Exhibit 99.01

 

El Paso Electric

NEWS RELEASE

 

For Immediate Release Date: August 4, 2010		Contact: Media Teresa Souza 915/543-5823		Investor Relations: Steve Busser 915/543-5983 Rachelle Williams 915/543-2257

El Paso Electric Announces Second Quarter Financial Results

Overview

 

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For the second quarter 2010, EE reported net income of $21.5 million, or $0.49 basic and diluted earnings per share. In the second quarter of 2009, EE reported net income of $15.4 million, or $0.34 basic and diluted earnings per share.

 

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For the six months ended June 30, 2010, EE reported net income of $33.0 million, or $0.75 basic and diluted earnings per share. Net income for the six months ended June 30, 2009 was $25.0 million, or $0.56 basic and diluted earnings per share.

“The second quarter of 2010 was another strong quarter for El Paso Electric Company, both financially and operationally,” said David W. Stevens, Chief Executive Officer. “We continue to experience significant growth in non-fuel base retail revenues and we reached a new native system peak of 1,615 MW in July 2010.”

 

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El Paso Electric Ÿ P.O. Box 982 Ÿ El Paso, Texas 79960

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Earnings Summary

The table and explanations below present the major factors affecting 2010 net income relative to 2009 net income.

 

		Quarter Ended												Six Months Ended
		Pre-Tax Effect				After-Tax Net Income				Basic EPS				Pre-Tax Effect				After-Tax Net Income				Basic EPS
June 30, 2009						$	15,431			$	0.34							$	25,040			$	0.56
Changes in:
Retail non-fuel base revenue		$	6,721				4,235				0.10			$	14,846				9,353				0.21
Deregulated Palo Verde Unit 3 revenues			2,869				1,808				0.04				2,356				1,484				0.03
Interest and investment income			1,991				1,665				0.04				3,575				3,079				0.07
Palo Verde O&M			1,599				1,007				0.02				929				585				0.01
Depreciation and amortization			(1,461	)			(921	)			(0.02	)			(3,066	)			(1,932	)			(0.04	)
Pension and benefits expense			(1,194	)			(752	)			(0.02	)			(1,344	)			(847	)			(0.02	)
Interest on long-term debt			(45	)			(28	)			—				1,678				1,058				0.02
Elimination of Medicare Part D tax benefit			—				—				—				—				(4,787	)			(0.11	)
Other							(938	)			(0.02	)							(77	)			—
June 30, 2010						$	21,507				0.48							$	32,956				0.73
Change in weighted average number of shares											0.01												0.02
June 30, 2010										$	0.49											$	0.75

Second Quarter 2010

Earnings for the quarter ended June 30, 2010 when compared to the same period last year, were positively affected by:

 

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Higher retail non-fuel base revenues in 2010 primarily due to a 4.2% increase in kWh sales to retail customers as a result of a 1.7% growth in customers served, increased sales to large commercial and industrial customers, and new non-fuel base rates in our New Mexico jurisdiction effective beginning January 2010.

 

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Increased revenues from retail sales of deregulated Palo Verde Unit 3 power due to increased generation at Palo Verde Unit 3 in 2010. In 2009 Palo Verde Unit 3 had a scheduled refueling and maintenance outage through most of April and May.

 

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Increased interest and investment income primarily due to a decline in impairment losses on investments in our Palo Verde decommissioning trusts of $2.4 million in 2010 when compared to the same period in 2009.

 

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Decreased Palo Verde operations and maintenance costs primarily due to decreased operations costs at all three units.

Earnings for the quarter ended June 30, 2010 when compared to the same period last year were negatively affected by:

 

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Increased depreciation and amortization expense due to increased depreciable plant balances.

 

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Increased pension and benefits expense primarily due to changes in actuarial assumptions for our pension plan and increased costs associated with our medical and dental plans.

 

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El Paso Electric Ÿ P.O. Box 982 Ÿ El Paso, Texas 7996

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Year to Date

Earnings for the six months ended June 30, 2010 when compared to the same period last year, were positively affected by:

 

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Higher retail non-fuel base revenues in 2010 primarily due to a 5.3% increase in kWh sales to retail customers as a result of colder winter weather, increased sales to large commercial and industrial customers, a 1.8% growth in customers served, and new non-fuel base rates in our New Mexico jurisdiction effective beginning January 2010.

 

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Increased interest and investment income primarily due to a decline in impairment losses on investments in our Palo Verde decommissioning trusts of $4.9 million in 2010 when compared to the same period in 2009.

 

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Increased revenues from retail sales of deregulated Palo Verde Unit 3 power due to increased generation at Palo Verde Unit 3 in 2010. In 2009, Palo Verde Unit 3 had a scheduled refueling and maintenance outage through most of April and May.

 

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Decreased interest expense on long-term debt primarily as the result of lower interest rates on pollution control bonds. Two series of pollution control bonds were refunded in March 2009 at a fixed 7.25% interest rate which was lower than the variable interest rates applied to these bonds before the refunding.

 

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Decreased Palo Verde operations and maintenance costs primarily due to decreased operations costs at all three units.

Earnings for the six months ended June 30, 2010 when compared to the same period last year were negatively affected by:

 

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A one-time increase in tax expense to recognize a change in tax law enacted in the Patient Protection and Affordable Care Act to eliminate the tax benefit related to the Medicare Part D subsidies.

 

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Increased depreciation and amortization expense due to increased depreciable plant balances.

 

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Increased pension and benefits expense primarily due to changes in actuarial assumptions for our pension plan.

Retail Non-fuel Base Revenues

Retail non-fuel base revenues increased by $6.7 million, pre-tax, or 5.4% in the second quarter of 2010 compared to the same period in 2009 primarily due to (i) a 32.5 % increase in retail non-fuel base revenues received from large commercial and industrial customers attributable to an increase of 13.3% in kWh sales and the implementation of higher rates in new contracts with several large customers whose contracts had expired; (ii) a 2.5% increase in kWh sales to residential customers reflecting 1.7% growth in the average number of customers served; and (iii) a 2.6% increase in kWh sales to small commercial and industrial customers primarily due to a 2.4% increase in the average number of small commercial and industrial customers served. Revenues to public authorities increased 2.1% primarily reflecting increased kWh sales of 2.9% largely due to increased sales from military bases. Revenues in all customer classes also reflect increased non-fuel base rates in New Mexico which were effective beginning January 2010. Non-fuel base revenues and kilowatt-hour sales are provided by customer class on page 11 of the Release.

For the six months ended June 30, 2010, retail non-fuel base revenues increased by $14.8 million, pre-tax, or 6.6% compared to the same period in 2009 primarily due to a 7.6% increase in kWh sales to residential customers reflecting colder winter weather in 2010 and 1.8% growth in the average number of customers served. During the six months ended June 30, 2010, heating degree days were 33% above the same period in 2009 and 13% above the 10-year average. Retail non-fuel base revenues from large commercial and industrial customers increased 25.7% due to an increase of 9.9% in kWh sales and the implementation of higher rates in new contracts with several large customers whose contracts had expired. Retail non-fuel base revenues also increased

 

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El Paso Electric Ÿ P.O. Box 982 Ÿ El Paso, Texas 79960

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due to a 2.5% increase in kWh sales to small commercial and industrial customers primarily as a result of a 2.2% increase in the average number of small commercial and industrial customers served. Revenues to public authorities increased 2.7% primarily reflecting increased kWh sales of 3.1% largely due to increased sales from military bases. Revenues in all customer classes also reflect increased non-fuel base rates in New Mexico which were effective beginning January 2010. Non-fuel base revenues and kilowatt-hour sales are provided by customer class on page 13 of the Release.

2009 Texas Retail Rate Case

On July 30, 2010, the Public Utility Commission of Texas (PUCT) approved a settlement in the 2009 Texas retail rate case in PUCT Docket No. 37690. The settlement calls for an annual non-fuel base rate increase of $17.15 million effective for usage beginning July 1, 2010. Interim rates were placed in effect July 1, 2010 pending final approval by the PUCT. All additions to electric plant in service since June 30, 1993 through June 30, 2009 were deemed to be reasonable and necessary with the exception of one small addition. In addition, our new customer information system completed in April 2010 was also included in base rates with a ten-year amortization. The settlement provides for the reconciliation of fuel costs incurred through June 30, 2009 except for the recovery of final coal reclamation costs which will be litigated separately. The fuel reconciliation was bifurcated from the rate case (Docket No. 38361) to allow for litigation of the final coal reclamation costs. The PUCT also approved the use of a formula-based fuel factor which provides for more timely recovery of fuel costs. Consistent with a prior rate agreement, effective July 1, 2010, we will share 90% of off-system sales margins with customers and retain 10% of such margins. Previously, we retained 75% of off-system sales margins. The PUCT approved a $19.7 million or 11% reduction in our fixed fuel factor as the initial rate under the approved fuel factor formula. The PUCT also approved an energy efficiency cost-recovery factor that includes the recovery of deferred energy efficiency costs over a three-year period.

Patient Protection and Affordable Care Act

On March 23, 2010, the Patient Protection and Affordable Care Act was signed into law. A major provision of the law is that, beginning in 2013, the income tax deductions for the cost of providing certain prescription drug coverage will be reduced by the amount of the Medicare Part D subsidies received. We were required to recognize the impacts of the tax law change at the time of enactment and recorded a one-time non-cash charge to income tax expense of approximately $4.8 million in the first quarter of 2010.

Palo Verde Operations

We own approximately 633 MW (undivided interest) of generating capacity in the three generating units at the Palo Verde Nuclear Generating Station, operated by Arizona Public Service Company. The operation of Palo Verde not only affects our ability to make off-system sales but also impacts fuel costs to native load customers and represents a significant portion of our non-fuel operation and maintenance expenses. Palo Verde generation accounted for approximately 54% of total Company generation in the second quarter of 2010. Palo Verde had a capacity factor of 80.4% in the second quarter of 2010 compared to 80.6% for the same period last year. A scheduled spring refueling outage at Palo Verde Unit 1 began April 3, 2010 and was completed May 23, 2010. The 2009 scheduled spring refueling outage at Palo Verde Unit 3 began April 3, 2009 and was completed May 28, 2009.

 

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El Paso Electric Ÿ P.O. Box 982 Ÿ El Paso, Texas 79960

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Off-system Sales

We make off-system sales in the wholesale power markets when competitively priced excess power is available from our generating plants and purchased power contracts. The Company shared 25% of off-system sales margins with customers and retained 75% of off-system sales margins through June 30, 2010 pursuant to rate agreements in prior years. Effective July 1, 2010, the Company will share 90% of off-system sales margins with customers and retain 10% of off-system sales margins. The table below shows off-system sales in MWh and the pre-tax margins realized and retained by us from sales during the quarter and six months ended June 30, 2010 and 2009:

 

		Quarter Ended June 30,						Six Months Ended June 30,
		2010			2009			2010			2009
MWh sales			511,470			634,078			1,359,208			1,692,481
Total margins (in thousands)		$	1,049		$	1,143		$	6,890		$	7,865
Retained margins (in thousands)		$	787		$	857		$	5,169		$	5,900

For the quarter ended June 30, 2010, retained margins from off-system sales decreased approximately $0.1 million, pre-tax, over the corresponding period in 2009 due primarily to a 19.3% decrease in MWh sales partially offset by a slight increase in margins per MWh. The table below shows on a per MWh basis, pre-tax revenues, costs and margins from off-system sales for 2010 and 2009.

 

Quarter Ended		Average Revenue Per MWh			Average Cost of Energy Per MWh			Pre-Sharing Average  Margin Per MWh
March 31, 2009		$	36.49		$	30.13		$	6.36
June 30, 2009		$	35.43		$	33.63		$	1.80
March 31, 2010		$	45.65		$	38.76		$	6.89
June 30, 2010		$	34.63		$	32.57		$	2.06

Capital and Liquidity

We continue to maintain a strong capital structure to ensure access to capital markets at reasonable rates. At June 30, 2010, common stock equity represented 46.3% of our capitalization (common stock equity, long-term debt and the current portion of long-term debt, and financing obligations). At June 30, 2010, we had a balance of $29.4 million in cash and cash equivalents, most of which was in funds invested in United States Treasury securities.

Cash flows from operations for the six months ended June 30, 2010 were $59.5 million compared to $111.3 million in the corresponding period in 2009. The primary factor affecting the decreased cash flow was reduced collection of deferred fuel revenues in 2010. The difference between fuel revenues and fuel expense is deferred to be refunded (over-recoveries) or surcharged (under-recoveries) to customers in the future. The collection of deferred fuel revenues included the over-recovery of fuel costs by $12.1 million in 2010 compared to an over-recovery of fuel costs of $36.6 million in 2009. During the first six months of 2010, we refunded $11.8 million of over-recoveries to Texas customers compared to recovering through a surcharge of $16.3 million of under-recoveries from Texas customers in the first six months of 2009. Over-recoveries in New Mexico and from our FERC customer are refunded through fuel adjustment clauses with a two month lag. At June 30, 2010, we had a net fuel over-recovery balance of $18.4 million, including $17.9 million in Texas, $0.6 million in New Mexico, and an under-recovery balance of $0.1 million from our FERC customer. On July

 

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El Paso Electric Ÿ P.O. Box 982 Ÿ El Paso, Texas 79960

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15, 2010, the PUCT approved our request to refund to our Texas customers $11.1 million of over-recoveries in July and August 2010.

During the six months ended June 30, 2010, our primary capital requirements were for the construction and purchase of electric utility plant, purchases of nuclear fuel, and the repurchase of common stock. Capital requirements for new electric plant were $90.6 million for the six months ended June 30, 2010 compared to $99.8 million for the six months ended June 30, 2009.

We maintain a $200 million revolving credit facility to provide liquidity to the Company. Up to $120 million under the revolving credit facility is available through direct borrowings to a trust that is used to finance our nuclear fuel inventory. Nuclear fuel financing requirements exceeded the trust borrowing capacity in June 2010 and as a result, the Company itself borrowed under the facility to finance nuclear fuel that could not be financed by the trust. Amounts due under the revolving credit facility by both the trust and the Company for nuclear fuel were $122.8 million as of June 30, 2010, including accrued interest and fees. Borrowings by the trust for nuclear fuel were $103.5 million as of June 30, 2009, including accrued interest and fees. The revolving credit facility is scheduled to expire in April 2011.

On February 19, 2010, the Board of Directors authorized repurchases of up to 2 million additional shares of the Company’s outstanding common stock. During the six months ended June 30, 2010, we repurchased 502,492 shares of common stock in the open market at an aggregate cost of $10.0 million under both the previously authorized program and under the recently authorized program. As of June 30, 2010, 1,698,490 shares remain available for repurchase under the recently authorized program. The Company currently intends to continue to repurchase shares in the open market from time to time.

We believe that we will have adequate liquidity through our current cash balances, cash from operations, and our revolving credit facility which terminates in April 2011 to meet all of our anticipated cash requirements through 2010 based on current projections. In June 2010, we received approval from the FERC and the New Mexico Public Regulatory Commission to refinance our revolving credit facility and to issue in a private placement up to $110 million of senior notes from the Rio Grande Resource Trust II (the RGRT), guaranteed by the Company, to finance nuclear fuel. We currently expect to complete the notes financing by RGRT during the third quarter and to use the proceeds to repay amounts borrowed under the revolving credit facility for nuclear fuel. This would enable the future nuclear fuel financing requirements by RGRT to be met with the senior notes with any additional amounts borrowed from the revolving credit facility.

2010 Earnings Guidance

We are providing earnings guidance for 2010 of a range of $1.65 to $2.10 per basic share excluding any one-time impacts of the 2009 Texas retail rate case.

Conference Call

A conference call to discuss second quarter 2010 earnings is scheduled for 10:30 a.m. Eastern Time, August 4, 2010. The dial-in number is 866-818-1393 with a conference ID of 1468302. The conference leader will be Steven P. Busser, Vice President – Treasurer and Chief Risk Officer of EE. A replay will run through August 18, 2010 with a dial-in number of 866-837-8032 and a conference ID of 1468302. The conference call and presentation slides will be webcast live on EE’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 may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This information may involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

 

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El Paso Electric Ÿ P.O. Box 982 Ÿ El Paso, Texas 79960

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Factors that could cause or contribute to such differences include, but are 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) fluctuations in off-system sales margins due to uncertainty in the economy power market and the availability of generating units; (iii) recovery of capital investments and operating costs through rates in Texas and New Mexico; (iv) recovery of franchise fees and taxes through tax surcharges in New Mexico; (v) uncertainties and instability in the general economy and the resulting impact of EE’s sales and profitability; (vi) unanticipated increased costs associated with scheduled and unscheduled outages; (vii) the size of our construction program and our ability to complete construction on budget and on time; (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; (xii) uncertainties and instability in the financial markets and the resulting impact on EE’s ability to access the capital and credit markets; and (xiii) other factors detailed by EE in its public filings with the Securities and Exchange Commission. EE’s filings are available from the Securities and Exchange Commission 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. EE does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of EE except as required by law.

 

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El Paso Electric Ÿ P.O. Box 982 Ÿ El Paso, Texas 79960

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El Paso Electric Company and Subsidiary

Consolidated Statements of Operations

Quarter Ended June 30, 2010 and 2009

(In thousands except for per share data)

(Unaudited)

 

		2010			2009				Variance
Operating revenues, net of energy expenses:
Base revenues		$	130,752		$	124,039			$	6,713	(a)
Off-system sales margins, net of sharing			787			857				(70	)
Deregulated Palo Verde Unit 3 revenues			4,268			1,399				2,869
Other			5,286			5,176				110
Operating Revenues Net of Energy Expenses			141,093			131,471				9,622
Other operating expenses:
Other operations and maintenance			41,684			39,844				1,840
Palo Verde operations and maintenance			25,595			27,194				(1,599	)
Taxes other than income taxes			13,170			12,511				659
Other income (deductions)			462			(1,327	)			1,789
Earnings Before Interest, Taxes, Depreciation and Amortization			61,106			50,595				10,511	(b)
Depreciation and amortization			20,167			18,706				1,461
Interest on long-term debt			12,241			12,196				45
AFUDC and capitalized interest			4,499			4,560				(61	)
Other interest expense			25			82				(57	)
Income Before Income Taxes			33,172			24,171				9,001
Income tax expense			11,665			8,740				2,925
Net Income		$	21,507		$	15,431			$	6,076
Basic Earnings per Share		$	0.49		$	0.34			$	0.15
Diluted Earnings per Share		$	0.49		$	0.34			$	0.15
Weighted average number of shares outstanding			43,460			44,783				(1,323	)
Weighted average number of shares and dilutive potential shares outstanding			43,558			44,792				(1,234	)

 

(a)	Base revenues exclude fuel recovered through New Mexico base rates of $17.8 million and $16.4 million, respectively.

(b)	EBITDA is a non-GAAP financial measure and is not a substitute for net income or other measures of financial performance in accordance with GAAP.

 

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El Paso Electric Company and Subsidiary

Consolidated Statements of Operations

Six Months Ended June 30, 2010 and 2009

(In thousands except for per share data)

(Unaudited)

 

		2010			2009				Variance
Operating revenues, net of energy expenses:
Base revenues		$	241,222		$	226,384			$	14,838	(a)
Off-system sales margins, net of sharing			5,169			5,900				(731	)
Deregulated Palo Verde Unit 3 revenues			9,349			6,993				2,356
Other			11,581			10,939				642
Operating Revenues Net of Energy Expenses			267,321			250,216				17,105
Other operating expenses:
Other operations and maintenance			83,875			80,782				3,093
Palo Verde operations and maintenance			48,002			48,931				(929	)
Taxes other than income taxes			24,913			25,028				(115	)
Other income (deductions)			1,203			(2,916	)			4,119
Earnings Before Interest, Taxes, Depreciation and Amortization			111,734			92,559				19,175	(b)
Depreciation and amortization			39,451			36,385				3,066
Interest on long-term debt			24,442			26,120				(1,678	)
AFUDC and capitalized interest			8,834			9,081				(247	)
Other interest expense			65			252				(187	)
Income Before Income Taxes			56,610			38,883				17,727
Income tax expense (c)			23,654			13,843				9,811
Net Income		$	32,956		$	25,040			$	7,916
Basic Earnings per Share		$	0.75		$	0.56			$	0.19
Diluted Earnings per Share		$	0.75		$	0.56			$	0.19
Weighted average number of shares outstanding			43,599			44,770				(1,171	)
Weighted average number of shares and dilutive potential shares outstanding			43,710			44,791				(1,081	)

 

(a)	Base revenues exclude fuel recovered through New Mexico base rates of $33.6 million and $31.8 million, respectively.

(b)	EBITDA is a non-GAAP financial measure and is not a substitute for net income or other measures of financial performance in accordance with GAAP.

(c)	Income tax expense for the six months ended June 30, 2010 includes a charge of $4,787 related to the Patient Protection and Affordable Care Act which required the elimination of the tax benefit associated with the Medicare Part D subsidies beginning in 2013.

 

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El Paso Electric Company and Subsidiary

Cash Flow Summary

Six Months Ended June 30, 2010 and 2009

(In thousands and Unaudited)

 

		2010				2009
Cash flows from operating activities:
Net income		$	32,956			$	25,040
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization of electric plant in service			39,451				36,385
Deferred income taxes, net			14,206				(4,186	)
Other			15,815				16,635
Change in working capital items:
Net recovery of fuel revenues			420				51,618
Accounts receivable			(26,175	)			3,499
Other			(17,148	)			(17,680	)
Net cash provided by operating activities			59,525				111,311
Cash flows from investing activities:
Cash additions to utility property, plant and equipment			(90,603	)			(99,795	)
Cash additions to nuclear fuel			(26,981	)			(20,199	)
Decommissioning trust funds			(5,604	)			(3,903	)
Other			(4,454	)			(3,405	)
Net cash used for investing activities			(127,642	)			(127,302	)
Cash flows from financing activities:
Repurchase of common stock			(9,988	)			—
Financing obligations			15,829				9,840
Other			(104	)			(1,782	)
Net cash provided by financing activities			5,737				8,058
Net decrease in cash and cash equivalents			(62,380	)			(7,933	)
Cash and cash equivalents at beginning of period			91,790				91,642
Cash and cash equivalents at end of period		$	29,410			$	83,709
Cash interest payments		$	23,825			$	23,526

 

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El Paso Electric Company and Subsidiary

Quarter Ended June 30, 2010 and 2009

Sales and Revenues Statistics

 

										Increase (Decrease)
		2010				2009				Amount				Percentage
MWh sales:
Retail:
Residential			583,096				569,004				14,092			2.5	%
Commercial and industrial, small			601,048				585,678				15,370			2.6	%
Commercial and industrial, large			289,095				255,178				33,917			13.3	%
Sales to public authorities			403,770				392,328				11,442			2.9	%
Total retail sales			1,877,009				1,802,188				74,821			4.2	%
Wholesale:
Sales for resale			17,335				18,564				(1,229	)		(6.6	)%
Off-system sales			511,470				634,078				(122,608	)		(19.3	)%
Total wholesale sales			528,805				652,642				(123,837	)		(19.0	)%
Total MWh sales			2,405,814				2,454,830				(49,016	)		(2.0	)%
Operating revenues (in thousands):
Non-fuel base revenues:
Retail:
Residential		$	50,153			$	48,073			$	2,080			4.3	%
Commercial and industrial, small			47,238				45,888				1,350			2.9	%
Commercial and industrial, large			11,608				8,762				2,846			32.5	%
Sales to public authorities			21,186				20,741				445			2.1	%
Total retail non-fuel base revenues			130,185				123,464				6,721			5.4	%
Wholesale:
Sales for resale			567				575				(8	)		(1.4	)%
Total non-fuel base revenues			130,752				124,039				6,713			5.4	%
Fuel revenues:
Recovered from customers during the period (a)			45,248				47,447				(2,199	)		(4.6	)%
Over collection of fuel			(6,402	)			(13,285	)			6,883			(51.8	)%
New Mexico fuel in base rates			17,753				16,444				1,309			8.0	%
Total fuel revenues			56,599				50,606				5,993			11.8	%
Off-system sales			17,710				22,464				(4,754	)		(21.2	)%
Other			6,336				6,540				(204	)		(3.1	)%
Total operating revenues		$	211,397			$	203,649			$	7,748			3.8	%
Off-system sales (in thousands):
Gross margins		$	1,049			$	1,143			$	(94	)		(8.2	)%
Retained margins			787				857				(70	)		(8.2	)%
Average number of retail customers:
Residential			330,976				325,302				5,674			1.7	%
Commercial and industrial, small			36,740				35,892				848			2.4	%
Commercial and industrial, large			49				49				—			—
Sales to public authorities			4,701				4,929				(228	)		(4.6	)%
Total			372,466				366,172				6,294			1.7	%
Number of retail customers (end of period):
Residential			331,050				325,707				5,343			1.6	%
Commercial and industrial, small			36,713				35,964				749			2.1	%
Commercial and industrial, large			49				50				(1	)		(2.0	)%
Sales to public authorities			4,795				4,925				(130	)		(2.6	)%
Total			372,607				366,646				5,961			1.6	%
Weather statistics											10 Yr Average
Heating degree days			82				82				69
Cooling degree days			995				1,013				988

 

(a)	Excludes $4.0 million in 2009 of prior periods deferred fuel revenues recovered through Texas fuel surcharge.

 

Page 11 of 15

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El Paso Electric Company and Subsidiary

Quarter Ended June 30, 2010 and 2009

Generation and Purchased Power Statistics

 

								Increase (Decrease)
		2010			2009			Amount			Percentage
Generation and purchased power (MWh):
Palo Verde		1,091,969			1,093,069			(1,100	)		(0.1	)%
Four Corners		167,625			186,566			(18,941	)		(10.2	)%
Gas plants		766,575			581,947			184,628			31.7	%
Total generation		2,026,169			1,861,582			164,587			8.8	%
Purchased power		545,720			729,839			(184,119	)		(25.2	)%
Total available energy		2,571,889			2,591,421			(19,532	)		(0.8	)%
Line losses and Company use		166,075			136,591			29,484			21.6	%
Total		2,405,814			2,454,830			(49,016	)		(2.0	)%
Palo Verde capacity factor		80.4	%		80.6	%		(0.2	)%
Four Corners capacity factor		76.9	%		84.9	%		(8.0	)%

 

Page 12 of 15

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El Paso Electric Company and Subsidiary

Six Months Ended June 30, 2010 and 2009

Sales and Revenues Statistics

 

										Increase (Decrease)
		2010				2009				Amount				Percentage
MWh sales:
Retail:
Residential			1,139,376				1,058,633				80,743			7.6	%
Commercial and industrial, small			1,085,330				1,058,965				26,365			2.5	%
Commercial and industrial, large			525,708				478,175				47,533			9.9	%
Sales to public authorities			729,327				707,377				21,950			3.1	%
Total retail sales			3,479,741				3,303,150				176,591			5.3	%
Wholesale:
Sales for resale			26,515				28,958				(2,443	)		(8.4	)%
Off-system sales			1,359,208				1,692,481				(333,273	)		(19.7	)%
Total wholesale sales			1,385,723				1,721,439				(335,716	)		(19.5	)%
Total MWh sales			4,865,464				5,024,589				(159,125	)		(3.2	)%
Operating revenues (in thousands):
Non-fuel base revenues:
Retail:
Residential		$	94,988			$	88,264			$	6,724			7.6	%
Commercial and industrial, small			86,437				83,552				2,885			3.5	%
Commercial and industrial, large			20,821				16,568				4,253			25.7	%
Sales to public authorities			38,102				37,118				984			2.7	%
Total retail non-fuel base revenues			240,348				225,502				14,846			6.6	%
Wholesale:
Sales for resale			874				882				(8	)		(0.9	)%
Total non-fuel base revenues			241,222				226,384				14,838			6.6	%
Fuel revenues:
Recovered from customers during the period (a)			83,281				97,908				(14,627	)		(14.9	)%
Over collection of fuel			(12,092	)			(36,641	)			24,549			(67.0	)%
New Mexico fuel in base rates			33,582				31,804				1,778			5.6	%
Total fuel revenues			104,771				93,071				11,700			12.6	%
Off-system sales			56,413				61,081				(4,668	)		(7.6	)%
Other			13,159				13,549				(390	)		(2.9	)%
Total operating revenues		$	415,565			$	394,085			$	21,480			5.5	%
Off-system sales (in thousands):
Gross margins		$	6,890			$	7,865			$	(975	)		(12.4	)%
Retained margins			5,169				5,900				(731	)		(12.4	)%
Average number of retail customers:
Residential			330,356				324,542				5,814			1.8	%
Commercial and industrial, small			36,644				35,839				805			2.2	%
Commercial and industrial, large			48				49				(1	)		(2.0	)%
Sales to public authorities			4,833				4,934				(101	)		(2.0	)%
Total			371,881				365,364				6,517			1.8	%
Number of retail customers (end of period):
Residential			331,050				325,707				5,343			1.6	%
Commercial and industrial, small			36,713				35,964				749			2.1	%
Commercial and industrial, large			49				50				(1	)		(2.0	)%
Sales to public authorities			4,795				4,925				(130	)		(2.6	)%
Total			372,607				366,646				5,961			1.6	%
Weather statistics										10 Yr Average
Heating degree days			1,478				1,112				1,305
Cooling degree days			1,004				1,050				1,006

 

(a)	Excludes $11.8 million refund in 2010 and a $16.3 million surcharge in 2009 related to prior periods Texas deferred fuel revenues.

 

Page 13 of 15

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El Paso Electric Company & Subsidiary

Six Months Ended June 30, 2010 and 2009

Generation and Purchased Power Statistics

 

								Increase (Decrease)
		2010			2009			Amount			Percentage
Generation and purchased power (MWh):
Palo Verde		2,372,281			2,446,153			(73,872	)		(3.0	)%
Four Corners		288,034			385,956			(97,922	)		(25.4	)%
Gas plants		1,319,377			1,013,471			305,906			30.2	%
Total generation		3,979,692			3,845,580			134,112			3.5	%
Purchased power		1,155,743			1,442,013			(286,270	)		(19.9	)%
Total available energy		5,135,435			5,287,593			(152,158	)		(2.9	)%
Line losses and Company use		269,971			263,004			6,967			2.6	%
Total		4,865,464			5,024,589			(159,125	)		(3.2	)%
Palo Verde capacity factor		87.9	%		90.6	%		(2.7	)%
Four Corners capactiy factor		66.0	%		86.9	%		(20.9	)%

 

Page 14 of 15

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El Paso Electric Company and Subsidiary

Financial Statistics

At June 30, 2010 and 2009

(In thousands, except number of shares, book value per share, and ratios)

 

Balance Sheet		2010				2009
Cash and cash equivalents		$	29,410			$	83,709
Common stock equity		$	744,163			$	726,175
Long-term debt, net of current portion			739,721				739,674
Financing obligations, net of current portion			—				69,464
Total capitalization		$	1,483,884			$	1,535,313
Current portion of long-term debt and financing obligations		$	122,826			$	34,029
Number of shares—end of period			43,515,310				44,966,307
Book value per common share		$	17.10			$	16.15
Common equity ratio			46.3	%			46.3	%
Debt ratio			53.7	%			53.7	%

 

Page 15 of 15