EXHIBIT 99.01

El Paso Electric

NEWS RELEASE

For Immediate Release	Contact:
Date: July 28, 2003	Media	Analyst
	Teresa Souza	Cynthia Gamez
	915/543-5823	915/543-2213

El Paso Electric Announces Second Quarter Financial Results

El Paso Electric (NYSE: EE) today reported net income for the quarter ended June 30, 2003, of $5.0 million, or $0.10 basic and diluted earnings per share. Net income for the same period last year was $12.3 million, or $0.25 and $0.24 basic and diluted earnings per share, respectively.

The decrease in earnings for the quarter ended June 30, 2003, when compared to the quarter ended June 30, 2002, resulted primarily from decreased wholesale sales revenue related to the expiration of two long-term contracts, increased maintenance expense at local plants, and increased Palo Verde operations and maintenance expenses. These decreases in earnings were partially offset by reduced interest and depreciation expense resulting from the adoption of SFAS No. 143, “Accounting for Asset Retirement Obligations” on January 1, 2003, and increased margins on economy sales.

“We have seen increased expenses at our local plants and at Palo Verde which were necessary to ensure the availability of those units for our peak season,” said Gary Hedrick, President and CEO. “Although our commercial and industrial sales are down, our residential growth continues to be strong.”

Year to Date

Net income before the cumulative effect of accounting change for the six months ended June 30, 2003, was $7.1 million, or $0.15 basic and diluted earnings per share compared to net income of $18.2 million, or $0.36 basic and diluted earnings per share for the same period a year ago. Net income for the six months ended June 30, 2003, includes a cumulative effect of accounting change, net of related income taxes, in the amount of $39.6 million, or $0.80 basic and diluted earnings per share, related to the adoption of SFAS No. 143 on January 1, 2003. Net income after the cumulative effect of accounting change for the six months ended June 30, 2003, was $46.7 million, or $0.95 basic and diluted earnings per share. The decrease in earnings prior to the consideration of the cumulative effect of accounting change for the six months ended June 30, 2003, when compared to the same period a year ago is primarily attributable to decreased wholesale sales revenue related to

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

the expiration of two long-term contracts, increased maintenance expense at local plants, increased Palo Verde operations and maintenance expenses, increased pension and benefits expenses, and increased insurance expenses. These decreases were partially offset by increased sales and margins on economy sales, a loss on extinguishment of debt recorded in the prior year without any corresponding amounts in the current year, and the adoption of SFAS No. 143 which reduced interest and depreciation expense in the current year without any offsetting amounts from the prior year.

During the quarter EE repurchased approximately one million shares of common stock in the open market in accordance with the previously approved stock repurchase programs which in total permit the repurchase of 15 million shares. To date, almost 14.4 million shares have been repurchased in total at an aggregate cost of $163.5 million, including commissions. EE may continue making purchases of its stock at open market prices and may engage in private transactions, where appropriate.

EE has repurchased or retired $550.5 million of first mortgage bonds with internally generated cash since inception of its deleveraging program in 1996. No first mortgage bonds were repurchased during the second quarter of 2003. Common stock equity as a percentage of capitalization, including current portion of long-term debt and financing obligations, was 44% as of June 30, 2003.

EBITDA

The change in earnings before interest, income taxes, depreciation and amortization, and cumulative effect of accounting change (“EBITDA”) for the three and six months ended June 30, 2003, compared to the same periods in 2002, are as follows (in thousands):

	Three Months Ended			Six Months Ended
June 30, 2002	$	56,920		$	103,357
Changes in:
Decreased wholesale sales		(7,334	)		(18,912	)
Increased local plant maintenance		(3,413	)		(7,116	)
Increased Palo Verde expenses		(3,075	)		(3,985	)
Increased insurance expenses		(1,567	)		(2,193	)
Increased outside services		(1,163	)		(1,829	)
Increased pension and benefits expenses		(1,004	)		(2,347	)
Increased economy sales and/or margins		830			7,463
Loss on extinguishment of debt		100			3,410
Other		961			(329	)
June 30, 2003	$	41,255		$	77,519

Management and some members of the investment community utilize EBITDA to measure financial performance on an ongoing basis. EBITDA is defined as net income before interest, income taxes, depreciation and amortization, and cumulative effect of accounting change. This non-GAAP measure should be considered in addition to, not as a substitute for or superior to, net income, consolidated statements of cash flows, or other measures of financial performance prepared in accordance with GAAP.

Conference Call

A conference call to discuss second quarter 2003 earnings and earnings guidance is scheduled for 4 p.m. Eastern Time July 28, 2003. The dial-in number is 877-915-2768 with a passcode of 2003. A replay will run through August 11, 2003. The dial-in number is 800-337-4108, and a passcode is not required for the replay.

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

The conference call will be webcast live on EE’s website found at http://www.epelectric.com and http://www.streetevents.com. A replay of the webcast will be available shortly after the call.

Safe Harbor

This news release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This information may involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, increased prices for fuel and purchased power, the costs associated with unexpected local plant maintenance, the replacement of Palo Verde steam generators, the costs of unscheduled outages, the expenses associated with regulatory proceedings and other factors detailed by EE in its public filings with the Securities and Exchange Commission.

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

El Paso Electric Company’s consolidated results of operations for the three months ended June 30, 2003 and 2002, and consolidated pro forma results of operations for the three months ended June 30, 2002, which reflect the application of SFAS No. 143 on a retroactive basis are summarized as follows (In thousands except for share data):

	Three Months Ended June 30,
	2003			2002			Pro forma 2002
Electric utility operating revenues, net of energy expenses	$	110,557		$	114,786		$	114,786
Energy services operating income (loss)		(98	)		(328	)		(328	)
Other electric utility operating expenses		91,164			79,010			79,189
Other income (deductions)		225			(971	)		(971	)
Interest charges		11,536			14,344			12,280
Income tax expense		2,989			7,815			8,545
Net income	$	4,995		$	12,318		$	13,473
Basic earnings per share	$	0.10		$	0.25		$	0.27
Weighted average number of common shares outstanding		48,659,155			50,092,213			50,092,213
Diluted earnings per share	$	0.10		$	0.24		$	0.27
Weighted average number of common shares and common share equivalents outstanding		49,037,673			50,652,666			50,652,666
	Three Months Ended June 30,
	2003			2002			Pro forma 2002
Reconciliation of EBITDA to Net Income:
EBITDA	$	41,255		$	56,920		$	55,827
Less:
Depreciation and amortization		21,735			22,443			21,529
Net interest expense		11,536			14,344			12,280
Income taxes		2,989			7,815			8,545
Net Income	$	4,995		$	12,318		$	13,473

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El Paso Electric Company’s consolidated results of operations for the six months ended June 30, 2003 and 2002, and consolidated pro forma results of operations for the six months ended June 30, 2002, which reflect the application of SFAS No. 143 on a retroactive basis are summarized as follows (In thousands except for share data):

	Six Months Ended June 30,
	2003			2002			Pro forma 2002
Electric utility operating revenues, net of energy expenses	$	212,760		$	219,901		$	219,901
Energy services operating income (loss)		(109	)		(457	)		(457	)
Other electric utility operating expenses		177,822			156,929			157,286
Other income (deductions)		(407	)		(4,167	)		(4,167	)
Interest charges		23,415			29,302			25,174
Income tax expense		3,896			10,877			12,337
Income before cumulative effect		7,111			18,169			20,480
Cumulative effect of accounting change, net (1)		39,635			—			—
Net income	$	46,746		$	18,169		$	20,480
Basic earnings per share:
Income before cumulative effect	$	0.15		$	0.36		$	0.41
Cumulative effect of accounting change, net		0.80			—			—
Net income	$	0.95		$	0.36		$	0.41
Weighted average number of common shares outstanding		48,981,211			50,044,473			50,044,473
Diluted earnings per share:
Income before cumulative effect	$	0.15		$	0.36		$	0.40
Cumulative effect of accounting change, net		0.80			—			—
Net income	$	0.95		$	0.36		$	0.40
Weighted average number of common shares and common share equivalents outstanding		49,327,186			50,642,442			50,642,442
	Six Months Ended June 30,
	2003			2002			Pro forma 2002
Reconciliation of EBITDA to Net Income:
EBITDA	$	77,519		$	103,357		$	101,172
Less:
Depreciation and amortization		43,097			45,009			43,181
Net interest expense		23,415			29,302			25,174
Income taxes		3,896			10,877			12,337
Add:
Cumulative effect of accounting change, net (1)		39,635			—			—
Net Income	$	46,746		$	18,169		$	20,480

(1) Net of income tax expense of approximately $25.0 million.

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El Paso Electric Company’s consolidated results of operations for the twelve months ended June 30, 2003 and 2002, are summarized as follows (In thousands except for share data):

	Twelve Months Ended June 30,
	2003			2002
Electric utility operating revenues, net of energy expenses	$	448,147		$	462,679
Energy services operating income (loss)		(3,347	)		(84	)
FERC settlements		15,500			—
Other electric utility operating expenses		346,379			316,249
Other income (deductions)		(2,835	)		(8,014	)
Interest charges		52,467			61,096
Income tax expense		9,710			26,111
Income before cumulative effect		17,909			51,125
Cumulative effect of accounting change, net (1)		39,635			—
Net income	$	57,544		$	51,125
Basic earnings per share:
Income before cumulative effect	$	0.36		$	1.02
Cumulative effect of accounting change, net		0.81			—
Net income	$	1.17		$	1.02
Weighted average number of common shares outstanding		49,335,156			50,320,969
Diluted earnings per share:
Income before cumulative effect	$	0.36		$	1.00
Cumulative effect of accounting change, net		0.80			—
Net income	$	1.16		$	1.00
Weighted average number of common shares and common share equivalents outstanding		49,727,209			51,032,717
	Twelve Months Ended June 30,
	2003			2002
Reconciliation of EBITDA to Net Income:
EBITDA	$	167,756		$	228,404
Less:
Depreciation and amortization		87,670			90,072
Net interest expense		52,467			61,096
Income taxes		9,710			26,111
Add:
Cumulative effect of accounting change, net (1)		39,635			—
Net Income	$	57,544		$	51,125

(1) Net of income tax expense of approximately $25.0 million.

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El Paso Electric Company’s pro forma consolidated results of operations which reflects the application of SFAS No 143 on a retroactive basis for the twelve months ended June 30, 2003 and 2002, are summarized as follows (In thousands except for share data):

	Twelve Months Ended June 30,
	Pro forma 2003			Pro forma 2002
Electric utility operating revenues, net of energy expenses	$	448,147		$	462,679
Energy services operating income (loss)		(3,347	)		(84	)
FERC settlements		15,500			—
Other electric utility operating expenses		346,736			316,809
Other income (deductions)		(2,835	)		(8,014	)
Interest charges		48,339			53,123
Income tax expense		11,169			28,980
Net income	$	20,221		$	55,669
Basic earnings per share	$	0.41		$	1.11
Weighted average number of common shares outstanding		49,335,156			50,320,969
Diluted earnings per share	$	0.41		$	1.09
Weighted average number of common shares and common share equivalents outstanding		49,727,209			51,032,717
	Twelve Months Ended June 30,
	Pro forma 2003			Pro forma 2002
Reconciliation of EBITDA to Net Income:
EBITDA	$	165,571		$	224,224
Less:
Depreciation and amortization		85,842			86,452
Net interest expense		48,339			53,123
Income taxes		11,169			28,980
Net Income	$	20,221		$	55,669

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Three Months Ended June 30, 2003 and 2002 (In thousands):

	2003		2002			Increase (Decrease)
Electric kWh sales:
Retail:
Residential		447,248		437,998		2.1	%
Commercial and industrial, small		535,141		555,079		(3.6	%)
Commercial and industrial, large		301,785		307,784		(1.9	%)
Sales to public authorities		315,943		320,344		(1.4	%)
Wholesale:
Sales for resale		29,313		257,428		(88.6	%) (1)
Economy sales		417,896		499,053		(16.3	%) (2)
Total		2,047,326		2,377,686		(13.9	%)
Electric utility operating revenues:
Base revenues:
Retail:
Residential	$	40,437	$	39,366		2.7	%
Commercial and industrial, small		42,418		43,124		(1.6	%)
Commercial and industrial, large		11,023		11,184		(1.4	%)
Sales to public authorities		19,174		18,563		3.3	%
Wholesale:
Sales for resale		1,557		8,703		(82.1	%) (1)
Total base revenues		114,609		120,940		(5.2	%)
Fuel revenues		30,470		44,119		(30.9	%) (3)
Economy sales		15,639		13,209		18.4	%  (2)
Other (4)		1,595		1,649		(3.3	%)
Total electric utility operating revenues	$	162,313	$	179,917		(9.8	%)
Capital Expenditures	$	19,968	$	16,614
Cash Interest Payments	$	12,399	$	12,552
Depreciation and Amortization	$	21,735	$	22,443	(5)
EBITDA	$	41,255	$	56,920	(6)

(1) Primarily due to the expiration of wholesale power contracts with IID on April 30, 2002, and TNP on December 31, 2002.

(2) Primarily due to decreased available power as a result of maintenance at local plants and Palo Verde. The economic impact of this decrease was offset with higher market prices compared to the same period last year.

(3) Primarily due to decreased energy expenses passed through to Texas customers and the expiration of the wholesale contracts with IID and TNP.

(4) Represents revenues with no related kWh sales.

(5) Pro forma depreciation and amortization would be $21,529 assuming SFAS No. 143 had been applied on a retroactive basis.

(6) Pro forma EBITDA would be $55,827 assuming SFAS No. 143 had been applied on a retroactive basis.

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Six Months Ended June 30, 2003 and 2002 (In thousands):

	2003		2002			Increase (Decrease)
Electric kWh sales:
Retail:
Residential		878,450		870,655		0.9	%
Commercial and industrial, small		972,704		986,208		(1.4	%)
Commercial and industrial, large		566,526		569,776		(0.6	%)
Sales to public authorities		573,448		581,753		(1.4	%)
Wholesale:
Sales for resale		39,206		605,913		(93.5	%) (1)
Economy sales		1,033,584		612,219		68.8	%  (2)
Total		4,063,918		4,226,524		(3.8	%)
Electric utility operating revenues:
Base revenues:
Retail:
Residential	$	77,819	$	77,169		0.8	%
Commercial and industrial, small		78,123		78,221		(0.1	%)
Commercial and industrial, large		20,910		21,025		(0.5	%)
Sales to public authorities		35,063		34,288		2.3	%
Wholesale:
Sales for resale		1,947		20,672		(90.6	%) (1)
Total base revenues		213,862		231,375		(7.6	%)
Fuel revenues		51,967		76,595		(32.2	%) (3)
Economy sales		40,670		15,982		154.5	%  (2)
Other (4)		3,144		3,572		(12.0	%)
Total electric utility operating revenues	$	309,643	$	327,524		(5.5	%)
Capital Expenditures	$	32,735	$	32,316
Cash Interest Payments	$	26,659	$	28,979
Depreciation and Amortization	$	43,097	$	45,009	(5)
EBITDA	$	77,519	$	103,357	(6)

(1) Primarily due to the expiration of wholesale power contracts with IID on April 30, 2002, and TNP on December 31, 2002.

(2) Primarily due to increased available power as a result of the expiration of the wholesale contracts mentioned above and a more robust market.

(3) Primarily due to the expiration of the wholesale contracts with IID and TNP and decreased energy expenses passed through to Texas customers.

(4) Represents revenues with no related kWh sales.

(5) Pro forma depreciation and amortization would be $43,181 assuming SFAS No. 143 had been applied on a retroactive basis.

(6) Pro forma EBITDA would be $101,172 assuming SFAS No. 143 had been applied on a retroactive basis.

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Twelve Months Ended June 30, 2003 and 2002 (In thousands):

	2003		2002		Increase (Decrease)
Electric kWh sales:
Retail:
Residential		1,878,726		1,825,802	2.9	%
Commercial and industrial, small		2,063,254		2,070,258	(0.3	%)
Commercial and industrial, large		1,158,565		1,164,778	(0.5	%)
Sales to public authorities		1,203,875		1,201,365	0.2	%
Wholesale:
Sales for resale		419,427		1,360,374	(69.2	%) (1)
Economy sales		1,904,830		913,281	108.6	%  (2)
Total		8,628,677		8,535,858	1.1	%
Electric utility operating revenues:
Base revenues:
Retail:
Residential	$	166,970	$	162,211	2.9	%
Commercial and industrial, small		163,456		162,979	0.3	%
Commercial and industrial, large		43,304		43,540	(0.5	%)
Sales to public authorities		71,577		70,735	1.2	%
Wholesale:
Sales for resale		13,501		50,164	(73.1	%) (1)
Total base revenues		458,808		489,629	(6.3	%)
Fuel revenues		134,022		156,354	(14.3	%) (3)
Economy sales		68,343		33,704	102.8	%  (2)
Other (4)		6,472		7,844	(17.5	%)
Total electric utility operating revenues	$	667,645	$	687,531	(2.9	%)
Capital Expenditures	$	65,484	$	67,128
Cash Interest Payments	$	53,465	$	59,943
Depreciation and Amortization (5)	$	87,670	$	90,072
EBITDA (6)	$	167,756	$	228,404

(1) Primarily due to the expiration of wholesale power contracts with IID on April 30, 2002, and TNP on December 31, 2002.

(2) Primarily due to increased available power as a result of the expiration of the wholesale contracts mentioned above and a more robust market.

(3) Primarily due to the expiration of the wholesale contracts with IID and TNP and decreased energy expenses passed through to Texas customers.

(4) Represents revenues with no related kWh sales.

(5) Pro forma depreciation and amortization would be $85,842 and $86,452 in 2003 and 2002, respectively, assuming SFAS No. 143 had been applied on a retroactive basis.

(6) Pro forma EBITDA would be $165,571 and $224,224 in 2003 and 2002, respectively, assuming SFAS No. 143 had been applied on a retroactive basis.

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At June 30, 2003 and 2002 (In thousands):

	2003		2002
Cash and Temporary Investments	$	32,715	$	31,818
Common Stock Equity	$	490,445	$	462,594
Long-term Debt, Net of Current Portion		588,598		588,711
Financing Obligations, Net of Current Portion		23,116		27,207
Total Capitalization	$	1,102,159	$	1,078,512
Current Portion of Long-Term Debt and Financing Obligations	$	21,872	$	60,587
Book Value Per Common Share	$	10.18	$	9.22
Number of retail customers		320		313

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