Acosta, Beto O’Rourke, and Steve Ortega. Voting against were Ann Morgan Lilly, Carl Robinson, Eddie Holguin, and Steve Ortega. The mayor broke the tie by siding with those who voted in support of the solar energy. Representative Steve Ortega said he could not vote for supporting the construction of solar energy until he knew the way the electric company was going to recover their investment.