Exhibit 99.01

El Paso Electric

NEWS RELEASE

For Immediate Release	Contact:	Investor
Date: May 1, 2007	Media	Relations:
	Teresa Souza	Steve Busser
	915/543-5823	915/543-5983
		Rachelle Williams
		915/543-2257

El Paso Electric Announces First Quarter Financial Results

Overview

For the first quarter 2007, EE reported net income of $15.1 million, or $0.33 basic and diluted earnings per share, respectively. In the first quarter of 2006, EE had net income of $9.3 million, or $0.19 basic and diluted earnings per share.

“We had a very good first quarter in 2007 resulting in a 63% increase in earnings compared to the first quarter of 2006,” said Gary Hedrick, President and CEO. “We were pleased that the increase in earnings was the result of increased revenues from both retail sales and off-system sales and a reduction in costs of maintaining our gas-fired generating plants. Retail sales increased over 6% as a result of customer growth and colder winter weather in 2007 compared to 2006.”

Earnings Summary

The table and explanations below present the major factors affecting 2007 net income relative to 2006.

	Pre-tax Effect			After-tax Net Income			Basic EPS
March 31, 2006				$	9,304		$	0.19
Changes in:
Retail base revenue	$	5,854			3,630			0.08
Fossil fuel plant O&M		2,157			1,338			0.03
Off-system sales retained margins		2,109			1,308			0.03
Capitalized interest and AFUDC		1,309			812			0.02
New Mexico capacity cost adjustment		(2,079	)		(1,288	)		(0.03	)
Palo Verde O&M		(1,049	)		(650	)		(0.01	)
Other					665			0.02
March 31, 2007				$	15,119		$	0.33

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

First Quarter

Earnings for the quarter ended March 31, 2007 when compared to the same period last year were positively affected by:

• Higher retail base revenues in 2007 due to a 6.4% increase in retail kWh sales. KWh sales increased due to a 2.5% increase in the average number of customers served and colder weather conditions in the winter of 2007 compared to the winter of 2006.

• Decreased O&M costs at our gas-fired generating plants due to timing of planned maintenance.

• Increased off-system sales retained margins in 2007 due to increased MWh sales partially offset by lower margins per MWh.

• Increased capitalized interest and AFUDC (allowance for funds used during construction) in 2007 due to the re-application of SFAS No. 71 to our Texas jurisdiction at December 31, 2006 and increased construction work in progress subject to AFUDC in 2007.

Earnings for the quarter ended March 31, 2007 when compared to the same period last year were negatively affected by:

• A fuel revenue adjustment recorded in 2006 based on a final order of the New Mexico Public Regulation Commission finding that the Company could recover purchased power capacity costs through its New Mexico fuel adjustment clause with no comparable adjustment in the current period.

• Increased Palo Verde non-fuel operations and maintenance expenses in 2007 due to increased operating costs partially offset by decreased maintenance costs at Unit 1 and Unit 3.

Key Earnings Drivers

Our earnings are largely influenced by base revenues from retail electric customers, operations at Palo Verde, and off-systems sales margins.

Retail Non-fuel Base Revenues

Retail non-fuel base revenues increased by $5.9 million, pretax or 6.1% in the first quarter of 2007 compared to the same period in 2006 as revenues from all customer classes increased. Residential base revenues increased by $4.3 million or 11.5% in the first quarter of 2007 compared to the same period in 2006 as a result of a 13.0% increase in kWh sales. The increase in residential kWh sales was due to colder winter weather in 2007 versus the winter weather experienced in the first quarter of 2006 and a 2.5% increase in the average number of residential customers served. Heating degree days in the first quarter of 2007 were 25% above the first quarter of 2006 and 5% above the 10-year average.

Non-fuel base revenues from small commercial and industrial customers increased by $0.8 million or 2.2% in 2007 due to a 2.8% increase in the average number of customers served. KWh sold to small commercial and industrial customers increased 2.2% for the first quarter of 2007 compared to the same period in 2006. Large commercial and industrial revenues increased 3.3% and other public authority revenues increased 3.5% in 2007 due to a 5% and 4% increase in kWh sales, respectively.

Palo Verde Operations

We own approximately 622 MW (undivided interest) of generating capacity in the three generating units at the Palo Verde nuclear power station. The operation of Palo Verde not only affects our ability to make off-system sales, but also impacts fuel costs to native load customers and represents a significant portion of our non-fuel operating expenses. Palo Verde operated at a capacity factor of 93.9% in the first quarter of 2007 compared to a capacity factor of 70.6% in the first quarter of 2006. Palo Verde Unit 1 operated at significantly reduced power levels from December 25, 2005 until March 18, 2006 and did not operate from March 18, 2006 until

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

early July 2006 while repairs and modifications were made to one of its shutdown cooling lines. Palo Verde Unit 1 reached full capacity on July 16, 2006.

Palo Verde operation and maintenance expenses increased $1.0 million in the first quarter of 2007 compared to the first quarter of 2006 reflecting increased operating costs in response to an enhanced inspection regimen by the Nuclear Regulatory Commission (NRC). In October 2006, the NRC conducted an inspection of the Palo Verde emergency diesel generators after a Palo Verde Unit 3 generator did not activate during routine inspections in July and September 2006. On February 22, 2007, the NRC issued a “white” finding (low to moderate safety significance) for this matter. In connection with its finding, the NRC stated that it would use the NRC action matrix to determine the most appropriate response, including any increase in NRC oversight or identification of actions that Arizona Public Service Company (APS), the plant operator, needs to take in response to this performance deficiency, and will notify APS of its determination at a later date. Under the NRC’s action matrix, this finding, coupled with a previous NRC “yellow” finding (substantial safety significance) relating to a 2004 matter involving Palo Verde’s safety injection systems, placed Palo Verde in the “multiple/repetitive degraded cornerstone” column of the NRC’s action matrix which results in an enhanced NRC inspection regimen.

Off-system Sales

We continue to make off-system sales in the wholesale power markets when competitively priced excess power is available from our generating plants and purchased power contracts. The table below shows MWh of off-system sales and the pretax margins realized and retained by us from sales for the quarter ended March 31, 2007 and 2006:

	2007		2006
MWh sales		675,011		387,878
Total margins (in thousands)	$	10,341	$	7,726
Retained margins (in thousands)	$	8,359	$	6,250

For the quarter ended March 31, 2007, retained margins from off-system sales increased approximately $2.1 million, pretax, over the corresponding period in 2006 primarily due to the increase in off-system kWh sales of 74.0% partially offset by a decrease in the average margin per MWh. We had increased energy available for sale in the first quarter of 2007 compared to the same period in 2006 due to the increase in energy generated at Palo Verde. The table below shows on a per MWh basis, revenues, costs and margins from off-system sales for the first quarter of 2007 and 2006:

Quarter Ended	Average Revenue Per MWh		Average Cost of Energy Per MWh		Average Margin Per MWh
March 31, 2006	$	68.99	$	49.07	$	19.92
March 31, 2007	$	54.24	$	38.92	$	15.32

Capital and Liquidity

At March 31, 2007, common stock equity comprised 48% of our permanent capitalization (common stock, long-term debt and the current portion of long-term debt and financing obligations).

Cash flows from operations for the three months ended March 31, 2007 increased to $62 million from $48 million in the corresponding period in 2006. Cash flow in both 2007 and 2006 has been positively impacted by the recovery of deferred fuel revenues through fuel surcharges. In Texas, fuel costs are recovered through a fixed fuel factor which may be adjusted twice a year. We record deferred fuel revenues for the under-recovery

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

of fuel costs until they can be recovered from Texas customers. In October 2005, we began recovering through a fuel surcharge $53.6 million of fuel under-recoveries over a 24-month period. In February 2006, we implemented an additional fuel surcharge to recover $34 million of fuel under-recoveries, including interest through the surcharge period, over a twelve-month period. In the three month periods ended March 31, 2007 and March 31, 2006, we collected $8.9 million and $10.5 million of deferred fuel revenues in Texas through fuel surcharges. In the same three month periods, we also over-collected current fuel costs by $7.6 million and $2.6 million, respectively. At March 31, 2007, we had an unrecovered fuel balance of $16.2 million. The recovery of these fuel costs provided significant cash flow in the first quarters of both 2007 and 2006.

The increase in cash flows from operations has allowed us to internally finance additional investments in electric utility plant, to repurchase common stock and to increase our balance of cash and temporary investments by $18.9 million in 2007. We had a balance of $59.0 million of cash and temporary cash investments as of March 31, 2007. During the first quarter of 2007, EE repurchased 587,600 shares of common stock in the open market at an aggregate cost of $14.0 million. As of March 31, 2007, approximately 757,000 million shares remain available for repurchase under the currently authorized program.

Conference Call

A conference call to discuss first quarter 2007 earnings is scheduled for 4 p.m. Eastern Time, May 1, 2007. The dial-in number is 800-369-1120 with a passcode of 2007. The conference leader will be Scott Wilson, Executive Vice President, Chief Financial and Chief Administrative Officer of EE. A replay will run through May 16, 2007. The dial-in number is 888-566-0056 and a passcode is not required for the replay. The conference call and presentation slides will be webcast live on EE’s website found at http://www.epelectric.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: (i) 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; (ii) determinations by regulators that may adversely affect EE’s ability to recover previously incurred fuel costs in rates; (iii) fluctuations in off-system sales margins due to uncertainty in the economy power market and the availability of generating units; (iv) unanticipated increased costs associated with scheduled and unscheduled outages; (v) the cost of replacing steam generators for Palo Verde Unit 3 and other costs at Palo Verde, including additional costs relating to an enhanced NRC oversight and inspection regimen; (vi) the costs of legal defense and possible judgments which may accrue as the result of ongoing litigation or any regulatory proceeding; (vii) deregulation of the electric utility industry; (viii) reduced wholesale margins; (ix) possible increased costs of compliance with environmental or other laws, regulations and policies; (x) possible income tax and interest payments as a result of audit adjustments proposed by the IRS; (xi) possible warranty obligations attributable to MiraSol Energy Services, a subsidiary of EE; (xii) a possible reduction in the reliability of our service and possible added expense in the event of a strike by, or lock out of, our union employees; and (xiii) other factors detailed by EE in its public filings with the Securities and Exchange Commission. EE’s filings are available from the Securities and Exchange Commission 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. EE does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of EE except as required by law.

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

El Paso Electric Company and Subsidiary

Consolidated Statements of Operations

Quarter Ended March 31, 2007 and 2006

(In thousands except for per share data)

(Unaudited)

	2007		2006		Variance
Operating revenues, net of energy expenses:
Base revenues	$	102,364	$	96,481	$	5,883	(a)
Off-system sales margins, net of sharing		8,359		6,250		2,109
Other		3,571		6,586		(3,015	) (b)
Operating Revenues Net of Energy Expenses		114,294		109,317		4,977
Other operating expenses:
Other operations and maintenance		37,530		40,503		(2,973	)
Palo Verde operations and maintenance		17,738		16,689		1,049
Taxes other than income taxes		12,066		12,560		(494	)
Other income		651		131		520
Earnings Before Interest, Taxes, Depreciation and Amortization		47,611		39,696		7,915	(c)
Depreciation and amortization		17,051		17,218		(167	)
Interest on long-term debt		8,946		8,678		268
AFUDC		1,607		248		1,359
Capitalized interest and other		496		784		(288	)
Income Before Income Taxes		23,717		14,832		8,885
Income tax expense		8,598		5,528		3,070
Net Income	$	15,119	$	9,304	$	5,815
Basic Earnings per Share	$	0.33	$	0.19	$	0.14
Diluted Earnings per Share	$	0.33	$	0.19	$	0.14
Weighted average number of shares outstanding		45,937		48,132		(2,195	)
Weighted average number of shares and dilutive potential shares outstanding		46,374		48,656		(2,282	)

(a) Base revenues exclude fuel recovered through New Mexico base rates of $7.0 million and $6.6 million, respectively.

(b) Other revenues for 2006 includes a $2.1 million adjustment to increase deferred fuel revenues, reflecting a New Mexico Public Regulation Commission decision which includes purchased power capacity charges in the fuel adjustment clause.

(c) EBITDA is a non-GAAP financial measure and is not a substitute for net income or other measures of financial performance in accordance with GAAP.

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El Paso Electric Company and Subsidiary

Cash Flow Summary

Three Months Ended March 31, 2007 and 2006

(In thousands and Unaudited)

	2007			2006
Cash flows from operating activities:
Net income	$	15,119		$	9,304
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization of electric plant in service		17,051			17,218
Deferred income taxes, net		(11,514	)		5,428
Other		6,791			6,217
Change in working capital items:
Net recovery (deferral) of fuel revenues		16,332			12,964
Other		17,960			(3,103	)
Net cash provided by operating activities		61,739			48,028
Cash flows from investing activities:
Cash additions to utility property, plant and equipment		(25,273	)		(23,240	)
Cash additions to nuclear fuel		(9,373	)		(2,129	)
Decommissioning trust funds		(2,708	)		(2,240	)
Other		(861	)		(223	)
Net cash used for investing activities		(38,215	)		(27,832	)
Cash flows from financing activities:
Proceeds from exercise of stock options		3,408			556
Repurchase of treasury stock		(14,033	)		—
Nuclear fuel financing obligation		5,715			(911	)
Other		254			(219	)
Net cash used for financing activities		(4,656	)		(574	)
Net increase in cash and temporary investments		18,868			19,622
Cash and temporary investments at beginning of period		40,101			7,956
Cash and temporary investments at end of period	$	58,969		$	27,578
Cash Interest Payments	$	2,929		$	2,639

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El Paso Electric Company and Subsidiary

Quarter Ended March 31, 2007 and 2006

Sales and Revenues Statistics

	2007			2006			Increase (Decrease)
MWh sales:
Retail:
Residential		509,679			451,163		13.0	%
Commercial and industrial, small		459,396			449,607		2.2	%
Commercial and industrial, large		274,422			261,464		5.0	%
Public authorities		293,854			282,226		4.1	%
Total retail sales		1,537,351			1,444,460		6.4	%
Wholesale:
Sales for resale		9,402			9,237		1.8	%
Off-system sales		675,011			387,878		74.0	%
Total wholesale sales		684,413			397,115		72.3	%
Total MWh sales		2,221,764			1,841,575		20.6	%
Operating revenues (in thousands):
Non-fuel base revenues:
Retail:
Residential	$	41,438		$	37,165		11.5	%
Commercial and industrial, small		35,642			34,888		2.2	%
Commercial and industrial, large		9,348			9,045		3.3	%
Public authorities		15,561			15,036		3.5	%
Total retail non-fuel base revenues		101,989			96,134		6.1	%
Wholesale:
Sales for resale		375			347		8.1	%
Total non-fuel base revenues		102,364			96,481		6.1	%
Fuel revenues:
Recovered from customers during the period (a)		46,337			50,715		(8.6	)%
Under (over) collection of fuel		(7,559	)		(2,588	)	—
New Mexico fuel in base rates		6,981			6,617		5.5	%
Total fuel revenues		45,759			54,744		(16.4	)%
Off-system sales		36,616			26,759		36.8	%
Other		3,678			4,445		(17.3	)%
Total operating revenues	$	188,417		$	182,429		3.3	%
Off-system sales (in thousands):
Gross margins	$	10,341		$	7,726		33.8	%
Retained margins		8,359			6,250		33.7	%
Average number of retail customers:
Residential		313,430			305,704		2.5	%
Commercial and industrial, small		33,108			32,220		2.8	%
Commercial and industrial, large		58			58		0.0	%
Public authorities		4,808			4,803		0.1	%
Total		351,404			342,785		2.5	%
Number of retail customers (end of period):
Residential		314,096			306,574		2.5	%
Commercial and industrial, small		33,224			32,325		2.8	%
Commercial and industrial, large		57			58		(1.7	)%
Public authorities		4,818			4,809		0.2	%
Total		352,195			343,766		2.5	%
Weather statistics							10 Yr Average
Heating degree days		1,288			1,024		1,220
Cooling degree days		33			13		13

(a) Excludes $8.9 million and $10.5 million, respectively, of prior periods deferred fuel revenues recovered

through Texas fuel surcharges.

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El Paso Electric Company and Subsidiary

Quarter Ended March 31, 2007 and 2006

Generation and Purchased Power Statistics

	2007		2006		Increase (Decrease)
Generation and purchased power (MWh):
Palo Verde	1,248,156		934,168		33.6	%
Four Corners	179,539		207,511		(13.5	)%
Gas plants	450,393		446,360		0.9	%
Total generation	1,878,088		1,588,039		18.3	%
Purchased power	487,180		410,470		18.7	%
Total available energy	2,365,268		1,998,509		18.4	%
Line losses and Company use	143,504		156,934		(8.6	)%
Total MWh sold	2,221,764		1,841,575		20.6	%
Palo Verde capacity factor	93.9	%	70.6	%
Four Corners capacity factor	79.1	%	91.2	%

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El Paso Electric Company and Subsidiary

Financial Statistics

At March 31, 2007 and 2006

(In thousands, except number of shares, book value per share, and ratios)

Balance Sheet	2007			2006
Cash and Temporary Investments	$	58,969		$	27,578
Common Stock Equity (a)	$	585,322		$	567,375
Long-Term Debt, Net of Current Portion		590,872			590,844
Financing Obligations, Net of Current Portion		32,077			19,330
Total Capitalization	$	1,208,271		$	1,177,549
Current Portion of Long-Term Debt and
Financing Obligations	$	19,877		$	21,665
Number of Shares—End of Period		45,737,359			48,303,868
Book Value Per Common Share	$	12.80		$	11.75
Common Equity Ratio		47.66	%		47.31	%
Debt Ratio		52.34	%		52.69	%

(a) Includes an adjustment to increase Retained Earnings in 2007 by $1.9 million related to the implementation of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109.”

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