UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
November 4, 2015
El Paso Electric Company
(Exact name of registrant as specified in its charter)
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Texas | 001-14206 | 74-0607870 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
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Stanton Tower, 100 North Stanton, El Paso, Texas | | 79901 |
(Address of principal executive offices) | | (Zip Code) |
(915) 543-5711
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On November 4, 2015, the Company announced its financial results for the quarter ended September 30, 2015. A copy of the press release containing the announcement and a copy of the presentation at the Company's 3rd Quarter 2015 Earnings Conference Call is included as Exhibit 99.01 and Exhibit 99.02 to this Current Report and is incorporated herein by reference. The Company does not intend for this exhibit to be incorporated by reference into future filings under the Securities Exchange Act of 1934.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
99.01 Earnings Press Release, dated November 4, 2015
99.02 Presentation at the 3rd Quarter 2015 Earnings Conference Call
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
EL PASO ELECTRIC COMPANY
(Registrant)
By: /s/ NATHAN T. HIRSCHI
Name: Nathan T. Hirschi
Title: Senior Vice President - Chief Financial Officer
Dated: November 4, 2015
EXHIBIT INDEX
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Exhibit Number | Description of Exhibit | |
99.01 | Earnings Press Release, dated November 4, 2015 | |
99.02 | Presentation at the 3rd Quarter 2015 Earnings Conference Call | |
Exhibit 99.01 |
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| | News Release |
For Immediate Release | |
Date: November 4, 2015 | | |
El Paso Electric Announces Third Quarter Financial Results
Overview
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• | For the third quarter of 2015, El Paso Electric Company ("EE" or the "Company") reported net income of $56.7 million, or $1.40 basic and diluted earnings per share. In the third quarter of 2014, EE reported net income of $52.5 million, or $1.30 basic and diluted earnings per share. |
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• | For the nine months ended September 30, 2015, EE reported net income of $81.3 million, or $2.01 basic and diluted earnings per share. Net income for the nine months ended September 30, 2014 was $87.2 million, or $2.16 basic and diluted earnings per share. |
"Our third quarter results are primarily the result of the hotter than normal summer weather our service territory experienced during the quarter ended September 30, 2015," said Tom Shockley, Chief Executive Officer. "Our retail kWh sales grew 7.0% over the third quarter of 2014, which set a record for kWh consumption for our service territory during any calendar quarter. Further, we reached a new native system peak of 1,794 megawatts in August 2015. Although these accomplishments were largely the result of hotter weather conditions, they illustrate that we operate in a vibrant and growing community and we look forward to continuing to meet the region's expanding energy needs with clean and reliable technology."
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| El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960 | |
Earnings Summary
The table and explanations below present the major factors affecting 2015 net income relative to 2014 net income:
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| | Quarter Ended | | Nine Months Ended |
| | Pre-Tax Effect | | After-Tax Net Income | | Basic EPS | | Pre-Tax
Effect | | After-Tax
Net Income | | Basic EPS |
September 30, 2014 | | | $ | 52,476 |
| | $ | 1.30 |
| | | | $ | 87,187 |
| | $ | 2.16 |
|
Changes in: | | | | | | | | | | | |
| Retail non-fuel base revenues | $ | 14,050 |
| | 9,133 |
| | 0.23 |
| | $ | 12,869 |
| | 8,365 |
| | 0.21 |
|
| Investment and interest income | 3,539 |
| | 2,825 |
| | 0.07 |
| | 4,027 |
| | 3,232 |
| | 0.08 |
|
| Allowance for funds used during construction | (2,811 | ) | | (2,518 | ) | | (0.06 | ) | | (2,274 | ) | | (2,107 | ) | | (0.05 | ) |
| Interest on long-term debt
| (1,848 | ) | | (1,202 | ) | | (0.03 | ) | | (5,640 | ) | | (3,667 | ) | | (0.09 | ) |
| Depreciation and amortization | (1,695 | ) | | (1,102 | ) | | (0.03 | ) | | (4,744 | ) | | (3,084 | ) | | (0.08 | ) |
| Palo Verde operations and maintenance | (1,527 | ) | | (992 | ) | | (0.03 | ) | | 339 |
| | 221 |
| | 0.01 |
|
| Deregulated Palo Verde Unit 3 | (1,409 | ) | | (915 | ) | | (0.02 | ) | | (4,362 | ) | | (2,835 | ) | | (0.07 | ) |
| Transmission and distribution O&M | (548 | ) | | (356 | ) | | (0.01 | ) | | (2,820 | ) | | (1,832 | ) | | (0.05 | ) |
| O&M at fossil-fuel generating plants | (26 | ) | | (17 | ) | | — |
| | (4,305 | ) | | (2,799 | ) | | (0.07 | ) |
| Palo Verde performance rewards, net | — |
| | — |
| | — |
| | (2,143 | ) | | (1,415 | ) | | (0.04 | ) |
| Other | | | (592 | ) | | (0.02 | ) | | | | 4 |
| | — |
|
September 30, 2015
| | | $ | 56,740 |
| | $ | 1.40 |
| | | | $ | 81,270 |
| | $ | 2.01 |
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Regulatory Lag
The completion of Montana Power Station ("MPS") Units 1 & 2 (including common plant, transmission lines and substation) and the Eastside Operations Center ("EOC") are having a negative impact on the Company's 2015 financial results relative to 2014 due to regulatory lag associated with the placement in service of these assets without a corresponding increase in revenues. The primary impact from these assets being placed in service include a reduction in amounts capitalized for allowance for funds used during construction ("AFUDC"), and increases in depreciation, operations and maintenance expense, property taxes and interest cost.
Third Quarter 2015
Income for the quarter ended September 30, 2015, when compared to the same period last year, was positively affected by:
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• | Increased retail non-fuel base revenues, primarily due to increased revenues largely resulting from hotter weather experienced in the third quarter of 2015. Most of this increase was generated from our residential and small commercial and industrial customers. KWh sales to residential and small commercial and industrial customers increased 11.9% and 3.4%, respectively, reflecting a 22.4% increase in cooling degree days for the third quarter compared to the same period in 2014. Retail non-fuel base revenues increased $1.4 million from our large commercial and industrial customers and $1.3 million from sales to public authorities, compared to the same period in 2014. |
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| El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960 | |
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• | Increased investment and interest income due to further diversification of the Company’s Palo Verde decommissioning trust fund equity portfolio. |
Income for the quarter ended September 30, 2015, when compared to the same period last year, was negatively affected by:
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• | Decreased AFUDC due to lower balances of construction work in progress (“CWIP”), primarily due to MPS Units 1 & 2 and the EOC being placed in service during the first quarter of 2015 and a reduction in the AFUDC accrual rate. |
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• | Increased interest on long-term debt due to the interest accrued on the $150 million senior notes issued in December 2014. |
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• | Increased depreciation and amortization related to an increase in depreciable plant, primarily due to MPS Units 1 & 2 and the EOC being placed in service during the first quarter of 2015. |
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• | Increased Palo Verde operations and maintenance expense. |
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• | Decreased deregulated Palo Verde Unit 3 revenues, primarily due to a 20.3% decrease in proxy market prices reflecting a decline in the price of natural gas. |
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• | Increased transmission and distribution operation and maintenance expense primarily due to system support and improvements and preventive maintenance. |
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• | Increased operations and maintenance expense related to our fossil-fuel generating plants, primarily due to operations and maintenance expense at MPS in 2015, with no comparable expense during the same period last year and an increased level of maintenance activity at the Four Corners plant. These increases were largely offset by decreased maintenance expense at the Rio Grande plant. |
Year to Date
Income for the nine months ended September 30, 2015, when compared to the same period last year, was positively affected by:
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• | Increased retail non-fuel base revenues, primarily due to (i) increased revenues of $10.4 million from our residential customers due to hotter weather in the third quarter of 2015 contributing to a 5.6% increase in kWh sales; (ii) increased revenues of $1.9 million from small commercial and industrial customers due to a 1.5% increase in kWh sales resulting from hotter weather and a 1.8% increase in the average number of customers; and (iii) a $1.2 million increase from large commercial and industrial customers. These increases were partially offset by a $0.7 million decrease from sales to public authorities due to a military installation moving a portion of their load to an interruptible rate. |
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• | Increased investment and interest income due to further diversification of the Company’s Palo Verde decommissioning trust fund equity portfolio. |
Income for the nine months ended September 30, 2015, when compared to the same period last year, was negatively affected by:
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• | Increased interest on long-term debt due to the interest accrued on the $150 million senior notes issued in December 2014. |
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• | Increased depreciation and amortization related to an increase in depreciable plant, primarily due to MPS Units 1 & 2 and the EOC being placed in service during the first quarter of 2015. |
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• | Decreased deregulated Palo Verde Unit 3 revenues, primarily due to a 24.6% decrease in proxy market prices, reflecting a decline in the price of natural gas and a 12.5% decrease in generation due primarily to a Unit 3 planned spring refueling outage that was completed in May 2015 with no comparable outage in 2014. |
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| El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960 | |
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• | Increased operations and maintenance expense related to our fossil-fuel generating plants, primarily due to operations and maintenance expense at MPS in 2015, with no comparable expense during the same period last year and an increased level of maintenance activity at the Newman and Four Corners plants. These increases were partially offset by decreased maintenance expense at the Rio Grande plant. |
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• | Increased transmission and distribution operations and maintenance expense primarily due to (i) increased preventive maintenance; (ii) system support and improvements; and (iii) environmental expense. |
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• | Decreased amounts of AFUDC capitalized due to lower balances of construction work in process primarily due to MPS Units 1 & 2, and the EOC being placed in service during the first quarter of 2015 and a reduction in the AFUDC accrual rate. |
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• | Recognition of Palo Verde performance rewards associated with the 2009 to 2012 performance periods, net of disallowed fuel and purchased power costs related to the resolution of the Texas fuel reconciliation proceeding designated as PUCT Docket No. 41852 recorded in June 2014 with no comparable amount in the current period. |
Retail Non-fuel Base Revenues
Retail non-fuel base revenues increased $14.1 million, pre-tax, or 7.7% in the third quarter of 2015, compared to the same period in 2014. This increase includes a $9.5 million increase in revenues from residential customers and a $1.8 million increase in revenues from our small commercial and industrial customers reflecting hotter summer weather in the third quarter of 2015 when compared to 2014. Retail non-fuel base revenues from large commercial and industrial customers increased $1.4 million. Retail non-fuel revenues from sales to public authorities increased $1.3 million reflecting an 8.2% increase in kWh sales. Cooling degree days increased 22.4% for the third quarter of 2015, compared to the same quarter last year, and were 15.9% above the 10-year average. Non-fuel base revenues and kWh sales are provided by customer class on page 11 of this release.
For the nine months ended September 30, 2015, retail non-fuel base revenues increased $12.9 million, or 2.9% compared to the same period in 2014. This increase includes a $10.4 million increase in revenues from residential customers and a $1.9 million increase in revenues from small commercial and industrial customers reflecting hotter summer weather and an increase of 1.3% and 1.8%, respectively in the average number of customers. KWh sales to public authorities increased 1.6% while revenue declined by $0.7 million due to a military installation moving a portion of their load to an interruptible rate. Retail non-fuel revenues from large commercial and industrial customers increased $1.2 million. Cooling degree days increased 6.3% in 2015, when compared to the same period last year, and were 4.7% over the 10-year average. Heating degree days increased 15.7% for the nine months of 2015, compared to the same period last year, and were 3.3% below the 10-year average. Non-fuel base revenues and kWh sales are provided by customer class on page 13 of this release.
Capital and Liquidity
We continue to maintain a strong capital structure in which common stock equity represented 44.9% of our capitalization (common stock equity, long-term debt, current maturities of long-term debt, and short-term borrowings under the revolving credit facility). At September 30, 2015, we had a balance of $12.6 million in cash and cash equivalents. Based on current projections, we believe that we will have adequate liquidity through our current cash balances, cash from operations, and available borrowings under our Revolving Credit Facility ("RCF") to meet all of our anticipated cash requirements for the next 12 months. We may also issue long-term debt in the capital markets in early 2016 to finance capital requirements and reduce amounts outstanding on our RCF. At September 30, 2015 $85.0 million was outstanding under the RCF for working capital and general corporate purposes.
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| El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960 | |
Cash flows from operations for the nine months ended September 30, 2015 were $176.4 million, compared to $174.6 million in the corresponding period in 2014. A component of cash flows from operations is the change in net over-collection and under-collection of fuel revenues. The difference between fuel revenues collected and fuel expense incurred is deferred to be either refunded (over-recoveries) or surcharged (under-recoveries) to customers in the future. During the nine months ended September 30, 2015, the Company had a fuel over-recovery of $10.9 million compared to an under-recovery of fuel costs of $1.2 million during the nine months ended September 30, 2014. At September 30, 2015, we had a net fuel over-recovery balance of $1.6 million, including an under-recovery of $2.4 million in Texas, and an over-recovery of $4.0 million in the New Mexico and FERC jurisdictions. On April 15, 2015, we filed a request to lower our Texas fixed fuel factor by approximately 24% to reflect a change in fuel costs primarily related to a reduction in natural gas prices. This decrease was effective with May 2015 billings.
During the nine months ended September 30, 2015, our primary capital requirements were for the construction and purchase of electric utility plant, payment of common stock dividends, and purchases of nuclear fuel. Capital requirements for new electric utility plant were $211.5 million for the nine months ended September 30, 2015 and $189.3 million for the nine months ended September 30, 2014. Capital expenditures for 2015 are expected to be $278.7 million. Capital requirements for purchases of nuclear fuel were $30.5 million for the nine months ended September 30, 2015, and $28.8 million for the nine months ended September 30, 2014.
On September 30, 2015, we paid a quarterly cash dividend of $0.295 per share, or $11.9 million, to shareholders of record as of September 16, 2015. We paid a total of $35.1 million in cash dividends during the nine months ended September 30, 2015. At the current dividend rate, we expect to pay cash dividends of approximately $47.1 million during 2015.
No shares of common stock were repurchased during the nine months ended September 30, 2015. As of September 30, 2015, a total of 393,816 shares remain available for repurchase under the currently authorized stock repurchase program. The Company may repurchase shares in the open market from time to time.
We maintain the RCF for working capital and general corporate purposes and financing of nuclear fuel through the Rio Grande Resources Trust (the "RGRT"). The RGRT, the trust through which we finance our portion of nuclear fuel for Palo Verde, is consolidated in the Company's financial statements. The RCF has a term ending January 14, 2019. The aggregate unsecured borrowing available under the RCF is $300 million. We may increase the RCF by up to $100 million (up to a total of $400 million) during the term of the agreement, upon the satisfaction of certain conditions, more fully set forth in the agreement, including obtaining commitments from lenders or third party financial institutions. In August 2015, the RGRT $15.0 million Series A 3.67% Senior Notes matured and were paid utilizing funds borrowed from the RCF. The total amount borrowed for nuclear fuel by the RGRT was $128.7 million at September 30, 2015, of which $33.7 million had been borrowed under the RCF, and $95.0 million was borrowed through senior notes. Borrowings by the RGRT for nuclear fuel were $127.5 million as of September 30, 2014, of which $17.5 million had been borrowed under the RCF and $110.0 million was borrowed through senior notes. Interest costs on borrowings to finance nuclear fuel are accumulated by the RGRT and charged to us as fuel is consumed and recovered through fuel recovery charges. At September 30, 2015, $85.0 million was outstanding under the RCF for working capital and general corporate purposes. At September 30, 2014, $72.0 million was outstanding under the RCF for working capital and general corporate purposes.
We received approval from the New Mexico Public Regulation Commission on October 7, 2015, and from the Federal Energy Regulatory Commission ("FERC") on October 19, 2015, to issue up to $310 million in new long-term debt and to guarantee the issuance of up to $65 million of new debt by the RGRT to finance future purchases of nuclear fuel and to refinance existing nuclear fuel debt obligations. We also requested approval from the FERC to continue to utilize our existing RCF without change from the Commission’s previously approved
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| El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960 | |
authorization. The FERC authorization is effective from November 15, 2015 through November 15, 2017. The approvals granted in these cases supersede prior approvals.
2015 Earnings Guidance
We are adjusting and narrowing our earnings guidance for 2015 to a range of $1.95 to $2.10 per basic share from the previous range of $1.75 to 2.05.
Conference Call
A conference call to discuss third quarter 2015 financial results is scheduled for 10:30 A.M. Eastern Time, on November 4, 2015. The dial-in number is 888-461-2024 with a conference ID number of 4633829. The international dial-in number is 719-325-2361. The conference leader will be Lisa Budtke, Assistant Treasurer. A replay will run through November 18, 2015 with a dial-in number of 888-203-1112 and a conference ID number of 4633829. The replay international dial-in number is 719-457-0820. The conference call and presentation slides will be webcast live on the Company's website found at http://www.epelectric.com. A replay of the webcast will be available shortly after the call.
Safe Harbor
This news release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This information may involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: (i) increased prices for fuel and purchased power and the possibility that regulators may not permit EE to pass through all such increased costs to customers or to recover previously incurred fuel costs in rates; (ii) full and timely recovery of capital investments and operating costs through rates in Texas and New Mexico; (iii) uncertainties and instability in the general economy and the resulting impact on EE's sales and profitability; (iv) changes in customers' demand for electricity as a result of energy efficiency initiatives and emerging competing services and technologies; (v) unanticipated increased costs associated with scheduled and unscheduled outages of generating plant; (vi) the size of our construction program and our ability to complete construction on budget; (vii) potential delays in our construction schedule due to legal challenges or other reasons; (viii) costs at Palo Verde; (ix) deregulation and competition in the electric utility industry; (x) possible increased costs of compliance with environmental or other laws, regulations and policies; (xi) possible income tax and interest payments as a result of audit adjustments proposed by the IRS or state taxing authorities; (xii) uncertainties and instability in the financial markets and the resulting impact on EE's ability to access the capital and credit markets; (xiii) possible physical or cyber attacks, intrusions or other catastrophic events; and (xiv) other factors detailed by EE in its public filings with the Securities and Exchange Commission. EE's filings are available from the Securities and Exchange Commission or may be obtained through EE's website, http://www.epelectric.com. Any such forward-looking statement is qualified by reference to these risks and factors. EE cautions that these risks and factors are not exclusive. EE does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of EE except as required by law.
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| El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960 | |
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Media Contacts | |
Eddie Gutierrez | |
915.543.5763 | |
eduardo.gutierrez@epelectric.com | |
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Investor Relations | |
Lisa Budtke | |
915.543.5947 | |
lisa.budtke@epelectric.com | |
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| El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960 | |
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El Paso Electric Company |
Statements of Operations |
Quarter Ended September 30, 2015 and 2014 |
(In thousands except for per share data) |
(Unaudited) |
| | | | | | | |
| | 2015 | | 2014 | | Variance | |
| | | | | | | |
Operating revenues, net of energy expenses: | | | | | | |
| Base revenues | $ | 197,620 |
| | $ | 183,405 |
| | $ | 14,215 |
| (a) |
| Deregulated Palo Verde Unit 3 revenues | 2,535 |
| | 3,944 |
| | (1,409 | ) | |
| Other | 9,240 |
| | 7,702 |
| | 1,538 |
| |
Operating Revenues Net of Energy Expenses | 209,395 |
| | 195,051 |
| | 14,344 |
| |
| | | | | | | |
Other operating expenses: | | | | | | |
| Other operations and maintenance | 57,699 |
| | 54,417 |
| | 3,282 |
| |
| Palo Verde operations and maintenance | 22,016 |
| | 20,489 |
| | 1,527 |
| |
Taxes other than income taxes | 19,253 |
| | 17,964 |
| | 1,289 |
| |
Other income | 5,747 |
| | 1,389 |
| | 4,358 |
| |
Earnings Before Interest, Taxes, Depreciation and Amortization | 116,174 |
| | 103,570 |
| | 12,604 |
| (b) |
| | | | | | | |
Depreciation and amortization | 22,380 |
| | 20,685 |
| | 1,695 |
| |
Interest on long-term debt | 16,465 |
| | 14,617 |
| | 1,848 |
| |
AFUDC and capitalized interest | 4,435 |
| | 7,308 |
| | (2,873 | ) | |
Other interest expense | 424 |
| | 438 |
| | (14 | ) | |
Income Before Income Taxes | 81,340 |
| | 75,138 |
| | 6,202 |
| |
| | | | | | | |
Income tax expense | 24,600 |
| | 22,662 |
| | 1,938 |
| |
| | | | | | | |
Net Income | $ | 56,740 |
| | $ | 52,476 |
| | $ | 4,264 |
| |
| | | | | | | |
Basic Earnings per Share | $ | 1.40 |
| | $ | 1.30 |
| | $ | 0.10 |
| |
| | | | | | | |
Diluted Earnings per Share | $ | 1.40 |
| | $ | 1.30 |
| | $ | 0.10 |
| |
| | | | | | | |
Dividends declared per share of common stock | $ | 0.295 |
| | $ | 0.280 |
| | $ | 0.015 |
| |
| | | | | | | |
Weighted average number of shares outstanding | 40,289 |
| | 40,214 |
| | 75 |
| |
| | | | | | | |
Weighted average number of shares and dilutive | | | | | | |
| potential shares outstanding | 40,330 |
| | 42,065 |
| | (1,735 | ) | |
| | | | | | | |
(a) | Base revenues exclude fuel recovered through New Mexico base rates of $23.2 million and $22.4 million, respectively. |
(b) | Earnings before interest, taxes, depreciation and amortization ("EBITDA") is a non-generally accepted accounting principles ("GAAP") financial measure and is not a substitute for net income or other measures of financial performance in accordance with GAAP. |
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El Paso Electric Company |
Statements of Operations |
Nine Months Ended September 30, 2015 and 2014 |
(In thousands except for per share data) |
(Unaudited) |
| | | | | | | |
| | 2015 | | 2014 | | Variance | |
| | | | | | | |
Operating revenues, net of energy expenses: | | | | | | |
| Base revenues | $ | 451,648 |
| | $ | 438,613 |
| | $ | 13,035 |
| (a) |
| Deregulated Palo Verde Unit 3 revenues | 7,541 |
| | 11,903 |
| | (4,362 | ) | |
| Palo Verde performance rewards, net | — |
| | 2,220 |
| | (2,220 | ) | |
| Other | 23,001 |
| | 22,331 |
| | 670 |
| |
Operating Revenues Net of Energy Expenses | 482,190 |
| | 475,067 |
| | 7,123 |
| |
| | | | | | | |
Other operating expenses: | | | | | | |
| Other operations and maintenance | 160,685 |
| | 153,515 |
| | 7,170 |
| |
| Palo Verde operations and maintenance | 67,702 |
| | 68,041 |
| | (339 | ) | |
Taxes other than income taxes | 48,844 |
| | 48,883 |
| | (39 | ) | |
Other income | 11,324 |
| | 8,642 |
| | 2,682 |
| |
Earnings Before Interest, Taxes, Depreciation and Amortization | 216,283 |
| | 213,270 |
| | 3,013 |
| (b) |
| | | | | | | |
Depreciation and amortization | 67,080 |
| | 62,336 |
| | 4,744 |
| |
Interest on long-term debt | 49,443 |
| | 43,803 |
| | 5,640 |
| |
AFUDC and capitalized interest | 17,540 |
| | 19,853 |
| | (2,313 | ) | |
Other interest expense | 941 |
| | 899 |
| | 42 |
| |
Income Before Income Taxes | 116,359 |
| | 126,085 |
| | (9,726 | ) | |
| | | | | | | |
Income tax expense | 35,089 |
| | 38,898 |
| | (3,809 | ) | |
| | | | | | | |
Net Income | $ | 81,270 |
| | $ | 87,187 |
| | $ | (5,917 | ) | |
| | | | | | | |
Basic Earnings per Share | $ | 2.01 |
| | $ | 2.16 |
| | $ | (0.15 | ) | |
| | | | | | | |
Diluted Earnings per Share | $ | 2.01 |
| | $ | 2.16 |
| | $ | (0.15 | ) | |
| | | | | | | |
Dividends declared per share of common stock | $ | 0.870 |
| | $ | 0.825 |
| | $ | 0.045 |
| |
| | | | | | | |
Weighted average number of shares outstanding | 40,268 |
| | 40,181 |
| | 87 |
| |
| | | | | | | |
Weighted average number of shares and dilutive | | | | | | |
| potential shares outstanding | 40,300 |
| | 40,209 |
| | 91 |
| |
| | | | | | | |
(a) | Base revenues exclude fuel recovered through New Mexico base rates of $55.8 million and $55.6 million, respectively. |
(b) | Earnings before interest, taxes, depreciation and amortization ("EBITDA") is a non-generally accepted accounting principles ("GAAP") financial measure and is not a substitute for net income or other measures of financial performance in accordance with GAAP. |
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| | | | | | | | | | | |
El Paso Electric Company |
Cash Flow Summary |
Nine Months Ended September 30, 2015 and 2014 |
(In thousands and Unaudited) |
| | | | | | | |
| | | | 2015 | | 2014 | |
Cash flows from operating activities: | | | | |
| Net income | $ | 81,270 |
| | $ | 87,187 |
| |
| Adjustments to reconcile net income to net cash provided by operations: | | | | |
| | Depreciation and amortization of electric plant in service | 67,080 |
| | 62,336 |
| |
| | Amortization of nuclear fuel
| 32,864 |
| | 33,942 |
| |
| | Deferred income taxes, net | 32,090 |
| | 35,990 |
| |
| | Net gains on sale of decommissioning trust funds | (7,886 | ) | | (3,791 | ) | |
| | Other | 4,655 |
| | 2,111 |
| |
| Change in: | | | | |
| | Accounts receivable | (33,156 | ) | | (47,331 | ) | |
| | Net over-collection (under-collection) of fuel revenues | 10,934 |
| | (1,233 | ) | |
| | Accounts payable | (14,397 | ) | | 3,557 |
| |
| | Other | 2,976 |
| | 1,869 |
| |
| | | Net cash provided by operating activities | 176,430 |
| | 174,637 |
| |
| | | | | | | |
Cash flows from investing activities: | | | | |
| Cash additions to utility property, plant and equipment | (211,516 | ) | | (189,273 | ) | |
| Cash additions to nuclear fuel | (30,483 | ) | | (28,772 | ) | |
| Decommissioning trust funds | (6,240 | ) | | (6,988 | ) | |
| Other | (9,106 | ) | | (2,805 | ) | |
| | | Net cash used for investing activities | (257,345 | ) | | (227,838 | ) | |
| | | | | | | |
Cash flows from financing activities: | | | | |
| Dividends paid | (35,138 | ) | | (33,261 | ) | |
| Borrowings under the revolving credit facility, net | 104,161 |
| | 75,176 |
| |
| Payment on maturing RGRT senior notes | (15,000 | ) | | — |
| |
| Other | (1,039 | ) | | (896 | ) | |
| | | Net cash provided by financing activities | 52,984 |
| | 41,019 |
| |
| | | | | | | |
Net decrease in cash and cash equivalents | (27,931 | ) | | (12,182 | ) | |
| | | | | | | |
Cash and cash equivalents at beginning of period | 40,504 |
| | 25,592 |
| |
| | | | | | | |
Cash and cash equivalents at end of period | $ | 12,573 |
| | $ | 13,410 |
| |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | |
El Paso Electric Company |
Quarter Ended September 30, 2015 and 2014 |
Sales and Revenues Statistics |
| | | | | | | | | | | |
| | | | | | | | | | Increase (Decrease) | |
| | | | | | 2015 | | 2014 | | Amount | | Percentage | |
kWh sales (in thousands): | | | | | | | | |
| Retail: | | | | | | | | |
| | Residential | 1,000,997 |
| | 894,525 |
| | 106,472 |
| | 11.9 | % | |
| | Commercial and industrial, small | 718,897 |
| | 694,928 |
| | 23,969 |
| | 3.4 | % | |
| | Commercial and industrial, large | 270,240 |
| | 276,226 |
| | (5,986 | ) | | (2.2 | )% | |
| | Public authorities | 459,212 |
| | 424,445 |
| | 34,767 |
| | 8.2 | % | |
| | | Total retail sales | 2,449,346 |
| | 2,290,124 |
| | 159,222 |
| | 7.0 | % | |
| Wholesale: | | | | | | | | |
| | Sales for resale | 22,126 |
| | 19,211 |
| | 2,915 |
| | 15.2 | % | |
| | Off-system sales | 711,934 |
| | 740,153 |
| | (28,219 | ) | | (3.8 | )% | |
| | | Total wholesale sales | 734,060 |
| | 759,364 |
| | (25,304 | ) | | (3.3 | )% | |
| | | | Total kWh sales | 3,183,406 |
| | 3,049,488 |
| | 133,918 |
| | 4.4 | % | |
Operating revenues (in thousands): | | | | | | | | |
| Non-fuel base revenues: | | | | | | | | |
| | Retail: | | | | | | | | |
| | | Residential | $ | 90,803 |
| | $ | 81,296 |
| | $ | 9,507 |
| | 11.7 | % | |
| | | Commercial and industrial, small | 62,966 |
| | 61,143 |
| | 1,823 |
| | 3.0 | % | |
| | | Commercial and industrial, large | 13,327 |
| | 11,929 |
| | 1,398 |
| | 11.7 | % | |
| | | Public authorities | 29,588 |
| | 28,266 |
| | 1,322 |
| | 4.7 | % | |
| | | | Total retail non-fuel base revenues | 196,684 |
| | 182,634 |
| | 14,050 |
| | 7.7 | % | |
| | Wholesale: | | | | | | | | |
| | | Sales for resale | 936 |
| | 771 |
| | 165 |
| | 21.4 | % | |
| | | | Total non-fuel base revenues | 197,620 |
| | 183,405 |
| | 14,215 |
| | 7.8 | % | |
| Fuel revenues: | | | | | | | | |
| | Recovered from customers during the period | 39,614 |
| | 54,405 |
| | (14,791 | ) | | (27.2 | )% | |
| | Over collection of fuel (a) | (101 | ) | | (12,136 | ) | | 12,035 |
| | 99.2 | % | |
| | New Mexico fuel in base rates | 23,215 |
| | 22,416 |
| | 799 |
| | 3.6 | % | |
| | | Total fuel revenues (b) | 62,728 |
| | 64,685 |
| | (1,957 | ) | | (3.0 | )% | |
| Off-system sales: | | | | | | | | |
| | Fuel cost | 17,920 |
| | 22,007 |
| | (4,087 | ) | | (18.6 | )% | |
| | Shared margins | 2,446 |
| | 5,126 |
| | (2,680 | ) | | (52.3 | )% | |
| | Retained margins | 435 |
| | 605 |
| | (170 | ) | | (28.1 | )% | |
| | | Total off-system sales | 20,801 |
| | 27,738 |
| | (6,937 | ) | | (25.0 | )% | |
| Other (c) | 8,564 |
| | 7,817 |
| | 747 |
| | 9.6 | % | |
| | | Total operating revenues | $ | 289,713 |
| | $ | 283,645 |
| | $ | 6,068 |
| | 2.1 | % | |
| | | | | | | | | | | | | |
(a) | 2014 includes a Department of Energy refund related to spent fuel storage of $8.3 million. |
(b) | Includes deregulated Palo Verde Unit 3 revenues for the New Mexico jurisdiction of $2.5 million and $3.9 million, respectively. |
(c) | Represents revenues with no related kWh sales. |
|
| | | | | | | | | | | | | |
El Paso Electric Company |
Quarter Ended September 30, 2015 and 2014 |
Other Statistical Data |
| | | | | | | | | |
| | | | | Increase (Decrease) |
| | | 2015 | | 2014 | | Amount | | Percentage |
| | | | | | | | | |
Average number of retail customers: (a) | | | | | | | |
| Residential | 357,913 |
| | 353,075 |
| | 4,838 |
| | 1.4 | % |
| Commercial and industrial, small | 40,368 |
| | 39,730 |
| | 638 |
| | 1.6 | % |
| Commercial and industrial, large | 49 |
| | 49 |
| | — |
| | — |
|
| Public authorities | 5,240 |
| | 5,112 |
| | 128 |
| | 2.5 | % |
| | Total | 403,570 |
| | 397,966 |
| | 5,604 |
| | 1.4 | % |
| | | | | | | | | |
Number of retail customers (end of period): (a) | | | | | | | |
| Residential | 358,421 |
| | 353,640 |
| | 4,781 |
| | 1.4 | % |
| Commercial and industrial, small | 40,385 |
| | 39,813 |
| | 572 |
| | 1.4 | % |
| Commercial and industrial, large | 49 |
| | 49 |
| | — |
| | — |
|
| Public authorities | 5,232 |
| | 5,126 |
| | 106 |
| | 2.1 | % |
| | Total | 404,087 |
| | 398,628 |
| | 5,459 |
| | 1.4 | % |
| | | | | | | | | |
Weather statistics: (b) | | | | | 10-Yr Average | | |
| Heating degree days | — |
| | — |
| | 1 |
| | |
| Cooling degree days | 1,732 |
| | 1,415 |
| | 1,495 |
| | |
| | | | | | | | | |
Generation and purchased power (kWh, in thousands): | | | | | Increase (Decrease) |
| | | 2015 | | 2014 | | Amount | | Percentage |
| | | | | | | | | |
| Palo Verde | 1,374,274 |
| | 1,370,091 |
| | 4,183 |
| | 0.3 | % |
| Four Corners | 162,771 |
| | 164,665 |
| | (1,894 | ) | | (1.2 | )% |
| Gas plants | 1,351,775 |
| | 1,289,419 |
| | 62,356 |
| | 4.8 | % |
| | Total generation | 2,888,820 |
| | 2,824,175 |
| | 64,645 |
| | 2.3 | % |
| Purchased power: | | | | | | | |
| | Photovoltaic | 77,104 |
| | 65,854 |
| | 11,250 |
| | 17.1 | % |
| | Other | 421,571 |
| | 320,869 |
| | 100,702 |
| | 31.4 | % |
| | Total purchased power | 498,675 |
| | 386,723 |
| | 111,952 |
| | 28.9 | % |
| | Total available energy | 3,387,495 |
| | 3,210,898 |
| | 176,597 |
| | 5.5 | % |
| Line losses and Company use | 204,089 |
| | 161,410 |
| | 42,679 |
| | 26.4 | % |
| | Total kWh sold | 3,183,406 |
| | 3,049,488 |
| | 133,918 |
| | 4.4 | % |
| | | | | | | | | |
|
| | | | | | | | | | | | |
| Palo Verde capacity factor | 100.1 | % | | 99.8 | % | | 0.3 | % | | |
| | | | | | | | | |
(a) | The number of retail customers is based on the number of service locations. |
| | | | | | | | | |
(b) | A degree day is recorded for each degree that the average outdoor temperature varies from a standard of 65 degrees Fahrenheit. |
|
| | | | | | | | | | | | | | | | | | | | |
El Paso Electric Company |
Nine Months Ended September 30, 2015 and 2014 |
Sales and Revenues Statistics |
| | | | | | | | | | | | | |
| | | | | | | | | | Increase (Decrease) | |
| | | | | | 2015 | | 2014 | | Amount | | Percentage | |
kWh sales (in thousands): | | | | | | | | |
| Retail: | | | | | | | | |
| | Residential | 2,203,590 |
| | 2,087,558 |
| | 116,032 |
| | 5.6 | % | |
| | Commercial and industrial, small | 1,835,931 |
| | 1,809,477 |
| | 26,454 |
| | 1.5 | % | |
| | Commercial and industrial, large | 802,182 |
| | 794,891 |
| | 7,291 |
| | 0.9 | % | |
| | Public authorities | 1,222,187 |
| | 1,202,403 |
| | 19,784 |
| | 1.6 | % | |
| | | Total retail sales | 6,063,890 |
| | 5,894,329 |
| | 169,561 |
| | 2.9 | % | |
| Wholesale: | | | | | | | | |
| | Sales for resale | 54,575 |
| | 51,931 |
| | 2,644 |
| | 5.1 | % | |
| | Off-system sales | 1,913,215 |
| | 2,003,020 |
| | (89,805 | ) | | (4.5 | )% | |
| | | Total wholesale sales | 1,967,790 |
| | 2,054,951 |
| | (87,161 | ) | | (4.2 | )% | |
| | | | Total kWh sales | 8,031,680 |
| | 7,949,280 |
| | 82,400 |
| | 1.0 | % | |
Operating revenues (in thousands): | | | | | | | | |
| Non-fuel base revenues: | | | | | | | | |
| | Retail: | | | | | | | | |
| | | Residential | $ | 197,165 |
| | $ | 186,718 |
| | $ | 10,447 |
| | 5.6 | % | |
| | | Commercial and industrial, small | 148,800 |
| | 146,939 |
| | 1,861 |
| | 1.3 | % | |
| | | Commercial and industrial, large | 31,455 |
| | 30,220 |
| | 1,235 |
| | 4.1 | % | |
| | | Public authorities | 72,163 |
| | 72,837 |
| | (674 | ) | | (0.9 | )% | |
| | | | Total retail non-fuel base revenues | 449,583 |
| | 436,714 |
| | 12,869 |
| | 2.9 | % | |
| | Wholesale: | | | | | | | | |
| | | Sales for resale | 2,065 |
| | 1,899 |
| | 166 |
| | 8.7 | % | |
| | | | Total non-fuel base revenues | 451,648 |
| | 438,613 |
| | 13,035 |
| | 3.0 | % | |
| | | | | | | | | | | | | |
| Fuel revenues: | | | | | | | | |
| | Recovered from customers during the period | 102,985 |
| | 126,107 |
| | (23,122 | ) | | (18.3 | )% | |
| | Under (over) collection of fuel (a) | (10,933 | ) | | 1,223 |
| | (12,156 | ) | | — |
| |
| | New Mexico fuel in base rates | 55,765 |
| | 55,643 |
| | 122 |
| | 0.2 | % | |
| | | Total fuel revenues (b) | 147,817 |
| | 182,973 |
| | (35,156 | ) | | (19.2 | )% | |
| | | | | | | | | | | | | |
| Off-system sales: | | | | | | | | |
| | Fuel cost | 41,204 |
| | 61,470 |
| | (20,266 | ) | | (33.0 | )% | |
| | Shared margins | 8,698 |
| | 14,515 |
| | (5,817 | ) | | (40.1 | )% | |
| | Retained margins | 955 |
| | 1,729 |
| | (774 | ) | | (44.8 | )% | |
| | | Total off-system sales | 50,857 |
| | 77,714 |
| | (26,857 | ) | | (34.6 | )% | |
| Other (c) | 22,645 |
| | 21,662 |
| | 983 |
| | 4.5 | % | |
| | | Total operating revenues | $ | 672,967 |
| | $ | 720,962 |
| | $ | (47,995 | ) | | (6.7 | )% | |
| | | | | | | | | | | | | |
(a) | Includes a Department of Energy refund related to spent fuel storage of $5.8 million and $8.3 million, respectively. 2014 includes a $2.2 million related to Palo Verde performance rewards, net. |
(b) | Includes deregulated Palo Verde Unit 3 revenues for the New Mexico jurisdiction of $7.5 million and $11.9 million, respectively. |
(c) | Represents revenues with no related kWh sales. | |
|
| | | | | | | | | | | | | |
El Paso Electric Company |
Nine Months Ended September 30, 2015 and 2014 |
Other Statistical Data |
| | | | | | | |
| | | | | Increase (Decrease) |
| | | 2015 | | 2014 | | Amount | | Percentage |
| | | | | | | | | |
Average number of retail customers: (a) | | | | | | | |
| Residential | 356,388 |
| | 351,813 |
| | 4,575 |
| | 1.3 | % |
| Commercial and industrial, small | 40,207 |
| | 39,477 |
| | 730 |
| | 1.8 | % |
| Commercial and industrial, large | 49 |
| | 49 |
| | — |
| | — |
|
| Public authorities | 5,243 |
| | 5,090 |
| | 153 |
| | 3.0 | % |
| | Total | 401,887 |
| | 396,429 |
| | 5,458 |
| | 1.4 | % |
| | | | | | | | | |
Number of retail customers (end of period): (a) | | | | | | | |
| Residential | 358,421 |
| | 353,640 |
| | 4,781 |
| | 1.4 | % |
| Commercial and industrial, small | 40,385 |
| | 39,813 |
| | 572 |
| | 1.4 | % |
| Commercial and industrial, large | 49 |
| | 49 |
| | — |
| | — |
|
| Public authorities | 5,232 |
| | 5,126 |
| | 106 |
| | 2.1 | % |
| | Total | 404,087 |
| | 398,628 |
| | 5,459 |
| | 1.4 | % |
| | | | | | | | | |
Weather statistics: (b) | | | | | 10-Yr Average | | |
| Heating degree days | 1,206 |
| | 1,042 |
| | 1,247 |
| | |
| Cooling degree days | 2,695 |
| | 2,535 |
| | 2,574 |
| | |
| | | | | | | | | |
Generation and purchased power (kWh, in thousands): | | | | | Increase (Decrease) |
| | | 2015 | | 2014 | | Amount | | Percentage |
| | | | | | | | | |
| Palo Verde | 3,940,370 |
| | 3,926,066 |
| | 14,304 |
| | 0.4 | % |
| Four Corners | 473,416 |
| | 436,889 |
| | 36,527 |
| | 8.4 | % |
| Gas plants | 3,046,330 |
| | 2,884,707 |
| | 161,623 |
| | 5.6 | % |
| | Total generation | 7,460,116 |
| | 7,247,662 |
| | 212,454 |
| | 2.9 | % |
| Purchased power: | | | | | | | |
| Photovoltaic | 223,818 |
| | 174,038 |
| | 49,780 |
| | 28.6 | % |
| Other | 827,478 |
| | 974,317 |
| | (146,839 | ) | | (15.1 | )% |
| | Total purchased power | 1,051,296 |
| | 1,148,355 |
| | (97,059 | ) | | (8.5 | )% |
| | Total available energy | 8,511,412 |
| | 8,396,017 |
| | 115,395 |
| | 1.4 | % |
| Line losses and Company use | 479,732 |
| | 446,737 |
| | 32,995 |
| | 7.4 | % |
| Total kWh sold | 8,031,680 |
| | 7,949,280 |
| | 82,400 |
| | 1.0 | % |
|
| | | | | | | | | | | | |
| Palo Verde capacity factor | 96.7 | % | | 96.4 | % | | 0.3 | % | | |
| | | | | | | | | |
(a) | The number of retail customers presented is based on the number of service locations. |
| | | | | | | | | |
(b) | A degree day is recorded for each degree that the average outdoor temperature varies from a standard of 65 degrees Fahrenheit. |
|
| | | | | | | | | |
El Paso Electric Company |
Financial Statistics |
At September 30, 2015 and 2014 |
(In thousands, except number of shares, book value per share, and ratios) |
| | | | | |
Balance Sheet | | 2015 | | 2014 |
| | | | | |
Cash and cash equivalents | | $ | 12,573 |
| | $ | 13,410 |
|
| | | | | |
Common stock equity | | $ | 1,020,795 |
| | $ | 1,015,857 |
|
Long-term debt | | 1,134,258 |
| | 984,688 |
|
| Total capitalization | | $ | 2,155,053 |
| | $ | 2,000,545 |
|
| | | | | |
Current maturities of long-term debt | | $ | — |
| | $ | 15,000 |
|
| | | | | |
Short-term borrowings under the revolving credit facility | | $ | 118,693 |
| | $ | 89,528 |
|
| | | | | |
Number of shares - end of period | | 40,426,668 |
| | 40,357,982 |
|
| | | | | |
Book value per common share | | $ | 25.25 |
| | $ | 25.17 |
|
| | | | | |
Common equity ratio (a) | | 44.9 | % | | 48.3 | % |
Debt ratio | | 55.1 | % | | 51.7 | % |
| | | | | |
(a) | The capitalization component includes common stock equity, long-term debt and the current maturities of long-term debt, and short-term borrowings under the RCF. |
| | | | | |
Third Quarter 2015 Earnings Conference Call November 4, 2015
Safe Harbor Statement This presentation includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This information may involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: Increased prices for fuel and purchased power and the possibility that regulators may not permit EE to pass through all such increased costs to customers or to recover previously incurred fuel costs in rates Full and timely recovery of capital investments and operating costs through rates in Texas and New Mexico Uncertainties and instability in the general economy and the resulting impact on EE’s sales and profitability Changes in customers’ demand for electricity as a result of energy efficiency initiatives and emerging competing services and technologies Unanticipated increased costs associated with scheduled and unscheduled outages of generating plant The size of our construction program and our ability to complete construction on budget Potential delays in our construction schedule due to legal challenges or other reasons Costs at Palo Verde Deregulation and competition in the electric utility industry Possible increased costs of compliance with environmental or other laws, regulations and policies Possible income tax and interest payments as a result of audit adjustments proposed by the IRS or state taxing authorities Uncertainties and instability in the financial markets and the resulting impact on EE’s ability to access the capital and credit markets Possible physical or cyber attacks, intrusions or other catastrophic events Other factors detailed by EE in its public filings with the Securities and Exchange Commission. EE’s filings are available from the Securities and Exchange Commission or may be obtained through EE’s website, http://www.epelectric.com 2
3rd Quarter Results Set a new native peak record of 1,794 MW on August 6, 2015 Set a new all-time MWh sales record during the quarter Paid a quarterly cash dividend of $0.295 per share on September 30, 2015 to shareholders of record as of September 16, 2015 3rd Quarter 2015 net income of $56.7 million or $1.40 per share, compared to 3rd Quarter 2014 net income of $52.5 million or $1.30 per share 3
A A 4 3rd Quarter Key Earnings Drivers Basic EPS Description September 30, 2014 1.30$ Changes In: Retail non-fuel base revenues 0.23 Increased revenues primarily due to hotter than normal summer weather Investment and interest income 0.07 Investment gains recorded due to the further diversification of the Company's Palo Verde decommissioning trust fund portfolio Allowance for funds used during construction (AFUDC) (0.06) Decreased due to lower construction work in progress balances primarily due to Montana Power Station (MPS) Units 1 & 2 and the Eastside Operations Center (EOC) being placed in service during the first quarter of 2015 and the reduction of the AFUDC accrual rate Interest on long-term debt (0.03) Increased due to interest accrued on the $150 million senior notes issued in December 2014 Depreciation and amortization (0.03) Increased primarily due to MPS Units 1 & 2 and the EOC being placed in service during the first quarter of 2015 Palo Verde operations and maintenance (0.03) Increased Palo Verde operation and maintenance expenses in the third quarter of 2015 Deregulated Palo Verde Unit 3 (0.02) Decreased due to a 20% decrease in proxy market prices reflecting a decline in natural gas prices Transmission and distribution O&M (0.01) Increased due to system support and improvements and preventive maintenance expense Other (0.02) September 30, 2015 1.40$
Historical Weather Summary 1,223 1,504 1,147 1,601 1,603 1,787 1,497 1,444 1,415 1,732* 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 3rd Quarter CDD’s 10-Yr CDD Average – 1,495 5 * August 2015 CDD’s were the second highest level recorded in the last 20 years and September 2015 CDD’s were the most on record since 1943 **Chart illustrates CDD’s for El Paso, Texas as reported by NOAA
Non-Fuel Base Revenues (000's) Percent Change * MWH Percent Change * Residential 90,803$ 11.7% 1,000,997 11.9% C&I Small 62,966 3.0% 718,897 3.4% C&I Large 13,327 11.7% 270,240 (2.2%) Public Authorities 29,588 4.7% 459,212 8.2% Total Retail 196,684$ 7.7% 2,449,346 7.0% Cooling Degree Days (CDD's) 1,732 22.4% Average Retail Customers 403,570 1.4% * Percent Change expressed as change from Q3 2015 over Q3 2014 3rd Quarter Retail Revenues and Sales 6
Capital Requirements & Liquidity Expended $211.5mm for additions to utility plant for the nine months ended September 30, 2015 EE made $35.1mm in dividend payments for the nine months ended September 30, 2015 At September 30, 2015, EE had liquidity of $193.5mm including a cash balance of $12.6mm and unused capacity under the revolving credit facility Capital expenditures for utility plant in 2015 are anticipated to be approximately $279mm May issue long-term debt in early 2016 7
8 2015 Earnings Guidance We are adjusting and narrowing our earnings guidance range for 2015 to $1.95 - $2.10 per share from $1.75 - $2.05
A A a Rate Case Updates New Mexico Rate Case Intervenor testimony submitted September 30, 2015 NMPRC ruled against EE’s request to create a separate class with a different rate for residential roof-top solar customers EE retains the option to request a rider for residential roof-top solar customers in a separate proceeding Hearings on the merits of the general rate case set to begin on November 16, 2015 Anticipate new rates to become effective early 2nd quarter 2016 Texas Rate Case Intervenor testimony must be filed by December 11, 2015 Hearings on the merits set to begin on January 26, 2016 Anticipate new rates to become effective early 2nd quarter 2016 9
Expected Timeline - Current Rate Cases 10 (1) NM Rate Case filing used a historical test year end of December 2014 and via a “post test year adjustment” included MPS units 1 & 2 in requested rate base. (2) House Bill 1535 allows for rates to relate back to the 155th day after a rate case is filed. New Mexico Texas Dec Feb 2015 Apr Jun Aug Oct Dec Feb 2016 Apr Jun 2016 Final Order Early 2Q 2016 Final Order Early 2Q 2016 Hearing Begins Jan 26 Effective Date of Rates(2) Jan 12 Hearing Begins Nov 16 Intervention Deadline Sep 25 File Rate Case Aug 10 Intervention Deadline Aug 3 File Rate Case (1) May 11 Historical Test Year End Mar 31 Historical Test Year End Dec 31 2014
Potential Timeline - Next Rate Cases 11 (1) NM Rate Case filing would use a historical test year end of September 2016 and via a “post test year adjustment” include MPS units 3 & 4 in requested rate base. (2) TX House Bill 1535 allows for the TX Rate Case filing to reflect a historical test year ended September 2016 and include MPS units 3 & 4 in requested rate base. (3) TX House Bill 1535 allows for rates to relate back to the 155th day after a rate case is filed. New Mexico Texas 2016 May Jul Sep Nov Jan 2017 Mar May Jul Sep Nov Jan 2018 2018 Final Order Q1 2018 Final Order 4Q 2017 Effective Date of Rates(3) 3Q 2017 File Rate Case(1) 1Q 2017 File Rate Case 1Q 2017 MPS Unit 4 In-Service Dec 2016 MPS Unit 4 In-Service Dec 2016 Historical Test Year End Sep 2016 Historical Test Year End(2) Sep 2016 MPS Unit 3 In-Service May 2016 MPS Unit 3 In-Service May 2016
Q & A 12
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