One new unit at the gas-fired Montana power plant in Texas went commercial May 3, and another is due for commercial operation in September, but owner El Paso Electric reported in a May 4 earnings statement that these new units, for now, are money losers.
“As anticipated, regulatory lag had a negative impact on first quarter earnings,” said Mary Kipp, Chief Executive Officer of the company. “These results clearly illustrate the importance of obtaining final orders in our on-going rate cases so that we can recover the significant investments we have made to meet our customers’ energy needs. That said, we see these results as growing pains. We are fortunate to live and work in a region that continues to grow and develop. We look forward to continuing to provide safe, clean, affordable and reliable power to our customers.”
The completion of Montana Power Station (MPS) Units 1 and 2 (including common plant, transmission lines and substation) and the Eastside Operations Center (EOC) continues to have a negative impact on the company’s financial results due to regulatory lag associated with the placement in service of these assets without a corresponding increase in revenues. The placement in service of Unit 3 in May 2016 and the anticipated completion of Unit 4 in September 2016 will continue the negative impact of regulatory lag until new and higher rates become effective.
On May 3, El Paso Electric placed into commercial operation the third generating unit at the MPS and the related common facilities and transmission systems at a cost of approximately $82.4 million. The 88-MW simple cycle aero-derivative combustion turbine is fueled by natural gas and has quick start capabilities which allows the unit to go from off-line to full output in less than 10 minutes, thus increasing overall power grid stability, and allowing to work in concert with the company’s renewable energy sources. MPS Unit 4, identical to the other three MPS units, is expected to reach commercial operation in September 2016.