8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):

November 6, 2019

El Paso Electric Company

(Exact name of registrant as specified in its charter)

Texas		001-14206	74-0607870
(State or other jurisdiction of incorporation)		(Commission File Number)	(I.R.S. Employer Identification No.)
Stanton Tower
100 North Stanton Street
El Paso,	Texas		79901
(Address of principal executive offices)			(Zip Code)

(915) 543-5711

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, No Par Value	EE	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On November 6, 2019, the Company announced its financial results for the three months and nine months ended September 30, 2019. A copy of the earnings press release containing the announcement and a copy of the Company's Third Quarter 2019 Investor Presentation is furnished as Exhibit 99.01 and Exhibit 99.02, respectively, to this Current Report on Form 8-K.

None of the information furnished in this Item 2.02 and in Exhibits 99.01 and 99.02 to this Current Report on Form 8-K will be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor will it be deemed incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended.

ITEM 7.01 REGULATION FD DISCLOSURE

The information set forth in Item 2.02 above and in Exhibits 99.01 and 99.02 to this Current Report on Form 8-K is incorporated herein by reference.

None of the information furnished in this Item 7.01 will be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section nor will it be deemed incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

99.01    Earnings Press Release, dated November 6, 2019

99.02    Third Quarter 2019 Investor Presentation

104    Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline

XBRL document

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EL PASO ELECTRIC COMPANY

(Registrant)

By:     /s/    NATHAN T. HIRSCHI

Name:    Nathan T. Hirschi

Title:    Senior Vice President - Chief Financial Officer

Dated: November 6, 2019

EX-99.01

Exhibit 99.01

www.epelectric.com

	News Release
For Immediate Release
Date: November 6, 2019

El Paso Electric Announces Third Quarter 2019 Financial Results

Overview

Generally Accepted Accounting Principles ("GAAP") Financial Measures

• For the third quarter of 2019, El Paso Electric Company ("EE" or the "Company") reported net income of $77.9 million, or $1.91 basic and diluted earnings per share. In the third quarter of 2018, EE reported net income of $73.3 million, or $1.80 basic and $1.79 diluted earnings per share.

• For the nine months ended September 30, 2019, EE reported net income of $110.1 million, or $2.70 basic and diluted earnings per share. Net income for the nine months ended September 30, 2018, was $99.6 million, or $2.45 basic and $2.44 diluted earnings per share.

Non-GAAP Financial Measures

• For the third quarter of 2019, EE reported adjusted net income of $74.5 million, or $1.83 adjusted basic earnings per share. In the third quarter of 2018, EE reported adjusted net income of $66.0 million, or $1.62 adjusted basic earnings per share.

• For the nine months ended September 30, 2019, EE reported adjusted net income of $89.8 million, or $2.20 adjusted basic earnings per share. In the nine months ended September 30, 2018, EE reported adjusted net income of $91.9 million, or $2.26 adjusted basic earnings per share.

Adjusted net income and adjusted basic earnings per share, both non-GAAP financial measures, exclude the impact of changes in the fair value of equity securities and realized gains (losses) from the sale of both equity and fixed income securities in the Company's Palo Verde nuclear decommissioning trust funds ("NDT"). Refer to "Use of Non-GAAP Financial Measures" beginning on page 5 of this news release for a reconciliation of adjusted net income and adjusted basic earnings per share (non-GAAP financial measures) to Net income and Basic earnings per share, the most directly comparable GAAP financial measures, respectively.

“During the quarter, our region experienced hotter than normal summer weather with retail sales growing by 5% over last year’s third quarter resulting in reaching two native peak records and setting a new record for the most sales in any quarter,” said Adrian J. Rodriguez, Interim Chief Executive Officer. “On September 19, 2019, at a special meeting of our shareholders, the merger agreement between affiliates of the Infrastructure Investments Fund and our Company was approved by our shareholders, allowing us to continue the regulatory approval process required to complete the merger."

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El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960

Earnings Summary

The table and explanations below are presented on a GAAP basis and indicate the major factors affecting net income during the three months and nine months ended September 30, 2019, relative to net income during the three months and nine months ended September 30, 2018 (in thousands except Basic EPS data):

		Three Months Ended								Nine Months Ended
		Pre-Tax Effect		After-Tax Effect			Basic EPS			Pre-Tax Effect		After-Tax Effect			Basic EPS
September 30, 2018				$	73,271		$	1.80				$	99,600		$	2.45
Change in:
	Retail non-fuel base revenues	13,828		10,923			0.27			2,555		2,018			0.05
	O&M expenses at fossil-fuel generating plants	1,594		1,259			0.03			5,129		4,052			0.10
	Investment and interest income, NDT	(4,859	)	(3,878		)	(0.10		)	15,953		12,730			0.30
	Strategic transaction costs	(3,798	)	(3,453		)	(0.08		)	(9,473	)	(7,937		)	(0.19		)
	Other			(242		)	(0.01		)			(368		)	(0.01		)
September 30, 2019				$	77,880		$	1.91				$	110,095		$	2.70

Third Quarter of 2019

Net income for the three months ended September 30, 2019, when compared to the three months ended September 30, 2018, was positively affected by (presented on a pre-tax basis):

• Increased retail non-fuel base revenues primarily due to increased revenues from (i) residential customers of $11.3 million caused by a 10.1% increase in kilowatt-hour ("kWh") sales, (ii) small commercial and industrial customers of $1.5 million caused by a 1.9% increase in kWh sales, and (iii) sales to public authorities of $1.3 million caused by a 3.5% increase in kWh sales. The increases in kWh sales primarily resulted from favorable weather and overall customer growth of 1.6% in the three months ended September 30, 2019, compared to the three months ended September 30, 2018. Retail kWh sales grew 5.0% over the three months ended September 30, 2018, which set a record for kWh consumption during any calendar quarter. During the three months ended September 30, 2019, the Company also set a peak demand record. On August 7, 2019, the Company recorded a record peak demand of 1,952 MW. Subsequently, on August 26, 2019, the Company recorded a peak demand of 1,985 MW, which exceeds the previous record established prior to August 2019 by 50 MW, or 2.6%, set on June 22, 2017. Cooling degree days increased 10.5% in the three months ended September 30, 2019, when compared to the three months ended September 30, 2018, and were 16.1% above the 10-year average. Non-fuel base revenues and kWh sales for the three months ended September 30, 2019, are provided by customer class on page15 of this news release.

• Decreased operations and maintenance ("O&M") expenses related to the Company's fossil-fuel generating plants primarily due to decreased outage costs at Newman Power Station ("Newman") Unit 2 and decreased maintenance costs at Newman.

Net income for the three months ended September 30, 2019, when compared to the three months ended September 30, 2018, was negatively affected by (presented on a pre-tax basis):

• Decreased investment and interest income, NDT primarily due to net realized and unrealized gains of $4.2 million for the three months ended September 30, 2019, compared to net realized and unrealized

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El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960

gains of $9.1 million for the three months ended September 30, 2018, on securities held in the NDT. Refer to "Use of Non-GAAP Financial Measures" for further details.

• Increased strategic transaction costs of $3.8 million incurred in connection with the proposed merger between the Company and an affiliate of the Infrastructure Investments Fund, an investment vehicle advised by J.P. Morgan Investment Management Inc. ("IIF"). Refer to "Agreement and Plan of Merger" below for further details.

First Nine Months of 2019

Net income for the nine months ended September 30, 2019, when compared to the nine months ended September 30, 2018, was positively affected by (presented on a pre-tax basis):

• Increased investment and interest income, NDT primarily due to net realized and unrealized gains of $25.4 million for the nine months ended September 30, 2019, compared to net realized and unrealized gains of $9.7 million for the nine months ended September 30, 2018, on securities held in the NDT. This increase primarily relates to higher levels of market returns experienced in both the international and domestic equity markets during the nine months ended September 30, 2019, when compared to the nine months ended September 30, 2018. Refer to "Use of Non-GAAP Financial Measures" for further details.

• Decreased O&M expenses related to the Company's fossil-fuel generating plants primarily due to decreased outage costs at Newman Units 1 & 2 and Rio Grande Power Station Unit 8, and decreased maintenance costs at Newman. These decreases were partially offset by increased outage costs at Newman Unit 4 and increased maintenance costs at Montana Power Station.

• Increased retail non-fuel base revenues primarily due to a $3.8 million increase related to the 1% increase in the City of El Paso franchise fee on gross revenues for services within the City of El Paso applicable to customer billings issued on or after October 1, 2018. Overall, kWh sales for the nine months ended September 30, 2019, declined 0.7% primarily due to milder weather in the second quarter of 2019, which was substantially offset by record sales in the third quarter of 2019 due to favorable weather and overall customer growth of 1.6%. Non-fuel base revenues and kWh sales for the nine months ended September 30, 2019, are provided by customer class on page 17 of this news release.

Net income for the nine months ended September 30, 2019, when compared to the nine months ended September 30, 2018, was negatively affected by (presented on a pre-tax basis):

• Increased strategic transaction costs of $9.5 million incurred in connection with the proposed merger between the Company and an affiliate of IIF. Refer to "Agreement and Plan of Merger" below for further details.

Agreement and Plan of Merger

On June 1, 2019, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement"), by and among the Company, Sun Jupiter Holdings LLC, a Delaware limited liability company ("Parent"), and Sun Merger Sub Inc., a Texas corporation and wholly owned subsidiary of Parent ("Merger Sub"). Pursuant to the Merger Agreement, on and subject to the terms and conditions set forth therein, Merger Sub will merge with and into the Company (the "Merger"), with the Company continuing as the surviving corporation in the Merger and becoming a wholly owned subsidiary of Parent. Parent and Merger Sub are affiliates of IIF.

On and subject to the terms and conditions set forth in the Merger Agreement, upon the closing of the Merger, each share of common stock of the Company shall be cancelled and converted into the right to receive $68.25 in cash, without interest (the "Merger Consideration").

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El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960

Consummation of the Merger is subject to various conditions, including: (1) approval of the shareholders of the Company, (2) expiration or termination of the applicable Hart-Scott-Rodino Act waiting period, (3) receipt of all required regulatory and statutory approvals without the imposition of a Burdensome Condition, (4) absence of any law or order prohibiting the consummation of the Merger and (5) other customary closing conditions, including (a) subject to materiality qualifiers, the accuracy of each party's representations and warranties, (b) each party's compliance in all material respects with its obligations and covenants under the Merger Agreement and (c) the absence of a material adverse effect with respect to the Company.

The Merger Agreement contains certain termination rights for both the Company and Parent, including if the Merger is not consummated by June 1, 2020 (subject to extension for an additional three months if all of the conditions to closing, other than the conditions related to obtaining regulatory approvals, have been satisfied). The Merger Agreement also provides for certain termination rights for each of the Company and Parent, and provides that, upon termination of the Merger Agreement under certain specified circumstances, Parent would be required to pay a termination fee of $170 million to the Company, and under other specified circumstances, the Company would be required to pay Parent a termination fee of $85 million.

On August 2, 2019, the Company filed a definitive proxy statement with the SEC in connection with the Merger.

On August 13, 2019, the Company, Parent and IIF US Holdings 2 LP, an affiliate of IIF, as applicable, filed (1) the joint report and application for regulatory approvals with the Public Utility Commission of Texas ("PUCT") requesting approval of the Merger pursuant to the Texas Public Utility Regulatory Act, (2) the joint application for regulatory approvals with the New Mexico Public Regulation Commission ("NMPRC") requesting approval of the Merger pursuant to the New Mexico Public Utility Act and NMPRC Rule 450, (3) the joint application requesting approval of the Merger with the Federal Energy Regulatory Commission ("FERC") under Section 203 of the Federal Power Act and (4) the joint application for regulatory approval for the indirect transfer of the Company's Nuclear Regulatory Commission ("NRC") licenses to Parent from the NRC under the Atomic Energy Act of 1954. In addition, on August 13, 2019, the Company and Parent sought the authorization of the Federal Communications Commission ("FCC") to assign or transfer control of the Company's FCC licenses.

On August 16, 2019, the Company and Parent filed the notification and report form with the Antitrust Division of the Department of Justice and the Federal Trade Commission ("FTC") under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), as amended, and the rules and regulations promulgated thereunder. On September 3, 2019, the Company and Parent received notice from the FTC granting early termination of the waiting period under the HSR Act.

Under the Merger Agreement, the consent to the Merger by the City of El Paso under its franchise agreement with the Company is a condition to the closing of the Merger. Under the franchise agreement, if the City of El Paso does not grant its consent to the Merger, the franchise agreement would terminate upon the closing of the Merger. On September 20, 2019, the Company submitted the franchise agreement assignment application to the City of El Paso.

At a special meeting of the Company's shareholders held on September 19, 2019, the Company's shareholders approved the Merger Agreement and the transactions contemplated thereby, including the Merger, and the compensation that will or may become payable by the Company to its named executive officers in connection with the Merger.

Subject to receipt of remaining approvals and satisfaction of the other closing conditions, the Company anticipates that the closing of the Merger will occur in the first half of 2020.

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El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960

For more information regarding the terms of the Merger, including a copy of the Merger Agreement, see the Company's Current Report on Form 8-K filed with the SEC on June 3, 2019 and its definitive proxy statement relating to the special meeting of shareholders filed with the U.S. Securities and Exchange Commission (the "SEC") on August 2, 2019.

Regulatory Matters

Texas Regulatory Matters

Transmission Cost Recovery Factor. On January 25, 2019, the Company filed an application with the PUCT to establish its Transmission Cost Recovery Factor ("TCRF"), which was assigned PUCT Docket No. 49148 (the "2019 TCRF rate filing"). The 2019 TCRF rate filing is designed to recover a requested $8.2 million of Texas jurisdictional transmission revenue requirement that is not currently being recovered in the Company’s Texas base rates for transmission-related investments placed in service from October 1, 2016, through September 30, 2018, net of retirements. Pursuant to the procedural order issued on February 20, 2019, the Company's TCRF rate was approved on an interim basis effective July 30, 2019, subject to any refund or surcharge to the extent the PUCT's final order establishes a TCRF rate that differs from the interim rate. On September 12, 2019, the Company filed an unopposed Settlement Agreement and proposed order for a TCRF revenue requirement of $7.5 million with a provision for recovery of revenue relating-back to the interim effective date of July 30, 2019. Such relate back revenue through September 30, 2019, is expected to approximate $1.4 million. The ALJ remanded the proceeding to the PUCT for consideration of a final order. The Company cannot predict the outcome of this pending matter at this time.

Distribution Cost Recovery Factor. On March 28, 2019, the Company filed an application with the PUCT and each of its Texas municipalities to establish its Distribution Cost Recovery Factor ("DCRF"), which was assigned PUCT Docket No. 49395 (the "2019 DCRF rate filing"). The 2019 DCRF rate filing is designed to recover a requested $7.9 million of Texas jurisdictional distribution revenue requirement that is not currently being recovered in the Company's Texas base rates for distribution-related investments placed in service from October 1, 2016, through December 31, 2018, net of retirements. On August 13, 2019, the Company filed an unopposed Settlement Agreement and proposed order which resolved all issues in the proceeding and approved a DCRF revenue requirement of $7.8 million. On September 27, 2019, the PUCT issued a final order reflecting the Settlement Agreement, and the Company's DCRF rates became effective in billings beginning October 1, 2019.

New Mexico Regulatory Matters

The Company was required to file its next New Mexico base rate case no later than July 31, 2019. On July 10, 2019, the NMPRC issued an order approving a joint request by the Company, NMPRC Staff, and the New Mexico Attorney General to delay filing of the Company's next base rate case until after the conclusion of a proceeding addressing the Merger. The NMPRC order requires the Company to file its next rate case application within three months of the conclusion of the proceeding addressing the Merger in New Mexico. The Company cannot predict the outcome of this filing at this time.

Use of Non-GAAP Financial Measures

As required by ASU 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities, changes in the fair value of equity securities are recognized in the Company's Statements of Operations. This standard added the potential for significant volatility to the Company's reported results of operations as changes in the fair value of equity securities may occur. Furthermore, the equity investments included in the NDT are significant and are expected to increase significantly during the remaining life (estimated to be 26 to 29 years) of the Palo Verde Generating Station ("Palo Verde"). Accordingly, the Company has provided the following non-GAAP financial measures to exclude the impact of changes in fair value of equity securities

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El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960

and realized gains (losses) from the sale of both equity and fixed income securities. Reconciliations of both non-GAAP financial measures to the most directly comparable financial information presented in accordance with GAAP are presented in the table below. Non-GAAP adjusted net income is reconciled to GAAP net income, and non-GAAP adjusted basic earnings per share is reconciled to GAAP basic earnings per share.

	Three Months Ended
	September 30,
	2019 (a)			2018
	(In thousands except for per share data)
Net income (GAAP)	$	77,880		$	73,271
Adjusting items before income tax effects
Unrealized gains, net	(874		)	(6,528		)
Realized gains, net	(3,338		)	(2,562		)
Total adjustments before income tax effects	(4,212		)	(9,090		)
Income taxes on above adjustments	842			1,818
Adjusting items, net of income taxes	(3,370		)	(7,272		)
Adjusted net income (non-GAAP)	$	74,510		$	65,999
Basic earnings per share (GAAP)	$	1.91		$	1.80
Adjusted basic earnings per share (non-GAAP)	$	1.83		$	1.62

(a) Net income (GAAP) and Adjusted net income (non-GAAP) include a pre-tax charge of $3.8 million or $0.08 per share, after-tax, of strategic transaction costs.

	Nine Months Ended
	September 30,
	2019 (a)			2018
	(In thousands except for per share data)
Net income (GAAP)	$	110,095		$	99,600
Adjusting items before income tax effects
Unrealized gains, net	(22,773		)	(3,730		)
Realized gains, net	(2,654		)	(5,953		)
Total adjustments before income tax effects	(25,427		)	(9,683		)
Income taxes on above adjustments	5,085			1,937
Adjusting items, net of income taxes	(20,342		)	(7,746		)
Adjusted net income (non-GAAP)	$	89,753		$	91,854
Basic earnings per share (GAAP)	$	2.70		$	2.45
Adjusted basic earnings per share (non-GAAP)	$	2.20		$	2.26

(a) Net income (GAAP) and Adjusted net income (non-GAAP) include a pre-tax charge of $9.5 million or $0.19 per share, after-tax, of strategic transaction costs.

Adjusted net income and adjusted basic earnings per share are not measures of financial performance under GAAP and should not be considered as an alternative to net income and basic earnings per share, respectively. Furthermore, the Company's presentation of any non-GAAP financial measure may not be comparable to similarly

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El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960

titled measures used by other companies. The Company believes adjusted net income and adjusted basic earnings per share are useful financial measures for investors and analysts in understanding the Company's core operating performance because each measure removes the effects of variances reported in the Company's results of operations that are not indicative of fundamental changes in the earnings capacity of the Company. Non-GAAP financial information should be read together with, and is not an alternative or substitute for, the Company's financial results reported in accordance with GAAP.

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El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960

Capital and Liquidity

At September 30, 2019, our capital structure, including common stock equity, long-term debt, and short-term borrowings under our revolving credit facility ("RCF"), consisted of 45.3% common stock equity and 54.7% debt. As of September 30, 2019, we had a balance of $15.6 million in cash and cash equivalents. Based on current projections, we believe that we will have adequate liquidity through our current cash balances, cash from operations, available borrowings under the RCF and, if necessary, debt issuances in the capital markets or, after the closing of the Merger, an equity commitment from the Parent to meet all of our anticipated cash requirements for working capital and construction programs during the next twelve months. Prior to closing the Merger, the Company can incur additional indebtedness up to $200 million (excluding borrowings up to the existing borrowing capacity of the RCF), without written consent from the Parent; however, we cannot issue shares of common stock without the prior written consent of Parent. As discussed below, we have the necessary regulatory approvals to issue long-term debt and equity in the capital markets.

Cash flows from operations for the nine months ended September 30, 2019, were $191.0 million, compared to $221.5 million for the nine months ended September 30, 2018. A component of cash flows from operations is the change in net over-collection and under-collection of fuel revenues. The difference between fuel revenues collected and fuel expense incurred is deferred to be either refunded (over-recoveries) or surcharged (under-recoveries) to customers in the future. During the nine months ended September 30, 2019, we had fuel over-recoveries of $3.3 million compared to over-recoveries of fuel costs of $3.7 million during the nine months ended September 30, 2018. At September 30, 2019, we had a net fuel over-recovery balance of $14.4 million, including over-recoveries of $14.1 million in our Texas, $0.2 million in our New Mexico and $0.1 million in our FERC jurisdictions. On April 29, 2019, the Company filed a petition with the PUCT, which was assigned PUCT Docket No. 49482, requesting authority to implement, beginning on June 1, 2019, a four-month, interim fuel refund of $19.4 million in fuel cost over-recoveries, including interest, for the period from April 2016 through March 2019. On May 30, 2019, the Company's fuel refund credit was approved on an interim basis. The Company implemented the fuel refund in customer bills on June 1, 2019. On September 27, 2019, the PUCT issued a final order approving the fuel refund credits. The fuel refund was completed on September 30, 2019, with a total fuel refund of $20.1 million, including interest, returned to Texas customers. On September 13, 2019, the Company filed a request with the PUCT, which was assigned PUCT Docket No. 49960, to decrease our Texas fixed fuel factor by approximately 12.2% to reflect decreased fuel expenses primarily related to a decrease in the price of natural gas used to generate power. On September 25, 2019, our fixed fuel factor was approved by the PUCT on an interim basis effective for the first billing cycle of the October 2019 billing month. The Texas fixed fuel factor was determined to be final on October 15, 2019, and will continue until changed by the PUCT.

During the nine months ended September 30, 2019, our primary capital requirements were related to the construction and purchase of electric utility plant, payment of common stock dividends and purchases of nuclear fuel. Capital expenditures for new electric utility plant were $160.0 million in the nine months ended September 30, 2019, compared to $171.4 million in the nine months ended September 30, 2018. Capital expenditures for 2019 are expected to be approximately $244 million. Capital requirements for purchases of nuclear fuel were $19.2 million in the nine months ended September 30, 2019, compared to $28.8 million in the nine months ended September 30, 2018.

On September 30, 2019, we paid a quarterly cash dividend of $0.385 per share, or $15.7 million, to shareholders of record as of the close of business on September 16, 2019. We paid a total of $46.0 million in cash dividends during the nine months ended September 30, 2019. On October 17, 2019, the Board of Directors declared a quarterly cash dividend of $0.385 per share, payable in cash on December 27, 2019, to shareholders of record as of the close of business on December 13, 2019. At the current dividend rate, we expect to pay cash dividends of approximately $61.7 million during 2019. Under the Merger Agreement, the Company may not declare or pay dividends or distributions on shares of common stock in an amount in excess of $0.385 per share for quarterly dividends declared before June 1, 2020, and $0.41 per share for quarterly dividends declared on or after June 1,

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El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960

2020. Shareholders will continue to be entitled to receive any quarterly cash dividends, including a "stub period" dividend with respect to the period between the last quarterly dividend paid by the Company and the closing of the Merger.

Our cash requirements for federal and state income taxes vary from year to year based on taxable income, which is influenced by the timing of revenues and expenses recognized for income tax purposes. The following summary describes the major impacts of the federal legislation commonly referred to as the Tax Cuts and Jobs Act of 2017 (the "TCJA") on our liquidity.

The TCJA discontinued bonus depreciation for regulated utilities, which reduced tax deductions previously available to us beginning in 2018. The decrease in tax deductions results in the utilization of our net operating loss carryforwards (“NOL carryforwards”) and other carryforwards approximately one year earlier than previously anticipated and is expected to result in higher income tax payments beginning in 2020, after the full utilization of NOL and other carryforwards. However, due to the lower federal corporate income tax rate enacted by the TCJA, our future federal corporate income tax payments will be made at the reduced rate of 21%. Due to NOL carryforwards, minimal tax payments are expected for 2019, which are mostly related to state income taxes. 

The effect of the TCJA on our rates is beneficial to our customers. Following the enactment of the TCJA and the reduction of the federal corporate income tax rate, revenues collected from our customers in 2018 were reduced by $28.2 million, which negatively impacted our cash flows. A comparable amount is expected during 2019.

We received approval from the NMPRC on October 7, 2015, to guarantee the issuance of up to $65.0 million of long-term debt by the Rio Grande Resources Trust (the "RGRT") to finance future purchases of nuclear fuel and to refinance existing nuclear fuel debt obligations. We received additional approval from the NMPRC on October 4, 2017, to amend and extend the RCF, issue up to $350.0 million in long-term debt and to redeem and refinance the $63.5 million 2009 Series A 7.25% Pollution Control Bonds ("PCBs") and the $37.1 million 2009 Series B 7.25% PCBs. The NMPRC approval to issue up to $350.0 million in long-term debt supersedes its prior approval. We received approval from the FERC on October 31, 2017, to issue up to $350.0 million in long-term debt, to guarantee the issuance of up to $65.0 million of long-term debt by the RGRT, and to continue to utilize our existing RCF with the ability to amend and extend the RCF at a future date, and to redeem, refinance and/or replace the 2009 Series A 7.25% PCBs and 2009 Series B 7.25% PCBs with debt of equal face value. The authorization approved by the FERC was effective from November 15, 2017 through November 14, 2019, and superseded its prior approvals. On March 27, 2019, the NMPRC issued a final order approving the Company's request to issue shares of common stock, including the reissuance of treasury shares, in an amount up to $200.0 million in one or more transactions. On April 18, 2019, the Company received approval from the FERC to issue shares of common stock, including the reissuance of treasury shares, in an amount up to $200.0 million in one or more transactions; to utilize the existing RCF for short-term borrowings not to exceed $400.0 million at any one time; to issue up to $225.0 million in new long-term debt; and to remarket the $63.5 million Series A 7.25% PCBs and the $37.1 million Series B 7.25% PCBs in the form of replacement bonds or senior notes of equivalent value, not to exceed $100.6 million. The authorization approved by the FERC is effective from April 18, 2019 through April 18, 2021, and supersedes its prior approvals.

Under these authorizations, on June 28, 2018, the Company issued $125.0 million in aggregate principal amount of 4.22% Senior Notes due August 15, 2028, and guaranteed the issuance by the RGRT of $65.0 million in aggregate principal amount of 4.07% Senior Guaranteed Notes due August 15, 2025. The net proceeds from the sale of these senior notes were used to repay outstanding short-term borrowings under the RCF, which included borrowings made for working capital, general corporate purposes and the purchase of nuclear fuel. Also, under these authorizations, on September 13, 2018, the Company and RGRT entered into a third amended and restated credit agreement where we have available a $350.0 million RCF with a term ending on September 13, 2023. We may increase the RCF by up to $50.0 million (to a total of $400.0 million) during the term of the RCF, upon the

Page 9 of 19

El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960

satisfaction of certain conditions more fully set forth in the agreement, including obtaining commitments from lenders or third party financial institutions. In addition, we may extend the maturity date of the RCF up to two times, in each case for an additional one-year period upon the satisfaction of certain conditions. On February 1, 2019, the Company purchased in lieu of redemption all of the 2009 Series A 7.25% PCBs utilizing funds borrowed under the RCF. On April 1, 2019, the Company purchased in lieu of redemption all of the 2009 Series B 7.25% PCBs utilizing funds borrowed under the RCF. On May 22, 2019, the Company reoffered and sold $63.5 million aggregate principal amount of 2009 Series A 7.25% PCBs and $37.1 million aggregate principal amount of 2009 Series B 7.25% PCBs with a fixed interest rate of 3.60% per annum until the bonds mature on February 1, 2040 and April 1, 2040, respectively. The bonds are subject to optional redemption at a redemption price of par on or after June 1, 2029. Proceeds from the remarketing of the bonds were primarily used to repay outstanding short-term borrowings under the RCF.

The Merger would constitute a "Change in Control" under the RCF and the consummation of the Merger would result in an event of default under the RCF. On and subject to the terms and conditions of the Merger Agreement, the Company requested that the lenders under the RCF consent to the Merger and waive any default or event of default that would occur as a result of the Merger. On August 9, 2019, the lenders agreed to such consent and waiver.

We maintain the RCF for working capital and general corporate purposes and financing of nuclear fuel through the RGRT. The RGRT, the trust through which we finance our portion of nuclear fuel for Palo Verde, is consolidated in our financial statements. The total amount borrowed for nuclear fuel by the RGRT, excluding debt issuance costs, was $132.8 million at September 30, 2019, of which $22.8 million had been borrowed under the RCF, and $110.0 million was borrowed through the issuance of senior notes. Borrowings by the RGRT for nuclear fuel, excluding debt issuance costs, were $129.4 million as of September 30, 2018, of which $19.4 million had been borrowed under the RCF and $110.0 million was borrowed through the issuance of senior notes. Interest costs on borrowings to finance nuclear fuel are accumulated by the RGRT and charged to us as fuel is consumed and recovered through fuel recovery charges. At September 30, 2019, $77.0 million was outstanding under the RCF for working capital and general corporate purposes. At September 30, 2018, no borrowings were outstanding under the RCF for working capital and general corporate purposes. Total aggregate borrowings under the RCF at September 30, 2019, were $99.8 million with an additional $250.0 million available to borrow.

2019 Earnings Guidance

In light of the proposed Merger, the Company will no longer provide guidance nor is it affirming past guidance.

Safe Harbor

This news release includes statements that are forward-looking statements made pursuant to the safe harbor provisions of the Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the proposed Merger, regulatory approvals, the expected timetable for completing the proposed Merger and for obtaining such regulatory approvals; statements regarding the impact of the TCJA; statements regarding current regulatory filings and anticipated regulatory filings; statements regarding expected capital expenditures; statements regarding expected dividends; and statements regarding the adequacy of our liquidity to meet cash requirements. This information may involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to: the timing to consummate the proposed Merger; satisfaction of the conditions to closing of the proposed Merger may not be satisfied; the risk that a regulatory approval that may be required for the proposed Merger is not obtained or is obtained subject to conditions that are not anticipated; the diversion of management’s time on Merger-related issues.

Page 10 of 19

El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960

Additional information concerning factors that could cause actual results to differ materially from those expressed in forward-looking statements is contained in EE's most recently filed periodic reports and in other filings made by EE with the SEC, and include, but is not limited to: (i) the impact of the TCJA and other U.S. tax reform legislation; (ii) increased prices for fuel and purchased power and the possibility that regulators may not permit EE to pass through all such increased costs to customers or to recover previously incurred fuel costs in rates; (iii) full and timely recovery of capital investments and operating costs through rates in Texas and New Mexico, and at the FERC; (iv) uncertainties and instability in the general economy and the resulting impact on EE's sales and profitability; (v) changes in customers' demand for electricity as a result of energy efficiency initiatives and emerging competing services and technologies, including distributed generation; (vi) unanticipated increased costs associated with scheduled and unscheduled outages of generating plant; (vii) unanticipated maintenance, repair, or replacement costs for generation, transmission, or distribution facilities and the recovery of proceeds from insurance policies providing coverage for such costs; (viii) the size of our construction program, the receipt of necessary permits and approvals and our ability to complete construction on budget and on time; (ix) potential delays in our construction and resource contracting schedule due to legal challenges or other reasons; (x) costs at Palo Verde; (xi) decisions and actions of EE's regulators and the resulting impact on EE's cost of capital, sales and profitability; (xii) deregulation and competition in the electric utility industry; (xiii) possible increased costs of compliance with environmental or other laws, regulations and policies; (xiv) possible income tax and interest payments as a result of audit adjustments proposed by the Internal Revenue Service or state taxing authorities; (xv) uncertainties and instability in the financial markets and the resulting impact on EE's ability to access the capital and credit markets; (xvi) actions by credit rating agencies; (xvii) possible physical or cyber-attacks, intrusions or other catastrophic events; (xviii) a U.S. Government shutdown and the resulting impact on EE's sales and profitability; and (xix) other factors of which we are currently unaware or deem immaterial. EE's filings are available from the SEC or may be obtained through EE's website, http://www.epelectric.com. Any such forward-looking statement is qualified by reference to these risks and factors. EE cautions that these risks and factors are not exclusive. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels. Forward-looking statements speak only as of the date of this news release, and EE does not undertake to update any forward-looking statement contained herein.

Media Contacts	Investor Relations
Eddie Gutierrez	Lisa Budtke
915.543.5763	915.543.5947
eduardo.gutierrez@epelectric.com	lisa.budtke@epelectric.com

Page 11 of 19

El Paso Electric Ÿ P.O.Box 982 Ÿ El Paso, Texas 79960

El Paso Electric Company
Statements of Operations
Three Months Ended September 30, 2019 and 2018
(In thousands except for per share data)
(Unaudited)
		2019			2018			Variance
Operating revenues		$	294,453		$	300,271		$	(5,818	)
Operating expenses:
	Fuel and purchased power	50,583			71,086			(20,503		)
	Operations and maintenance	82,186			83,355			(1,169		)
	Depreciation and amortization	25,704			24,169			1,535
	Taxes other than income taxes	21,953			21,728			225
		180,426			200,338			(19,912		)
Operating income		114,027			99,933			14,094
Other income (deductions):
	Allowance for equity funds used during construction	481			824			(343		)
	Investment and interest income, net	11,904			16,815			(4,911		)
	Miscellaneous non-operating income	3,150			3,037			113
	Strategic transaction costs	(3,798		)	—			(3,798		)
	Miscellaneous non-operating deductions	(2,930		)	(3,263		)	333
		8,807			17,413			(8,606		)
Interest charges (credits):
	Interest on long-term debt and revolving credit facility	18,772			19,603			(831		)
	Other interest	5,314			4,127			1,187
	Capitalized interest	(1,435		)	(1,488		)	53
	Allowance for borrowed funds used during construction	(986		)	(881		)	(105		)
		21,665			21,361			304
Income before income taxes		101,169			95,985			5,184
Income tax expense		23,289			22,714			575
Net income		$	77,880		$	73,271		$	4,609
Basic earnings per share		$	1.91		$	1.80		$	0.11
Diluted earnings per share		$	1.91		$	1.79		$	0.12
Dividends declared per share of common stock		$	0.385		$	0.360		$	0.025
Weighted average number of shares outstanding		40,617			40,535			82
Weighted average number of shares and dilutive
	potential shares outstanding	40,680			40,697			(17		)

Page 12 of 19

El Paso Electric Company
Statements of Operations
Nine Months Ended September 30, 2019 and 2018
(In thousands except for per share data)
(Unaudited)
		2019			2018			Variance
Operating revenues		$	671,891		$	712,780		$	(40,889	)
Operating expenses:
	Fuel and purchased power	131,015			176,737			(45,722		)
	Operations and maintenance	243,907			252,370			(8,463		)
	Depreciation and amortization	76,050			71,941			4,109
	Taxes other than income taxes	56,245			54,616			1,629
		507,217			555,664			(48,447		)
Operating income		164,674			157,116			7,558
Other income (deductions):
	Allowance for equity funds used during construction	1,996			2,462			(466		)
	Investment and interest income, net	48,625			33,042			15,583
	Miscellaneous non-operating income	9,288			9,245			43
	Strategic transaction costs	(9,473		)	—			(9,473		)
	Miscellaneous non-operating deductions	(7,615		)	(8,775		)	1,160
		42,821			35,974			6,847
Interest charges (credits):
	Interest on long-term debt and revolving credit facility	56,024			55,785			239
	Other interest	16,357			13,896			2,461
	Capitalized interest	(4,424		)	(4,067		)	(357		)
	Allowance for borrowed funds used during construction	(3,020		)	(2,551		)	(469		)
		64,937			63,063			1,874
Income before income taxes		142,558			130,027			12,531
Income tax expense		32,463			30,427			2,036
Net income		$	110,095		$	99,600		$	10,495
Basic earnings per share		$	2.70		$	2.45		$	0.25
Diluted earnings per share		$	2.70		$	2.44		$	0.26
Dividends declared per share of common stock		$	1.130		$	1.055		$	0.075
Weighted average number of shares outstanding		40,601			40,515			86
Weighted average number of shares and dilutive
	potential shares outstanding	40,680			40,644			36

Page 13 of 19

El Paso Electric Company
Cash Flow Summary
Nine Months Ended September 30, 2019 and 2018
(In thousands and Unaudited)
				2019			2018
Cash flows from operating activities:
	Net Income			$	110,095		$	99,600
	Adjustments to reconcile net income to net cash provided by operations:
		Depreciation and amortization of electric plant in service		76,050			71,941
		Amortization of nuclear fuel		30,933			29,822
		Deferred income taxes, net		25,071			24,369
		Net gains on decommissioning trust funds		(25,427		)	(9,683		)
		Other		10,836			12,996
	Change in:
		Accounts receivable		(34,897		)	(33,958		)
		Accounts payable		1,355			4,920
		Net over-collection of fuel revenues		3,327			3,680
		Other current liabilities		(217		)	9,185
		Other		(6,122		)	8,606
			Net cash provided by operating activities	191,004			221,478
Cash flows from investing activities:
	Cash additions to utility property, plant and equipment			(159,992		)	(171,433		)
	Cash additions to nuclear fuel			(19,224		)	(28,769		)
	Decommissioning trust funds			(5,568		)	(4,282		)
	Other			(6,195		)	2,372
			Net cash used for investing activities	(190,979		)	(202,112		)
Cash flows from financing activities:
	Dividends paid			(46,035		)	(42,898		)
	Borrowings (repayments) under the revolving credit facility, net			50,619			(154,171		)
	Proceeds from issuance of pollution control bonds			100,600			—
	Payments on purchase of pollution control bonds			(100,600		)	—
	Proceeds from issuance of senior notes			—			125,000
	Proceeds from issuance of RGRT senior notes			—			65,000
	Other			(1,912		)	(3,322		)
			Net cash provided by (used for) financing activities	2,672			(10,391		)
Net increase in cash and cash equivalents				2,697			8,975
Cash and cash equivalents at beginning of period				12,900			6,990
Cash and cash equivalents at end of period				$	15,597		$	15,965

Page 14 of 19

El Paso Electric Company
Three Months Ended September 30, 2019 and 2018
Sales and Revenues Statistics
(Unaudited)
											Increase (Decrease)
					2019			2018			Amount			Percentage
kWh sales (in thousands):
	Retail:
		Residential			1,166,364			1,059,193			107,171			10.1	%
		Commercial and industrial, small			742,939			729,414			13,525			1.9	%
		Commercial and industrial, large			249,257			262,052			(12,795		)	(4.9	)%
		Sales to public authorities			463,091			447,280			15,811			3.5	%
			Total retail sales		2,621,651			2,497,939			123,712			5.0	%
	Wholesale:
		Sales for resale - full requirement customer			22,496			19,099			3,397			17.8	%
		Off-system sales			618,745			628,669			(9,924		)	(1.6	)%
			Total wholesale sales		641,241			647,768			(6,527		)	(1.0	)%
				Total kWh sales	3,262,892			3,145,707			117,185			3.7	%
Operating revenues (in thousands):
	Non-fuel base revenues:
		Retail:
			Residential		$	118,290		$	106,961		$	11,329		10.6	%
			Commercial and industrial, small		67,019			65,540			1,479			2.3	%
			Commercial and industrial, large		11,108			11,385			(277		)	(2.4	)%
			Sales to public authorities		33,167			31,870			1,297			4.1	%
				Total retail non-fuel base revenues (a) (b)	229,584			215,756			13,828			6.4	%
		Wholesale:
			Sales for resale - full requirement customer		1,050			904			146			16.2	%
				Total non-fuel base revenues	230,634			216,660			13,974			6.4	%
	Fuel revenues:
		Recovered from customers during the period			39,894			49,676			(9,782		)	(19.7	)%
		Over collection of fuel			(5,170		)	(3,245		)	(1,925		)	(59.3	)%
				Total fuel revenues (c)	34,724			46,431			(11,707		)	(25.2	)%
	Off-system sales (d) (e)				17,603			27,014			(9,411		)	(34.8	)%
	Wheeling revenues (f)				5,883			5,145			738			14.3	%
	Energy efficiency cost recovery				2,326			2,077			249			12.0	%
	Miscellaneous (f)				1,988			2,042			(54		)	(2.6	)%
				Total revenues from customers	293,158			299,369			(6,211		)	(2.1	)%
	Other (f) (g)				1,295			902			393			43.6	%
				Total operating revenues	$	294,453		$	300,271		$	(5,818	)	(1.9	)%
(a)	2019 and 2018 include $10.4 million and $10.8 million, respectively, base rate decreases related to the reduction in federal statutory income tax rate enacted under the TCJA.
(b)	2019 includes $1.8 million related to the 1% increase in the City of El Paso franchise fee on gross revenues for services within the City of El Paso applicable to customer billings issued on or after October 1, 2018.
(c)	Includes deregulated Palo Verde Unit 3 revenues for the New Mexico jurisdiction of $1.4 million and $2.0 million in 2019 and 2018, respectively.
(d)	Off-system sales decreased primarily due to a decrease in available power as a result of an increase in retail sales, and lower average market prices for power in August 2019.
(e)	Includes retained margins of $0.6 million and $0.7 million in 2019 and 2018, respectively.
(f)	Represents revenue with no related kWh sales.
(g)	Includes an energy efficiency bonus of $0.4 million in 2019.

Page 15 of 19

El Paso Electric Company
Three Months Ended September 30, 2019 and 2018
Other Statistical Data
							Increase (Decrease)
			2019		2018		Amount			Percentage
Average number of retail customers: (a)
	Residential		381,283		375,410		5,873			1.6	%
	Commercial and industrial, small		42,856		42,508		348			0.8	%
	Commercial and industrial, large		48		48		—			—
	Sales to public authorities		6,248		5,770		478			8.3	%
		Total	430,435		423,736		6,699			1.6	%
Number of retail customers (end of period): (a)
	Residential		382,076		376,040		6,036			1.6	%
	Commercial and industrial, small		42,970		42,428		542			1.3	%
	Commercial and industrial, large		48		48		—			—
	Sales to public authorities		6,253		5,928		325			5.5	%
		Total	431,347		424,444		6,903			1.6	%
Weather statistics: (b)							10-Yr Average
	Cooling degree days		1,880		1,702		1,619
	Heating degree days		—		—		1
Generation and purchased power (kWh, in thousands):							Increase (Decrease)
			2019		2018		Amount			Percentage
	Palo Verde		1,351,569		1,357,125		(5,556		)	(0.4	)%
	Gas plants		1,734,695		1,618,553		116,142			7.2	%
		Total generation	3,086,264		2,975,678		110,586			3.7	%
	Purchased power:
		Photovoltaic	78,924		75,129		3,795			5.1	%
		Other	288,160		277,877		10,283			3.7	%
		Total purchased power	367,084		353,006		14,078			4.0	%
		Total available energy	3,453,348		3,328,684		124,664			3.7	%
	Line losses and Company use		190,456		182,977		7,479			4.1	%
		Total kWh sold	3,262,892		3,145,707		117,185			3.7	%
	Palo Verde O&M expenses (c)		$	20,713	$	20,277	$	436
	Palo Verde capacity factor		98.4%		97.3%		1.1%

(a)	The number of retail customers presented is based on the number of service locations.
(b)	A degree day is recorded for each degree that the average outdoor temperature varies from a standard of 65 degrees Fahrenheit.
(c)	Represents the Company's 15.8% interest in Palo Verde.

Page 16 of 19

El Paso Electric Company
Nine Months Ended September 30, 2019 and 2018
Sales and Revenues Statistics
(Unaudited)
											Increase (Decrease)
					2019			2018			Amount			Percentage
kWh sales (in thousands):
	Retail:
		Residential			2,415,525			2,402,400			13,125			0.5	%
		Commercial and industrial, small			1,860,790			1,886,552			(25,762		)	(1.4	)%
		Commercial and industrial, large			773,170			792,845			(19,675		)	(2.5	)%
		Sales to public authorities			1,198,536			1,209,961			(11,425		)	(0.9	)%
			Total retail sales		6,248,021			6,291,758			(43,737		)	(0.7	)%
	Wholesale:
		Sales for resale - full requirement customer			52,576			49,395			3,181			6.4	%
		Off-system sales			2,183,752			1,918,672			265,080			13.8	%
			Total wholesale sales		2,236,328			1,968,067			268,261			13.6	%
				Total kWh sales	8,484,349			8,259,825			224,524			2.7	%
Operating revenues (in thousands):
	Non-fuel base revenues:
		Retail:
			Residential		$	243,371		$	240,430		$	2,941		1.2	%
			Commercial and industrial, small		154,382			155,104			(722		)	(0.5	)%
			Commercial and industrial, large		27,197			27,391			(194		)	(0.7	)%
			Sales to public authorities		76,572			76,042			530			0.7	%
				Total retail non-fuel base revenues (a) (b)	501,522			498,967			2,555			0.5	%
		Wholesale:
			Sales for resale - full requirement customer		2,459			2,247			212			9.4	%
				Total non-fuel base revenues	503,981			501,214			2,767			0.6	%
	Fuel revenues:
		Recovered from customers during the period			94,415			127,348			(32,933		)	(25.9	)%
		Over collection of fuel (c)			(23,200		)	(3,611		)	(19,589		)	—
				Total fuel revenues (d) (e)	71,215			123,737			(52,522		)	(42.4	)%
	Off-system sales (e) (f)				65,026			59,791			5,235			8.8	%
	Wheeling revenues (g)				16,739			13,578			3,161			23.3	%
	Energy efficiency cost recovery				6,164			5,877			287			4.9	%
	Miscellaneous (g)				6,304			6,313			(9		)	(0.1	)%
				Total revenues from customers	669,429			710,510			(41,081		)	(5.8	)%
	Other (g) (h)				2,462			2,270			192			8.5	%
				Total operating revenues	$	671,891		$	712,780		$	(40,889	)	(5.7	)%
(a)	2019 and 2018 include $22.8 million and $22.6 million, respectively, base rate decreases related to the reduction in federal statutory income tax rate enacted under the TCJA.
(b)	2019 includes $3.8 million related to the 1% increase in the City of El Paso franchise fee on gross revenues for services within the City of El Paso applicable to customer billings issued on or after October 1, 2018.
(c)	2019 and 2018 include the portion of the U.S. Department of Energy refunds related to spent fuel storage of $1.0 million and $1.1 million, respectively, that were credited to customers through the applicable fuel adjustment clauses.
(d)	Includes deregulated Palo Verde Unit 3 revenues for the New Mexico jurisdiction of $4.0 million and $6.0 million in 2019 and 2018, respectively.
(e)	Off-system sales increased due to favorable market conditions. Lower gas costs resulted in increased margins which were credited to customers through the fuel adjustment clause.
(f)	Includes retained margins of $2.0 million and $1.7 million in 2019 and 2018, respectively.
(g)	Represents revenue with no related kWh sales.
(h)	Includes an energy efficiency bonus of $0.4 million in 2019.

Page 17 of 19

El Paso Electric Company
Nine Months Ended September 30, 2019 and 2018
Other Statistical Data
							Increase (Decrease)
			2019		2018		Amount			Percentage
Average number of retail customers: (a)
	Residential		379,358		373,377		5,981			1.6	%
	Commercial and industrial, small		42,542		42,389		153			0.4	%
	Commercial and industrial, large		48		48		—			—
	Sales to public authorities		6,249		5,648		601			10.6	%
		Total	428,197		421,462		6,735			1.6	%
Number of retail customers (end of period): (a)
	Residential		382,076		376,040		6,036			1.6	%
	Commercial and industrial, small		42,970		42,428		542			1.3	%
	Commercial and industrial, large		48		48		—			—
	Sales to public authorities		6,253		5,928		325			5.5	%
		Total	431,347		424,444		6,903			1.6	%
Weather statistics: (b)							10-Year Average
	Cooling degree days		2,874		3,058		2,739
	Heating degree days		1,187		976		1,182
Generation and purchased power (kWh, in thousands):							Increase (Decrease)
			2019		2018		Amount			Percentage
	Palo Verde		3,909,783		3,843,503		66,280			1.7	%
	Gas plants		3,973,531		3,860,053		113,478			2.9	%
		Total generation	7,883,314		7,703,556		179,758			2.3	%
	Purchased power:
	Photovoltaic		227,882		225,940		1,942			0.9	%
	Other		791,526		743,685		47,841			6.4	%
		Total purchased power	1,019,408		969,625		49,783			5.1	%
		Total available energy	8,902,722		8,673,181		229,541			2.6	%
	Line losses and Company use		418,373		413,356		5,017			1.2	%
	Total kWh sold		8,484,349		8,259,825		224,524			2.7	%
	Palo Verde O&M expenses (c)		$	66,294	$	67,429	$	(1,135	)
	Palo Verde capacity factor		95.9%		94.3%		1.6%

(a)	The number of retail customers presented is based on the number of service locations.
(b)	A degree day is recorded for each degree that the average outdoor temperature varies from a standard of 65 degrees Fahrenheit.
(c)	Represents the Company's 15.8% interest in Palo Verde.

Page 18 of 19

El Paso Electric Company
Financial Statistics
At September 30, 2019 and 2018
(In thousands, except number of shares, book value per common share, and ratios)
(Unaudited)
Balance Sheet		2019			2018
Cash and cash equivalents		$	15,597		$	15,965
Common stock equity		$	1,229,249		$	1,197,200
Long-term debt		1,340,832			1,385,254
	Total capitalization	$	2,570,081		$	2,582,454
Current maturities of long-term debt		$	44,959		$	—
Short-term borrowings under the revolving credit facility		$	99,826		$	19,362
Number of shares outstanding - end of period		40,735,161			40,691,951
Book value per common share		$	30.18		$	29.42
Common equity ratio (a)		45.3		%	46.0		%
Debt ratio		54.7		%	54.0		%
(a)	The capitalization component includes common stock equity, long-term debt, and short-term borrowings under the RCF.

Page 19 of 19

EX-99.02

Third Quarter 2019 Investor Presentation November 6, 2019

ThisSafe presentation includes Harbor statements that are forward Statement-looking statements made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the proposed acquisition of El Paso Electric Company (“EE” or the “Company”) by an affiliate of the Infrastructure Investments Fund (the “Merger”), regulatory approvals, the expected timetable for completing the proposed Merger and for obtaining such regulatory approvals; statements regarding the impact of the federal legislation commonly referred to as the Tax Cuts and Jobs Act of 2017 (the “TCJA”); statements regarding current regulatory filings and anticipated regulatory filings; statements regarding expected capital expenditures; statements regarding expected dividends; and statements regarding the adequacy of our liquidity to meet cash requirements. This information may involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to: the timing to consummate the proposed Merger; satisfaction of the conditions to closing of the proposed Merger may not be satisfied; the risk that a regulatory approval that may be required for the proposed Merger is not obtained or is obtained subject to conditions that are not anticipated; and the diversion of management’s time on Merger-related issues. Additional information concerning factors that could cause actual results to differ materially from those expressed in forward-looking statements is contained in EE’s most recently filed periodic reports and in other filings made by EE with the U.S. Securities and Exchange Commission (the "SEC"), and include, but is not limited to:  The impact of the TCJA and other U.S. tax reform legislation  Increased prices for fuel and purchased power and the possibility that regulators may not permit EE to pass through all such increased costs to customers or to recover previously incurred fuel costs in rates  Full and timely recovery of capital investments and operating costs through rates in Texas and New Mexico, and at the Federal Energy Regulatory Commission  Uncertainties and instability in the general economy and the resulting impact on EE’s sales and profitability  Changes in customers’ demand for electricity as a result of energy efficiency initiatives and emerging competing services and technologies, including distributed generation  Unanticipated increased costs associated with scheduled and unscheduled outages of generating plant  Unanticipated maintenance, repair, or replacement costs for generation, transmission, or distribution facilities and the recovery of proceeds from insurance policies providing coverage for such costs  The size of our construction program, the receipt of necessary permits and approvals and our ability to complete construction on budget and on time  Potential delays in our construction and resource contracting schedule due to legal challenges or other reasons  Costs at Palo Verde  Decisions and actions of EE’s regulators and the resulting impact on EE’s cost of capital, sales, and profitability  Deregulation and competition in the electric utility industry  Possible increased costs of compliance with environmental or other laws, regulations and policies  Possible income tax and interest payments as a result of audit adjustments proposed by the Internal Revenue Service or state taxing authorities  Uncertainties and instability in the financial markets and the resulting impact on EE’s ability to access the capital and credit markets  Actions by credit rating agencies  Possible physical or cyber-attacks, intrusions or other catastrophic events  A U.S. Government shutdown and the resulting impact on EE’s sales and profitability  Other factors of which EE is currently unaware or deem immaterial EE’s filings are available from the SEC or may be obtained through EE’s website, http://www.epelectric.com. Any such forward-looking statement is qualified by reference to these risks and factors. EE cautions that these risks and factors are not exclusive. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels. Forward-looking statements speak only as of the date of this presentation, and EE does not undertake to update any forward-looking statement contained herein. 2

IIF Acquisition Update  On September 19, 2019, EE received shareholder approval for the Merger  Of the shares voted, 99.61% voted to approve and adopt the Merger  Required regulatory filings(1)(2) Regulatory Filing Proceeding Number Date Filed Date Approved Federal Energy Regulatory Commission (“FERC”)(3) EC19-120-000 August 13, 2019 TBD U.S. Nuclear Regulatory Commission (“NRC”) NRC-2019-0214 August 13, 2019 TBD Federal Communications Commission (“FCC”) File Number 0008737430 August 13, 2019 TBD Public Utility Commission of Texas (“PUCT”)(4)(5) Docket No. 49849 August 13, 2019 TBD New Mexico Public Regulation Commission (“NMPRC”)(6) Case No. 19-00234-UT August 13, 2019 TBD City of El Paso Franchise Agreement Matter No. 19-1008-126 September 20, 2019 TBD Federal Trade Commission (Hart-Scott-Rodino Act) Transaction Number August 16, 2019 September 3, 2019 20191858 (1) If the Merger is not consummated by June 1, 2020 because the required approvals have not been obtained, Sun Jupiter Holdings, LLC or EE can extend the date to September 1, 2020 (2) For more information regarding approvals, please reference pages 42-46 of the definitive proxy statement filed by EE with the SEC on August 2, 2019 (3) A FERC ruling is required within 180 days of filing, which is February 10, 2020, but the deadline may be extended 180 days (4) Hearing has been scheduled for November 20-22, 2019 (5) A PUCT ruling is required within 180 days of filing, which is February 10, 2020, but the deadline may be extended 60 days for cause 3 (6) Hearing has been scheduled for December 3-6, 2019

Recent Highlights  On October 1, 2019, EE issued a request for proposals (“RFP”) for an Advanced Metering Infrastructure system, which will improve customer service and reliability, provide better customer programs and services, and spur greater sustainability and regional economic development  Bidder selection is tentatively scheduled for April 1, 2020  Evaluating proposals submitted in an RFP for 141,000 MWh of renewable energy to comply with the New Mexico Renewable Portfolio Standard and New Mexico’s Energy Transition Act  Notice of contract award is tentatively scheduled for October 30, 2019  On October 15, 2019, finalized a new four year collective bargaining agreement with IBEW Local 960  Newman Power Plant was awarded 2019 Innovation Project of the Year by Ovation Users’ Group for control system upgrades  Received the 2019 Corporation of the Year Award from the Southwest Minority Supplier Development Council 4

Recent Highlights (cont.)  On August 26, 2019, EE customers set a new peak demand of 1,985 MW, which was 2.6% higher than the peak established in June 2017 (1) 2,000 1,800 1,600 1,400 1,985 1,935 1,929 1,892 Peak MW’s 1,794 1,766 1,750 1,200 1,714 1,688 1,616 1,571 1,524 1,508 1,428 1,376 1,332 1,000 1,308 1,282 1,199 1,159 1,159 800 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019  During the 3rd Quarter 2019, EE customers established a new record for the most MWH retail sales in any quarter 2,800,000 2,600,000 2,400,000 2,200,000 Q3MWH 2,000,000 2,621,651 2,497,939 1,800,000 2,449,346 2,408,613 2,395,785 2,334,896 2,290,124 2,286,186 2,282,568 2,247,928 2,144,248 2,101,110 1,600,000 2,032,527 1,998,895 1,980,384 1,907,541 1,905,935 1,863,645 1,833,694 1,830,696 1,400,000 1,774,724 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 5 (1) Two separate new peaks were set in 2019. The first peak of 1,952 MW established on August 7, 2019 surpassed the previous record set in June 2017.

Regulatory Update  On September 12, 2019, filed an unopposed settlement agreement and proposed order for the Transmission Cost Recovery Factor (“TCRF”), which is pending approval by the PUCT(1)  On September 13, 2019, filed for a reduction to the Texas fixed fuel factor of 12.21%, which became effective with the first billing cycle of October 2019  On September 27, 2019, the Distribution Cost Recovery Factor was approved by the PUCT and rates became effective in billings beginning October 1, 2019  On September 27, 2019, filed a fuel reconciliation application in Texas to reconcile fuel and purchased power expenses incurred from April 1, 2016 through March 31, 2019  In Q4 2019, anticipate filing for Power Purchase Agreements (“PPAs”) and Certificate of Convenience and Necessity regulatory approvals for new generating resources(2)  In Q4 2019 or early 2020, anticipate filing a Federal Energy Regulatory Commission general rate case (1) On February 20, 2019, EE’s TCRF rate was approved on an interim basis effective July 30, 2019, and is subject to any refund or surcharge following final PUCT approval 6 (2) Summary of anticipated timeline provided on page 15 of appendix

3rd Quarter and YTD Financial Results  GAAP – Q3 2019 net income of $77.9 million (or $1.91 per basic share), compared to Q3 2018 net income of $73.3 million (or $1.80 per basic share)  GAAP – 2019 YTD net income of $110.1 million (or $2.70 per basic share), compared to 2018 YTD net income of $99.6 million (or $2.45 per basic share)  Non-GAAP – Q3 2019 adjusted net income of $74.5 million (or $1.83 per basic share), compared to Q3 2018 adjusted net income of $66.0 million (or $1.62 per basic share)(1)  Non-GAAP – 2019 YTD adjusted net income of $89.8 million (or $2.20 per basic share), compared to 2018 YTD adjusted net income of $91.9 million (or $2.26 per basic share)(1) (1) Adjusted net income and adjusted basic earnings per share are non-GAAP financial measures that reflect net income and basic earnings per share, respectively (the most comparable GAAP financial measures) adjusted to exclude the impact of changes in fair value of EE’s equity securities and realized gains (losses) from the sale of both equity and fixed income securities held in EE’s Palo Verde nuclear decommissioning trust funds (“NDT”). Refer to slide 14 for a reconciliation of adjusted net income and adjusted basic earnings per share (non-GAAP) to net income and basic earnings per share, 7 respectively (the most comparable GAAP financial measures).

3rd Quarter 2019 Key Earnings Drivers EPS Q3 Q3 2019 vs Q3 2018 $1.95 September 30, 2018 (GAAP) $ 1.80 $1.91 $1.90 Changes in: $1.85 $1.83 Retail non-fuel base revenues $ 0.27 $1.80 O&M expenses at fossil-fuel $1.80 generating plants $ 0.03 $1.75 Investment & interest income, NDT $ (0.10) $1.70 Strategic transaction costs $ (0.08) $1.65 $1.62 Other $ (0.01) $1.60 September 30, 2019 (GAAP) * $ 1.91 $1.55 $1.50 Non-GAAP Adjustments $ (0.08) $1.45 September 30, 2019 (non-GAAP) * $ 1.83 2019 2018 2019 2018 (non- (non- (GAAP) (GAAP) GAAP) GAAP) ⃰ Excluding the strategic transaction costs associated with the proposed Merger, Q3 2019 GAAP EPS was $1.99 and Q3 2019 non-GAAP EPS was $1.91. Neither EE nor Sun Jupiter Holdings, LLC will 8 seek to recover transaction costs associated with the proposed Merger.

Historical Weather Analysis 3rd Quarter CDDs vs 10-YR Average 2,000 1,880 1,787 1,800 1,732 1,702 1,603 1,497 1,596 1,532 1,600 10-YR CDD 1,444 1,415 Average – 1,619 1,400 1,200 1,000 800 600 400 200 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q2 CDDs 10-YR Average 3rd Quarter 2019 CDDs • 10.5% Above 3rd Quarter 2018 9 • 16.1% Above 10-YR Average

3rd Quarter Customers and Retail Sales Average No. Percent Percent of Retail MWH Change(1) Change(1) Customers Residential 381,283 1.6% 1,166,364 10.1% C&I Small 42,856 0.8% 742,939 1.9% C&I Large 48 - 249,257 (4.9%) Public Authorities 6,248 8.3% 463,091 3.5% Total Retail 430,435 1.6% 2,621,651 5.0% Cooling Degree Days 1,880 10.5% (1) Percent change expressed as change in third quarter 2019 from third quarter 2018 10

Capital Requirements and Liquidity Sept 30, 2019 Credit Quality (1) (2) Total Liquidity (in $ millions) Moody's S&P Revolving Credit Rating Baa2 BBB $ 250.0 Facility Availability Outlook Stable Negative Cash $ 15.6 Liquidity $ 265.6  On October 17, 2019, the Board approved a quarterly cash dividend of $0.385 per share of common stock payable on December 27, 2019 to shareholders of record as of the close of business on December 13, 2019(3)  In light of the proposed Merger, EE will no longer provide guidance nor is it affirming past guidance (1) On September 17, 2019, Moody’s downgraded EE from Baa1 to Baa2 and changed its outlook to Stable from Rating Under Review (2) On June 5, 2019, S&P affirmed EE’s BBB credit rating and revised its outlook to Negative from Stable (3) In accordance with the proposed Merger, until closing, shareholders will continue to be entitled to receive any 11 quarterly cash dividends, including a “stub period” dividend with respect to the period between the last quarterly dividend paid by EE and the close of the proposed Merger.

Appendix 12

Use of Non-GAAP Financial Measures  As required by an accounting standard, changes in the fair value of equity securities are now recognized in EE’s Statements of Operations. The adoption of this standard added the potential for significant volatility to the reported results of operations as changes in the fair value of equity securities may occur.  Accordingly, in addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), EE has provided adjusted net income and adjusted basic earnings per share, both of which are non-GAAP financial measures. Management believes that providing this additional information is useful to investors in understanding EE’s core operating performance because each measure removes the effects of variances that are not indicative of fundamental changes in the earnings capacity of EE. Adjusted net income and adjusted basic earnings per share are calculated by excluding the impact of changes in fair value from EE’s equity securities and realized gains (losses) from the sale of both equity and fixed income securities in the Company’s Palo Verde nuclear decommissioning trust funds.  Adjusted net income and adjusted basic earnings per share are not measures of financial performance under GAAP and should not be considered as an alternative to net income and basic earnings per share, respectively. Furthermore, EE’s presentation of any non-GAAP financial measure may not be comparable to similarly titled measures used by other companies. Please refer to slide 14 of this presentation for a reconciliation of adjusted net income and adjusted basic earnings per share to the most directly comparable financial measures, net income and basic earnings per share, respectively, prepared in accordance with GAAP. 13

Reconciliation of Net Income (GAAP) and Basic EPS (GAAP) to Adjusted Net Income (Non-GAAP) and Adjusted Basic EPS (Non-GAAP) Use of Non-GAAP Financial Measures As required by ASU 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities, changes in the fair value of equity securities are recognized in the Company's Statements of Operations. This standard added the potential for significant volatility to the Company's reported results of operations as changes in the fair value of equity securities may occur. Furthermore, the equity investments included in the NDT are significant and are expected to increase significantly during the remaining life (estimated to be 26 to 29 years) of the Palo Verde Generating Station. Accordingly, the Company has provided the following non-GAAP financial measures to exclude the impact of changes in fair value of equity securities and realized gains (losses) from the sale of both equity and fixed income securities. Reconciliations of both non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP are presented in the table below. Non-GAAP adjusted net income is reconciled to GAAP net income, and non-GAAP adjusted basic earnings per share is reconciled to GAAP basic earnings per share. Three Months Ended Nine Months Ended September 30, September 30, 2019 (a) 2018 2019 (b) 2018 (In thousands except for per share data) (In thousands except for per share data) Net Income (GAAP) $ 77,880 $ 73,271 $ 110,095 $ 99,600 Adjusting items before income tax effects Unrealized gains, net (874) (6,528) (22,773) (3,730) Realized gains, net (3,338) (2,562) (2,654) (5,953) Total adjustments before income tax effects (4,212) (9,090) (25,427) (9,683) Income taxes on above adjustments 842 1,818 5,085 1,937 Adjusting items, net of income taxes (3,370) (7,272) (20,342) (7,746) Adjusted net income (non-GAAP) $ 74,510 $ 65,999 $ 89,753 $ 91,854 Basic earnings per share (GAAP) $ 1.91 $ 1.80 $ 2.70 $ 2.45 Adjusted basic EPS (non-GAAP) $ 1.83 $ 1.62 $ 2.20 $ 2.26 As of September 30, 2019, the EE nuclear decommissioning trust portfolio had a market value of $312 million. (a) Net income (GAAP) and adjusted net income (non-GAAP) include a pre-tax charge of $3.8 14 million or $0.08 per share, after tax, of strategic transaction costs. (b) Net income (GAAP) and adjusted net income (non-GAAP) include a pre-tax charge of $9.5 million or $0.19 per share, after tax, of strategic transaction costs.

Anticipated Timeline for New Generating Resources In November 2019, EE will (1) Announced RFP submit requests for Additional 278 MW of results regulatory approvals in peak generating Texas and New Mexico capacity Q2 Q4 Q1 Q2 Q3 Q4 Q2 Q3 Q2 Q3 2020 2021 2017 2018 2019 2019 2019 2019 2022 2022 2023 2023 Issued All-Source Contract negotiations Additional 100 MW RFP & execution of peak generating capacity (1) The winning bids include: (a) the construction of a 228 MW natural gas combustion turbine generating unit at the Company’s Newman Power Station for an expected cost of approximately $143 million, (b) the expected PPAs of 200 MW of utility scale solar resources, and (c) the potential PPA of 100 MW of battery storage 15

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Document and Entity Information Document	Nov. 06, 2019
Cover page.
Document Type	8-K
Document Period End Date	Nov. 06, 2019
Entity Registrant Name	EL PASO ELECTRIC CO /TX/
Entity Central Index Key	0000031978
Amendment Flag	false
Entity Incorporation, State or Country Code	TX
Entity File Number	001-14206
Entity Tax Identification Number	74-0607870
Entity Address, Address Line One	100 North Stanton Street
Entity Address, City or Town	El Paso,
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	79901
City Area Code	915
Local Phone Number	543-5711
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, No Par Value
Trading Symbol	EE
Security Exchange Name	NYSE
Entity Emerging Growth Company	false