Attached files
| file | filename |
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| EX-99.01 - EARNINGS PRESS RELEASE - EL PASO ELECTRIC CO /TX/ | exh99013-31x2017.htm |
| 8-K - FORM 8-K - EL PASO ELECTRIC CO /TX/ | form8k3-31x17.htm |
First Quarter 2017
Earnings Conference Call
May 3, 2017
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This presentation includes statements that are forward-looking statements made pursuant to the safe harbor provisions of the Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. This information may involve
risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Additional information
concerning factors that could cause actual results to differ materially from those expressed in forward-looking statements is contained in EE's
most recently filed periodic reports and in other filings made by EE with the U.S. Securities and Exchange Commission (the "SEC"), and
include, but is not limited to:
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
Full and timely recovery of capital investments and operating costs through rates in Texas and New Mexico
Uncertainties and instability in the general economy and the resulting impact on EE’s sales and profitability
Changes in customers’ demand for electricity as a result of energy efficiency initiatives and emerging competing services and
technologies, including distributed generation
Unanticipated increased costs associated with scheduled and unscheduled outages of generating plant
Unanticipated maintenance, repair, or replacement costs for generation, transmission, or distribution facilities and the recovery of
proceeds from insurance policies providing coverage for such costs
The size of our construction program and our ability to complete construction on budget and on time
Potential delays in our construction schedule due to legal challenges or other reasons
Costs at Palo Verde
Deregulation and competition in the electric utility industry
Possible increased costs of compliance with environmental or other laws, regulations and policies
Possible income tax and interest payments as a result of audit adjustments proposed by the IRS or state taxing authorities
Uncertainties and instability in the financial markets and the resulting impact on EE’s ability to access the capital and credit markets
Possible physical or cyber attacks, intrusions or other catastrophic events
Other factors of which we are currently unaware or deem immaterial
EE’s filings are available from the SEC 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. Management cautions
against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior
earnings levels. Forward-looking statements speak only as of the date of this news release, and EE does not undertake to update any forward-
looking statement contained herein.
Safe Harbor Statement
31st Quarter Financial Results
Reported 1st Quarter 2017 net loss of $4.0 million (or $0.10
per share), compared to 1st Quarter 2016 net loss of $5.8
million (or $0.14 per share)
Reported $2.43 per share for the twelve months ended March
31, 2017
42017 Texas Rate Case
Filed general rate case on February 13, 2017, Docket No.
46831, based on a historical test year ended September 30,
2016
Rate case is needed to recover costs of approximately $444.3
million to complete the Montana Power Station (MPS) and other
investments, which continue to help:
Meet customer and load growth*
Maintain and improve electric system
Request included:
Non-fuel base revenue increase of $42.5 million
Final rates relating back to July 18, 2017**
* EE has set a new peak in 15 out of the past 16 years
** 155 days after the rate case was filed on February 13, 2017
5Texas Rate Case Procedural Schedule
PUC Docket No. 46831 Date
Deadline for discovery on EPE direct case June 9, 2017
Intervenor’s direct testimony June 23, 2017
Staff’s direct testimony June 30, 2017
Effective date for new rates pursuant to relate
back provision
July 18, 2017
Cross-rebuttal testimony (staff & intervenors) July 21, 2017
EPE rebuttal testimony July 21, 2017
Prehearing Conference August 18, 2017
Hearing on the Merits Aug 21 – Sep 1, 2017
An order was issued on March 14, 2017 establishing the
following procedural schedule:
6Recent Developments
On April 12, 2017, the NMPRC approved the request to delay EE’s
New Mexico general rate case filing up to a date no later than July
31, 2019
EE continues to work towards a settlement agreement in the current
fuel reconciliation proceeding in Texas
Expect the Commission to consider a proposed settlement in Q2
2017
EE finalized certain agreements with the Air Force Base for a large
scale solar project at Holloman Air Force Base – 5 MW capacity
Construction is anticipated to be completed in Q4 2017 or early
2018
7Texas Community Solar Program- 3 MW Capacity
100% of the output was subscribed within one month
Allows customers to hedge against certain future rate increases
Subscription is accessible and portable in Texas service territory
Customers enjoy contract flexibility
EE expects to complete
construction of its first large scale
solar project in Q2 2017
Largest utility-owned community
solar facility in Texas
There are approximately 1,500 customers subscribed to the
program
Almost 400 customers are on a waiting list
Customers will be contacted on a first-come-first-served basis if
capacity becomes available
8Economic Growth
Recently announced projects
Restoration of the the Roberts-Banner Building
Renovation of the Blue Flame Building
The Substation Retail Center
The Canyons at Cimarron
Franklin Galleria Mall
Resort at Montecillo
Franklin Avenue Apartments
Miradores at Shadow Mountain
Plaza Del Rey
91st Quarter Key Earnings Drivers
Q1 Basic EPS Description
March 31, 2016 (0.14)$
Changes In:
Allowance for funds used
during construction (AFUDC)
(0.05)
Decreased due to lower construction work in progress balances, primarily due
to MPS Units 3 & 4 being placed in service in May and September 2016,
respectively and a reduction in the AFUDC rate effective January 2017.
O&M at fossil-fuel generating
plants
(0.04)
Increased due to maintenance outages at Newman Units 1, 3, & 4 and
increased routine maintenance at MPS and Rio Grande Power Station (RG).
These costs were partially offset by the sale of EE's interest in the Four
Corners Power Plant and a maintenance outage at RG Unit 7 in 2016.
Interest on long-term debt (0.03)
Increased primarily due to the $150 million principal amount of senior notes
issued in March 2016.
Retail non-fuel base revenues 0.08
Increased primarily due to the recognition of non-fuel base rate increase
related to the final order in the Texas 2015 rate case and the growth in the
average number of retail customers; partially offset by a decrease in kWh
sales from residential customers primarily due to milder weather compared to
same period in 2016.
Depreciation and amortization 0.02
Decreased primarily due to reductions resulting from changes in depreciation
rates as approved by the PUCT and NMPRC in our 2015 Texas and New
Mexico rate cases and the sale of EE's interest in Four Corners Power Plant.
These decreases were offset by an increase in plant, including MPS Units 3 &
4, which were placed in service in May and September 2016, respectively.
Investment and interest income 0.02
Increased primarily due to higher realized gains on securities sold from EE's
Palo Verde decommissioning trusts.
Other revenues 0.02
Increased primarily due to additional miscellaneous service revenues that were
approved by the PUCT and NMPRC in our 2015 Texas and New Mexico rate
cases, and the New Mexico energy efficiency bonus.
Other 0.02
March 31, 2017 (0.10)$
10Historical Weather Summary
1,191
1,030
1,396
1,265
1,159
1,338
958
1,153
1,054
810
0
200
400
600
800
1,000
1,200
1,400
1,600
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
First Quarter HDD’s
10-Yr HDD
Average – 1,135
First Quarter HDD’s
• 28.6% Below 10-Year Average
• 23.1% Below 1st Quarter 2016
11Q1 Retail Sales and Customers
(1) Percent Change expressed as change in Q1 2017 from Q1 2016
Average No.
of Customers
Percent
Change (1)
MWH
Percent
Change (1)
Residential 365,311 1.5% 545,128 (4.2%)
C&I Small 42,076 3.8% 500,590 0.1%
C&I Large 49 - % 252,998 3.3%
Public Authorities 5,433 1.1% 335,563 (3.1%)
Total Retail 412,869 1.7% 1,634,279 (1.6%)
Cooling Degree Days 72 213%
Heating Degree Days 810 (23.1%)
12Capital Requirements & Liquidity
On March 31, 2017, EE had liquidity of $220.5 million,
including cash and cash equivalents of $5.2 million and
unused capacity under the revolving credit facility
Expended $53.9 million for additions to utility plant for the
three months ended March 31, 2017
Capital expenditures for utility plant in 2017 are expected to
be approximately $215.0 million
Anticipate issuing an all-source request for proposal for
generation resources in 2017
13Capital Requirements & Liquidity (Cont’d)
On January 26, 2017, the Board declared a quarterly cash
dividend of $0.31 per share payable on March 31, 2017 to
shareholders of record as of March 17, 2017
In Q2 2017, EE anticipates raising the annual dividend (beyond
the historical $0.06 annual increase per share) to move towards
achieving an annual 55% to 65% payout ratio by 2020
Two tranches of debt maturing or subject to mandatory tender
for purchase in August and September 2017 for $50.0 million
and $33.3 million, respectively
EE has adequate liquidity to meet all our cash requirements, including
the repayment of these two tranches
14
Q & A