Public Utility Commission of Texas Approves Final Order in El Paso Electric Company’s Texas Rate Case Docket No. 46831

EL PASO, Texas–(BUSINESS WIRE)–The Public Utility Commission of Texas (the “Commission”) approved a
Final Order (the “Order”) in El Paso Electric Company’s (the “Company”
or “EPE”) (NYSE: EE) rate case today. The Order resolves all issues in
this rate case.

“We are pleased to have been able to work together with all parties and
to reach the agreement reflected in this final order,” said Mary Kipp,
President and CEO of El Paso Electric. “As always, we will continue to
serve our customers safely and reliably, while finding innovative
solutions for meeting the needs of our growing region.”

The Order provides, among other things, for the following: (i) an annual
non-fuel base rate increase of $14.5 million; (ii) a return on equity of
9.65%; (iii) all new plant in service as filed in the Company’s rate
filing package was prudent and used and useful and therefore is included
in rate base; (iv) the Company to recover reasonable rate case expenses
of approximately $3.4 million through a separate surcharge over a three
year period; and (v) a requirement that the Company file a refund tariff
if the federal statutory income tax rate, as it relates to the Company,
is decreased before the Company files its next rate case. The Order also
establishes baseline revenue requirements for recovery of future
transmission and distribution investment costs, and includes a minimum
monthly bill of $30.00 for new residential customers with distributed
generation, such as private rooftop solar. Additionally, the Order
allows for the annual recovery of $2.1 million of nuclear
decommissioning funding and establishes annual depreciation expense that
is approximately $1.9 million lower than the annual amount requested by
the Company in its initial filing. Finally, the Order allows for the
Company to recover revenues associated with the relation back of rates
to consumption on and after July 18, 2017 through a separate surcharge.

New rates are anticipated to be implemented in January 2018. As a result
of the non-fuel base rate increase, the Company’s Texas residential
customers will likely see an average monthly bill increase of $3.50 and
$5.00 in winter and summer months, respectively.

El Paso Electric Company is a regional electric utility providing
generation, transmission and distribution service to approximately
417,000 retail and wholesale customers in a 10,000 square mile area of
the Rio Grande valley in west Texas and southern New Mexico.

Safe Harbor

This news release includes statements that may constitute
forward-looking statements made pursuant to the safe harbor provisions
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements often involve risks and
uncertainties that could cause actual results to differ materially from
such forward-looking statements. Risks and factors that could cause or
contribute to such differences include, but are not limited to: (i) new
rates are not implemented in January 2018; (ii) increased prices for
fuel and purchased power and the possibility that regulators may not
permit EPE to pass through all such increased costs to customers or to
recover previously incurred fuel costs in rates; (iii) full and timely
recovery of capital investments and operating costs through rates in
Texas and New Mexico; (iv) impact of U.S. tax reform legislation; and
(v) other factors detailed by EPE in its public filings with the
Securities and Exchange Commission (SEC). EPE's filings are available
from the SEC or may be obtained through EPE's website,
http://www.epelectric.com. Although EPE believes that the expectations
reflected in such forward-looking statements are reasonable, no
assurances can be given that these expectations will prove to be
correct. Any such forward-looking statement is qualified by reference to
these risks and factors. EPE cautions that these risks and factors are
not exclusive. The forward-looking statements are subject to and involve
risks, uncertainties and assumptions and you should not place undue
reliance on these forward-looking statements. EPE does not undertake to
update or revise any forward-looking statement that may be made from
time to time by or on behalf of EPE except as required by law. If EPE
does update one or more forward-looking statements, there should be no
inference that EPE will make additional updates with respect to these or
other forward-looking statements.

Contacts

El Paso Electric Company
Public Relations
Eddie
Gutierrez, 915-543-5763
[email protected]
or
Investor
Relations
Lisa Budtke, 915-543-5947
[email protected]
or
Richard
Gonzalez, 915-543-2236
[email protected]