Printer Friendly

ON MOTIONS FOR REHEARING, COURT OF APPEALS MODIFIES PRIOR RULING REGARDING PALO VERDE OPERATING AND CARRYING COSTS

 ON MOTIONS FOR REHEARING, COURT OF APPEALS MODIFIES PRIOR RULING
 REGARDING PALO VERDE OPERATING AND CARRYING COSTS
 EL PASO, Texas, Sept. 2 /PRNewswire/ -- El Paso Electric (NASDAQ: ELPAQ) announced today that on Aug. 26, 1992, the Court of Appeals for the 3rd Judicial District in Austin, Texas, modified a prior ruling with respect to the company's 1988 final rate order (Docket 7460) issued by the Public Utility Commission of Texas (PUCT). The decision was rendered by the court after the company and other parties filed Motions for Rehearing on the court's previous ruling, which was issued Aug. 14, 1991.
 In its prior ruling, the court had ruled the PUCT was not authorized under applicable law to include in rate base operating and carrying costs on Units 1 and 2 of the Palo Verde Nuclear Generating Station incurred during the interim period between the time the units were declared as plant-in-service (upon completion of their construction for Texas purposes) and their actual inclusion in rates charged to Texas customers.
 However, with its latest ruling on the Motions for Rehearing, the Court of Appeals has reversed its prior ruling with respect to operation and maintenance costs incurred during the interim period and held that such costs could be and were properly included in rate base. Although the court maintained its previous position that the related carrying costs could not be included in rate base, it stated that those costs could be amortized by the company. This allows recovery of the carrying costs, but does not allow the company to earn a return in rate base on such costs.
 The company currently is evaluating the latest decision and has not determined whether it will seek a rehearing, but anticipates that other parties to the case will pursue a rehearing and may appeal further to the Texas Supreme Court.
 The company estimates, based on a preliminary review and analysis, that the total amount of the return on such carrying costs previously included as part of the company's Texas jurisdictional revenue requirement pursuant to all of its prior rate orders is approximately $20 million. Assuming the Court of Appeals does not reverse its position on further motions for rehearing and the decision is upheld in its present form by the Texas Supreme Court, the company believes, but cannot be assured, that upon remand of the order to the Texas Commission, such revenues collected as part of the company's Texas jurisdictional revenue requirement related to carrying costs disallowed from rate base pursuant to the decision of the Court of Appeals, would not be refunded but instead could be offset against authorized deferrals. It is also possible that, upon remand, the Texas Commission could find that the inability to earn a return on deferred carrying costs increases the company's risk and correspondingly adjust the company's allowed rate of return such that the previously determined total revenue requirement would remain unchanged.
 The total amount of such deferred carrying costs presently reflected on the company's regulatory books of account is approximately $50 million net of related deferred taxes. This amount would remain on the company's regulatory books, subject to the amortization allowed by the Court of Appeals Order, but would not be placed in rate base in any future proceeding.
 If the Court of Appeals decision is ultimately upheld, there will be no impact on the company's books of account for financial reporting purposes, since the company eliminated its regulatory assets, including $154 million of accounting deferrals, from its balance sheet as of Dec. 31, 1991.
 El Paso Electric Company, which filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code on Jan. 8, 1992, is an electric utility serving approximately 250,000 customers in El Paso, and an area of the Rio Grande Valley in west Texas and southern New Mexico.
 -0- 9/2/92
 /CONTACT: John E. Droubay of El Paso Electric, 915-543-4122/
 (ELPAQ) CO: El Paso Electric ST: Texas IN: UTI SU:


CK -- NY039 -- 5913 09/02/92 12:17 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Sep 2, 1992
Words:668
Previous Article:HEILIG-MEYERS OPENS REGIONAL DISTRIBUTION CENTER IN GEORGIA
Next Article:UNITED AIRLINES CALLS ON BRITISH AIRWAYS TO JOIN IT IN SEEKING LIBERALIZATION OF BERMUDA 2 AGREEMENT
Topics:


Related Articles
EPE ANNU?NCES FINAL ORDER IN DOCKET 9945; MOTION FOR REHEARING TO BE FILED BY COMPANY
EL PASO ELECTRIC ANNOUNCES 1991 THIRD QUARTER FINANCIAL RESULTS
EL PASO ELECTRIC LOWERED TO 'B' BY FITCH AS BANKRUPTCY LOOMS -- FITCH FINANCIAL WIRE --
EL PASO ELECTRIC REQUESTS EXTENSIONS OF TIME TO FILE REORGANIZATION PLAN AND TO ASSUME OR REJECT PALO VERDE LEASES
EXTENSION OF PERIOD FOR EL PASO ELECTRIC TO SOLICIT ACCEPTANCES OF PLAN OF REORGANIZATION EXTENDED FROM 11/9/92 TO 12/23/92
BANKRUPTCY COURT ISSUES PARTIAL SUMMARY JUDGMENT RELATED TO APPLICATION OF LETTER OF CREDIT PROCEEDS ON PALO VERDE ADVERSARY PROCEEDING
COURT OF APPEALS DENIES MOTIONS FOR REHEARING IN TEXAS-NEW MEXICO POWER COMPANY RATE REQUEST
PUCT Modifies Decisions and Remands for Rehearing Some Issues in CSW Subsidiary's Rate Case
CSW Subsidiary Requests Approval to Lower Rates To Levels Existing Prior to Implementation of Bonded Rates
BGE/PEPCO Disappointed With Circuit Court's Decision Denying Motion To Remand Merger Back to MD PSC

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters