The electric utility that serves the city of El Paso has agreed to a $15 million annual rate decrease after it was determined through a financial review that its revenues were excessive.
The settlement comes at no cost to El Paso ratepayers, and will result in lower rates for both businesses and residential customers. It also represents a rare victory for electric consumers in such cases, which more typically lead to rate hikes.
Public Utility Commission spokesman Terry Hadley told the online Texas Energy Report that it’s been 15 years since a similar rate case resulted in a big drop in customer bills. When combined with a related reduction in the fuel portion of the bill, a typical residential customer should see a reduction of about $4 per month.
“I’m thrilled! This is a victory for people and small businesses of El Paso,” said El Paso City Councilmember Cortney Niland, on her Twitter account.
El Paso is located outside the area of the state with electric deregulation, and the company that serves its residents — the El Paso Electric Company — remains rate regulated. In October the city called upon El Paso Electric to justify its rates. The company responded by filing paperwork in which it requested a $26 million rate increase. But under the deal approved April 17, the company instead must submit to a $15 million rate cut, effective in May.
For residential customers, the settlement will result in rate savings of about $1.5 million annually — but in the form of a credit to summer electric bills. For business customers, the rate cute will amount to savings of about $13.5 million annually. The cost of reviewing the case will be borne by the company only, and not by its customers. El Paso Electric also has committed to provide an additional $2.2 million towards an economic development incentive program.
The company’s rates have typically been somewhat high in comparison to rates charged in other areas of Texas exempt from electric deregulation, and often higher than rates in deregulated areas. The general trend statewide is that average electricity prices in areas exempt from deregulation typically are lower than average prices in deregulated areas.
The last time El Paso Electric cut its rates was in 1998.
Is a policy analyst for TCAP, a coalition of cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.