Attached files
| file | filename |
|---|---|
| EX-99.01 - EARNINGS PRESS RELEASE - EL PASO ELECTRIC CO /TX/ | exh99016-30x2017.htm |
| 8-K - FORM 8-K - EL PASO ELECTRIC CO /TX/ | form8k6-30x17.htm |
Second Quarter 2017
Earnings Conference Call
August 2, 2017
Exhibit 99.02
2
Safe Harbor Statement
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 made by EE with the U.S. Securities and Exchange Commission (the "SEC"),
and includes, 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.
August 2, 2017
3
Q2 & YTD Financial Results
August 2, 2017
Reported Q2 2017 net income of $36.1 million (or $0.89 per
share), compared to Q2 2016 net income of $22.3 million
(or $0.55 per share)
Reported YTD 2017 net income of $32.1 million (or $0.79
per share), compared to YTD 2016 net income of $16.5
million (or $0.41 per share)
4
2017 Texas Rate Case Update
August 2, 2017
Filed general rate case on February 13, 2017, Docket No. 46831,
based on a historical test year ended September 30, 2016
Request included:
Non-fuel base revenue increase of $42.5 million
Revised on July 21, 2017 to $39.2 million, primarily due to
severing rate case expenses of $3.0 million
Rate case expenses will be reviewed under Docket No. 47228
Final rates relating back to July 18, 2017
Rate case is needed to recover costs of approximately $444.3
million to complete the Montana Power Station (MPS) and other
investments
Hearing on the merits scheduled to begin August 21, 2017 and
extend through September 1, 2017
5
Large Scale Solar Projects
EE’s Texas Community Solar
Facility (3MW) became
operational during Q2 2017
and is the largest utility-owned
community solar project in
Texas
The Holloman Air Force Base
(HAFB) Solar Project (5MW) is
anticipated to be completed in
the first half of 2018
Currently exploring additional
projects
August 2, 2017
6
Native System Peak Load Growth
Set a new native system peak record on June 22, 2017 of
1,935 MW
The 2017 peak is 2.3% or 43 MW higher than the peak
established in 2016
EE has set a new peak in 16 out of the past 17 years
CAGR
2.88%
August 2, 2017
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
1,376
1,428
1,508
1,524
1,571
1,616
1,714 1,688
1,750 1,766
1,794
1,892
1,935
MW’s
7
Request For Proposal (RFP) to Meet
Future Power Generation Needs
August 2, 2017
EE anticipates that a total of approximately 370 MW of
additional resources will be needed by the summer of 2023
Approximately 50 MW of capacity will be needed by 2022
and an additional capacity of 320 MW by 2023
EE issued an All-Source RFP on June 30, 2017
Bids must be submitted by October 4, 2017
Anticipate a final decision in Q2 2018
All sources of generation will be considered in order to
provide the most cost effective and reliable electric service
to our customers
8
Q2 Key Earnings Drivers
August 2, 2017
Q2 Basic EPS Description
June 30, 2016 0.55$
Changes In:
Retail non-fuel base revenues 0.30
Increased primarily due to the non-fuel base rate increase related to the final
order in the 2015 Texas rate case, warmer weather and a 1.8% growth in the
average number of retail customers.
Palo Verde performance rewards, net 0.08
Recognition of performance rewards associated with the 2013 to 2015 periods,
net of disallowed fuel and purchased power costs related to the resolution of
the Texas fuel reconciliation proceeding.
Investment and interest income 0.06
Increased primarily due to higher realized gains on securities sold from EE's
Palo Verde decommissioning trusts.
Depreciation and amortization 0.02
Decreased primarily due to reductions resulting from changes in depreciation
rates as approved in our 2015 Texas and New Mexico rate cases and the sale
of EE's interest in Units 4 and 5 of the Four Corners Power Plant. These
decreases were partially offset by increases in plant, including MPS Units 3 &
4, which were placed in service in May and September 2016, respectively.
AFUDC (0.05)
Decreased primarily due to lower construction work in progress balances,
primarily due to MPS Units 3 & 4 being placed in service in May & September
2016, respectively and a reduction in the AFUDC rate effective January 2017.
Administrative and general expense (0.04)
Increased due to timing of the accrual of employee incentive compensation
and an annual merit increase.
Taxes other than income taxes (0.03)
Increased due to increased revenue related taxes and increased property
valuations in Texas as a result of MPS Units 3 & 4 being placed in service in
2016.
June 30, 2017 0.89$
9
Q2 Customers and Retail Sales
August 2, 2017
Average No.
of Customers
Percent
Change (1)
MWH
Percent
Change (1)
Residential 367,686 1.6% 724,656 6.7%
C&I Small 41,860 2.5% 647,377 2.2%
C&I Large 48 (2.0%) 276,391 2.0%
Public Authorities 5,622 6.6% 423,374 4.5%
Total Retail 415,216 1.8% 2,071,798 4.2%
Cooling Degree Days 1,108 14.8%
Heating Degree Days 45 (40.0%)
(1) Percent Change expressed as change in Q2 2017 from Q2 2016
10
Q2 Weather Summary
August 2, 2017
1,008 1,013 995
1,169 1,178 1,138 1,095
929
965
1,108
0
200
400
600
800
1000
1200
1400
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Q2 CDD's 10-YR Average
10-YR CDD
Average – 1,060
Q2 2017 CDD’s
• 4.5% Above 10-YR Average
• 14.8% Above Q2 2016
11
Capital Requirements and Liquidity
August 2, 2017
On June 30, 2017, EE had liquidity of $182.4 million, including
cash and cash equivalents of $11.3 million and unused capacity
under the revolving credit facility
Expended $108.1 million for additions to utility plant for the six
months ended June 30, 2017
Capital expenditures for utility plant in 2017 are expected to be
approximately $215.0 million
On July 27, 2017, the Board declared a quarterly cash dividend of
$0.335 per share of common stock payable on September 29,
2017 to shareholders of record as of September 15, 2017
Two tranches of debt are maturing or subject to mandatory tender
for purchase on August 15, 2017 and September 1, 2017 for
$50.0 million and $33.3 million, respectively
EE has adequate liquidity to meet all cash requirements,
including the repayment of these two tranches
12
Q & A
August 2, 2017