El Pasoans still have time to tell officials from El Paso Electric how they feel about the utility’s proposed double-digit rate increases for household electric bills.
Every four years, Texas law requires utilities to evaluate the rates they are charging homes, businesses and governments for electricity. El Paso Electric is currently in the middle of that process and is holding city-mandated public meetings in each City Council district to explain the reasons for the prospective rate increases.
The rate case filed in June still has to go before the state regulators at the Public Utility Commission of Texas for approval.
The El Paso City Council has authority to set rates for people within city limits, a power given to the body under state law, city code and the franchise agreement with El Paso Electric. The city council voted unanimously in late June to suspend the proposed rates. City staff, attorneys and outside counsel are reviewing the 6,000-page filing and the city is expected to release its own rate proposal sometime in October.
El Paso Electric filed an appeal of the City Council’s decision to the Public Utility Commission of Texas, who has the final say. Often, state regulators accept a settlement rate determined by the parties.
That hearing is scheduled for January, which means the new rates wouldn’t be determined until March or April 2022, said James Schichtl, the vice president of regulatory and government affairs for El Paso Electric.
There are two more public meetings this week. The first is an in-person meeting at 5:30 p.m. Wednesday at Carnitas Queretaro, at 9077 Gateway West Blvd., for City Council District 3. The other is a virtual meeting at 6 p.m. Thursday for City Council District 5. The meeting can be accessed through a Microsoft Teams link, or by calling 915-213-4096 and using conference ID 703 135 764#.
Currently, the utility is asking for a more than 13% increase to residential customers, meaning an average household using 686 kilowatt hours monthly would see their bill increase by nearly $12, according to the rate case filed with state regulators. A specific fee called the “residential customer charge” will be $2.29 more per month. That charge is separate from the electric rates.
Schichtl told attendees at a recent community meeting at Mesita Elementary School that the utility needs to raise rates because of the increased capital investment in the power grid and other equipment. He also said current “rates are not producing sufficient revenue to cover costs,” and that most of that demand is coming from residential customers. The utility is looking to recover investments of $953 million since the last rate case in 2017.
“What’s driving most of the capital investment and driving a lot of the increased expenditures is our growth in residential customers,” Schichtl said.
He said the exact increase across individual monthly bills would fluctuate depending on other factors, but that most customers could expect about a $12 a month increase.
Texas law requires that the utility present the preceding year, in this case 2020, as a “test year” for examining usage and other factors to justify the need for fee increases.
Schichtl said the year was unusual due to the pandemic’s stay-at-home orders, business and office closures and extreme summer temperatures, which drove higher usage in homes.
When asked how much that residential bump skews the data, Schichtl said it’s accounted for in the rate case, but didn’t say exactly how it changes the utility’s argument.
“We correct for that going forward, because it’s hopefully not something that will repeat itself,” Schichtl said.
This is also not the company’s only pending rate increase. El Paso Electric is proposing an added surcharge — $2 in the winter and $4 in the summer — to recover $40 million the utility said it lost when fuel prices increased during the deadly Texas blackouts in February. The other case proposes that residents in New Mexico and Texas pay a surcharge to add automated metering to the system, with a proposed settlement of a monthly $2 fee.
If all the rate cases were approved as they stand, that would be a nearly $20-a-month increase for a typical customer, depending on the season.
The current rate cases are the first under new ownership.
In July 2020, El Paso Electric went from a publicly traded company to private ownership after being purchased for $4.3 billion by the Infrastructure Investments Fund, which is managed by J.P. Morgan.
El Paso City Rep. Peter Svarzbein, who represents District 1 in West El Paso, said in the three rate cases he’s overseen as a member of the council, the company has agreed to a settlement with the city that resulted in a lower rate increase than initially proposed.
In the 2017 rate case, the city of El Paso opposed El Paso Electric’s proposed $42.5 million increase, reducing that to $14.5 million in a settlement agreement signed off by state regulators — a 65% decrease from their original ask.
In 2017, home rates increased 5%, meaning a $3.50 to $5 monthly increase to household bills based on seasonal rates, and saw $2.14 in surcharges.
“The first numbers thrown out, like the $40 million (increase), that number usually settles for lower,” Svarzbein said, adding that he did not support the rate case as it currently stands.
Disclosure: El Paso Electric is a financial supporter of El Paso Matters.
Cover photo: The El Paso Electric sign in the lobby of 100 N. Stanton St. (Danielle Prokop/El Paso Matters)