Judges in El Paso Electric rate case recommend smaller rate increase, less profit for utility
Proposal urges keeping customer charges flat and maintaining rooftop solar minimum bill pending further study.
December 14, 2025
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The proposed bill increase by El Paso Electric that could take effect next year may be decreased after a panel of judges overseeing the utility’s rate case sided with customers and suggested moderating it.
A final decision on the rate increase by the state’s Public Utility Commission likely won’t come until February. But the judges on Dec. 7 issued a proposal for decision – a recommendation for the state’s public utility commissioners – that argued El Paso Electric is asking to make too much profit off customers.
Instead of authorizing the requested shareholder profit margin of 10.7%, the PUC should approve an allowed return of 9.4% that’s close to the utility’s current authorized profit margin.
El Paso Electric is evaluating the panel’s recommendation, the utility said in a statement.
“Because this is an ongoing regulatory proceeding, we are not in a position to comment on specific recommendations included in the Proposal for Decision, including customer charge levels, return on equity, revenue requirement adjustments, or the treatment of distributed generation customers,” the utility said.
Since it filed to raise rates in January, El Paso Electric has argued it needs to collect about $85 million more annually from customers to pay off $1.55 billion in various investments it made between 2021 and 2024, such as the $217 million Newman 6 power plant unit that started operating in 2023.
Monopoly utilities can’t set their own rates. Instead, utilities have to seek approval from state public utility commissions to raise their rates to recover money they’ve spent on investments such as substations or power plants – plus their authorized profit margin.
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The judges said El Paso Electric’s proposed shareholder profit margin made up $38 million of the total requested rate increase.
El Paso Electric’s original request would raise average monthly bills from $96 to $118.
It’s difficult to calculate how the recommendation from the judges overseeing the case would impact bills, but it’s likely the increase will be lower than the $22 proposed if the PUC adopts the recommended decision when commissioners vote early next year.
The judges recommended the PUC hold the flat monthly customer charge at $9.25 rather than the proposed $13.71. That would take off $4.46 of the proposed $22 per month increase. And if the PUC approves the 9.4% shareholder profit margin over the 10.7%, it would mean a smaller increase for customers.
A big part of the rate case involves what to do with customers who have rooftop solar panels. The utility currently charges a $30 minimum bill for rooftop solar customers, arguing they still rely on the grid when their panels aren’t producing electricity.
El Paso Electric sought to change the solar customer fee – which would have likely resulted in an increase to rooftop solar customers. But the judges recommended keeping the current fee in place and said the utility hasn’t studied closely enough how those customers affect the electric grid and the utility’s costs.
A coalition of pro-solar organizations known as the Joint Solar Advocates weighed in on the ruling, saying they largely supported the judges’ conclusions.
“The Joint Solar Advocates are generally supportive of the outcome in the recommended decision,” the group said in a statement to El Paso Matters. “Importantly, the (case’s judges) agreed that there is no cost-basis for a unique demand charge on customers that choose to install their own solar panels to meet part of their electricity needs.”
The solar advocates – which include the national nonprofit Solar United Neighbors and other pro-rooftop solar groups such as Public Citizen and Amanecer Peoples’ Project – say El Paso Electric should conduct a detailed study to look at the benefits rooftop solar customers bring as a decentralized source of electricity generation. And they want the utility to pay customers more for the electricity their panels produce.
That kind of study “is what’s really needed so that EPE and customers can make a more informed decision on adopting rooftop solar,” the joint statement said. “The study will also speak to the appropriateness of EPE’s minimum bill for solar customers, and the utility’s compensation rate for those customers’ energy exports back to the grid.”
Separately, El Paso Electric told the New Mexico Public Regulation Commission that it plans to apply to raise rates for its customers in New Mexico in February, likely after the Texas rate case is resolved. The utility in 2024 had more than 459,000 customers, including 107,000 New Mexico customers, according to the U.S. Energy Information Administration.
El Paso Electric didn’t provide details yet to the NMPRC about what the rate increase in New Mexico could look like – for example, whether rates would rise more for residential, commercial or big industrial customers.
However, in the utility’s Texas rate case, El Paso Electric said it needs to bring in $140.7 million more from all of its customers, annually, to cover the cost of investments and operations, including $85.7 million more from all of its Texas customers. That would indicate the utility needs to collect about $55 million more from its New Mexico customers – a 38% increase in revenue.
“Regarding New Mexico, we have not yet finalized our filing, the revenue requirement or calculated residential customer impacts,” El Paso Electric said in its statement.
El Paso Electric plans to spend $4.4 billion in capital projects over the next five years as spending across the U.S. utility industry has accelerated rapidly in recent years.
Most of that spending is driven largely by the construction boom of power-hungry data centers and increased electricity demand for air conditioning in homes and businesses caused by climate change and higher average temperatures.
This article first appeared on El Paso Matters and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.
