City Council authorizes ongoing negotiations to protect ratepayers from Meta data center energy facility
UPDATE: El Paso Electric provided a statement in response to El Paso City Council authorizing the City Attorney and City Manager to continue settlement negotiations and develop a counteroffer holding ratepayers protections from costs.
"El Paso Electric is aware of the proposal for decision on McCloud Generation and the recent news release from the city of El Paso and is in agreement with the city regarding provisions for large-load customers, as has always been our long-standing commitment. We have also heard concerns about whether serving large new customers, including data centers, could result in higher costs for other customers. Let us be clear: our commitment, and the regulatory framework under which we operate, is to ensure that costs associated with serving these customers are appropriately assigned to them. We are not seeking to shift those costs onto residential or other customers. El Paso Electric's responsibility is to provide safe, reliable electric service while responsibly supporting the continued growth of the communities we serve.
As new large-load customers seek service in our region, El Paso Electric evaluates each request through regulatory, operational and financial processes designed to preserve the electric system and our customers. El Paso Electric has never wavered in its commitment to include provisions safeguarding customers in the energy service agreements with large-load customers. Large energy users like data centers pay upfront for the local infrastructure they need and commit to long-term contracts with collateral requirements, minimum bills and termination payments, which ensure that large load customers cover the full cost of service. This structure helps keep base rates stable and protects residential and small business customers from subsidizing large users.
Additionally, El Paso Electric cannot nor has ever been able to change rates or add charges to customer bills without regulatory approval. We remain committed to ensuring that any proposed arrangements with large-load customers are consistent with making them pay for their costs and services and does not transfer any to those costs to all other customers. We will continue to provide information through the appropriate regulatory and public processes as proposals move forward,” said Kelly Tomblin, President and CEO of El Paso Electric
EL PASO, Texas (KVIA) -- Monday, the City of El Paso's City Council authorized the City Attorney, in consultation with the City Manager, to continue settlement negotiations and make a counteroffer for a "full hold harmless" for ratepayers from costs of the McCloud Generation facility.
During Monday’s City Council meeting, the City Attorney’s Office provided Council with an update on El Paso Electric's (EPE) application to construct the proposed 366-megawatt natural gas generation facility, which EPE proposes to use to serve Meta’s data center.
On September 23, two Administrative Law Judges (ALJ) issued a recommendation with the following after reviewing the evidence and arguments presented in the case:
- The McCloud Generation facility may be approved only with protections intended to prevent EPE customers, other than Meta’s data center, from paying the plant’s construction and operating costs for the life of the facility.
- Without those protections, the judges would recommend denying EPE’s application.
- EPE could not simply shift McCloud’s construction and operating costs to other customers in the future. EPE would first have to return to state regulators and demonstrate that the costs should be allowed to be recovered from other customers.
According to City officials, the judges also found that EPE did not adequately consider alternatives or demonstrate that the proposed McCloud Generation facility was the most cost-effective option.
The ALJ recommendation is not a final decision; the five Public Utility Commission of Texas (PUCT) commissioners will make the final decision on whether to accept, change, or reject the recommendation. The PUCT is expected to issue a final order by December 7, 2026.
The City says that in addition to protecting ratepayers from McCloud’s construction and operating costs, a “full hold harmless” would protect customers from other financial impacts, including the potential loss of revenue credits from EPE’s off-system power sales.
