El Paso Electric customers in Texas will see a mix of changes to their monthly bills starting in May — including a rate increase, new charges tied to the controversial Proposition K political fight and higher costs for some rooftop solar users. That comes after state regulators approved a sweeping update to the utility’s pricing structure earlier this month.
The rate that the Public Utility Commission of Texas approved will increase average residential bills by about $13 a month, according to the utility, going from about $98 to about $111.
“The rate case reflects investments already made to maintain system reliability and support continued growth across our service territory,” Jacob Reyes, a spokesman for El Paso Electric, said in a statement.
In the final decision, the state’s utility commissioners trimmed El Paso Electric’s initial request and lowered its requested shareholder profit margin. Still, the PUC approved most of what El Paso Electric requested.
El Paso Electric applied for this rate increase nearly a year and a half ago. The utility has said it needs to collect an additional $85 million from customers annually to pay off $1.55 billion in capital investments it’s made since its last rate hike in 2021 – in addition to its requested profit margin.
Among the investments are the $217 million Newman 6 natural gas power plant in Northeast El Paso, $560 million in improvements to its distribution system, and $180 million in enhancements to its transmission system.
El Paso Electric has said that commercial and industrial customers have historically paid higher rates to subsidize rates for residential customers, but the utility will now charge different customer classes more equally. As a result, residential customers are seeing the largest rate increase, while some business customers could see a decrease.
Profit margin
Monopoly utilities can’t set their own rates. Instead, utilities have to seek approval from state public utility commissions to raise their rates to recover their investments and their authorized profit margin.
In 2021, the PUC authorized the utility to earn a return on equity of 9.35%. For this rate increase, the utility requested a profit margin of 10.7%, but the PUC approved a return of only 9.4%.
That decreased profit margin is a big reason the monthly residential rate increase is $13 and not $23 the utility initially requested.
El Paso Electric’s approved shareholder profit margin is in line with other utilities. The average profit regulators throughout the U.S. authorized for electric utilities was 9.68% in rate cases decided during the first half of 2025, according to research published by S&P Global.
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One of the major changes for residential customers is a higher fixed monthly fee. That’s because the PUC approved an increase in the residential customer charge — the flat fee customers pay regardless of how much electricity they use — from $9.25 to $13.71 .
That shift means a larger share of electric bills will be unavoidable, even for customers who cut back on energy use. Utilities often seek to implement higher fixed charges because that helps them recover the fixed costs – such as having to maintain poles and wire infrastructure – that stay the same regardless of how much energy customers consume.
But consumer advocates argue higher flat customer charges reduce incentives to conserve energy and hit low-usage households hardest.
Some large customers such as local public school districts and governmental entities will also see a significant change to their electricity rates.
For years, customers such as the El Paso and Ysleta school districts, El Paso County and other public-sector and large institutional users that consume large amounts of electricity paid a discounted rate.
But in its final order, the Public Utility Commission eliminated that discount and required those customers to pay rates fully aligned with the actual cost of serving them. The decision reflects a broader philosophical shift for El Paso Electric: that each class of customers should pay for the costs they impose on the electric system, rather than relying on some customers to cover costs for others.
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Having business customers subsidize households is “not usually good rate-making, because what you do is you put down the pressure on (commercial and industrial) growth, which doesn’t give jobs, which gives you the ability to pay your electric bill,” El Paso Electric CEO Kelly Tomblin said during an April 1 City Council meeting. “So, it’s sort of a spiral.”
For large public entities, the change could flow through to taxpayers who will have to pay for higher operating costs for local schools and governments facing elevated electricity bills.
What about people with rooftop solar?
The Public Utility Commission also approved major billing changes for customers with rooftop solar panel systems that will result in an increase of monthly bills of around $7.50, according to El Paso Electric.
In the power company’s Texas service area, over 25,400 customers had rooftop solar panels as of 2024, the most recent year with available data. Those panels made up a combined 141 megawatts of generation capacity distributed on rooftops across the city. By comparison, El Paso Electric’s single largest power plant unit – Newman 6 – has a generating capacity of 228 megawatts.
El Paso Electric has long argued that rooftop solar panel customers don’t pay their fair share of the utility’s grid maintenance costs, so the utility for years has charged solar customers a $30 minimum bill even if a customer’s panels produced more energy in a month than the customer used.
Now, the utility will get rid of the minimum bill and replace it with a so-called demand charge for customers with solar panels.
“As a result of El Paso Electric’s rate case, rooftop solar customers (or DG customers) will now have to pay a monthly ‘demand charge’ fee that will range, on average, from $28.50 to $47.50 for most DG customers,” said Sam Silerio, Texas Program Director for the advocacy organization Solar United Neighbors.
Silerio said El Paso Electric should conduct a detailed study to look at the benefits rooftop solar customers bring as a decentralized source of electricity generation. And they want the utility to eventually pay customers more for the electricity their panels produce.
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Customers with rooftop solar “contribute many benefits to the electric grid. EPE will tell you that (rooftop solar) customers also bring their own unique costs to the grid,” Silerio said. “EPE needs to show their work and appropriately value the individual El Pasoan’s contributions to the electric grid.”
The city of El Paso intervened in the rate increase case to push back on El Paso Electric’s request. In a statement, the city said it is reviewing the final order.
The City Attorney’s Office will seek a rehearing in the coming days to continue arguing over certain aspects of the rate increase, although it’s unclear if regulators will allow a rehearing.
“From the City’s perspective, the case is not fully resolved. We will continue advocating for fair, evidence-based rates and for protections that help reduce impacts on El Paso customers,” spokeswoman Laura Cruz-Acosta said in a statement. “The City’s rehearing will focus on issues that could further reduce customer impacts, including matters related to credits and residential cost allocation.”
Newman 6 Settlement
There’s another much smaller but controversial item El Paso Electric is seeking to charge to customers as part of its proposed rate increase.
El Paso Electric in 2021 agreed to a settlement with New Mexico environmental groups who were seeking to block construction of the Newman 6 plant, which is located near Chaparral, New Mexico, just south of the Texas-New Mexico state line.
In exchange for the groups dropping their opposition to the plant’s construction, El Paso Electric made various commitments such as controlling the facility’s air pollution, and the utility also paid $440,000 to the environmental groups, including the Sierra Club and others.
Environmental advocates in turn used a portion of that settlement cash to fund the 2023 campaign for the ballot measure Proposition K, also known as the climate charter. The measure sought to enact a wide range of environmental policies in El Paso, including studying a city takeover of El Paso Electric. But it was soundly rejected by over 81% of voters in the November 2023 election.
El Paso Electric now will charge customers to recover that settlement cost. In other words, El Paso Electric’s customers in Texas will pay back some of the money that environmental groups used to fund the Proposition K campaign.
“EPE did not agree to forgo recovery of the settlement payments in this base rate case,” El Paso Electric said in filings.
The utility plans to spend $4.4 billion on capital projects over the next several years. That mirrors a nationwide trend as spending across the U.S. utility industry has accelerated rapidly in recent years to renovate aging power grids and meet higher electricity demand – caused by factors such as more widespread refrigerated air conditioning in households and power-hungry large data center developments.
For El Paso Electric, much of that planned spending will go toward building multiple big solar farms and battery storage arrays over the next couple of years, as well as to upgrade the regional power grid.
The post What’s changing on your El Paso Electric bill: rate hike, new fees and solar charges approved appeared first on El Paso Matters.
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