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PUCT approves El Paso Electric rate case settlement

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PUCT approves El Paso Electric rate case settlement

The Public Utility Commission of Texas on Dec. 14 approved a settlement in El Paso Electric Co.'s rate case.

The commission approved for El Paso Electric an annual nonfuel base rate increase of $14.5 million, a return on equity of 9.65% and authorization to recover approximately $3.4 million in rate case expenses through a separate surcharge over the next three years.

The average residential monthly electric bill will increase by $3.50 in winter and $5 in summer months, according to a Dec. 14 news release. El Paso Electric is authorized to recover revenues associated with making the rate change retroactive to July 18, 2017, through a separate surcharge. The new rates are expected to take effect in January 2018.

The PUCT also required El Paso Electric to file a refund tariff if the federal income tax rate decreases before the utility files its next rate case.

In February, El Paso Electric proposed a rate case including a $42.5 million, or 8.71% increase, in base rate revenue, a 10.5% ROE and an 8.136% return on a year-end, Texas-jurisdictional rate base valued at $1.69 billion for a test year ended Sept. 30, 2016.

The approved rate case includes all new plants in service. The initial base rate in proposed rate case included $59.4 million of costs related to "fresh start accounting" for the Palo Verde Nuclear Generating Station.

The company said the rate case was driven by the need to begin recovery of $151.3 million in costs associated with units 3 and 4 at the Montana Power Station, which started operating in May 2016 and September 2016, respectively.

In its order, the commission also allowed El Paso Electric to annually recover $2.1 million of nuclear decommissioning funding and set annual depreciation expenses approximately $1.9 million lower than what was requested by El Paso Electric in its initial filing.

The order also establishes baseline revenue requirements for recovery of future transmission and distribution investment costs, including a minimum monthly bill of $30 for new residential customers with distributed generation, like private rooftop solar, El Paso Electric said. (Texas Docket No. 46831)