El Paso Electric will refund nearly $40 on average to its Texas customers over the next three months, which will lower households’ average monthly power bills in El Paso by around 14% over that time.
Texas regulators approved the refund this week, which will lower bills for the average household by $8.24 in April and by $15.05 in both May and June.
In all, El Paso Electric is refunding $30 million to customers, which includes $509,000 of interest.
El Paso Electric is issuing the refund because the utility over the last year has made “significant” off-system sales of electricity, El Paso Electric said in regulatory filings. That means El Paso Electric has been selling electricity generated at its power plants to other utilities.
El Paso Electric commonly trades electricity with other utilities and merchant power companies. The utility is connected to the power grid serving most of the Western United States, and also has some ties into Mexico’s power grid. About 16% of the electricity El Paso Electric supplied from 2020 through 2023 was purchased and imported from elsewhere.
The utility in 2023 joined the so-called Western Energy Imbalance Market, which allows utilities to trade power with each other on a more short-term, minute-by-minute basis. El Paso Electric credits all of the profit margin it makes from selling into the imbalance market to customers, which offsets the fuel charge on ratepayers’ bills.
“EPE seeks to purchase power when it can be purchased at a lower cost than EPE can generate the power. EPE also seeks to sell power in the wholesale power market when it can earn a margin above the cost of the energy,” Victor Martinez, director of energy resources for El Paso Electric, said in testimony submitted earlier this year to the Public Utility Commision of Texas.
“Participation in the EIM is particularly useful in the case of a need for emergency power,” Martinez said. “That power can be quickly acquired from the EIM; this ability to acquire power on an emergency basis was not available to EPE prior to joining the EIM.”
Being a part of a large, interconnected power market is one reason that EPE executives say customers shouldn’t worry about the utility running out of electricity supplies, even as new power-hungry customers enter the city – such as Meta’s incoming data center in Northeast El Paso.
If there’s a shortfall, El Paso Electric can likely buy and import power from somewhere else. There’s a risk, however, that if El Paso Electric is having trouble meeting demand on a hot summer day as customers crank their air conditioners, other utilities in the southwestern U.S. could also be stretched thin with limited excess power to sell. That’s part of the reason why El Paso Electric still wants to have its own generation sources in the form of natural gas power plants and solar fields.
Average residential electricity bills in El Paso will be $51.10 in April, compared with $59.34 before the refund. During the hotter months of May and June, household electric bills will average $92.62 after the refund, a decline from nearly $108.
Longer term, electric bills in El Paso will almost certainly escalate next year as El Paso Electric negotiates a rate increase with regulators, local governments, business groups and other stakeholders.
El Paso Electric’s initial rate hike proposal would increase household bills by around $23 per month. It’s likely, however, that negotiations this year will bring that number down.
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