El Paso Electric (NYSE: EE) announced Feb. 4 that it filed a joint stipulation with the New Mexico Public Regulation Commission reflecting a settlement with Commission Utility Division Staff and the New Mexico Attorney General proposing approval of abandonment and sale of its 7% minority ownership interest in Four Corners Units 4 and 5 and common facilities to Arizona Public Service (APS).
The joint parties agree that the sale of this interest in the coal-fired Four Corners plant is in the public interest and will provide net benefits to customers and the public. El Paso Electric said it will meet with all parties to the proceeding to discuss this proposed resolution.
The company filed an application with the NMPRC in April 2015 requesting all necessary approvals in order to withdraw as a participant in the plant and to sell its 7% ownership interest to APS. The case is scheduled to go to hearing on Feb. 16-18, 2016, with a final order expected in the first half of 2016. The hearing is expected to address the proposed joint stipulation and resolve matters related to the sale, including the rate treatment for estimated decommissioning and mine reclamation costs, certain lease payments as well as certain unfunded employee benefits costs. No significant gain or loss is expected to be realized upon closing, said El Paso Electric.
The Federal Energy Regulatory Commission has authorized the proposed transaction request. El Paso Electric expects the sale to close in the summer of 2016.
“We are pleased with the progress that has been made towards reaching a settlement in this case with those parties who represent the public interest as well as the interests of the Company’s residential and commercial customers in New Mexico,” said Mary Kipp, El Paso Electric CEO. “El Paso Electric has been working towards becoming a coal-free utility by diversifying its generation portfolio and investing in local generation resources.”
The stipulation noted: “EPE’s exit from Four Comers was planned and considered in IRPs accepted in 2009 and 2012 and other resources have been approved in [Certificate of Convenience and Necessity] cases. All of the Commission-approved resources are in service except the last two Montana Power Station (‘MPS’) units 3 and 4, scheduled to enter service in May 2016 and December 2016, respectively. The Commission’s standard to issue a CCN has been equated by the Commission to be the public interest requiring a ‘net public benefit.’ The CCN cases approving EPE’s recent generating units were litigated, and the Commission issued final orders determining the CCNs to be in the public interest. Approval of EPE’s proposed sale to APS should be timely approved because it is in the public interest with substantial net benefits to the public.”
The agreement also said: “This Stipulation is made to accommodate timely approval for EPE to sell its interest in Four Comers to APS in July 2016. The Signatories seek a prompt resolution of this case to complete EPE’s planned exit from Four Comers with a result that balances the interests of customers and shareholders and creates a substantial net benefit for the public.”
El Paso Electric is a regional electric utility providing generation, transmission and distribution service to approximately 400,000 retail and wholesale customers in a 10,000 square mile area of the Rio Grande valley in west Texas and southern New Mexico. El Paso Electric has a net dependable generating capability of 2,010 MW.