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Podcast: Things to know about El Paso Electric and its push to raise rates [1]
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Date: 2025-07-28
Diego Mendoza-Moyers: Imagine it’s this time next year – the peak of summer – and you get home during a sweltering late afternoon or early evening and crank the air conditioner to cool off. But what if that was a privilege you could no longer truly afford? What would you do?
El Paso Electric wants to increase average household electricity bills in the borderland by about $22 per month. And part of that increase is so that El Paso Electric can earn a bigger profit margin and, ultimately, send dividends funded by higher customer bills to the J.P. Morgan-backed investment fund that owns the utility.
El Paso Electric also says its commercial customers, mostly small- and medium-sized businesses, have been paying more than their fair share historically. So, residential customers are shouldering most of this rate increase, while many businesses in El Paso will actually pay lower rates if it’s approved as is.
El Paso Electric, as well as local business executives and elected officials here, want a modern, resilient electric grid that doesn’t experience lots of power outages, and that’s strong enough to support new businesses that want to come and operate in El Paso, hopefully to provide much-needed, well-paying jobs here, like data centers or manufacturing facilities.
The fact is that El Paso Electric is a central part of El Paso’s economic future, and I want to spend a few minutes together to talk about it and share some thoughts.
But before we start: this El Paso Matters Podcast episode is sponsored by Tawney, Acosta and Chaparro, truck crash and injury attorneys. Their team of local, seasoned trial attorneys are ready to help if you’ve been injured in a crash.
So, we’ll start here: The way El Paso Electric makes money is by spending on capital projects, stuff that the utility builds. Since 2020, El Paso Electric said it has spent $1.5 billion dollars on a lot of stuff, like the Newman 6 natural gas power plant that it finished building last year in Northeast El Paso near the state line at a price of about $217 million. It’s also spent hundreds of millions building substations to distribute power throughout the county. And it’s spent a lot on poles and wires, for example replacing hundreds of wood poles – which carry power through the Gila National Forest into El Paso – with stronger and more fire-resistant steel poles.
El Paso Electric’s newest power plant, the $211 million natural gas-fired Newman 6 turbine. Credit: Diego Mendoza-Moyers / El Paso Electric
But, since EPE is a monopoly, it can’t just raise prices. It has to present a bunch of information to its regulator, the Public Utility Commission of Texas, and say, “Look, we spent all this money making our system newer and stronger and better. So, let us raise rates to recover that money we spent, plus a profit margin.” And the PUC decides how much profit the utility is allowed to earn; for now, around 9%.
The idea is that El Paso Electric’s owners or shareholders – in this case, the Infrastructure Investments Fund, or IIF – need a guaranteed rate of return so they have a reason to put up cash to fund the utility’s construction projects before getting paid back. Otherwise, the argument goes, shareholders might tell utilities: “Well, you know what? I’ll just put my money in the stock market or some other investment instead of funding construction of your project.” And over time, the fear is that would lead to a lack of investment and deterioration of our electricity system.
But, like I mentioned at the top, for customers, maybe the most bitter part of El Paso Electric’s rate increase request is the fact that the utility is asking the PUC to allow it to make a bigger profit, from a margin of just over 9% to almost 11%.
And, unless regulators deny the request or approve a slimmer profit margin, customers would pay more expensive bills, in part, so that El Paso Electric can send bigger dividends to IIF. In the three-year period from 2022 through 2024, the utility sent $492 million in dividends to the J.P. Morgan-backed fund.
So, it’s fair to say the rate increase is about paying off infrastructure the utility has invested in to better serve customers. But it’s also about generating bigger payouts for its lone shareholder.
Before we go any further, though, I want to share some thoughts about what El Pasoans are getting in exchange for the money they pay to EPE every month.
Imagine utilities have a school report card that grades how they provide power to customers, and they have to pass three main classes: reliability – meaning the lights don’t go out all the time – affordability – making sure bills aren’t too expensive – and sustainability, or ensuring the utility isn’t polluting too much or contributing to climate change. So, let’s go through all three and see how EPE grades out.
As far as reliability, El Paso Electric customers, since 2013, have experienced fewer and shorter power outages than the statewide and national averages. And, I know, many of us have experienced outages and still do, but so do customers of every electric utility. Numbers from the Department of Energy show El Paso Electric has reliably provided power to homes and businesses here with relatively few outages compared to most other electric utilities across the country.
And part of that is inherent to our location and geography, right? I mean, we don’t experience the natural disasters that rip up electric infrastructure elsewhere, like hurricanes and tornadoes. And wildfires haven’t really disrupted the electric grid here like they have in California, even though we have seen some recent blazes in the Gila approach El Paso Electric power lines.
As far as affordability for customers, the government data would tell you that El Paso Electric has a passing grade, which I know is something El Paso ratepayers, understandably, may not want to hear or believe. But the bills EPE customers pay are cheaper on average compared to what customers of most other electric utilities in Texas and throughout the U.S. pay.
As it stands now, before any rate increase, households in El Paso pay El Paso Electric an average monthly bill of about $96. Across the rest of Texas, households on average pay a monthly power bill of $165. So, again, it’s about $96 bucks here every month, on average, versus $165 for the rest of the state. And the nationwide average residential electric bill is $135. So, on average, we’re a little bit cheaper here and more affordable.
And, I know, workers in El Paso generally earn lower pay, right? But, even so, El Pasoans pay about 1.5% of our annual income on electricity bills, which is below the 4% threshold when power bills are no longer considered affordable for a household. And that’s the same as the U.S. average – about 1.5% of income going to electricity. So, we’re right in line with the rest of the nation, and the average Texas household actually pays a bigger share of its annual income on electricity.
But, I don’t want to be naive or overly positive. I know that, even if the data suggests that most El Pasoans will be able to afford their monthly power bill even if El Paso Electric’s rate hike is approved as is, we know that El Pasoans would not feel a big cost increase equally.
The proposed rate increase would lift average electricity costs here to well over $1,400 per year. And for about one-third of El Paso households, the increase could make running the AC during scorching summer days an unaffordable luxury when you look at higher electric bills on top of other things like rising housing costs, insurance and water bills that increase every year. And El Paso Electric does have a program to waive the $9.25 flat charge that you see on your bills, but eligibility is pretty limited.
So, affordability could go from passable currently to failing for El Paso Electric after this rate increase.
And just one other comment I want to make on this: You’ll commonly hear arguments against monopoly utilities like El Paso Electric, and this idea that we need competition for EPE here, whatever that would look like. But, the Department of Energy data show customers in the deregulated, non-monopolized power market in Texas, by and large, aren’t paying cheaper bills than El Pasoans do. Just something to keep in mind.
As far as sustainability and the shift away from fossil fuels, El Paso Electric is in an interesting spot, because on the one hand, the utility doesn’t rely on coal, which is the dirtiest source of electricity. And almost half of the power that El Pasoans use comes from the big nuclear power plant that EPE partially owns near Phoenix, which doesn’t produce carbon emissions.
El Paso Electric is also building a massive amount of solar, which I think is one thing that EPE’s customers haven’t fully recognized. And I think you can make the case that maybe El Paso Electric has been late to the ballgame here as far as building solar, especially compared with utilities throughout the Southwest and throughout Texas that were a little earlier to add solar, and maybe a little bit more aggressive. But El Paso Electric has said that it has almost 1,200 megawatts of solar capacity under construction, which is a really huge amount for a utility of EPE’s size, and it’s enough to power something like 200,000 homes, roughly.
El Paso Electric built its Buena Vista solar farm outside Chaparral, New Mexico. (Diego Mendoza-Moyers/El Paso Matters)
So, soon, we could really see a much bigger share of the electricity we all use come from zero-emission solar farms. Today, though, the biggest source of power we rely on are the utility’s natural gas-fired power plants, especially the Newman power station in far Northeast El Paso.
When it comes to reducing emissions of the greenhouse gases that contribute to climate change and the hotter weather we’ve been experiencing here, New Mexico’s state mandate is still forcing El Paso Electric to shift to zero-carbon sources of electricity. And that’s going to continue regardless of the shift in attitude we’ve seen within the federal government this year, which has deprioritized addressing climate change and building out renewable sources of energy.
So, in El Paso, we’ll probably see a steady shift toward cleaner sources of electricity, even if we are still very much reliant on natural gas power plants. But, where are we going from here?
A big change coming is that El Paso Electric’s power grid will soon depend on big batteries. The utility is building a massive amount of battery capacity along with solar farms to, basically, charge them up with solar energy during the middle of the day and then discharge that power from the batteries onto the power grid in the evening and night time, when everyone gets home and you run your dishwasher or your washing machine, you crank the AC.
And, so, we’re going to see batteries play a bigger role and, eventually, customers could be part of that as well.
El Paso Electric has said it’s looking at ways to, eventually, incentivize customers to install batteries along with rooftop solar systems. And home batteries are still really expensive, but the idea is that, as battery prices fall, more households can add them and charge their battery with rooftop solar panels. And, then, when El Paso Electric really needs power, it could tap batteries throughout the city to meet demand instead of firing up a natural gas power plant unit.
The other big change on the horizon that El Paso Electric customers should know about is that, within a handful of years, it’ll likely cost you a lot more to run your washing machine, for example, at 4 in the afternoon on a summer day, when it’s really hot out and everyone in the city is using electricity. And then, at nighttime, when there’s less demand, rates will be cheaper. And, in theory, you could lower your power bill by running appliances early in the morning or at night.
The thinking is that, instead of El Paso Electric building a power plant it only needs to run for a few hours a year on the absolute hottest summer days, the utility can get customers to lower their demand by shifting their times of usage. And, for customers, that actually might be better than receiving higher bills to fund construction of a new power plant.
So, the bottom line is that this rate increase is one step within a broader and rapid shift in El Paso’s electricity system. Within a few years, the model of centralized fossil fuel power plants might shift into more of a system of solar farms and batteries, and changing prices to supply electricity and incentivize ratepayers to shift their power consumption to times with less demand. The question is what the cost of that shift will be for customers. This coming rate increase will certainly be followed by others.
Kelly Tomblin, CEO of El Paso Electric, speaks to reporters after the utility unveiled the new Newman 6 power plant. (Diego Mendoza-Moyers / El Paso Matters) Credit: Diego Mendoza-Moyers / El Paso Matters
And, by most measures, we do have a reliable and relatively affordable electricity system in El Paso that local leaders want to ensure remains modern and robust, so the city’s economy can grow and attract good-paying jobs. We’ve heard the CEO of El Paso Electric say “If we can’t build power, then employers can’t build jobs.” But it’s clear the cost increase on the table could be tough for tens of thousands of households here to afford.
And all utilities invest and upgrade their system, and customers everywhere pay that price. That’s just the system we have in place.
But for this rate increase, negotiations are underway between El Paso Electric and the Public Utility Commission, the city government, local businesses and others, and new rates will probably take effect early next year. After these negotiations, it’s likely the impact will be less than the increase of $22 per month I mentioned when things are all said and done. But no one knows for sure at this point, and it’s uncertain.
But customers should expect their electricity bills to increase by some amount in 2026.
There’s always more to say about utilities and this big cost increase that we’re all going to face. But I’ll wrap up there for now. I’m Diego Mendoza-Moyers, a reporter with El Paso Matters. And if you have any thoughts on El Paso Electric’s rate increase, I’d love to hear from you. Feel free to shoot me an e-mail. And, otherwise, visit elpasomatters.org to sign up for our free newsletter or to read all of our local reporting.
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