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G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
G sachs mrktingtourpres
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  • 1. El Paso Electric R June 2013 1 Goldman Sachs Marketing Tour June 2013
  • 2. El Paso Electric R El Paso Electric R June 2013 2 Safe Harbor Statement 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: 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 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 Potential delays in our construction schedule due to legal challenges or other reasons Unanticipated increased costs associated with scheduled and unscheduled outages of generating plant The size of our construction program and our ability to complete construction on budget 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 Other factors detailed by EE in its public filings with the Securities and Exchange Commission. Please refer to EE’s 2012 Form 10K and other 1934 Act Filings
  • 3. El Paso Electric R El Paso Electric R 3 ee 1 1,852 MW 1,714 MW Approx 384,000 $2.37 S&P BBB Moody’s Baa2 $1.06 Per Share $2.20 (Low) $2.60 (High) NYSE Ticker Symbol Net Dependable Generating Capability 2011 Native System Peak Demand * Retail Customers 12 Months Ended March 2013 EPS (Basic) Credit Ratings Annual Dividend 2013 EPS Guidance (Basic) * Did not set a new Native Peak record in 2012 June 2013 El Paso Electric Profile
  • 4. El Paso Electric R El Paso Electric R 4June 2013 Service Territory Rate Regulated Growth Potential CAPEX Financial Environmental Regional electric utility serving west Texas and southern New Mexico Rate regulated business – no retail competition – fuel “pass through” Above average customer and retail sales growth Sizeable capital expenditures plan and resulting rate base growth for the next several years Financially strong utility with good credit metrics Favorable environmental profile – low carbon footprint EE Overview
  • 5. El Paso Electric R El Paso Electric R 5 * Represents revenues with no related kWh sales **Off-System Sales are sales made to power marketers and other utilities with the exception of the Rio Grande Electric Cooperative which is a full requirements customer. Effective July 1, 2010, 90% of off-system sales margins are shared with retail customers. 12 Months Ended 3/31/2013 Service Territory Texas 6,075,989 77% $438,251 76% New Mexico 1,706,681 22% 124,386 21% FERC 64,459 1% 2,308 <1% NM PV3 Stipulation 0 0% 10,291 2% Total Native Load Sales 7,847,129 100.00% $575,236 100% Other * 0 28,313 Off-System Margins ** 2,581,380 1,434 Total 10,428,509 $604,983 Operating Revenues, Net of Energy Expenses ($000)MWH Sales June 2013 Service Territory No interconnection with ERCOT Interconnected with Mexico Approximately 384,000 retail customers EPE owns 1,820 miles of transmission and distribution lines Clean dependable generating capability 1,852 MW (net) – nuclear (34%), natural gas (60%) and limited coal (6%)
  • 6. El Paso Electric R El Paso Electric R Regulated in Texas by PUCT, in New Mexico by NMPRC and by FERC No current plans for a Texas rate case prior to 2015* No current plans for a New Mexico rate case prior to 2015* FERC rates are formula based 6 * Texas and New Mexico rate cases are likely to be deferred until 2015 June 2013 Regulatory Overview
  • 7. El Paso Electric R El Paso Electric R EE continues to have above average growth as compared to the industry 7June 2013 Above Average Customer and Retail Sales Growth
  • 8. El Paso Electric R El Paso Electric R June 2013 8 El Paso Growth Summary El Paso economy heavily influenced by growing Mexican economy El Paso’s economy provides services to the growing Mexico economy Fort Bliss build out nearing completion; hospital construction has started Customer growth & usage per customer growth Quality of life projects adding to growth
  • 9. El Paso Electric R El Paso Electric R June 2013 9 -0.50% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 1.61% -0.32% EE Avg. Customer Growth (2007-2012) Industry Avg. Customer Growth (2007-2012) -3.00% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 4.30% 2.50% -2.47% EE Excluding Industrial (2007-2012) EE (2007-2012) Industry Avg. (2007-2012) 5 Year Retail Customer Growth 5 Year Retail KWh Sales Growth Source: Industry data detailed in EEI-2012 Financial Review Report Five Year Total Customer and KWh Sales Growth Source: Industry data detailed in EEI-2012 Financial Review Report
  • 10. El Paso Electric R El Paso Electric R June 2013 10 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2,800 2007 2008 2009 2010 2011 2012 GWHSales GWH Sales by Class Residential C & I Small C & I Large Public Authorities CAGR 3.5% CAGR 1.3% CAGR -2.0% CAGR 3.2% Sales Growth by Class Above-average customer and retail kWh sales growth exceeds the industry average; reflects the expansion at Fort Bliss and economic growth in the service territory Fort Bliss currently represents approximately 67 MW’s of load Current active duty soldier population of approximately 34,000
  • 11. El Paso Electric R El Paso Electric R 11 Number of Customers Usage per Customer * Source EEI-2012 Financial Review Report 10 Year CAGR EE Industry* Usage per Customer 1.50% -0.36% Customer Growth 2.01% 0.54% June 2013 200,000 220,000 240,000 260,000 280,000 300,000 320,000 340,000 360,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 6,694 6,761 6,769 6,954 6,852 7,085 6,955 7,244 7,560 7,832 7,767 8,000 7,500 7,000 6,500 6,000 5,500 5,000 4,500 Residential customers at end of year Avg. annual kWh use per residential customer Residential Customer and Usage per Customer Growth Refrigerated air conditioning is being installed in 99% of new homes; approximately 35% of El Paso residences have refrigerated air conditioning Refrigerated air conditioning uses 85% less water and 3 times more electricity than evaporative coolers
  • 12. El Paso Electric R El Paso Electric R June 2013 12 El Paso Economic Perspective Maquiladoras impact on El Paso 10 percent increase in maquiladora output in Ciudad Juarez leads to an increase in El Paso employment as follows: 2.8 percent increase in total employment 5.3 percent in transportation employment 1.3 percent in retail trade employment 2.1 percent in finance, insurance and real estate (FIRE) employment 1.8 percent in services employment (-) 1.3 percent in manufacturing employment For the 10 months ended October 31, 2012, the maquiladoras added 22,335 new employees
  • 13. El Paso Electric R El Paso Electric R June 2013 13 Fort Bliss El Paso Community College (2015) New branch to be built on 250 acre site at Fort Bliss Residential and Mixed Commercial Development Anticipate 1,800 acres of public land will be sold to developers for mixed commercial and residential development William Beaumont Army Medical Center (2017) Total expected cost of $1 billion Will include 135 private rooms, 30 specialty clinics, and a four-story administration building
  • 14. El Paso Electric R El Paso Electric R June 2013 14 New Baseball Franchise and 2012 Quality-of-Life Bond Projects A group of El Paso business leaders recently entered into a partnership to acquire a Triple-A baseball franchise from the Tucson Padres A new $50mm baseball stadium will be constructed in the heart of downtown El Paso, and is slated to open in time for the start of the 2014 season Approximately $473mm in Quality-of-Life bonds were approved by voters in November 2012 Bond proceeds will be used for parks, pools, museums, libraries and community center expansions and upgrades and the continued revitalization of the zoo; also includes the construction of a new children’s museum and new downtown multipurpose performing arts and entertainment facility
  • 15. El Paso Electric R El Paso Electric R Capital requirements are being driven by the need to build infrastructure to meet customer demand 15June 2013 Expanding Rate Base
  • 16. El Paso Electric R El Paso Electric R Newman •Natural Gas •732 MW Palo Verde •Nuclear •633 MW Rio Grande • Natural Gas • 316 MW * Four Corners • Coal • 108 MW Copper •Natural Gas •62 MW Hueco Mountain • Wind • 1 MW Solar Power 47 MW’s Includes Purchases Resource Purchases •65 MW’s 16 Company Owned Generation 1,852 MW’s Solar & Purchases 112 MW’s 2013 Total Energy Resources 1,964 MW’s Record Native Peak 1,714 MW’s set in 2011 June 2013 * Rio Grande 9 (87 MW) placed into service May 2013 Load and Resources
  • 17. El Paso Electric R El Paso Electric R June 2013 17 2013 2014 2015 2016 2017 1,852 1,852 1,983 2,071 2,055 Generating Capacity at Summer Peak (MW) Existing Generation Generation Additions Existing capacity 1,852 MW* Additions 2014 MPS Unit 1 (88 MW) (a) 2015 MPS Unit 2 (88 MW) 2016 MPS Unit 3 (88 MW) 2017 MPS Unit 4 (88 MW) Unit Retirements (b) 2014 Rio Grande 6 (45 MW) 2016 Four Corners 4 & 5 (104MW) (a) Unit 1 expected to be commercially operational by December 2014 (b) Unit retirements occur in December and impact capacity available in the following year Generation Additions Schedule * Includes Rio Grande Unit 9 which became commercially operational in May 2013 Projected Peak
  • 18. El Paso Electric R El Paso Electric R June 2013 18 Generation Additions Rio Grande 9 began commercial operation May 2013 The quick start General Electric LMS 100 aero-derivative unit is capable of producing 87MW’s
  • 19. El Paso Electric R El Paso Electric R June 2013 19 Generation Additions EE’s next investment to prepare for the region’s growing customer demand is a new power station in east El Paso The Montana Power Station will consist of four state of the art 88 megawatt simple-cycle LMS 100 aero-derivative combustion turbines The plan calls for one unit per year to be placed into service annually from 2014-2017
  • 20. El Paso Electric R El Paso Electric R $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 2013 Est 2014 Est 2015 Est 2016 Est 2017 Est EE Estimated Costs Generation Transmission Distribution General June 2013 20 $258mm $326mm $222mm $209mm $179mm ($000’s) Five Year Cash Capital Expenditures
  • 21. El Paso Electric R El Paso Electric R 21 Pro forma Rate Base Balances for Future Rate Case Filings ($000) (1) Includes Palo Verde Unit 3 rate base of approximately $35mm for 2013 & 2014, $36mm for 2015 and $37mm for 2016 & 2017 (2) Rate Base totals exclude year end CWIP balances (3) Represents a pro-forma rate base amount that EE would use in rate filings for test year ending, calendar year presented Rio 9 MPS 1 MPS 2 MPS 3 MPS 4 2013 2014 2015 2016 2017 Beginning Rate Base (1)(2) $1,537 $1,676 $1,881 $2,100 $2,231 Plant Additions: Excluding new generating units 175 188 238 158 172 New generating units: Rio Grande U9 (expected in-service 2013) 93 Montana Site - Common Plant 57 8 5 2 Montana Site - U1 (expected in-service 2014) 71 Montana Site - U2 (expected in-service 2015) 72 Montana Site - U3 (expected in-service 2016) 77 Montana Site - U4 (expected in-service 2017) 79 Total 268 316 318 240 253 Depreciation Expense (83) (90) (96) (104) (110) Change in Deferred Income Taxes & Other (46) (21) (3) (5) (6) Total Rate Base (3) $1,676 $1,881 $2,100 $2,231 $2,368 Year End CWIP Balances ($ in millions) $274 $307 $229 $213 $149 June 2013 Projected Rate Base and CWIP
  • 22. El Paso Electric R El Paso Electric R June 2013 22 December 2014 MPS Unit1 begins Operation December 2014 Historical Test Year End April 2015 File Texas Rate Case February 2016 New Rates in Effect * Example of a potential rate case timeline assuming Montana Unit #1 is placed into service in November 2014 Example Rate Case Timeline
  • 23. El Paso Electric R El Paso Electric R EE has solid credit metrics, which should allow continued access to capital markets while at the same time providing cash for common dividends and construction expenditures 23June 2013 Financial Stability
  • 24. El Paso Electric R El Paso Electric R June 2013 24 Capital Requirements and Liquidity EE expended $55.4mm for additions to utility plant during the first quarter Capital expenditures for utility plant in 2013 are anticipated to be approximately $258mm EE dividend payments during the first quarter were $10.1mm In May, increased quarterly cash dividend by 6% to $0.265 per share EE had a cash balance of $43.7mm at March 31, 2013 At March 31, 2013, EE had liquidity of $318.2mm including cash and the revolving credit facility
  • 25. El Paso Electric R El Paso Electric R 25 ** Regulatory Capitalization excludes borrowings for NF by the Rio Grande Resources Trust (RGRT), while book capitalization includes nuclear fuel borrowings in the debt portion of capitalization. * Capital structure includes current maturities and short-term borrowings As of 3/31/2013 * (thousands) Capital Structure Regulatory Capitalization**Book Capitalization Moody's S&P EE (unsecured) Baa2 BBB Stable Stable Debt 55.3% June 2013 Common Stock Equity $829,481 Long-term & short-term debt, net of RGRT 889,556 Total Capitalization Before RGRT $1,719,037 RGRT - LT & ST Debt 135,039 Total Capitalization After RGRT $1,854,076 Debt 55.3% Equity 44.7% Debt 51.7% Equity 48.3% Commitment to Credit Quality Well positioned to finance planned investments Investment grade credit ratings S&P reaffirmed its BBB rating and Stable Outlook in October 2012 Moody’s reaffirmed its Baa2 rating and Stable Outlook in August 2012
  • 26. El Paso Electric R El Paso Electric R 26 MARKET PRICE PER SHARE ANNUAL VALUE OF SHARE REPURCHASES AND DIVIDENDS * 2012 – $31.91 2011 – $34.64 2010 – $27.53 2009 – $20.28 2012 – $38.9 2011 – $113.7 2010 – $33.7 2009 – $24.1 (in millions) * EE Initiated a quarterly cash dividend in 2011 distributing a total of $27.2mm in 2011 and $38.9mm during 2012 June 2013 $0 $50 $100 $150 Dec. 31, 2007 Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010 Dec.31, 2011 Dec. 31, 2012 Total Return Comparison $100 Investment on December 31, 2007 EE EEI NYSE EE $130 EEI $108 NYSE $87 Shareholder Return
  • 27. El Paso Electric R El Paso Electric R June 2013 27 2013 Earnings Guidance range of $2.20 to $2.60 per basic share $2.27 $2.40 ($0.07) ($0.06) ($0.06) ($0.02) ($0.02) $0.03 $1.50 $1.70 $1.90 $2.10 $2.30 $2.50 Depr & Amort Interest on LT debt TX rate case settlement Weather O&M Other Dereg. PV3, off-system sales, & other AFUDC & capitalized interest Underlying growth $0.05 $0.10 $0.18 2012 EPS Actual Mid-Point 2013 earnings guidance 2013 Earnings Guidance
  • 28. El Paso Electric R El Paso Electric R EE has a favorable environmental profile and is well-positioned to comply with proposed environmental regulations 28June 2013 Favorable Environmental Profile
  • 29. El Paso Electric R El Paso Electric R 29 EE vs. U.S. Carbon Footprint (Short tons CO2 equivalent emissions/MWH) 2009 National Average 0.61 2011 EE 0.32 2012 Energy Sources (by MWh’s) Nuclear 46% Natural Gas 32% Purchased Power 16%* Coal 6% *Renewable energy purchases represent 6% of total purchased power June 2013 Diversified Energy Portfolio and Low Carbon Footprint
  • 30. El Paso Electric R El Paso Electric R 30June 2013 Environmental Regulations Recent Environmental Rulemaking Cross State Air Pollution Rule (CSAPR) was vacated by the D.C. Circuit Court of Appeals on August 21, 2012 A request for a re-hearing by the EPA was denied on January 24, 2013 On March 29, 2013, EPA petitioned the Supreme Court to review the D.C. Circuit Court’s decision that vacated CSAPR EE’s exposure to possible cross state air pollution rules are minimal due to natural gas-fired generation in Texas Mercury and Air Toxics Standards (Utility MACT) requires significant reductions in emissions of mercury and other air toxics EPA estimates the cost to U.S. utilities could reach $35 billion EE will not have any costs associated with MACT requirement Rule will not apply to EE’s local generation due to natural gas- fired units; fuel oil for back-up/emergency usage will be below rule applicability levels No modifications expected at Four Corners due to this rule
  • 31. El Paso Electric R El Paso Electric R 31June 2013 Renewable Energy Initiatives EE solar initiatives are designed to meet regulatory demands as well as identify opportunities where solar or purchased solar power make sound economic sense A power-purchase agreement with First Solar for the total output from the Macho Springs Solar Project (50MW), which is expected to come online in 2014, was approved by the NMPRC in May 2013 With the First Solar purchase power agreement, EE’s owned solar energy projects and purchase power agreements represent over 5.5% of the Company’s dedicated generating capacity, which represents one of the largest percentages in the United States for an investor-owned utility EE partnered with El Paso Community College to install solar panels that will be used in EPCC’s renewable energy education curriculum
  • 32. El Paso Electric R El Paso Electric R 32June 2013 Texas Renewables Requirements EE must obtain approximately 2% of Texas energy sales from renewables through renewable generation or purchase of Renewable Energy Credits (REC’s) Compliance EE primarily purchases REC’s Cost Recovery REC costs recovered through base rates EE capital investments included in rate base Purchased energy costs (including REC’s) recovered through fuel
  • 33. El Paso Electric R El Paso Electric R 33June 2013 New Mexico Renewables Requirements EE is required to meet 10% of its current retail energy sales in New Mexico via renewables; escalates to 15% in 2015 and to 20% in 2020 Must be from diverse sources – at least 20% solar, 30% wind, 5% biomass and 1.5% renewable distributed generation (increases to 3% in 2015) Compliance Purchase of wind RECs from Southwestern Public Service (SPS) Purchase 47MW of solar PV energy as of July 2012 Cost Recovery Renewable energy with RECs recovered through fuel clause; RECs without energy recovered through base rates
  • 34. El Paso Electric R El Paso Electric R 34 Appendix June 2013
  • 35. El Paso Electric R El Paso Electric R June 2013 35 First Quarter Key Earnings Drivers Basic EPS Description March 31, 2012 0.08$ Changes In: Retail Non-Fuel Base Revenue 0.04 Increased retail non-fuel base revenues mainly due to colder weather in 2013 compared to 2012 Fossil Fuel Plant O&M 0.04 Decreased O&M at our fossil-fuel plants primarily due to Q1 2012 planned maintenance at Rio Grande Unit 8 and Newman Unit 1 Palo Verde O&M 0.02 Due to timing of outages in 2012 compared to 2013. 2012 outage began in mid-March and 2013 outage began at the end of March Allowance for Funds Used During Construction 0.02 Increased due to higher construction balances Administrative and General Expense (0.03) Increased administrative and general expenses due to information technology and other outside services. Also due to forfeiture of stock awards in 2012 Other 0.02 March 31, 2013 0.19$
  • 36. El Paso Electric R El Paso Electric R June 2013 36 1st Quarter Non-Fuel Base Revenues Description Amount Percent Change Rate Decrease (2,463)$ (2.3%) Weather 814 0.7% Other (sales mix & growth) 4,004 3.8% Total Retail Non-Fuel Base Revenues 2,355$ 2.2% Q1 2013 vs. Q1 2012
  • 37. El Paso Electric R El Paso Electric R 37 Public Utility Commission of Texas - Appointed by Governor Name Position Term Ends Party Donna L. Nelson Chair 08/31/2015 Republican Kenneth W. Anderson Commissioner 08/31/2017 Republican Vacant* Commissioner 08/31/2013 New Mexico Public Regulation Commission - Elected Name District Term Ends Party Karen Montoya 1 12/31/2016 Democrat Patrick Lyons Chair 2 12/31/2014 Republican Valerie Espinoza Commissioner 3 12/31/2016 Democrat Theresa Bencenti-Aguilar (Vice Chair) Commissioner 4 12/31/2014 Democrat Ben Hall (Chair) Commissioner 5 12/31/2014 Republican June 2013 *Commissioner Rolando Pablos resigned March 1, 2013 State Regulatory Commissioners
  • 38. El Paso Electric R El Paso Electric R Tom Shockley El Paso Electric Headquarters Chief Executive Officer Stanton Tower (915) 521-5721 100 North Stanton tom.shockley@epelectric.com El Paso, Texas 79901 (800) 592-1634 David G. Carpenter Senior Vice President - Chief Financial Officer (915) 543-5945 Richard S. Gonzalez david.carpenter@epelectric.com Supervisor Investor Relations (915) 543-2236 Steven P. Busser richard.gonzalez@epelectric.com Vice President –Treasurer (915) 543-5983 steve.busser@epelectric.com Lisa D. Budtke Assistant Treasurer (915) 543-5947 Lisa.budtke@epelectric.com 38June 2013 EE Contact Information

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