Council Votes To Move Forward With EPE Rate Case
City leaders are moving forward with a rate case against El Paso Electric Co., the first in 20 years.
They say the regulated utility is making too much of a profit off its current rate structure. Thus, City Council voted unanimously Tuesday to start the legal process of a rate case against El Paso Electric, something that has not been done since 1991.
“Our expenses are getting higher and higher,” El Paso small-business owner Belinda Luna told council. “Our revenues are getting lower and lower.”
Like many, she thinks the El Paso Electric’s new rates, which charge more for electricity in the summer, are out of control.
“It just doesn’t pass the smell test,” Luna told council, “and so I ask that you carefully look at this.”
Shortly afterward, council ordered its utility expert, Norman Gordon, to enter discussions over the next three weeks with El Paso Electric about a settlement. If an agreement cannot be reached, a rate case would be next.
“There are some cases where people’s bills have actually doubled,” said City Rep. Cortney Niland, who is heading up the rate case effort. “It has everything to do with (El Paso Electric’s) earnings. They reported their second-quarter earnings, which were up 53 percent, and their return on equity is close to 12 percent. We agreed on 10 percent. They’re over-earning by 200 basis points.”
El Paso Electric Senior Vice President Richard Fleager said council’s approach is “a very costly” one. He added that if a rate case is filed against the company, which is using its profits mostly to build new infrastructure, it will move to raise rates again. The rate case, expected to take nearly a year, could cost both sides $7 million, which would also be passed on to customers.
“It’s a question as to how do we want to design rates,” Fleager said. “We already know we’re trying to hit a target. The question becomes what’s the best way to get there?”
City Rep Steve Ortega said the threats are many, but he is not concerned for customers.
“They’re saying things to discourage a rate case such as this,” Ortega said. “It’s going to cost a lot of money, going to take a lot of time, your rates are going to go up … All those are true, they’re not likely.”
Niland said she believes El Paso Electric’s rates are also hurting economic development in the Borderland, because new companies don’t like its high rates. But Fleager, who served on the Regional Economic Development Corp. board for several years, said he knows of only one company that was upset about the electric rates during that time.
