El Paso Electric Announces Second Quarter Financial Results

EL PASO, Texas--(BUSINESS WIRE)--

El Paso Electric EE:

Overview

• For the second quarter of 2015, El Paso Electric Company ("EE" or the "Company") reported net income of $21.1 million, or $0.52 basic and diluted earnings per share. In the second quarter of 2014, EE reported net income of $30.1 million, or $0.75 basic and diluted earnings per share.
• For the six months ended June 30, 2015, EE reported net income of $24.5 million, or $0.61 basic and diluted earnings per share. Net income for the six months ended June 30, 2014 was $34.7 million, or $0.86 basic and diluted earnings per share.

"Despite the mild weather we experienced in the second quarter, we are pleased to announce that we reached a new native system peak of 1,787 megawatts on June 22, 2015. This represents a 1.2% increase over our previous peak of 1,766 megawatts experienced in 2014 and is consistent with our continued growth in the average number of total customers served of 1.4% in 2015," said Tom Shockley, Chief Executive Officer. "As anticipated, regulatory lag has adversely impacted earnings due to the Montana Power Station Units 1 and 2 and other assets being placed into service in the first quarter. Our operating expenses increased without corresponding increases in our rates. As we previously commented, we filed for an increase in base rates for our New Mexico service territory on May 11, 2015. We also plan to file for a base rate increase in our Texas territory in early August 2015; and we expect new rates to become effective early in the second quarter of 2016 in both jurisdictions."

Earnings Summary

The table and explanations below present the major factors affecting 2015 net income relative to 2014 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, 2014									$	30,096					$	0.75								$	34,711					$	0.86
Changes in:
O&M at fossil-fuel generating plants				$	(4,171	)		(2,711			)			(0.07			)		$	(4,280	)		(2,782			)			(0.07
Allowance for funds used during construction				(1,769		)		(1,567			)			(0.04			)		537				411						0.01
Palo Verde performance rewards, net				(2,143		)		(1,415			)			(0.04			)		(2,143		)		(1,415			)			(0.04
Depreciation and amortization				(2,052		)		(1,333			)			(0.03			)		(3,049		)		(1,981			)			(0.05
Retail non-fuel base revenues				(1,899		)		(1,234			)			(0.03			)		(1,181		)		(768			)			(0.02
Interest on long-term debt				(1,888		)		(1,227			)			(0.03			)		(3,792		)		(2,465			)			(0.06
Deregulated Palo Verde Unit 3				(1,672		)		(1,086			)			(0.03			)		(2,953		)		(1,919			)			(0.05
Palo Verde operation and maintenance				2,358				1,533						0.04					1,866				1,212						0.03
Other								16						—									(474			)			—
June 30, 2015									$	21,072					$	0.52								$	24,530					$	0.61

Regulatory Lag

The completion of Montana Power Station ("MPS") Units 1 & 2 (including common plant, transmission lines and substation) and the Eastside Operations Center ("EOC") are having a negative impact on the Company's 2015 financial results relative to 2014 due to regulatory lag associated with the placement in service of these assets without a corresponding increase in revenues. The primary impact from these assets being placed in service include a reduction in amounts capitalized for allowance for funds used during construction ("AFUDC"), and increases in depreciation, operation and maintenance expense, property taxes and interest cost.

Second Quarter 2015

Income for the quarter ended June 30, 2015, when compared to the same period last year, was negatively affected by:

• Increased operation and maintenance expense related to our fossil-fuel generating plants, primarily due to an increased level of maintenance activity at the Newman and Four Corners plants; and operation and maintenance expense at MPS in 2015, with no comparable expense during the same period last year.
• Decreased AFUDC due to lower balances of construction work in progress ("CWIP"), primarily due to MPS Units 1 & 2, and the EOC being placed in service during the first quarter of 2015.
• Recognition of Palo Verde performance rewards associated with the 2009 to 2012 performance periods, net of disallowed fuel and purchased power costs related to the resolution of the Texas fuel reconciliation proceeding designated as PUCT Docket No. 41852 recorded in June 2014 with no comparable amount in the current period.
• Increased depreciation and amortization related to an increase in depreciable plant, primarily due to MPS Units 1 & 2, and the EOC being placed in service during the first quarter of 2015.
• Decreased retail non-fuel base revenues, primarily due to (i) decreased revenues from sales to public authorities due to a 3.5% decrease in kWh sales and a military installation moving a portion of their load to an interruptible rate, and (ii) decreased revenues from our residential customers reflecting lower per customer energy usage primarily due to milder weather during the quarter compared to the same period in 2014, partially offset by a 1.3% increase in the average number of residential customers.
• Increased interest on long-term debt due to the interest accrued on the $150 million senior notes issued in December 2014.
• Decreased deregulated Palo Verde Unit 3 revenues, primarily due to a 13.3% decrease in proxy market prices reflecting a decline in the price of natural gas and a 36.9% decrease in generation due in part to a Unit 3 planned 2015 spring refueling outage that was completed in May 2015 with no comparable outage in 2014.

Income for the quarter ended June 30, 2015, when compared to the same period last year, was positively affected by decreased Palo Verde operation and maintenance expense in the second quarter of 2015.

Year to Date

Income for the six months ended June 30, 2015, when compared to the same period last year, was negatively affected by:

• Increased operation and maintenance expense related to our fossil-fuel generating plants, primarily due to an increased level of maintenance activity at the Newman and Four Corners plants; and operation and maintenance expense at MPS in 2015, with no comparable expense during the same period last year.
• Increased interest on long-term debt due to the interest accrued on the $150 million senior notes issued in December 2014.
• Increased depreciation and amortization related to an increase in depreciable plant, primarily due to MPS Units 1 & 2 and the EOC being placed in service during the first quarter of 2015.
• Decreased deregulated Palo Verde Unit 3 revenues, primarily due to a 26.1% decrease in proxy market prices, reflecting a decline in the price of natural gas and an 18.8% decrease in generation due primarily to a Unit 3 planned spring refueling outage that was completed in May 2015 with no comparable outage in 2014.
• Recognition of Palo Verde performance rewards associated with the 2009 to 2012 performance periods, net of disallowed fuel and purchased power costs related to the resolution of the Texas fuel reconciliation proceeding designated as PUCT Docket No. 41852 recorded in June 2014 with no comparable amount in the current period.
• Decreased retail non-fuel base revenues, primarily due to decreased revenues of $2.0 million from sales to public authorities due to a 1.9% decrease in kWh sales and a military installation moving a portion of their load to an interruptible rate, partially offset by a $0.9 million increase in non-fuel base revenues from our residential customers reflecting a 1.3% increase in the average number of residential customers served, partially offset by milder weather during 2015.

Income for the six months ended June 30, 2015, when compared to the same period last year, was positively affected by:

• Decreased Palo Verde operation and maintenance expenses in the second quarter of 2015.
• Increased amounts of AFUDC capitalized due to higher balances of construction work in process that existed prior to MPS Units 1 and 2, and the EOC being placed in service during the first quarter of 2015.

Retail Non-fuel Base Revenues

Retail non-fuel base revenues decreased $1.9 million, pre-tax, or 1.3% in the second quarter of 2015 compared to the same period in 2014, despite total customer growth of 1.4%. This decrease includes a $1.6 million decrease from sales to public authorities reflecting a military installation moving a portion of their load to an interruptible rate as well as a 3.5% decrease in kWh sales reflecting energy savings from energy conservation and efficiency programs and the use of solar distributed generation at military installations. Retail non-fuel base revenues from residential customers decreased $0.4 million due to a 1.4% decrease in kWh sales reflecting milder weather during the quarter compared to the same period in 2014, despite a 1.3% increase in the average number of residential customers. Cooling degree days decreased 15.2% for the second quarter of 2015, compared to the same quarter last year, and were 11.5% below the 10-year average. Non-fuel base revenues and kWh sales are provided by customer class on page 10 of this release.

For the six months ended June 30, 2015, retail non-fuel base revenues decreased $1.2 million, or 0.5% compared to the same period in 2014. This decrease includes a $2.0 million decrease from sales to public authorities reflecting a military installation moving a portion of their load to an interruptible rate as well as a 1.9% decrease in kWh sales reflecting energy savings from energy conservation and efficiency programs and the use of solar distributed generation at military installations. Retail non-fuel base revenues from residential customers increased $0.9 million due to a 1.3% increase in the average number of customers served, partially offset by milder weather during 2015. Non-fuel base revenues and kWh sales are provided by customer class on page 12 of this release.

Commercial Operation of Montana Power Station Units 1 and 2

During March 2015, the Company placed into commercial operation the first two generating units at MPS and the related common facilities and transmission systems at a cost of approximately $227.2 million. The two state-of-the-art 88-MW simple cycle aero-derivative combustion turbines are powered by natural gas and have quick start capabilities which allow the units to go from off-line to full output in less than 10 minutes, thus increasing overall power grid stability, and work in concert with our renewable energy sources. These two units will generate enough energy to power more than 80,000 homes.

Quarterly Cash Dividend

On May 28, 2015, the Board of Directors approved an increase to the quarterly cash dividend to $0.295 per share of common stock from our previous quarterly rate of $0.28 per share. This represents an increase in the annualized cash dividend from $1.12 to $1.18 per share. The dividend increase commenced with the June 30, 2015 payment. On July 23, 2015, the Board of Directors declared a quarterly cash dividend of $0.295 per share payable on September 30, 2015 to shareholders of record as of September 16, 2015.

Capital and Liquidity

We continue to maintain a strong capital structure in which common stock equity represented 43.5% of our capitalization (common stock equity, long-term debt, current maturities of long-term debt, and short-term borrowings under the revolving credit facility). At June 30, 2015, we had a balance of $10.4 million in cash and cash equivalents. Based on current projections, we believe that we will have adequate liquidity through our current cash balances, cash from operations, and available borrowings under our Revolving Credit Facility ("RCF") to meet all of our anticipated cash requirements for the next 12 months including the $15 million maturity of our Series A 3.67% Senior Notes (due August 2015). We may also issue long-term debt in the capital markets in late 2015 or early 2016 to finance capital requirements.

Cash flows from operations for the six months ended June 30, 2015 were $60.4 million, compared to $57.0 million in the corresponding period in 2014. A component of cash flows from operations is the change in net over-collection and under-collection of fuel revenues. The difference between fuel revenues collected and fuel expense incurred is deferred to be either refunded (over-recoveries) or surcharged (under-recoveries) to customers in the future. During the six months ended June 30, 2015, the Company had a fuel over-recovery of $10.8 million compared to an under-recovery of fuel costs of $13.4 million during the six months ended June 30, 2014. At June 30, 2015, we had a net fuel over-recovery balance of $1.5 million, including $1.1 million in Texas and $0.4 million in New Mexico. On April 15, 2015, we filed a request to lower our Texas fixed fuel factor by approximately 24% to reflect a change in fuel costs primarily related to a reduction in natural gas prices. This decrease was effective with May 2015 billings.

During the six months ended June 30, 2015, our primary capital requirements were for the construction and purchase of electric utility plant, payment of common stock dividends, and purchases of nuclear fuel. Capital requirements for new electric utility plant were $147.0 million for the six months ended June 30, 2015 and $106.0 million for the six months ended June 30, 2014. Capital expenditures for 2015 are expected to be $276.3 million. Capital requirements for purchases of nuclear fuel were $22.4 million for the six months ended June 30, 2015 and $17.7 million for the six months ended June 30, 2014.

On June 30, 2015, we paid a quarterly cash dividend of $0.295 per share, or $11.9 million to shareholders of record on June 16, 2015. We paid a total of $23.2 million in cash dividends during the six months ended June 30, 2015. At the current dividend rate, we expect to pay cash dividends of approximately $47.1 million during 2015.

No shares of common stock were repurchased during the six months ended June 30, 2015. As of June 30, 2015, a total of 393,816 shares remain available for repurchase under the currently authorized stock repurchase program. The Company may repurchase shares in the open market from time to time.

We maintain the RCF for working capital and general corporate purposes and financing of nuclear fuel through the Rio Grande Resources Trust (the "RGRT"). The RGRT, the trust through which we finance our portion of nuclear fuel for Palo Verde, is consolidated in the Company's financial statements. The RCF has a term ending January 14, 2019. The aggregate unsecured borrowing available under the RCF is $300 million. We may increase the RCF by up to $100 million (up to a total of $400 million) during the term of the agreement, upon the satisfaction of certain conditions, more fully set forth in the agreement, including obtaining commitments from lenders or third party financial institutions. The amounts we borrow under the RCF may be used for working capital and general corporate purposes. The total amount borrowed for nuclear fuel by the RGRT was $128.1 million at June 30, 2015, of which $18.1 million had been borrowed under the RCF, and $110.0 million was borrowed through senior notes. Borrowings by the RGRT for nuclear fuel were $126.8 million as of June 30, 2014, of which $16.8 million had been borrowed under the RCF and $110.0 million was borrowed through senior notes. Interest costs on borrowings to finance nuclear fuel are accumulated by the RGRT and charged to us as fuel is consumed and recovered through fuel recovery charges. At June 30, 2015, $110.0 million was outstanding under the RCF for working capital and general corporate purposes. At June 30, 2014, $81.0 million was outstanding under the RCF for working capital and general corporate purposes.

2015 Earnings Guidance

We are adjusting our earnings guidance for 2015 to a range of $1.75 to $2.05 per basic share from the previous range of $1.75 to 2.15.

Conference Call

A conference call to discuss second quarter 2015 financial results is scheduled for 10:30 A.M. Eastern Time, on August 5, 2015. The dial-in number is 888-503-8169 with a conference ID number of 3216276. The international dial-in number is 719-325-2454. The conference leader will be Lisa Budtke, Assistant Treasurer. A replay will run through August 19, 2015 with a dial-in number of 888-203-1112 and a conference ID number of 3216276. The replay international dial-in number is 719-457-0820. The conference call and presentation slides will be webcast live on the Company'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. 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) full and timely recovery of capital investments and operating costs through rates in Texas and New Mexico; (iii) uncertainties and instability in the general economy and the resulting impact on EE's sales and profitability; (iv) changes in customers' demand for electricity as a result of energy efficiency initiatives and emerging competing services and technologies; (v) unanticipated increased costs associated with scheduled and unscheduled outages of generating plant; (vi) the size of our construction program and our ability to complete construction on budget; (vii) potential delays in our construction schedule due to legal challenges or other reasons; (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 or state taxing authorities; (xii) uncertainties and instability in the financial markets and the resulting impact on EE's ability to access the capital and credit markets; (xiii) possible physical or cyber attacks, intrusions or other catastrophic events; and (xiv) 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.

El Paso Electric Company
Statements of Operations
Quarter Ended June 30, 2015 and 2014
(In thousands except for per share data)
(Unaudited)
		2015				2014				Variance
Operating revenues, net of energy expenses:
Base revenues		$	149,171			$	151,061			$	(1,890	)	(a)
Deregulated Palo Verde Unit 3 revenues		1,879				3,551				(1,672		)
Palo Verde performance rewards, net		—				2,220				(2,220		)
Other		6,903				7,169				(266		)
Operating Revenues Net of Energy Expenses		157,953				164,001				(6,048		)
Other operating expenses:
Other operations and maintenance		53,675				50,034				3,641
Palo Verde operations and maintenance		23,838				26,196				(2,358		)
Taxes other than income taxes		15,433				15,557				(124		)
Other income		634				1,914				(1,280		)
Earnings Before Interest, Taxes, Depreciation and Amortization		65,641				74,128				(8,487		)	(b)
Depreciation and amortization		23,135				21,083				2,052
Interest on long-term debt		16,495				14,607				1,888
AFUDC and capitalized interest		4,920				6,709				(1,789		)
Other interest expense		354				288				66
Income Before Income Taxes		30,577				44,859				(14,282		)
Income tax expense		9,505				14,763				(5,258		)
Net Income		$	21,072			$	30,096			$	(9,024	)
Basic Earnings per Share		$	0.52			$	0.75			$	(0.23	)
Diluted Earnings per Share		$	0.52			$	0.75			$	(0.23	)
Dividends declared per share of common stock		$	0.295			$	0.28			$	0.015
Weighted average number of shares outstanding		40,270				40,181				89
Weighted average number of shares and dilutive potential shares outstanding		40,303				40,212				91
(a) Base revenues exclude fuel recovered through New Mexico base rates of $16.4 million and $17.1 million, respectively.
(b) Earnings before interest, taxes, depreciation and amortization ("EBITDA") is a non-generally accepted accounting principles ("GAAP") financial measure and is not a substitute for net income or other measures of financial performance in accordance with GAAP.

El Paso Electric Company
Statements of Operations
Six Months Ended June 30, 2015 and 2014
(In thousands except for per share data)
(Unaudited)
		2015				2014				Variance
Operating revenues, net of energy expenses:
Base revenues		$	254,028			$	255,208			$	(1,180	)	(a)
Deregulated Palo Verde Unit 3 revenues		5,006				7,959				(2,953		)
Palo Verde performance rewards, net		—				2,220				(2,220		)
Other		13,761				14,629				(868		)
Operating Revenues Net of Energy Expenses		272,795				280,016				(7,221		)
Other operating expenses:
Other operations and maintenance		102,986				99,098				3,888
Palo Verde operations and maintenance		45,686				47,552				(1,866		)
Taxes other than income taxes		29,591				30,919				(1,328		)
Other income		5,577				7,253				(1,676		)
Earnings Before Interest, Taxes, Depreciation and Amortization		100,109				109,700				(9,591		)	(b)
Depreciation and amortization		44,700				41,651				3,049
Interest on long-term debt		32,978				29,186				3,792
AFUDC and capitalized interest		13,105				12,545				560
Other interest expense		517				461				56
Income Before Income Taxes		35,019				50,947				(15,928		)
Income tax expense		10,489				16,236				(5,747		)
Net Income		$	24,530			$	34,711			$	(10,181	)
Basic Earnings per Share		$	0.61			$	0.86			$	(0.25	)
Diluted Earnings per Share		$	0.61			$	0.86			$	(0.25	)
Dividends declared per share of common stock		$	0.575			$	0.545			$	0.030
Weighted average number of shares outstanding		40,257				40,165				92
Weighted average number of shares and dilutive
potential shares outstanding		40,285				40,181				104
(a) Base revenues exclude fuel recovered through New Mexico base rates of $32.6 million and $33.2 million, respectively.
(b) Earnings before interest, taxes, depreciation and amortization ("EBITDA") is a non-generally accepted accounting principles ("GAAP") financial measure and is not a substitute for net income or other measures of financial performance in accordance with GAAP.

El Paso Electric Company
Cash Flow Summary
Six Months Ended June 30, 2015 and 2014
(In thousands and Unaudited)
		2015					2014
Cash flows from operating activities:
Net income		$	24,530				$	34,711
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization of electric plant in service		44,700					41,651
Amortization of nuclear fuel		21,379					21,877
Deferred income taxes, net		8,789					15,141
Net gains on sale of decommissioning trust funds		(3,563		)			(2,967		)
Other		2,588					631
Change in:
Accounts receivable		(20,782		)			(33,585		)
Net over-collection (under-collection) of fuel revenues		10,833					(13,369		)
Accounts payable		(15,528		)			1,983
Other		(12,571		)			(9,102		)
Net cash provided by operating activities		60,375					56,971
Cash flows from investing activities:
Cash additions to utility property, plant and equipment		(147,040		)			(105,999		)
Cash additions to nuclear fuel		(22,424		)			(17,690		)
Decommissioning trust funds		(3,871		)			(4,550		)
Other		(6,480		)			(2,151		)
Net cash used for investing activities		(179,815		)			(130,390		)
Cash flows from financing activities:
Dividends paid		(23,220		)			(21,969		)
Borrowings under the revolving credit facility, net		113,540					83,420
Other		(1,020		)			(928		)
Net cash provided by financing activities		89,300					60,523
Net decrease in cash and cash equivalents		(30,140		)			(12,896		)
Cash and cash equivalents at beginning of period		40,504					25,592
Cash and cash equivalents at end of period		$	10,364				$	12,696

El Paso Electric Company
Quarter Ended June 30, 2015 and 2014
Sales and Revenues Statistics
										Increase (Decrease)
		2015				2014				Amount				Percentage
kWh sales (in thousands):
Retail:
Residential		640,940				650,003				(9,063		)		(1.4	)%
Commercial and industrial, small		626,968				620,630				6,338				1.0	%
Commercial and industrial, large		278,822				292,113				(13,291		)		(4.5	)%
Public authorities		419,882				434,930				(15,048		)		(3.5	)%
Total retail sales		1,966,612				1,997,676				(31,064		)		(1.6	)%
Wholesale:
Sales for resale		20,504				20,328				176				0.9	%
Off-system sales		517,752				565,853				(48,101		)		(8.5	)%
Total wholesale sales		538,256				586,181				(47,925		)		(8.2	)%
Total kWh sales		2,504,868				2,583,857				(78,989		)		(3.1	)%
Operating revenues (in thousands):
Non-fuel base revenues:
Retail:
Residential		$	59,422			$	59,828			$	(406	)		(0.7	)%
Commercial and industrial, small		53,864				53,675				189				0.4	%
Commercial and industrial, large		9,879				9,963				(84		)		(0.8	)%
Public authorities		25,317				26,915				(1,598		)		(5.9	)%
Total retail non-fuel base revenues		148,482				150,381				(1,899		)		(1.3	)%
Wholesale:
Sales for resale		689				680				9				1.3	%
Total non-fuel base revenues		149,171				151,061				(1,890		)		(1.3	)%
Fuel revenues:
Recovered from customers during the period		28,949				40,529				(11,580		)		(28.6	)%
Under collection of fuel (a)		4,855				15,369				(10,514		)		(68.4	)%
New Mexico fuel in base rates		16,437				17,132				(695		)		(4.1	)%
Total fuel revenues (b)		50,241				73,030				(22,789		)		(31.2	)%
Off-system sales:
Fuel cost		10,419				18,000				(7,581		)		(42.1	)%
Shared margins		2,316				2,645				(329		)		(12.4	)%
Retained margins		164				322				(158		)		(49.1	)%
Total off-system sales		12,899				20,967				(8,068		)		(38.5	)%
Other (c)		7,197				6,743				454				6.7	%
Total operating revenues		$	219,508			$	251,801			$	(32,293	)		(12.8	)%
(a) 2014 includes $2.2 million related to Palo Verde performance rewards, net.
(b) Includes deregulated Palo Verde Unit 3 revenues for the New Mexico jurisdiction of $1.9 million and $3.6 million, respectively.
(c) Represents revenues with no related kWh sales.

El Paso Electric Company
Quarter Ended June 30, 2015 and 2014
Other Statistical Data
										Increase (Decrease)
		2015				2014				Amount			Percentage
Average number of retail customers: (a)
Residential		356,495				352,035				4,460			1.3	%
Commercial and industrial, small		40,213				39,482				731			1.9	%
Commercial and industrial, large		50				49				1			2.0	%
Public authorities		5,273				5,108				165			3.2	%
Total		402,031				396,674				5,357			1.4	%
Number of retail customers (end of period): (a)
Residential		356,932				352,340				4,592			1.3	%
Commercial and industrial, small		40,356				39,557				799			2.0	%
Commercial and industrial, large		49				49				—			—	%
Public authorities		5,298				5,079				219			4.3	%
Total		402,635				397,025				5,610			1.4	%
Weather statistics: (b)										10-Yr Average
Heating degree days		53				84				66
Cooling degree days		929				1,095				1,050
Generation and purchased power (kWh, in thousands):										Increase (Decrease)
		2015				2014				Amount			Percentage
Palo Verde		1,203,902				1,191,898				12,004			1.0	%
Four Corners		173,427				137,988				35,439			25.7	%
Gas plants		1,025,980				1,027,544				(1,564	)		(0.2	)%
Total generation		2,403,309				2,357,430				45,879			1.9	%
Purchased power:
Photovoltaic		87,655				79,385				8,270			10.4	%
Other		164,194				320,130				(155,936	)		(48.7	)%
Total purchased power		251,849				399,515				(147,666	)		(37.0	)%
Total available energy		2,655,158				2,756,945				(101,787	)		(3.7	)%
Line losses and Company use		150,290				173,088				(22,798	)		(13.2	)%
Total kWh sold		2,504,868				2,583,857				(78,989	)		(3.1	)%
Palo Verde capacity factor		88.6	%			87.8	%			0.8	%
(a) The number of retail customers is based on the number of service locations.
(b) A degree day is recorded for each degree that the average outdoor temperature varies from a standard of 65 degrees Fahrenheit.

El Paso Electric Company
Six Months Ended June 30, 2015 and 2014
Sales and Revenues Statistics
											Increase (Decrease)
			2015				2014				Amount				Percentage
kWh sales (in thousands):
Retail:
Residential			1,202,593				1,193,033				9,560				0.8	%
Commercial and industrial, small			1,117,034				1,114,549				2,485				0.2	%
Commercial and industrial, large			531,942				518,665				13,277				2.6	%
Public authorities			762,975				777,958				(14,983		)		(1.9	)%
Total retail sales			3,614,544				3,604,205				10,339				0.3	%
Wholesale:
Sales for resale			32,449				32,720				(271		)		(0.8	)%
Off-system sales			1,201,281				1,262,867				(61,586		)		(4.9	)%
Total wholesale sales			1,233,730				1,295,587				(61,857		)		(4.8	)%
Total kWh sales			4,848,274				4,899,792				(51,518		)		(1.1	)%
Operating revenues (in thousands):
Non-fuel base revenues:
Retail:
Residential			$	106,362			$	105,422			$	940			0.9	%
Commercial and industrial, small			85,834				85,796				38				—	%
Commercial and industrial, large			18,128				18,291				(163		)		(0.9	)%
Public authorities			42,575				44,571				(1,996		)		(4.5	)%
Total retail non-fuel base revenues			252,899				254,080				(1,181		)		(0.5	)%
Wholesale:
Sales for resale			1,129				1,128				1				0.1	%
Total non-fuel base revenues			254,028				255,208				(1,180		)		(0.5	)%
Fuel revenues:
Recovered from customers during the period			63,371				71,702				(8,331		)		(11.6	)%
Under (over) collection of fuel (a)			(10,832		)		13,359				(24,191		)		—	%
New Mexico fuel in base rates			32,550				33,227				(677		)		(2.0	)%
Total fuel revenues (b)			85,089				118,288				(33,199		)		(28.1	)%
Off-system sales:
Fuel cost			23,284				39,463				(16,179		)		(41.0	)%
Shared margins			6,252				9,389				(3,137		)		(33.4	)%
Retained margins			520				1,124				(604		)		(53.7	)%
Total off-system sales			30,056				49,976				(19,920		)		(39.9	)%
Other (c)			14,081				13,845				236				1.7	%
Total operating revenues			$	383,254			$	437,317			$	(54,063	)		(12.4	)%
(a) 2015 includes a DOE refund related to spent fuel storage of $5.8 million and 2014 includes $2.2 million related to Palo Verde performance rewards, net.
(b) Includes deregulated Palo Verde Unit 3 revenues for the New Mexico jurisdiction of $5.0 million and $8.0 million, respectively.
(c) Represents revenues with no related kWh sales.

El Paso Electric Company
Six Months Ended June 30, 2015 and 2014
Other Statistical Data
										Increase (Decrease)
		2015				2014				Amount				Percentage
Average number of retail customers: (a)
Residential		355,625				351,183				4,442				1.3	%
Commercial and industrial, small		40,127				39,350				777				2.0	%
Commercial and industrial, large		50				50				—				—	%
Public authorities		5,245				5,078				167				3.3	%
Total		401,047				395,661				5,386				1.4	%
Number of retail customers (end of period): (a)
Residential		356,932				352,340				4,592				1.3	%
Commercial and industrial, small		40,356				39,557				799				2.0	%
Commercial and industrial, large		49				49				—				—	%
Public authorities		5,298				5,079				219				4.3	%
Total		402,635				397,025				5,610				1.4	%
Weather statistics: (b)										10-Yr Average
Heating degree days		1,206				1,042				1,246
Cooling degree days		963				1,120				1,078
Generation and purchased power (kWh, in thousands):										Increase (Decrease)
		2015				2014				Amount				Percentage
Palo Verde		2,566,096				2,555,975				10,121				0.4	%
Four Corners		310,645				272,224				38,421				14.1	%
Gas plants		1,694,555				1,595,288				99,267				6.2	%
Total generation		4,571,296				4,423,487				147,809				3.3	%
Purchased power:
Photovoltaic		146,714				108,184				38,530				35.6	%
Other		405,907				653,448				(247,541		)		(37.9	)%
Total purchased power		552,621				761,632				(209,011		)		(27.4	)%
Total available energy		5,123,917				5,185,119				(61,202		)		(1.2	)%
Line losses and Company use		275,643				285,327				(9,684		)		(3.4	)%
Total kWh sold		4,848,274				4,899,792				(51,518		)		(1.1	)%
Palo Verde capacity factor		95.0	%			94.6	%			0.4	%
(a) The number of retail customers presented is based on the number of service locations.
(b) A degree day is recorded for each degree that the average outdoor temperature varies from a standard of 65 degrees Fahrenheit.

El Paso Electric Company
Financial Statistics
At June 30, 2015 and 2014
(In thousands, except number of shares, book value per share, and ratios)
Balance Sheet		2015				2014
Cash and cash equivalents		$	10,364			$	12,696
Common stock equity		$	984,678			$	973,828
Long-term debt		1,134,231				999,665
Total capitalization		$	2,118,909			$	1,973,493
Current maturities of long-term debt		$	15,000			$	—
Short-term borrowings under the revolving credit facility		$	128,072			$	97,772
Number of shares - end of period		40,425,884				40,352,024
Book value per common share		$	24.36			$	24.13
Common equity ratio (a)		43.5		%		47.0		%
Debt ratio		56.5		%		53.0		%
(a)The capitalization component includes common stock equity, long-term debt and the current maturities of long-term debt, and short-term borrowings under the RCF.

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