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7 Attachment A TARIFF CONTROL NO PETITION OF EL PASO ELECTRIC COMPANY FOR APPROVAL TO REVISE MILITARY BASE DISCOUNT RECOVERY FACTOR TARIFF PURSUANT TO PURA PUBLIC UTILITY COMMISSION OF TEXAS DIRECT TESTIMONY OF JAMES SCHICHTL FOR EL PASO ELECTRIC COMPANY JULY 15,

8 Attachment A TABLE OF CONTENTS SUBJECT PAGE I. INTRODUCTION... 1 II. PURPOSE OF TESTIMONY... 4 III. REVISED MILITARY BASE DISCOUNT RECOVERY FACTOR TARIFF... 4 IV. CALCULATION OF THE MILITARY BASE DISCOUNT RECOVERY FACTOR... 5 V. FUTURE MBDRF CHANGES VI. CONCLUSION EXHIBITS Exhibit JS-1 Exhibit JS-2 Exhibit JS-3 Rate Schedule No. 96 Military Base Discount Recovery Factor Military Base Discount Recovery Factor Calculation Military Base Discount Recovery Factor Impact on Typical Residential Customer Bills DIRECT TESTIMONY JAMES SCHICHTL 8

9 Attachment A I. INTRODUCTION Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. A. My name is James Schichtl, and my business address is 100 North Stanton Street, El Paso, Texas, Q. HOW ARE YOU EMPLOYED? A. I am employed by El Paso Electric Company ("EPE") as Manager Economic & Rate Research. I direct the work of the Economic & Rate Research Department Q. PLEASE SUMMARIZE YOUR EDUCATIONAL AND BUSINESS BACKGROUND. A. In June 2013, I became Manager Economic & Rate Research at EPE. Prior to that date, I was a Senior Regulatory Case Manager responsible for the production, filing and execution of regulatory applications before both the New Mexico Public Regulation Commission ( NMPRC ) and the Public Utility Commission of Texas ( PUCT ). Prior to joining EPE in February 2012, I spent 18 years in various regulatory functions at Southern California Edison Company, including 6 years as Manager of Pricing Design and Research. I graduated from the University of Texas at El Paso ( UTEP ) with a Bachelor of Science degree in Mechanical Engineering in PAGE 1 OF 12 DIRECT TESTIMONY JAMES SCHICHTL 9

10 Attachment A Q. PLEASE DESCRIBE YOUR CURRENT RESPONSIBILITIES WITH EPE. A. As Manager of the Economic & Rate Research Department, my primary responsibilities include: (1) overseeing EPE's rate research function; (2) developing EPE's jurisdictional cost of service studies; (3) developing EPE's class cost of service studies; (4) conducting rate design analysis and developing EPE's retail rate schedules and charges; and, (5) evaluating end-use costs to serve and developing specialized rate designs and rate agreements Q. WHAT GENERAL TYPES OF INFORMATION HAVE YOU RELIED ON AND DO YOU RELY ON TO DISCHARGE YOUR RESPONSIBILITIES AT EPE? A. As I stated above, during my employment by EPE, I have had responsibility for preparing and coordinating various regulatory filings and at present I oversee the company s rate research function. EPE expects that I will obtain and use the information I need to fulfill these responsibilities, and EPE is organized such that I and others with whom I work can do so. Accordingly, in the normal course of my duties, I have routinely reviewed and used internal Company information from a wide array of disciplines and areas. This is fairly typical of persons in positions comparable to mine within utilities. Sometimes I must use and rely on information from outside the Company that it is necessary that I know to perform my job. 21 PAGE 2 OF 12 DIRECT TESTIMONY JAMES SCHICHTL 10

11 Attachment A Q. DO YOU NEED TO KNOW THE INFORMATION PRESENTED IN YOUR TESTIMONY AND EXHIBITS TO FULFILL YOUR JOB RESPONSIBILITIES? A. Yes, I do. Of course, to carry out my duties, I rely on much more information than the limited amount presented in this testimony Q. ARE YOU SPONSORING ANY EXHIBITS IN THIS FILING? A. Yes, I am sponsoring the following Exhibits: Exhibit JS-1 Exhibit JS-2 Exhibit JS-3 Rate Schedule No. 96 Military Base Discount Recovery Factor Military Base Discount Recovery Factor Calculation Military Base Discount Recovery Factor Impact on Typical Residential Customer Bills Q. WERE THE ATTACHED EXHIBITS PREPARED BY YOU OR UNDER A. Yes. YOUR SUPERVISION? Q. HAVE YOU PREVIOUSLY PRESENTED TESTIMONY BEFORE UTILITY REGULATORY BODIES? A. Yes, I have previously filed testimony with the New Mexico Public Regulation Commission and the California Public Utility Commission PAGE 3 OF 12 DIRECT TESTIMONY JAMES SCHICHTL 11

12 Attachment A 1 II. PURPOSE OF TESTIMONY Q. WHAT IS THE PURPOSE OF YOUR DIRECT TESTIMONY? A. The purpose of my direct testimony is to present and support EPE's request to revise its Military Base Discount Recovery Factor (MBDRF) tariff, Rate Schedule No. 96. I will provide and describe the calculation of the rate, present the revised tariff and provide a typical residential bill comparison showing the impact of the proposed change on the average residential customer. In addition, I also propose an administrative filing for purposes of modifying the MBDRF in the future, pursuant to the methodology adopted by the Commission in previous applications III. REVISED MILITARY BASE DISCOUNT RECOVERY FACTOR TARIFF Q. WHAT IS THE PURPOSE OF THE MBDRF TARIFF? A. The MBDRF tariff allows EPE to recover from other Texas jurisdiction customers the cost of the discount provided to military base facilities under EPE's Rate Schedule No. 95 Military Base Rate Discount, as allowed under the Texas Public Utility Regulatory Act (PURA) (c) Q. CAN YOU DESCRIBE EPE'S RATE SCHEDULE NO MILITARY BASE RATE DISCOUNT? A. Yes. Consistent with PURA , EPE provides a military base rate discount to federal military installations. Schedule No Military Base Rate Discount, provides for a 20 percent discount from the base portion of the eligible customers' PAGE 4 OF 12 DIRECT TESTIMONY JAMES SCHICHTL 12

13 Attachment A applicable tariff rate for electric service. The base portion of electric rates includes: the Customer Charge, Demand Charge and Base Energy Charge, and excludes the fixed Fuel Factor and Energy Efficiency Cost Recovery Factor. EPE has a single customer eligible for service under Schedule No. 95, which has been receiving the authorized discount since the schedule was first implemented on July 1, Q. HAVE YOU PROVIDED THE REVISED MBDRF TARIFF WITH YOUR DIRECT TESTIMONY? A. Yes, Exhibit JS-1 contains the revised Schedule No. 96 Military Base Discount Recovery Factor. The revised tariff includes the proposed factor of percent, which is applicable to the non-fuel base rate charges of all of EPE s other Texasjurisdiction, excluding the customer served under Rate Schedule No. 31 Military Reservation Service Rate IV. CALCULATION OF THE MILITARY BASE DISCOUNT RECOVERY FACTOR Q. HOW DID EPE CALCULATE THE PROPOSED MBDRF? A. EPE calculated the MBDRF pursuant to PURA (c) and consistent with the method approved in the unanimous Stipulation and Settlement Agreement in Docket No The Signatories to the Stipulation agreed that the MBDRF would be calculated based on actual historical data for the twelve month period ending on June 30 of the year in which the application to revise the MBDRF is filed. As such, the revised MBDRF proposed herein is based on the most recent 12-months (ending PAGE 5 OF 12 DIRECT TESTIMONY JAMES SCHICHTL 13

14 Attachment A June 30, 2013) historical base rate discounts provided to the participating federal military installation, and base rate revenues for all rate classes subject to the MBDRF. In addition, as agreed to in the Stipulation and Settlement Agreement in Docket No , EPE s prior MBDRF application, a historical under-recovery amount of $2,344,962 (recorded through August 2012) was to be amortized for recovery over a two-year period, through August The amount of the underrecovery included in the current MBDRF is $1,172,481. EPE proposes to recover the identical remaining amount in the proposed MBDRF in this filing, net of any additional over- or under-recovery incurred between September 2012 and June Q. CAN YOU DESCRIBE THE CALCULATION OF THE PROPOSED MBDRF? A. Yes. The MBDRF is equal to: the sum of total estimated discounts to be provided under Schedule No. 95 (based on recorded data) for the applicable period, plus any over/under-recovery amounts from prior periods, divided by total estimated base revenues of customers subject to the MBDRF for the applicable period. For purposes of this filing, the applicable period is the 12-months commencing September 1, 2013, the date on which EPE requests the Commission make the proposed rate effective. Consistent with the methodology described above, forecasted discounts and base revenues for the applicable period are equal to actual recorded discounts and base revenues for the period of July 2012 through June The MBDRF calculation is shown in Exhibit JS PAGE 6 OF 12 DIRECT TESTIMONY JAMES SCHICHTL 14

15 Attachment A Q. WHAT IS EPE'S ESTIMATE OF THE AMOUNT OF DISCOUNT TO BE PROVIDED UNDER RATE SCHEDULE NO. 95? A. There is one military installation that qualifies for the military base discount in EPE's Texas service territory. This customer is also the only customer served under EPE's Schedule No. 31 Military Reservation Service Rate. EPE estimates a discount of $3,340,547 will be provided under Schedule No. 95 from September 1, 2013 through August 31, The estimated discount is 20 percent of the actual historical Schedule No. 31 base revenues of $16,702,733 for the twelve months ended June 30, Q. WHAT AMOUNT OF UNDER-RECOVERY DOES EPE PROPOSE TO INCLUDE IN THE PROPOSED MBDRF? A. EPE proposes to include a cumulative under-recovery amount of $1,487,741 in the MBDRF. This amount consists of the remaining amount to be amortized pursuant to the Final Order in Docket No of $1,172,481 and an under-recovery of $315,260 accrued during the period September 2012 through June The additional under-recovery amount is the difference between recorded monthly discounts provided under Schedule No. 95 and recorded revenues recovered under Schedule No. 96, through June 30, Recorded monthly Schedule No. 95 discounts and Schedule No. 96 MBDRF revenues are shown in Exhibit JS Recorded Schedule No. 96 revenues included recovery of the first amortization of the Docket No amount. PAGE 7 OF 12 DIRECT TESTIMONY JAMES SCHICHTL 15

16 Attachment A Q. HOW WERE RETAIL BASE REVENUES DETERMINED FOR PURPOSES OF THE MBDRF CALCULATION? A. Retail base revenues for Texas rate classes used in the MBDRF calculation are recorded historical base revenues for the twelve months ended June 30, As shown in Exhibit JS-2, the recorded total retail base revenues for Texas customers during this period were $434,933,584. Recorded base revenues over the same period for the military installation served under Schedule No. 31, to which the MBDRF does not apply, are removed from the total historical retail base revenues to determine the estimated retail base revenues to which the MBDRF will apply. Removing the Schedule No. 31 revenues attributed to the military installation, which totaled $16,702,733, results in an estimated retail base revenue amount for purposes of MBDRF of $418,230, Q. WHAT IS THE COMPANY'S PROPOSED MBDRF? A. EPE proposes an MBDRF of percent, applicable to a customer's non-fuel base rate charges. This is calculated, as shown in Exhibit JS-2, by dividing the MBDRF revenue requirement of $4,828,288 (the sum of the estimated discount and recorded under-recovery amounts) by estimated Texas retail base revenues (net of Schedule No. 31 revenues) of $418,230, Q. WHAT IS THE CURRENT MBDRF? A. The current MBDRF is percent of a customer's non-fuel base rate charges. 23 PAGE 8 OF 12 DIRECT TESTIMONY JAMES SCHICHTL 16

17 Attachment A Q. HOW DOES THE REVISED MBDRF AFFECT A TYPICAL EPE RESIDENTIAL CUSTOMER? A. The typical EPE residential customer in Texas averaged approximately 600 kwh per month for A residential customer averaging 600 kwh per month under the revised tariff would, on average, incur an MBDRF charge of $0.63 per month, which is an increase of $0.05 per month over the current average MBDRF charge of $0.58 per month. This calculation is shown in Exhibit JS-3. This represents an increase in the base portion of the average residential bill of 0.09% and an increase in the total bill of 0.07% Q. WHAT FACTORS CAUSED THE CHANGE IN THE MBDRF FROM PERCENT TO PERCENT? A. Changes in the MBDRF from year to year are the result of two factors. The first is variation from one year to the next in customer revenues. The MBDRF is the ratio of historical discounts provided to military installation participants under Rate 95, and historical base revenues from all other Texas customers. If either of these amounts changes from year-to-year, which can result from a variety of factors such as weather differences and customer growth, the resulting MBDRF rate will fluctuate. For example, expected discounts under Schedule 95 are lower (1.4%) in the proposed MBDRF relative to the previous factor, but lower expected base revenues for recovery (3.3%) result in a higher factor for the discount portion of MBDRF (0.016% of the 0.099% increase). PAGE 9 OF 12 DIRECT TESTIMONY JAMES SCHICHTL 17

18 Attachment A The second factor, which can result from the first, is under- or over-recoveries over time. If an MBDRF is set, based on historical amounts, too low relative to the amount of discount provided over the next year, in relation to the amount of revenues received from all other customers, an under-recovery occurs which is then reflected in the next MBDRF. For example, lower actual base revenues than those used in calculating the current MBDRF produced reduced recovery in the current period and contributed to the under-collection. Also, delaying implementation of a change in the MBDRF may result in an over- or under-recovery. A substantial portion of the $315,260 under-collection, which is included in the proposed MBDRF, resulted from a delay in implementing the current factor V. FUTURE MBDRF CHANGES Q. IS EPE S FILING FOR MODIFICATION OF THE MBDRF CONSISTENT WITH PRIOR APPLICATIONS? A. Yes. EPE is authorized to file for modification of the MBDRF on an annual basis, in order to update the factor for the most current historical data. The MBDRF calculation proposed here is calculated pursuant to PURA (c) and consistent with the method approved in the unanimous Stipulation and Settlement Agreement in Docket No , and includes the amortized under-collection amount authorized by Final Order in Docket No Consistent with prior applications, EPE is providing testimony and exhibits which describe in detail the determination of the proposed MBDRF. 23 PAGE 10 OF 12 DIRECT TESTIMONY JAMES SCHICHTL 18

19 Attachment A Q. HOW IS EPE PROPOSING THE MBDRF BE REVISED ANNUALLY IN THE FUTURE? A. Given the statutory requirements and support underlying the MBDRF and that the methodology for setting the factor is well established, EPE proposes that subsequent modifications to the factor be proposed through a simple administrative filing. EPE anticipates the filing would consist of simply a petition that presents the revised MBDRF tariff and factor, as well all supporting data and computations in workpapers. This approach is consistent with the September 26, 2003 memorandum by Commission Staff to Commissioners entitled Military Bases Discounts and Surcharges (Staff Memo), which addressed the process by which affected utilities would make their original applications to establish the MBDRF discount and surcharge tariffs. Given that the tariffs and methodology for determining the MBDRF are now well established, EPE proposes that for purposes of regulatory efficiency all future changes be addressed through a more expedient administrative filing, similar to those employed for fuel factor updates VI. CONCLUSION Q. IS THE REVISED RATE SCHEDULE 96 MILITARY BASE DISCOUNT RECOVERY FACTOR REASONABLE? A. Yes. The Schedule 96 Military Base Discount Recovery Factor is reasonable. The percent MBDRF was calculated to recover the estimated discount amount of $3,340,547 provided under Rate Schedule No. 95 Military Base Discount, which is PAGE 11 OF 12 DIRECT TESTIMONY JAMES SCHICHTL 19

20 Attachment A based on the historical discounts provided to the participating military installation for the twelve months ended June 2013, pursuant to the Stipulation. It will also recover the balance of the MBDRF under-recovery of $1,487,741, which includes the amortized recovery of $1,172,481 pursuant to the Final Order in Docket No EPE is allowed to recover the full cost of the statutory military discount from all other customers in its Texas Jurisdiction. The proposed MBDRF charge represents a very small fraction of the average customer s bill. EPE also proposes streamlining future filings through the use of an administrative approval process similar to fuel factor changes Q. DOES THIS CONCLUDE YOUR DIRECT TESTIMONY? A. Yes, it does. PAGE 12 OF 12 DIRECT TESTIMONY JAMES SCHICHTL 20

21 EL PASO ELECTRIC COMPANY Exhibit JS-1 Page 1 of 1 SCHEDULE NO. 96 MILITARY BASE DISCOUNT RECOVERY FACTOR APPLICABILITY Electric service billed under rate schedules having a Military Base Discount Recovery Factor Clause shall be subject to a Military Base Discount Recovery Factor ( MBDRF ). Pursuant to PURA (c), the MBDRF allows the Company to recover the total base rate discount provided to military base facilities pursuant to Schedule No. 95 Military Base Rate Discount. TERRITORY Texas Service Area MONTHLY RATE Percentage of monthly non-fuel base rate charges % (I) HISTORICAL ADJUSTMENTS AND TRUE-UP The MBDRF shall be based on actual historic revenues and adjusted in September of each year to include the over/under recovery balance. Section Number 1 Revision Number 32 Sheet Number 32 Effective with bills issued on or after the first Page 1 of 1 billing cycle in September

22 Exhibit JS-2 Page 1 of 4 El Paso Electric Company Military Base Discount Recovery Factor Calculation Revenues and Discount Based on Historical Data for the Twelve Month Period Ended June 30, 2013 Description 1 Rate 95 Military Base Rate Discount 20% PURA Historical Military Base Revenues (July June 2013) $ 16,702,733 Page 3 3 Total Amount of Discount $ 3,340,547 Line 1 * Line 2 4 Under/(Over) Amount to be Recovered in Proposed MBDRF 1,487,741 Page 4 5 MBDRF Revenue Requirement $ 4,828,288 Line3 + Line 4 6 Total Texas Retail Base Revenues $ 434,933,584 Page 3 7 Less Rate 31 Military Base Revenues 16,702,733 Line 2 8 Total Revenues Less Military Base $ 418,230,851 Line 6 - Line 7 9 Proposed MBDRF (% of Base) 1.154% Line 5 / Line 8 10 Current MBDRF (% of Base) 1.055% 11 Change in MBDRF 0.099% 22

23 Exhibit JS-2 Page 2 of 4 El Paso Electric Company Military Base Discount Recovery Factor Calculation Recorded Base (Non-Fuel) Revenues For the Twelve Month Period Ended June 30, 2013 Rate Group July 2012 August 2012 September 2012 October 2012 November 2012 December 2012 January Rate 01 Residential Service $ 20,947,801 $ 21,241,081 $ 20,609,049 $ 14,265,868 $ 10,891,966 $ 10,945,917 $ 14,265,758 2 Rate 02 Small Commercial Service 3,087,298 2,978,308 2,990,034 2,401,221 1,987,954 1,830,770 2,098,363 3 Rate 07 Outdoor Recreational Lighting Service 28,267 32,417 35,852 46,494 43,858 36,718 33,097 4 Rate 08 Governmental Street Lighting Service 349, , , , , , ,213 5 Rate 11 Municipal Pumping Service 821,074 1,065, , , , , ,846 6 Rate 15 Electrolytic Refining Service 283, , , , , , ,292 7 Total Water Heating Service 69,779 66,412 70,723 70,677 66,464 73,889 89,934 8 Rate 22 Irrigation Service 43,097 45,518 43,876 35,943 21,756 15,123 11,380 9 Rate 24 General Service 13,422,352 13,543,759 13,572,776 11,745,844 6,273,763 5,895,812 5,546, Rate 25 Large Power Service 4,319,188 4,329,809 4,298,714 3,599,046 2,542,100 2,461,597 2,473, Rate 26 Petroleum Refining Service 1,030,956 1,041,696 1,302,981 1,042,157 1,045,417 1,022,907 1,055, Rate 28 Area Lighting Service 217, , , , , , , Rate 30 Electric Furnace Rate 141, , , , , , , Rate 31 Military Reservation Service 2,309,504 2,360,566 2,256,712 1,447, , , , Rate 34 Cotton Gin Service ,244 1,299 19,626 23,065 9, Rate 38 Noticed Interruptible Power Service 292, , , , , , , Rate 41 City and County Service 2,188,468 2,624,217 2,777,712 2,317,928 1,550,914 1,373,582 1,426, Rate 43 University Service Rate 248, , , , , , , Rate 45 Cogeneration Service 144, , ,453 97,226 78,681 70,703 68, Total Base Revenues $ 49,947,628 $ 51,054,126 $ 50,606,969 $ 39,258,653 $ 27,350,143 $ 26,450,299 $ 29,861, Eligible Military Customer Base Revenues $ 2,309,504 $ 2,360,566 $ 2,256,712 $ 1,447,584 $ 926,749 $ 850,932 $ 931, Base Revenues for MBDRF Recovery $ 47,638,125 $ 48,693,560 $ 48,350,257 $ 37,811,069 $ 26,423,395 $ 25,599,366 $ 28,929,952 23

24 Exhibit JS-2 Page 3 of 4 El Paso Electric Company Military Base Discount Recovery Factor Calculation Recorded Base (Non-Fuel) Revenues For the Twelve Month Period Ended June 30, 2013 Rate Group 1 Rate 01 Residential Service 2 Rate 02 Small Commercial Service 3 Rate 07 Outdoor Recreational Lighting Service 4 Rate 08 Governmental Street Lighting Service 5 Rate 11 Municipal Pumping Service 6 Rate 15 Electrolytic Refining Service 7 Total Water Heating Service 8 Rate 22 Irrigation Service 9 Rate 24 General Service 10 Rate 25 Large Power Service 11 Rate 26 Petroleum Refining Service 12 Rate 28 Area Lighting Service 13 Rate 30 Electric Furnace Rate 14 Rate 31 Military Reservation Service 15 Rate 34 Cotton Gin Service 16 Rate 38 Noticed Interruptible Power Service 17 Rate 41 City and County Service 18 Rate 43 University Service Rate 19 Rate 45 Cogeneration Service 20 Total Base Revenues 21 Eligible Military Customer Base Revenues 22 Base Revenues for MBDRF Recovery February 2013 March 2013 April 2013 May 2013 June 2013 Total $ 12,558,832 $ 10,277,974 $ 9,986,222 $ 12,653,733 $ 18,493,983 $ 177,138,183 2,109,569 1,777,774 1,845,757 2,229,290 2,702,808 28,039,147 38,332 34,468 32,680 31,083 30, , , , , , ,137 4,204, , , , ,524 1,069,142 8,925, , , , , ,356 2,424,318 86,341 70,711 63,315 70,791 60, ,161 14,496 23,522 38,502 52,005 65, ,854 5,795,066 5,594,732 5,956,640 11,188,240 12,891, ,427,580 2,489,576 2,472,308 2,521,492 2,526,236 3,181,039 37,214,986 1,003, ,767 1,056,491 1,025,979 1,037,740 12,646, , , , , ,333 2,626,004 69,746 87,265 89,986 87, ,619 1,439, , , ,617 1,008,005 2,009,415 16,702,733 1,274 1, , , , , , ,092 3,218,120 1,401,316 1,356,884 1,540,901 2,315,327 2,405,905 23,279, , , , , ,966 2,739,402 76,578 74,635 72,636 71, ,384 1,152,086 $ 28,263,105 $ 25,285,703 $ 25,997,878 $ 35,311,737 $ 45,545,635 $ 434,933,584 $ 852,867 $ 850,026 $ 898,617 $ 1,008,005 $ 2,009,415 $ 16,702,733 $ 27,410,238 $ 24,435,677 $ 25,099,261 $ 34,303,732 $ 43,536,220 $ 418,230,851 24

25 Exhibit JS-2 Page 4 of 4 El Paso Electric Company Military Base Discount Recovery Factor Calculation Under / (Over) Recovery Tracking Under/(Over) Description Recovery Amount Under/(Over) Recovery through December $ 761, Under/(Over) Recovery through December 1,764, Under/(Over) Recovery through June (212,691) 4 Cumulative Under/(Over) Recovery through June ,313, Under/(Over) Recovery (July-August) 31,560 Line 38 6 Cumulative Under/(Over) Recovery through August 2012 $ 2,344,962 Final Order, DN Amount to be Recovered Through August 2013 from Order No $ 1,172,481 Final Order, DN Under/(Over) Recovery September 2012 through June 2013 (857,221) Line 39 9 Cumulative Under/(Over) Recovery through June 2013 $ 315,260 Line 7 + line 8 10 Amount to be Recovered Through August 2014 from Order No. $ 1,172,481 Final Order, DN Under/(Over) Recovery to be Recovered in Proposed MBDRF $ 1,487,741 Line 9 + line 10 Under/(Over) Recovery Month Discount Recovery Monthly / Annual Cumulative (a) 1,222,297 (574,343) 647, , ,823 (98,357) 56, , ,401 (103,547) 56, , Total 2010 $ 1,537,521 $ (776,246) $ 761, $ 169,816 $ (103,401) $ 66,415 $ 827, ,372 (100,788) 86, , ,409 (101,875) 63, , ,947 (96,967) 88,980 1,066, ,534 (126,077) 83,457 1,150, ,802 (165,376) 294,426 1,444, ,570 (192,680) 291,890 1,736, ,226 (187,906) 284,320 2,020, ,923 (188,036) 273,887 2,294, ,887 (149,531) 80,356 2,375, ,335 (99,395) 73,940 2,449, ,309 (102,279) 77,030 2,526, Total 2011 $ 3,379,130 $ (1,614,311) $ 1,764, $ 171,261 $ (112,133) $ 59,128 $ 2,585, ,468 (246,728) (74,260) 2,510, ,979 (243,279) (71,300) 2,439, ,734 (259,164) (42,430) 2,397, ,652 (333,705) (103,053) 2,294, ,325 (403,101) 19,224 2,313, Total June 2012 $ 1,385,419 $ (1,598,110) $ (212,691) $ 461,901 $ (446,349) $ 15,552 $ 2,328, ,113 (456,105) 16,008 2,344, Total August 2012 $ 934,014 $ (902,454) $ 31, $ 451,342 $ (452,880) $ (1,538) $ 2,343, ,517 (354,244) (64,727) 2,278, ,350 (247,499) (62,150) 2,216, ,186 (270,306) (100,119) 2,116, ,351 (305,071) (118,719) 1,997, ,573 (289,172) (118,598) 1,879, ,005 (257,963) (87,958) 1,791, ,723 (264,943) (85,220) 1,705, ,601 (362,072) (160,471) 1,545, ,883 (459,604) (57,721) 1,487, Total June 2013 $ 2,406,533 $ (3,263,754) $ (857,221) (a) Discount and Recovery from July through October

26 Exhibit JS-3 Page 1 of 1 El Paso Electric Company Military Base Discount Recovery Factor Impact On Typical Texas Residential Customer Bills Base Fuel Line Month Monthly Energy, kwh (a) Customer and Energy Charges Fixed Fuel Factor Current MBDRF Charge Total Bill (b) Proposed MBDRF Difference in MBDRF 1 January 614 $ $ $ 0.55 $ $ 0.61 $ February $ March $ April $ May $ June $ July $ August $ September $ October $ November $ December $ Annual 7,200 $ $ $ 6.90 $ $ 7.57 $ Monthly Average 600 $ $ $ 0.58 $ $ 0.63 $ Average Monthly Usage, kwh Annual Usage, kwh 7, Customer Charge $ 5.00 per Month 18 Winter Energy Charge $ per kwh 19 Summer Energy Charge $ per kwh 20 Residential Service Credit Rider $ per kwh 21 Fixed Fuel Factor $ per kwh 22 Proposed MBDRF 1.154% 23 Current MBDRF 1.055% 1 - denotes Summer Month (a) Based on monthly average usage per customer for 2012 (b) Excludes Energy Efficiency Cost Recovery Factor (EECRF) 26

27 Attachment B NOTICE OF PETITION OF EL PASO ELECTRIC COMPANY FOR APPROVAL TO REVISE MILITARY BASE DISCOUNT RECOVERY FACTOR TARIFF PURSUANT TO PURA On July 15, 2013, El Paso Electric Company ( EPE or Company ) filed with the Public Utility Commission of Texas ( PUCT ) a petition requesting approval to revise its Military Base Discount Recovery Factor (MBDRF) tariff, Rate Schedule No. 96, pursuant to Public Utility Regulatory Act (PURA) (Petition). EPE requested that the revised tariff be approved within 30 days after it filed the Petition and that the revised tariff become effective no later than September 1, The parties that will be affected by this tariff revision will be EPE and all of EPE s Texas retail customers except for customers taking service under Rate Schedule No. 31 Military Reservation Service Rate, to which the MBDRF does not apply. PURA (a) and (b) require electric utilities in areas where electric choice is not available to discount charges for electric service provided to military bases by 20 percent of the base rate for the otherwise applicable rate. Rate Schedule No. 95 Military Base Discount incorporates this 20 percent discount as required by those sections of PURA. In addition, PURA (c) provides that [a]n electric utility, municipally owned utility, or electric cooperative may assess a surcharge to all of the utility s retail customers in the state to recover the difference in revenue between the revenues from the discounted rate for military bases provided under Subsection (a) and the base commercial rate. Rate Schedule No. 96 assesses the surcharge allowed by PURA (c). The proposed revised factor is applicable to all rates except Rate Schedule No. 31. Based on recorded data, for the period of July 2012 through June 2013, EPE provided discounts of $3,340,547 under Rate Schedule No. 95. In addition, as of June 2013, the difference between the actual discount provided under Rate Schedule No. 95 and the revenues collected under Rate Schedule No. 96 resulted in an under-recovery of $1,487,741. Based on these calculations, EPE requests that the recovery factor under Rate Schedule No. 96 be revised to percent from the current recovery factor of percent. Under EPE s revised MBDRF tariff, and based on EPE s current base rates, a residential customer averaging 600 kwh of electricity per month would, on average, be charged $0.63 per month, which is an increase of $0.05 per month over the current average MBDRF monthly charge. 1 27

28 Attachment B The Petition has been assigned Tariff Control No Persons who wish to intervene or comment upon this proceeding or who want more information about EPE s Petition may contact the Company at 100 N. Stanton, El Paso, Texas 79901, or call (915) A complete copy of the Petition is available for inspection at this address. EPE has proposed an intervention deadline of August 5, 2013 for this proceeding. Persons who wish to formally participate in or comment upon these proceedings, or obtain further information, should contact the Public Utility Commission of Texas, P.O. Box 13326, Austin, Texas , or call the Commission s Office of Consumer Protection at (512) or (888) Hearing and speech-impaired individuals with text telephones (TTY) may contact the Commission at (512) or use Relay Texas (toll-free)