El Paso Electric Company (NYSE:EE):
Overview
- For the fourth quarter of 2015, El Paso
Electric Company ("EE" or the "Company") reported net income of
$0.6 million, or $0.02 basic and diluted earnings per share. Net
income for the fourth quarter of 2014 was $4.2 million, or $0.10
basic and diluted earnings per share.
- For the twelve months ended December
31, 2015, EE reported net income of $81.9 million, or $2.03 basic
and diluted earnings per share. Net income for the twelve months
ended December 31, 2014 was $91.4 million, or $2.27 basic and
diluted earnings per share.
“Despite the continued impact of regulatory lag on earnings, we
are reporting net income of $0.6 million for the three months ended
December 31, 2015,” said Mary Kipp, Chief Executive Officer of the
Company. “Reflecting back on last year, we accomplished a number of
critical objectives, including the completion of the first two
generating units at the Montana Power Station along with our
Eastside Operations Center. We have also continued construction of
Units 3 & 4 at the Montana Power Station and filed for
increases in base rates in both our Texas and New Mexico service
territories. Our region continues to grow as evidenced by an
increase in customers and reaching a new native system peak in
August 2015. We remain on-track and are now focused on key
objectives for 2016.”
Earnings Summary
The table and explanations below present the major factors
affecting 2015 net income relative to 2014 net income (in thousands
except per share data):
Quarter Ended Twelve
Months Ended
Pre-TaxEffect
After-TaxNetIncome
BasicEPS
Pre-TaxEffect
After-TaxNetIncome
BasicEPS
December 31, 2014 $ 4,241 $ 0.10 $ 91,428 $ 2.27 Changes in:
Allowance for funds used during construction $ (3,180 ) (2,846 )
(0.07 ) $ (5,454 ) (4,953 ) (0.12 ) Administrative and general
expense (2,877 ) (1,870 ) (0.04 ) (2,543 ) (1,653 ) (0.04 )
Depreciation and amortization (1,738 ) (1,130 ) (0.03 ) (6,482 )
(4,214 ) (0.10 ) Interest on long-term debt (1,183 ) (768 ) (0.02 )
(6,823 ) (4,435 ) (0.11 ) Deregulated Palo Verde Unit 3 (990 ) (644
) (0.02 ) (5,352 ) (3,479 ) (0.09 ) Investment and interest income
(152 ) (148 ) — 3,875 3,084 0.07 O&M at fossil-fuel generating
plants 3,853 2,506 0.06 (452 ) (294 ) — Retail non-fuel base
revenues 1,423 925 0.02 14,292 9,290 0.23 Palo Verde performance
rewards, net — — — (2,143 ) (1,415 ) (0.04 ) Other 382 0.02
(1,441 ) (0.04 ) December 31, 2015 $ 648 $ 0.02
$ 81,918 $ 2.03
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") continues to have a negative
impact on the Company's financial results due to regulatory lag
associated with the placement in service of these assets without a
corresponding increase in revenues. This trend will continue until
new and higher rates become effective. 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.
Fourth Quarter 2015
Income for the quarter ended December 31, 2015, when compared to
the quarter ended December 31, 2014, was negatively affected
by:
- 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 rate.
- Increased administrative and general
expenses primarily due to (i) increased payroll costs and employee
incentive compensation, and (ii) increased pension and benefits
costs due to changes in actuarial assumptions used to calculate
expenses for the post-retirement employee benefit plan and
increased medical claims paid.
- 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, partially offset by a change in the
estimated useful life of certain large intangible software
packages.
- Increased interest on long-term debt
due to the interest accrued on $150 million aggregate principal
amount of senior notes issued in December 2014.
- Decreased deregulated Palo Verde Unit 3
revenues, primarily due to a 27.5% decrease in proxy market prices
reflecting a decline in the price of natural gas.
Income for the quarter ended December 31, 2015, when compared to
the quarter ended December 31, 2014, was positively affected
by:
- Decreased operations and maintenance
expense related to our fossil-fuel generating plants, primarily due
to decreased maintenance related to Four Corners Unit 5 and Newman
Unit 4 in 2015. These decreases were partially offset by operations
and maintenance expense at MPS in 2015, with no comparable expense
during 2014.
- Increased retail non-fuel base
revenues, primarily due to increased revenues from our residential
customers resulting from favorable weather and a 1.4% increase in
the average number of customers.
Year to Date
Income for the twelve months ended December 31, 2015, when
compared to the twelve months ended December 31, 2014, was
negatively affected by:
- 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 rate.
- Increased interest on long-term debt
due to the interest accrued on $150 million aggregate principal
amount of senior notes issued in December 2014.
- 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, partially offset by a change in the
estimated useful life of certain large intangible software
packages.
- Decreased deregulated Palo Verde Unit 3
revenues, primarily due to a 25.6% decrease in proxy market prices,
reflecting a decline in the price of natural gas and a 9.3%
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.
- Increased administrative and general
expense primarily due to (i) an increase in employee incentive
compensation and (ii) increased pension and benefits costs due to
changes in actuarial assumptions used to calculate expenses for the
post-retirement employee benefit plan. These increases were
partially offset by decreased outside services in 2015 compared to
2014.
- 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 Public Utility Commission of Texas ("PUCT") Docket No. 41852
recorded in June 2014 with no comparable amount in 2015.
Income for the twelve months ended December 31, 2015, when
compared to the twelve months ended December 31, 2014, was
positively affected by:
- Increased retail non-fuel base
revenues, primarily due to (i) increased revenues of $11.9 million
from our residential customers due to hotter weather in the third
quarter of 2015 contributing to a 4.9% increase in kWh sales; (ii)
increased revenues of $2.0 million from small commercial and
industrial customers due to a 1.1% increase in kWh sales resulting
from hotter weather and a 1.6% 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 $0.8 million decrease from sales to public authorities due to a
military installation moving a portion of their load to an
interruptible rate.
- Increased investment and interest
income due to further diversification and re-balancing of the
Company’s Palo Verde decommissioning trust fund portfolio.
Retail Non-fuel Base Revenues
Retail non-fuel base revenues increased $1.4 million, pre-tax,
or 1.2%, in the fourth quarter of 2015, compared to the fourth
quarter of 2014. This increase includes a $1.4 million increase in
revenues from residential customers and a $0.2 million increase in
revenues from our small commercial and industrial customers
reflecting favorable weather and a 1.4% increase in the average
number of customers served. Cooling degree days increased 5.9% for
the fourth quarter of 2015, when compared to the fourth quarter of
2014, and were 17.1% over the 10-year average. Heating degree days
increased 3.6% for the three months ended December 31, 2015, when
compared to the fourth quarter of 2014, and were 4.1% below the
10-year average. Retail non-fuel base revenues from large
commercial and industrial customers and sales to public authorities
decreased less than 1.0% compared to the fourth quarter of 2014.
Non-fuel base revenues and kWh sales are provided by customer class
on page 11 of this release.
For the twelve months ended December 31, 2015, retail non-fuel
base revenues increased $14.3 million, or 2.6%, compared to 2014.
This increase includes an $11.9 million increase in revenues from
residential customers and a $2.0 million increase in revenues from
small commercial and industrial customers reflecting hotter summer
weather and increases of 1.3% and 1.6%, respectively, in the
average number of customers. Retail non-fuel revenues from large
commercial and industrial customers increased $1.2 million. KWh
sales to public authorities increased 1.5% while revenue declined
by $0.8 million due to a military installation moving a portion of
their load to an interruptible rate. Cooling degree days increased
6.3% in 2015, when compared to 2014, and were 5.3% over the 10-year
average. Heating degree days increased 10.3% in 2015, compared to
2014, and were 3.6% below the 10-year average. Non-fuel base
revenues and kWh sales are provided by customer class on page 13 of
this release.
2015 Rate Cases
On May 11, 2015, the Company filed with the New Mexico Public
Regulation Commission ("NMPRC"), NMPRC Case No. 15-00127-UT, for an
annual increase in non-fuel base rates of approximately $8.6
million or 7.1%. The filing also requests an annual reduction of
$15.4 million, or 21.5%, for fuel and purchased power costs
recovered in base rates. Subsequently, the Company reduced its
requested increase in non-fuel base rates to approximately $6.4
million. On February 16, 2016, the Hearing Examiner issued a
Recommended Decision to the NMPRC proposing an annual increase in
non-fuel base rates of approximately $640 thousand. On February 17,
2016, the NMPRC issued an order extending the suspension period in
the rate case from March 10, 2016 until April 8, 2016, by which
time the NMPRC is expected to either issue a final order with new
rates to go into effect in the second quarter of 2016 or again
extend the suspension period further to as late as June 10, 2016.
All parties will be allowed to file exceptions before the NMPRC
ultimately rules on the issues by final order. The Company cannot
predict the outcome of the rate case at this time.
On August 10, 2015, the Company filed with the City of El Paso,
other municipalities incorporated in its Texas service territory
and the PUCT in Docket No. 44941, a request for an increase in
non-fuel base revenues of approximately $71.5 million. On January
15, 2016, the Company filed its rebuttal testimony modifying the
requested increase to $63.3 million. The Company has invoked its
statutory right to have its new rates relate back for consumption
on and after January 12, 2016, which is the 155th day after the
filing. The difference in rates that would have been collected will
be surcharged or refunded to customers beginning after the PUCT's
final order in Docket No. 44941, which is expected to be in the
second quarter of 2016. The PUCT has the authority to require the
Company to surcharge or refund such difference over a period not to
exceed 18 months. On January 21, 2016, the Company, the City of El
Paso, the PUCT staff, the Office of Public Utility Counsel and the
Texas Industrial Energy Consumers filed a joint motion to abate the
procedural schedule to facilitate settlement talks. This motion was
granted. The Company cannot predict the outcome of the rate case at
this time.
Capital and Liquidity
We continue to maintain a strong capital structure in which
common stock equity represented 44.3% 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
December 31, 2015, we had a balance of $8.1 million in cash and
cash equivalents. Based on current projections, we believe that we
will have adequate liquidity through the issuance of long-term
debt, 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.
Cash flows from operations for the twelve months ended December
31, 2015 were $246.7 million, compared to $243.3 million for
the twelve months ended December 31, 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 twelve months ended December
31, 2015, the Company had a fuel over-recovery of $13.3 million
compared to an under-recovery of fuel costs of $3.1 million during
the twelve months ended December 31, 2014. At December 31, 2015, we
had a net fuel over-recovery balance of $4.0 million, including an
over-recovery of $0.1 million in Texas, $3.8 million in the New
Mexico and $0.1 million in the Federal Energy Regulatory Commission
("FERC") jurisdiction. 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 twelve months ended December 31, 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 $281.5 million for the twelve months ended
December 31, 2015 and $277.1 million for the twelve months ended
December 31, 2014. Capital expenditures for 2016 are expected to be
$231.1 million. Capital requirements for purchases of nuclear fuel
were $42.0 million for the twelve months ended December 31, 2015,
and $37.9 million for the twelve months ended December 31,
2014.
On January 28, 2016, the Board of Directors declared a quarterly
cash dividend of $0.295 per share payable on March 31, 2016 to
shareholders of record as of the close of business on March 15,
2016. On December 30, 2015, we paid a quarterly cash dividend of
$0.295 per share, or $11.9 million, to shareholders of record as of
the close of business on December 15, 2015. We paid a total of
$47.1 million in cash dividends during the twelve months ended
December 31, 2015. We expect to continue paying quarterly cash
dividends during 2016.
No shares of common stock were repurchased during the twelve
months ended December 31, 2015. As of December 31, 2015, a total of
393,816 shares remain available for repurchase under the Company's
currently authorized stock repurchase program. The Company may in
the future make purchases of its common stock in open market
transactions at prevailing prices and may engage in private
transactions where appropriate.
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 under the RCF. The total amount
borrowed for nuclear fuel by the RGRT was $128.7 million at
December 31, 2015, of which $33.7 million had been borrowed under
the RCF, and $95.0 million was borrowed through the issuance of
senior notes. Borrowings by the RGRT for nuclear fuel were $124.5
million as of December 31, 2014, of which $14.5 million had been
borrowed under the RCF and $110.0 million was borrowed through the
issuance of 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
December 31, 2015, $108.0 million was outstanding under the RCF for
working capital and general corporate purposes. No borrowings were
outstanding at December 31, 2014 under the RCF for working capital
and general corporate purposes. Total aggregate borrowings under
the RCF at December 31, 2015 were $141.7 million with an additional
$157.8 million available to borrow.
We received approval from the New Mexico Public Regulation
Commission on October 7, 2015, and from the 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 FERC’s previously approved authorization.
The FERC authorization is effective from November 15, 2015 through
November 15, 2017. The approvals granted in these cases supersede
prior approvals.
2016 Earnings Guidance
On May 11, 2015 and August 10, 2015, the Company filed rate
cases in New Mexico and Texas, respectively, as discussed above.
The outcome of these cases are expected to have a significant
impact on the Company's results of operations in 2016. Since we
cannot predict the outcome of these rate cases, the Company has
decided not to provide earnings guidance at this time. However, we
will continue to provide management's outlook on key earnings
drivers on the Company's February 24, 2016 conference call.
Conference Call
A conference call to discuss 2015 financial results is scheduled
for 10:30 A.M. Eastern Time, on February 24, 2016. The dial-in
number is 888-430-8694 with a conference ID number of 7522946. The
international dial-in number is 719-457-1035. The conference leader
will be Lisa Budtke, Director Treasury Services and Investor
Relations. A replay will run through March 9, 2016 with a dial-in
number of 888-203-1112 and a conference ID number of 7522946. 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 are forward-looking
statements made pursuant to the safe harbor provisions of the
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. This
information may involve risks and uncertainties that could cause
actual results to differ materially from such forward-looking
statements. Additional information concerning factors that could
cause actual results to differ materially from those expressed in
forward-looking statements is contained in EE's most recently filed
periodic reports and in other filings made by EE with the U.S.
Securities and Exchange Commission (the "SEC"), and include, but is
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, including distributed generation; (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 and on time; (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 of which we are currently unaware or deem
immaterial. EE's filings are available from the SEC 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. Management cautions against putting undue reliance on
forward-looking statements or projecting any future results based
on such statements or present or prior earnings levels.
Forward-looking statements speak only as of the date of this news
release, and EE does not undertake to update any forward-looking
statement contained herein.
El Paso Electric Company Statements of
Operations Three Months Ended December 31, 2015 and 2014
(In thousands except for per share data) (Unaudited)
2015
2014 Variance Operating
revenues, net of energy expenses: Base revenues $ 116,163 $ 114,728
$ 1,435 (a) Deregulated Palo Verde Unit 3 revenues 2,119 3,109 (990
) Other 7,452 8,812 (1,360 )
Operating Revenues
Net of Energy Expenses 125,734 126,649
(915 ) Other operating expenses: Other
operations and maintenance 49,849 51,722 (1,873 ) Palo Verde
operations and maintenance 29,937 31,183 (1,246 ) Taxes other than
income taxes 14,892 13,867 1,025 Other income 3,918 4,867
(949 )
Earnings Before Interest, Taxes,
Depreciation and Amortization
34,974 34,744 230 (b) Depreciation and
amortization 22,744 21,006 1,738 Interest on long-term debt 16,408
15,225 1,183 AFUDC and capitalized interest 5,004 8,269 (3,265 )
Other interest expense 372 351 21
Income
Before Income Taxes 454 6,431 (5,977
) Income tax expense (benefit) (194 ) 2,190
(2,384 )
Net Income $ 648
$ 4,241 $ (3,593 )
Basic Earnings per Share $ 0.02
$ 0.10 $ (0.08 )
Diluted Earnings per Share $ 0.02
$ 0.10 $ (0.08 )
Dividends declared per share of common stock $ 0.295 $ 0.280
$ 0.015 Weighted average number of shares
outstanding 40,297 40,220 77
Weighted average number of shares and
dilutive potential shares outstanding
40,335 40,220 115
(a) Base revenues exclude fuel recovered
through New Mexico base rates of $16.4 million and $16.0 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.
El Paso Electric Company Statements of
Operations Twelve Months Ended December 31, 2015 and
2014 (In thousands except for per share data)
(Unaudited)
2015 2014 Variance Operating revenues,
net of energy expenses: Base revenues $ 567,811 $ 553,341 $ 14,470
(a) Deregulated Palo Verde Unit 3 revenues 9,660 15,012 (5,352 )
Palo Verde performance rewards, net — 2,220 (2,220 ) Other 30,453
31,143 (690 )
Operating Revenues Net of Energy
Expenses 607,924 601,716 6,208
Other operating expenses: Other operations and maintenance 210,534
205,237 5,297 Palo Verde operations and maintenance 97,639 99,224
(1,585 ) Taxes other than income taxes 63,736 62,750 986 Other
income 15,242 13,509 1,733
Earnings Before
Interest, Taxes, Depreciation and Amortization 251,257
248,014 3,243 (b) Depreciation and
amortization 89,824 83,342 6,482 Interest on long-term debt 65,851
59,028 6,823 AFUDC and capitalized interest 22,544 28,122 (5,578 )
Other interest expense 1,313 1,250 63
Income Before Income Taxes 116,813 132,516
(15,703 ) Income tax expense 34,895
41,088 (6,193 )
Net Income $
81,918 $ 91,428 $
(9,510 ) Basic Earnings per Share
$ 2.03 $ 2.27 $
(0.24 ) Diluted Earnings per Share
$ 2.03 $ 2.27 $
(0.24 ) Dividends declared per share of common
stock $ 1.165 $ 1.105 $ 0.060 Weighted
average number of shares outstanding 40,275 40,191 84
Weighted average number of shares and
dilutive potential shares outstanding
40,309 40,212 97
(a) Base revenues exclude fuel recovered
through New Mexico base rates of $72.1 million and $71.6 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.
El Paso Electric Company Cash Flow
Summary Twelve Months Ended December 31, 2015 and 2014
(In thousands and Unaudited)
2015 2014 Cash flows from
operating activities: Net income $ 81,918 $ 91,428 Adjustments
to reconcile net income to net cash provided by operations:
Depreciation and amortization of electric plant in service 89,824
83,342 Amortization of nuclear fuel 43,099 43,864 Deferred income
taxes, net 30,846 39,129 Net gains on sale of decommissioning trust
funds (11,114 ) (7,350 ) Other 6,927 1,533 Change in: Accounts
receivable 4,839 (5,815 ) Net over-collection (under-collection) of
fuel revenues 13,344 (3,121 ) Accounts payable (11,235 ) 9,684
Other (1,777 ) (9,354 )
Net cash provided by operating
activities 246,671 243,340
Cash flows from investing activities: Cash additions to
utility property, plant and equipment (281,458 ) (277,078 ) Cash
additions to nuclear fuel (41,966 ) (37,877 ) Decommissioning trust
funds (7,656 ) (9,364 ) Other (11,654 ) (6,873 )
Net cash used
for investing activities (342,734 )
(331,192 ) Cash flows from financing
activities: Dividends paid (47,059 ) (44,556 ) Borrowings under
the revolving credit facility, net 127,206 180 Payment on maturing
RGRT senior notes (15,000 ) — Proceeds from issuance of senior
notes — 149,468 Other (1,439 ) (2,328 )
Net cash provided by
financing activities 63,708 102,764
Net increase (decrease) in cash and cash equivalents
(32,355 ) 14,912 Cash and cash
equivalents at beginning of period 40,504
25,592 Cash and cash equivalents at end of
period $ 8,149 $ 40,504
El Paso Electric Company Three
Months Ended December 31, 2015 and 2014 Sales and Revenues
Statistics
Increase (Decrease) 2015
2014 Amount
Percentage
kWh sales (in
thousands):
Retail: Residential 567,548 552,977 14,571 2.6 % Commercial and
industrial, small 548,583 548,369 214 — Commercial and industrial,
large 260,480 269,584 (9,104 ) (3.4 )% Public authorities 363,381
360,381 3,000 0.8 % Total retail sales
1,739,992 1,731,311 8,681 0.5 % Wholesale:
Sales for resale 8,772 9,798 (1,026 ) (10.5 )% Off-system sales
587,732 606,749 (19,017 ) (3.1 )% Total wholesale
sales 596,504 616,547 (20,043 ) (3.3 )% Total kWh
sales 2,336,496 2,347,858 (11,362 ) (0.5 )%
Operating
revenues (in thousands):
Non-fuel base revenues: Retail: Residential $ 49,100 $ 47,653 $
1,447 3.0 % Commercial and industrial, small 38,636 38,449 187 0.5
% Commercial and industrial, large 8,956 9,019 (63 ) (0.7 )% Public
authorities 19,081 19,229 (148 ) (0.8 )% Total retail
non-fuel base revenues 115,773 114,350 1,423 1.2 % Wholesale: Sales
for resale 390 378 12 3.2 % Total non-fuel
base revenues 116,163 114,728 1,435 1.3 % Fuel
revenues: Recovered from customers during the period 24,780 34,945
(10,165 ) (29.1 )% Under (over) collection of fuel (2,409 ) 1,887
(4,296 ) — New Mexico fuel in base rates 16,364 15,971
393 2.5 % Total fuel revenues (a) 38,735
52,803 (14,068 ) (26.6 )% Off-system sales: Fuel cost 11,202
13,246 (2,044 ) (15.4 )% Shared margins 2,350 6,602 (4,252 ) (64.4
)% Retained margins 407 418 (11 ) (2.6 )% Total
off-system sales 13,959 20,266 (6,307 ) (31.1 )% Other (b) (c)
8,045 8,766 (721 ) (8.2 )% Total operating revenues $
176,902 $ 196,563 $ (19,661 ) (10.0 )%
(a) Includes deregulated Palo Verde Unit 3
revenues for the New Mexico jurisdiction of $2.1 million and $3.1
million, respectively.
(b) Includes energy efficiency bonuses of
$1.3 million and $2.0 million, respectively.
(c) Represents revenues with no related
kWh sales.
El Paso Electric Company Three Months Ended
December 31, 2015 and 2014 Other Statistical Data
Increase (Decrease)
2015 2014 Amount
Percentage
Average number of
retail customers: (a)
Residential 358,712 353,657 5,055 1.4 % Commercial and industrial,
small 40,380 39,969 411 1.0 % Commercial and industrial, large 48
49
(1
)
(2.0 )% Public authorities 5,270 5,090 180 3.5 %
Total 404,410 398,765 5,645 1.4 %
Number of retail
customers (end of period): (a)
Residential 358,819 353,885 4,934 1.4 % Commercial and industrial,
small 40,367 40,038 329 0.8 % Commercial and industrial, large 49
49
—
— Public authorities 5,261 5,017 244 4.9 % Total
404,496 398,989 5,507 1.4 %
Weather
statistics: (b)
10-Yr Average Cooling degree days 144 136 123 Heating degree
days 889 858 927
Generation and
purchased power (kWh, in thousands):
Increase (Decrease) 2015 2014 Amount
Percentage Palo Verde 1,196,316 1,180,602 15,714 1.3
% Four Corners 184,328 159,363 24,965 15.7 % Gas plants 744,329
889,502
(145,173
)
(16.3 )% Total generation 2,124,973 2,229,467
(104,494
)
(4.7 )% Purchased power: Photovoltaic 53,423 53,941
(518
)
(1.0 )% Other 286,227 188,194 98,033 52.1 % Total
purchased power 339,650 242,135 97,515 40.3 % Total
available energy 2,464,623 2,471,602
(6,979
)
(0.3 )% Line losses and Company use 128,127 123,744 4,383
3.5 % Total kWh sold 2,336,496 2,347,858
(11,362
)
(0.5 )% Palo Verde capacity factor 87.0 % 85.9 %
1.1
%
(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 Twelve Months
Ended December 31, 2015 and 2014 Sales and Revenues
Statistics
Increase (Decrease) 2015
2014 Amount Percentage
kWh sales (in
thousands):
Retail: Residential 2,771,138 2,640,535 130,603 4.9 % Commercial
and industrial, small 2,384,514 2,357,846 26,668 1.1 % Commercial
and industrial, large 1,062,662 1,064,475 (1,813 ) (0.2 )% Public
authorities 1,585,568 1,562,784 22,784 1.5 %
Total retail sales 7,803,882 7,625,640 178,242
2.3 % Wholesale: Sales for resale 63,347 61,729 1,618 2.6 %
Off-system sales 2,500,947 2,609,769 (108,822 ) (4.2
)% Total wholesale sales 2,564,294 2,671,498 (107,204
) (4.0 )% Total kWh sales 10,368,176 10,297,138
71,038 0.7 %
Operating
revenues (in thousands):
Non-fuel base revenues: Retail: Residential $ 246,265 $ 234,371 $
11,894 5.1 % Commercial and industrial, small 187,436 185,388 2,048
1.1 % Commercial and industrial, large 40,411 39,239 1,172 3.0 %
Public authorities 91,244 92,066 (822 ) (0.9 )% Total
retail non-fuel base revenues 565,356 551,064 14,292 2.6 %
Wholesale: Sales for resale 2,455 2,277 178
7.8 % Total non-fuel base revenues 567,811 553,341
14,470 2.6 % Fuel revenues: Recovered from customers
during the period 127,765 161,052 (33,287 ) (20.7 )% Under (over)
collection of fuel (a) (13,342 ) 3,110 (16,452 ) — New Mexico fuel
in base rates 72,129 71,614 515 0.7 % Total
fuel revenues (b) 186,552 235,776 (49,224 ) (20.9 )%
Off-system sales: Fuel cost 52,406 74,716 (22,310 ) (29.9 )%
Shared margins 11,048 21,117 (10,069 ) (47.7 )% Retained margins
1,362 2,147 (785 ) (36.6 )% Total off-system sales
64,816 97,980 (33,164 ) (33.8 )% Other (c) (d) 30,690 30,428
262 0.9 % Total operating revenues $ 849,869 $
917,525 $ (67,656 ) (7.4 )%
(a) Includes Department of Energy refunds
related to spent fuel storage of $5.8 million and $7.9 million,
respectively. 2014 includes $2.2 million related to Palo Verde
performance rewards, net.
(b) Includes deregulated Palo Verde Unit 3
revenues for the New Mexico jurisdiction of $9.7 million and $15.0
million, respectively.
(c) Includes energy efficiency bonuses of
$1.3 million and $2.0 million, respectively.
(d) Represents revenues with no related
kWh sales.
El Paso Electric Company Twelve Months
Ended December 31, 2015 and 2014 Other Statistical Data
Increase (Decrease) 2015 2014
Amount Percentage
Average number of
retail customers: (a)
Residential 356,969 352,277 4,692 1.3 % Commercial and industrial,
small 40,250 39,600 650 1.6 % Commercial and industrial, large 49
49 — — Public authorities 5,250 5,088 162
3.2 % Total 402,518 397,014 5,504
1.4 %
Number of retail
customers (end of period): (a)
Residential 358,819 353,885 4,934 1.4 % Commercial and industrial,
small 40,367 40,038 329 0.8 % Commercial and industrial, large 49
49 — — Public authorities 5,261 5,017 244
4.9 % Total 404,496 398,989 5,507
1.4 %
Weather
statistics: (b)
10-Yr Average Cooling degree days 2,839 2,671 2,696
Heating degree days 2,095 1,900 2,174
Generation and
purchased power (kWh, in thousands):
Increase (Decrease) 2015 2014
Amount Percentage Palo Verde 5,136,686
5,106,668 30,018 0.6 % Four Corners 657,744 596,252 61,492 10.3 %
Gas plants 3,790,659 3,774,209 16,450
0.4 % Total generation 9,585,089 9,477,129 107,960 1.1 %
Purchased power: Photovoltaic 277,241 227,979 49,262 21.6 % Other
1,113,705 1,162,511
(48,806
)
(4.2 )% Total purchased power 1,390,946 1,390,490 456
— Total available energy 10,976,035 10,867,619
108,416 1.0 % Line losses and Company use 607,859 570,481
37,378 6.6 % Total kWh sold 10,368,176
10,297,138 71,038 0.7 % Palo
Verde capacity factor 94.3 % 93.7 %
0.6
%
(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 December 31, 2015 and 2014 (In
thousands, except number of shares, book value per common share,
and ratios) Balance Sheet
2015 2014 Cash and cash
equivalents $ 8,149 $ 40,504 Common stock
equity $ 1,016,538 $ 984,254 Long-term debt 1,134,284
1,134,179 Total capitalization $ 2,150,822 $
2,118,433 Current maturities of long-term debt $ —
$ 15,000 Short-term borrowings under the
revolving credit facility $ 141,738 $ 14,532
Number of shares - end of period 40,443,819
40,356,624 Book value per common share $ 25.13
$ 24.39 Common equity ratio (a) 44.3 % 45.8 % Debt
ratio 55.7 % 54.2 %
(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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160224005513/en/
El Paso Electric CompanyMedia ContactsEddie Gutierrez,
915-543-5763eduardo.gutierrez@epelectric.comorInvestor
RelationsLisa Budtke,
915-543-5947lisa.budtke@epelectric.com
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