L~w OFFICESO~

RANDALL W. CHILDIiESS, P.C.300 GALISTEO STREET

SUITE ~0~

S&NT& FE, NEw MEXICO 87~01(505) 982-4147

(505) 982-4402

April 30, 2015

VIA HAND DELIVERY

Ms. Melanie SandovalNew Mexico Public Regulation CommissionPERA BuildingSanta Fe, NM 87501

Re: E! Paso Electric Company’s NMPRC Rule 510.4 Annual Reportand Addendum Filing for 2014 and FERC Form 1

Dear Ms. Sandoval:

Enclosed please find E1 Paso Electric Company’s 2013 NMPRC Rule 510.4 (NMAC17.3.510.12) Annual Report and Addendum. This report covers the period from January 1, 2014through December 31, 2014. EPE is also submitting a courtesy copy ofEPE’s FERC Form 1 for2014.

Please conform the additional copy for return. Thank you for your assistance in this matter.

Very truly yours,

l~andall W. Childress

RWC*afmEnclosurescc: Elisha Leyba-Tercero

Sandra Skogen

EL PASO ELECTRIC COMPANY

NMPRC RULE 510.12

ANNUAL REPORTING

FOR THE YEAR ENDED DECEMBER 31, 2014

’\l -’

FILED

TABLE OF CONTENTS

DESCRIPTION

NM Jurisdictional Information Form 1

SEC Form 10-K Report

Demand and Energy Forecast

NMPRC Rule 510.12(B)(1) - (3) Information

Addendum in Compliance with Rule 450.10(B)(2) and 450.11

Addendum Attachment A

Addendum Attachment B

Page 1

Page 3

Page 151

Page 154

Page 158

Page 168

Page 168

FILED

NM Jurisdictional

Information Form 1

Page I of 168

FORM I

New Mexico Jurisdictional InformationYear Ending December 31, 2014

Electric Company Name EL PASO ELECTRIC COMPANY

Address 100 N. STANTON STREET, EL PASO, TEXAS 79901

Phone Number (915) 543-4697

Person Completing the Form James Schichtl, Director-Regulatory Affairs

Customer Class Residential Other Total

Number of Customers 83,131 11,143 94,274

KWH Sales (Thousands) 651,628 989,760 1,641,388

Gross Revenues $84,967,910 $108,089,595 $193,057,505

7,839 88,823 17,411

$1,022.10 $9,700.22 $2,047.83

$85.18 $808.35 $170.65

$0.13039 $0.10921 $0.11762

Avg. Annual KWH per Customer (1)

Avg. Annual Bill per Customer (2)

Avg. Monthly Bill per Customer (3)

Avg. Gross Revenue per KWH sold (4)

Directions for the completion of (1), (2), (3), (4):

(1) Divide KWH sales by number of customers.

(2) Divide gross revenues by number of customers.

(3) Divide (2) by 12 months.

(4) Divide gross revenues by KWH sales.

NMPRC Rule 510 Effective 01/01/89Page 2 of 168

SEC Form IO-K Report

Page 3 of 168

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K(Mark One)

[] ANNUAL REPORT PURSUANT TO SECTION 13 OR l~(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2014

OR

[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

El Paso Electric Company

For the transition period from

Commission file number 001-14206

(Exact name of registrant as specified in its charter)

Texas(State or other jurisdiction

ofincerpormion or organization)(I,R.S. Employer

Identification No.)

Stanton Tower, 100 North Stanton, El Paso, Texas(Address of principal executive offices)

Registrant’s telephone number, including area code: (915) 543-5711Securities Registered Pursuant to Section 12(b) of the Act:

79901(Zip Code)

Title of each class Name of ench exchange on which registeredCommon Stock, No Par Value New York Stock Exchange

Securifles Registered Pursuant to Section 12(g) of the Act:None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES [] NO []

Indicate by check mark ffthe registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

YES [] NO []

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), ~md (2) has been subject to such filing requirements for the past 90days. YES [] NOEl

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, ff any, every Interactive Data File requffed to besubmitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant wasrequired to submit and post such files). YES [] NO []

Indicate by check mark if disclosure of delinquent tilers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best ofregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part 1II of this Form 10-K or any amendment to this Form 10-K. []

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of"large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 126-2 of the Exchange Act.

Large accelerated filer [] Accelerated filer El

Non-accelerated filer [] (Do not check if a smaller reporting company) Smaller reporting company []

~ndi~ate by check mark whether the registrant is a shell company (as de~ned in Ru~e ~2b-2 ~fthe Act). YES El NO []As of June 30, 2014, the aggregate market value of the voting stock held by non-affdiates of the registrant was $1,597,139,431 (based on the dosing price as

quoted on the New York Stock Exchange on that date).

As of January 31, 2015, there were 40,352,478 shares of the Company’s no par value common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registlant’s definitive Proxy Statement for the 2015 annual meeting of its shareholders are incorporated by reference into Part III of this report.

Page 4 of 168

Table of Contents

DEFINITIONS

The following abbreviations, acronyms or defined terms used in this report are defined below:

Abbresiations, Acronyms or Defined Terms

ANPP Participation AgreementAPSASUCompanyDOEEl PasoFASBFERCFort BlissFour ComerskVkWkWhLas CrucesMWMWhNMPRCNet dependable generating capability

NRCPalo VerdePalo Verde Participants

PNMPUCTRGECRGRTTEP

Terms

Arizona Nuclear Power Project Participation Agreement dated August 23, 1973. as amendedArizona Public Service CompanyAccounting Standards UpdatesE!~ Paso Electric CompanyUnited States Department of EnergyCity of El Paso, TexasFinancial Accounting Standards BoardFederal Energy Regulatory CommissionFort Bliss, the United States Army post next to El Paso, TexasFour Corners Generating StationKilovolt(s)Kilowatt(s)Kilowatt-hour(s)City of Las Cruces, New MexicoMegawatt(s)Megawatt-hour(s)New Mexico Public Regulation CommissionThe maximum load net of plant operating requirements which a generating plant can supply underspecified conditions for a given time interval, without exceeding approved limits of temperature andstressNuclear Regulatory CommissionPalo Verde Nuclear Generating StationThose utilities who share in power and energy entitlements, and bear certain allocated costs, withrespect to Palo Verde pursuant to the ANPP Participation AgreementPublic Service Company of New MexicoPublic Utility Commission of TexasRio Grande Electric CooperativeRio Grande Resources TrustTucson Electric Power Company

(i)

Page 6 of 168

Table of Contents

TABLE OFCONTENTS

1 BusinesslA Risk FactorsIB Unresolved StaffComments2 Properties

3 Legal Proceedings4 Mine Safety Disclosures

PART I1

1520202020

PART II5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities6 Selected Financial Data7 Management’s Discussion and Analysis of Financial Condition and Results of Operations

7A Quantitative and Qualitative Disclosures About Market Risk8 Financial Statements and Supplementary Data9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

9A Controls and Procedures

9B Other Information

2124254143100100100

PART II110 Directors, Executive Officers and Corporate Governance11 Executive Compensation12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters13 Certain Relationships and Related Transactions. and Director Independence14 Principal Accounting Fees and Services

101101

101

101

101

15 Exhibits and Financial Statement SchedulesPART IV

102

(ii)

Page 7 of 168

Table of Contents

FORWARD-LOOKING STATEMENTS

Certain matters discussed in this Annual Report on Form 10-K other than statements of historical information are "forward-looking statements."The Private Securities Litigation Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Forward-lookingstatements may include words like we "believe", "anticipate", "target", "expect", "predict", "pro forma", "estimate", "intend", "will", "is designed to","plan" and words of similar meaning. Forward-looking statements describe our future plans, objectives, expectations or goals. Such statements addressfuture events and conditions concerning and include, but are not limited to. such things as:

¯ capital expenditures,

¯ earnings,

¯ liquidity and capital resources,

¯ ratem aking/regulatory matters,

¯ litigation,¯ accounting matters,¯ possible corporate restructurings, acquisitions and dispositions.

¯ compliance with debt and other restrictive covenants,

¯ interest rates and dividends,¯ environmental matters,¯ nuclear operations, and¯ the overall economy of our service area.

These forward-looking statements involve known and unknown risks that may cause our actual results in future periods to differ materially fromthose expressed in any forward-looking statement. Factors that would cause or contribute to such differences include, but are not limited to, such things

our ability to recover our costs and earn a reasonable rate of return on our invested capital through the rates that we charge,

the ability of our operating partners to maintain plant operations and manage operation and maintenance costs at the Palo Verdeand Four Comers plants, including costs to comply with any new or expanded regulatory or environmental requirements,

reductions in output at generation plants operated by us,

unscheduled outages of generating units including outages at Palo Verde,

the size of our construction program and our ability to complete construction on budget,

potential delays in our construction schedule,

disruptions in our transmission system, and in particular the lines that deliver power from our remote generating facilities,.

electric utility deregulation or re-regulation,

regulated and competitive markets,

ongoing municipal, state and federal activities,

economic and capital market conditions,

changes in accounting requirements and other accounting matters,

changing weather trends and the impact of severe weather conditions,

rates, cost recovery mechanisms and other regulatory matters including the ability to recover fuel costs on a timely basis,

changes in environmental laws and regulations and the enforcement or interpretation thereof, including those related to air, wateror greenhouse gas emissions or other environmental matters,

(iii)

Page 8 of 168

Table of Contents

¯ changes in customers’ demand for electricity as a result of energy efficiency initiatives and emerging competing services andtechnologies,

¯ cuts in military spending or shutdowns of the federal government that reduce demand for our services from military andgovernmental customers,

¯ political, legislative, judicial and regulatory developments,

¯ the impact of lawsuits filed against us,

¯ the impact of changes in interest rates,

¯ changes in, and the assumptions used for, pension and other post-retirement and post-employment benefit liability calculations, aswell as actual and assumed investment returns on pension plan and other post-retirement plan assets,

¯ the impact of recent U.S. health care reform legislation,

¯ the impact of changing cost escalation and other assumptions on our nuclear decommissioning liability for Palo Verde, as well asactual and assumed investment returns on decommissioning trust fund assets,

¯ Texas, New Mexico and electric industry utility service reliability standards,

¯ possible physical or cyber attacks, intrusions or other catastrophic events,

¯ homeland security considerations, including those associated with the U.S./Mexico border region,¯ coal, uranium, natural gas, oil and wholesale electricity prices and availability,

¯ possible income tax and interest payments as a result of audit adjustments proposed by the IRS or state taxing authorities,

¯ loss of key personnel, our ability to recruit and retain qualified employees and our ability to successfully implement successionplanning, and

¯ other circumstances affecting anticipated operations, sales and costs.

These lists are not all-inclusive because it is not possible to predict all factors. A discussion of some of these factors is included in this documentunder the headings "Risk Factors" and "Management’s Discussion and Analysis" "-Summary of Critical Accounting Policies and Estimates" and "-Liquidity and Capital Resources." This report should be read in its entirety. No one section of this report deals with all aspects of the subject matter. Anyforward-looking statement speaks only as of the date such statement was made, and we are not obligated to update any forward-looking statement toreflect events or circumstances after the date on which such statement was made, except as required by applicable laws or regulations.

(iv)

Page 9 of 168

Table of Contents

PART I

Item 1. Business

General

El Paso Elez~fic Company (the "Company") is a public utility engaged in the generation, transmission and distribution of electricity in an area otapproximately 10,000 square miles in west Texas and southern New Mexico. The Company also serves a full requirements wholesale customer inTexas. The Company owns or has significant ownership interests in several electrical generating facilities providing it with a net depend, able generatingcapability of approximately 1,879 MW. For the year ended December 31, 2014, the Company’s energy sources consisted of approximately 47% nuclearfuel, 35% natural gas, 5% coal, 13% purchased power and less than 1% generated by Company-owned solar photovoltaic panels and wind turbines. TheCompany’s current generation portfolio exhibits lower carbon intensity than most other electric utilities in the southwestern United States and theCompany continues to expand its portfolio of renewable energy sources, particularly solar photovottaic generation. As of December 31, 2014, theCompany has power purchase agreements for 107 MW from solar photovoltaic generation facilities. (See "Energy Sources- Purchased Power").

The Company serves approximately 399,000 residential, commercial, industrial, public authority and wholesale customers. The Companydistributes electricity to retail customers principally in El Paso, Texas and Las Cruces, New Mexico (representing approximately 62% and 12%,respectively, of the Company’s retail revenues for the year ended December 31, 2014). In addition, the Company’s wholesale sales include sales forresale to other electric utilities and power marketers. Principal industrial, public authority and other large retail customers of the Company includeUnited States military installations, including Fort Bliss in Texas and White Sands Missile Range and Holloman Air Force Base in New Mexico, an oilrefinery, several medical centers, two large universities and a steel production facility.

The Company’s principal offices are located at the Stanton Tower, 100 North Stanton, El Paso, Texas 79901 (telephone 915-543-5711). TheCompany was incorporated in Texas in 1901. As of January 31, 2015, the Company had approximately 1,000 employees, 38% of whom are covered bya collective bargaining agreement.

The Company makes available free of charge through its website, www.epclectdc.com, its annual report on Form 10-K, quarterly reports on Form10-Q, current reports on Form 8-K, proxy statement, and all amendments to those reports as soon as reasonably practicable after such material iselectronically filed with or furnished to the Securities and Exchange Commission ("SEC"). In addition, copies of the annual report will be madeavailable free of charge upon written request. The SEC also maintains an internet site that contains reports, proxy and information statements and otherinformation for issuers that file electronically with the SEC. The address of that site is www.sec.gov. The information on the Company’s website is notincorporated into this document by reference.

Facilities

As of December 31, 2014, the Company’s net dependable generating capability of 1,879 MW consists of the following:

Station

Palo VerdeNewman Power StationRio Grande Power StationFour Comers (Units 4 and 5)Copper Power Station

Primary FuelType

Natural Gas

Company’s Share ofNet

DependableGenerating CompanyCapability * Ownership

(MW) Interest

CoalNamml Gas

752 100%

Location

108 7%

El Paso, Texas

Renewables Wind/Solar 1 100%Total

Fruitland, New Mexi

HudspettVEl Paso Countie.,Dona Aria County, New 1~

* During summer peak period, the Company owned renewables include a wind ranch with a total capacity of 1.32 MW and six solarphotovoltaic facilities with a total capacity of 0.2 MW.

Page 10 of 168

Table of Contents

Palo Verde Station

The Company owns aa interest, along with six other utilities, in the three nuclear generating units and common facilities ("Common Facilities") atPalo Verde. Arizona Public Service Company ("APS") serves as operating agent for Palo Verde, and under the ANPP Participation Agreement, theCompany has limited ability to influence operations and costs at Palo Verde.

Palo Verde Operating Licenses. Operation of each of the three Palo Verde Units requires an operating license from the NRC. TheNRC issued full power operating licenses for Unit 1 in June 1985, Unit 2 in April 1986 and Unit 3 in November 1987,and issued renewed operating licenses for each of the three units in April 2011, which extended the licenses for Units 1,2 and 3 to June 2045, April 2046 and November 2047, respectively.

Decommissioning. Pursuant to the ANPP Participation Agreement and federal law, the Company must fund its share of the estimatedcosts to decommission Palo Verde Units 1, 2 and 3, including the Common Facilities, through the term of their respectiveoperating licenses. In 2013, the Palo Verde Participants approved the 2013 Palo Verde decommissioning study (the"2013 Study"), which estimated that the Company must fund approximately $380.7 million (stated in 2013 dollars) tocover its share of decommissioning costs. At December 31, 2014, the Company’s decommissioning trust fund had abalance of $234.3 million. Although the 2013 Study was based on the latest available information, there can be noassurance that decommissioning cost estimates will not increase in the future or that regulatory requirements will notchange.

Spent Fuel Storage. Pursuant to the Nuclear Waste Policy Act of 1982, as amended in 1987 (the "NWPA"), the DOE is legallyobligated to accept and dispose of all spent nuclear fuel and other high-level radioactive waste generated by alldomestic power reactors by 1998. The DOE’s obligations are reflected in a contract for Disposal of Spent NuclearFuel and/or High-Level Radioactive Waste (the "Standard Contract") with each nuclear power plant. The DOE failedto begin accepting spent nuclear fuel by 1998. On December 19, 2012, APS, acting on behalf of itself and theparticipant owners of Palo Verde, filed a second breach of contract lawsuit against the DOE. This lawsuit sought torecover damages incurred due to the DOE’s failure to accept Palo Verde’s spent nuclear fuel for the periodbeginning January 1, 2007 through June 30, 2011. On August 18, 2014, APS and the DOE entered into a settlementagreement, stipulating to a dismissal of the lawsuit and payment of $57.4 million by the DOE to the Palo Verdeowners for certain specified costs incurred by Palo Verde during the period January 1, 2007 through June 30, 2011.On October 8, 2014, the Company received approximately $9.1 million, representing its share of the award. Themajority of the award was refunded to customers through the applicable fuel adjustment clauses. On October 31,2014, APS acting on behalf of itself and the participant owners of Palo Verde, submitted to the government anadditional request for reimbursement of spent nuclear fuel storage costs for the period July 1, 2011 through June 30,2014. The total submitted claim amount was $42.5 million, of which the Company’s portion is $6.7 million. Thereimbursement is anticipated to be received in the first half of 2015, and the majority will be refunded to customersthrough the applicable fuel adjustment clauses.

DOE’s Construction Authorization Application for Yucca Mountain. The DOE had planned to meet its disposal obligations bydesigning, licensing, constructing, and operating a permanent geologic repository at Yucca Mountain, Nevada. InMarch 2010, the DOE filed a motion to dismiss with prejudice its Yucca Mountain construction authorizationapplication that was pending before the NRC. Several interested parties have intervened in the NRC proceeding, andthe proceeding has not been conclusively decided by the NRC or the courts. Additionally, a number of interestedparties have filed a variety of lawsuits in different jurisdictions around the country challenging the DOE’s authorityto withdraw the Yucca Mountain construction authorization application and NRC’s cessation of its review of theYucca Mountain construction authorization application. The cases have been consolidated into one matter at the U.S.Court of Appeals for the District of Columbia Circuit (the "D.C. Circuit"). In August 2013, the D.C. Circuit orderedthe NRC to resume its review of the application with available appropriated funds.

On October 16, 2014, the NRC issued Volume 3 of the safety evaluation report developed as part of the Yucca Mountain constructionauthorization application. This volume addresses repository safety after permanent closure, and its issuance is a key milestone in theYucca Mountain licensing process. Volume 3 contains the NRC staff’s finding that the DOE’s repository design meets therequirements that apply after the repository is permanently closed, including but not limited to the post-closure performance objectivesin NRC’s regulations.

On December 18, 2014, the NRC issued Volume 4 of the safety evaluation report developed as part of the Yucca Mountainconstruction authorization application. This volume covers administrative and programmatic requirements for the repository. Itdocuments the NRC staff’s evaluation of whether the DOE’s research and development and performance confirmation programs, aswell as other administrative controls and systems,

Page 11 of 168

Table of Contents

meet applicable NRC requirements. Volume 4 contains the NRC staff’s finding that most administrative and programmaticrequirements in NRC regulations are met, except for certain requirements relating to ownership of land and water rights.

Publication of Volumes 3 and 4 does not signal whether or when the NRC might authorize construction of the repository. TheCompany cannot predict when spent fuel shipments to the DOE will commence.

Waste Confidence. On June 8, 2012, the D.C. Circuit issued its decision on a challenge by several states and environmental groups ofthe NRC’s rulemaking regarding temporary storage and permanent disposal of high level nuclear waste and spentnuclear fuel. The petitioners had challenged the NRC’s 2010 update to the agency’s Waste Confidence Decision andtemporary storage rule ("Waste Confidence Decision").

The D.C. Circuit found that the agency’s 2010 Waste Confidence Decision update constituted a major federal action, which, consistentwith the National Environmental Policy Act ("NEPA"), requires either an environmental impact statement or a finding of nosignificant impact from the agency’s actions. The D.C. Circuit found that the NRC’s evaluation of the environmental risks from spentnuclear fuel was deficient, and therefore remanded the 2010 Waste Confidence Decision update for further action consistent withNEPA.

On September 6, 2012, the NRC Commissioners issued a directive to the NRC staff to proceed directly with development of a geneticenvironmental impact statement to support an updated Waste Confidence Decision. The NRC Commissioners also directed the NRCstaffto establish a schedule to publish a final rule and environmental impact study within 24 months of September 6, 2012.

In September 2013, the NRC issued its draft Generic Environmental Impact Statement ("GELS") to support an updated WasteConfidence Decision. On August 26, 2014, the NRC approved a final rule on the environmental effects of continued storage of spentnuclear fuel. The continued storage rule adopted the findings of the GElS regarding the environmental impacts of storing spent fuel atany reactor site after the reactor’s licensed period of operations. As a result, those generic impacts do not need to be re-analyzed in theenvironmental reviews for individual licenses. Although Palo Verde had not been involved in any licensing actions affected by theD.C. Circuit’s June 8, 2012, decision, the NRC lifted its suspension on final licensing actions on all nuclear power plant licenses andrenewals that went into effect when the D.C. Circuit issued its June 2012 decision. The August 24 final rule has been subject tocontinuing legal challenges before the NRC and the Court of Appeals.

Palo Verde has sufficient capacity at its on-site independent spent fuel storage installation ("ISFSI") to store all of the nuclear fuel thatwill be irradiated during the initial operating license period, which ends in December 2027. Additionally, Palo Verde has sufficientcapacity at its on-site ISFSI to store a portion of the fuel that will be irradiated during the period of extended operation, which ends inNovember 2047. If uncertainties regarding the United States government’s obligation to accept and store spent fuel are not favorablyresolved, APS will evaluate alternative storage solutions that may obviate the need to expand the ISFSI to accommodate all of the fuelthat will be irradiated during the period of extended operation.

NRC Oversight of the Nuclear Energy Industry in the Wake of the Earthquake and Tsunami in Japan . The NRC regulates theoperation of all commercial nuclear power reactors in the United States, including Palo Verde. The NRC periodicallyconducts inspections of nuclear facilities and monitors performance indicators to enable the agency to arrive at objectiveconclusions about a licensee’s safety performance. Following the March 11,2011 earthquake and tsunami in Japan, theNRC established a task force to conduct a systematic and methodical review of NRC processes and regulations todetermine whether the agency should make additional improvements to its regulatory system. On March 12, 2012, theNRC issued the first regulatory requirements based on the recommendations of the NRC’s Near Term Task Force. Withrespect to Palo Verde, the NRC issued two orders requiring safety enhancements regarding: (1) mitigation strategies torespond to extreme natural events resulting in the loss of power at plants; and (2) enhancement of spent fuel poolinstrumentation.

The NRC has issued a series of interim staff guidance documents regarding implementation of these requirements. Due to thedeveloping nature of these requirements, the Company cannot predict the ultimate financial or operational impacts on Palo Verde orthe Company; however, the NRC has directed nuclear power plants to implement the first tier recommendations of the NRC’s NearTerm Task Force. In response to these recommendations, Palo Verde expects to spend approximately $40 million for capitalenhancements to the plant over the next two years (the Company’s share is $6.3 million ) in addition to the approximate $80 million(the Company’s share is $12.6 million ) that has already been spent on capital enhancements as of December 31, 2014.

Page 12 of 168

Table of Contents

Liability and Insurance Matters . The Palo Verde Participants have insurance for public liability resulting from nuclear energyhazards, covered by primary liability insurance provided by commercial insurance carriers and an industry-wideretrospective assessment program. If a loss at a nuclear power plant covered by the programs exceeds the accumulatedfunds in the primary level of protection, the Company could be assessed retrospective premium adjustments on a perincident basis up to $60.4 million, with an annual payment limitation of approximately $9.0 million. The Palo VerdeParticipants also maintain $2.8 billion of "all risk" nuclear property insurance. The insurance provides coverage forproperty damage and decontamination at Palo Verde. For covered incidents involving property damage not accompaniedby a release of radioactive material, the policy’s coverage limit is $2.3 billion. In addition, the Company has securedinsurance against portions of any increased cost of generation or purchased power and business interruption resulting froma sudden and unforeseen outage at Palo Verde.

Fossil-Fueled Plants

The Newman Power Station consists of three conventional steam-electric generating units and two combined cycle generating units. The stationoperates primarily on natural gas but the conventional steam-electric generating units can also operate on fuel oil.

The Company’s Rio Grande Power Station consists of three conventional steam-electric generating units and one aeroderivative unit which operateon natural gas.

The Company’s Copper Power Station consists of a natural gas combustion turbine used primarily to meet peak demand.

The Company owns a 7% interest in Units 4 and 5 at Four Comers. The Company shares power entitlements and certain allocated costs of the twounits with APS (the Four Comers operating agent) and the other Four Comers participants. Four Comers is located on land under easements from thefederal government and a lease from the Navajo Nation that expires in 2016. APS, on behalf of the Four Comers participants, negotiated amendments tothe lease with the Navajo Nation which extended the lease from 2016 to 2041, pending the approval of the Department of the Interior and a Federalenvironmental review.

The Company notified the other participants in 2013 that it would not continue in Four Comers after the termination of the 50 -year contractualterm of the participation agreement but that it would offer to sell its interest to them in order to facilitate their decision to extend the life of the plant. OnFebruary 17, 2015, the Company and APS entered into an asset purchase agreement (the "Agreement"), providing for the purchase by APS of theCompany’s interests in Four Comers. The cash purchase price is equal to the net book value of the Company’s interest in Four Comers at the date oiclosing, which is expected to occur not later than July 2016, subject to the receipt of regulatory approvals. The purchase price will be adjusteddownward to reflect APS’s assumption in the Agreement of the Company’s obligation to pay for future plant decommissioning and mine reclamationexpenses. At the closing, APS will also reimburse the Company for the undepreciated value of certain capital expenditures made prior thereto. APS willassume responsibility for all capital expenditures made after July 2016 and, with certain exceptions, any pre-2016 capital expenditures to be put intoservice following the closing. In addition, APS will indemnify the Company against liabilities and costs related to the future operation of Four Comers.

Wind and Solar Photovoltaic Facilities

The Company’s Hueco Mountain Wind Ranch consists of two wind turbines with a total capacity of 1.32 MW. The Company also owns six solarphotovoltaic facilities with a total capacity of 0.2 MW.

Transmission and Distribution Lines and Agreements

The Company owns or has significant ownership interests in four 345 kV transmission lines in New Mexico, three 500 kV lines in Arizona, andowns the transmission and distribution network within its New Mexico and Texas retail service area and operates these facilities under franchiseagreements with various municipalities. The Company is also a party to various transmission and power exchange agreements that, together with itsowned transmission lines, enable the Company to deliver its energy entitlements from its remote generation sources at Palo Verde and Four Comers toits service area. Pursuant to standards established by the North American Electric Reliability Corporation and the Western Electricity CoordinatingCouncil, the Company operates its transmission system in a way that allows it to maintain system integrity in the event that any one of thesetransmission lines is out of service.

Page 13 of 168

Table of Contents

In addition to the transmission and distribution lines within our service territory, the Company’s transmission network and associated substationsinclude the following:

Line Length (miles)Springerville-Macho Springs-Luna-Diabio Line (1) 310West Mesa-Arroyo Line (2) 202

man Line (3)Greenlee-HidalguHidalgo-LunaLuna-Newman

Eddy County-AMRAD Line (4)Palo Verde Transmission

Palo Verde-Westwing (5) 45Palo Verde-Jojoba-Kyrene (6) 75

CompanyVoltage (kV) Ownership Interest

345 100.0°/6345 100.0°/6

60 345 40.0%50 57.2%86 345 100.0%125

5O0500 18.7%

(i) Runs from TEP’s Springerville Generating Plant near Springerville, Arizona, to the Company’s Diablo Substation near Sunland Park, NewMexico.

(2) Runs from PNM’s West Mesa Substation located near Albuquerque, New Mexico, to the Company’s Arroyo Substation located near LasCruces, New Mexico.

(3) Runs from TEP’s Greenlee Substation near Duncan, Arizona to the Newman Power Station.(4) Runs from the Company’s and PNM’s high voltage direct current terminal at the Eddy County Substation near Artesia, New Mexico to the

AMRAD Substation near Oro Grande, New Mexico. Due to damage caused by severe weather conditions which occurred in Novemberand December of 2013, this transmission line is not currently in service. The Company currently anticipates that this line will return toservice before May 2015.

(5) Represents two 45-mile, 500 kV lines running from Palo Verde to the Westwing Substation located northwest of Phoenix near Peoria,Arizona.

(6) Runs from Palo Verde to the Jojoba Substation located near Gila Bend, Arizona, then to the Kyrene Substation located near Tempe,Arizona. ~

Environmental Matters

The Company is subject to extensive laws, regulations and permit requirements with respect to air and greenhouse gas emissions, water discharges,soil and water quality, waste management and disposal, natural resources and other environmental matters by federal, state, regional, tribal and localauthorities. Failure to comply with such laws, regulations and requirements can result in actions by authorities or other third parties that might seek toimpose on the Company administrative, civil and/or criminal penalties or other sanctions. In addition, releases of pollutants or contaminants into theenvironment can result in costly cleanup liabilities. These laws, regulations and requirements are subject to change through modification orreinterpretation, or the introduction of new laws and regulations and, as a result, the Company may face additional capital and operating costs to comply.

See Part II, Item 8, "Financial Statements and Supplementary Data - Note K, Commitments, Contingencies and Uncertainties’ EnvironmentalMatters of Notes to Financial Statements" for more information regarding environmental risks, laws and regulations and legal proceedings for which weare and maybe subject to in the future.

Construction Program

Utility construction expenditures reflected in the following table consist primarily of local generation, expanding and updating the transmissionand distribution systems, and the cost of capital improvements and replacements at Palo Verde. Studies indicate that the Company will need additionalpower generation resources to meet increasing load requirements on its system and to replace retiring plants and terminated purchased poweragreements, the costs of which are included in the table below.

Page 14 of 168

Table of Contents

The Company’s estimated cash construction costs for 2015 through 2019 are approximately $1.1 billion. Actual costs may vary from theconstruction program estimates shown. Such estimates are reviewed and updated periodically to reflect changed conditions.

20152016201720182019

Total

By Year (IX2X3)(¢sthnatcs in millions)

203

199

$ 1,097

By Function(estimates in millions)

Transmission 156

General 95

Total $ 1,097

(1) Does not include acquisition costs for nuclear fuel. See "Energy Sources - Nuclear Fuel."(2) $514 million has been allocated for new generating capacity of which $136 million is to construct four units of the Montana Power

Station (the "MPS"). The $136 million consist of $11 million to complete construction of two 88 MW gas-fired LMS-100 units that arescheduled to come on line before March 31, 2015 and $112 million for two additional 88 MW gas fired LMS-100 units scheduled tocome on line before the summer peak in 2016 and 2017. An additional $13 million of common costs is associated with the developmentof the MPS common facilities. In addition to the construction costs for the MPS, $155 million of construction costs are included from2018 through 2019 for a combined cycle unit scheduled to be completed in 2022. In addition to construction costs for new generatingcapacity, generation costs include $24 million for other local generation, $13 million for Four Comers (which excludes costs for pollutioncontrol equipment that would be placed in service after the Company’s planned exit in July 2016), and $186 million for Palo Verde. TheCompany plans to deactivate Rio Grande Power Station Unit 6 ("Rio Grande 6") before the peak demand of 2015. Rio Grande 6 is a 45MW steam-electric generating unit which was originally placed in service in 1957. The Company may decide to reactivate Rio Grande 6if needed. Additionally, as noted above, the Company intends to cease its participation in Four Comers in 2016.

(3) Does not include four utility-scale solar energy generating facilities that may result from a recent request for proposal (RFP). These solarprojects could have a combined maximum capacity up to 30 MW.

Page 15 of 168

Table of Contents

Energy Sources

General

The following table summarizes the percentage contribution of nuclear fuel, natural gas, coal and purchased power to the total kWh energy mix o~the Company. Energy generated by Company-owned solar photovoltaic panels and wind turbines accounted for less than 1% of the total kWh energymix.

Years Ended December ;31,2014 201;3 2012

Power Source (percentage of energy mix)Nuclear 47°,6 46% 46%Natural gas 35 34 32Coal 5 6 6Purchased power

Total 100% 100% 100%

Allocated fuel and purchased power costs are generally recoverable from customers in Texas and New Mexico pursuant to applicable regulations.Historical fuel costs and revenues are reconciled periodically in proceedings before the Public Utility Commission of Texas ("PUCT") and the NewMexico Public Regulation Commission ("NMPRC"). See "Regulation - Texas Regulatory Matters" and "-New Mexico Regulatory Matters."

Nuclear Fuel

The nuclear fuel cycle for Palo Verde consists of the following stages: the mining and milling of uranium ore to produce uranium concentrates;the conversion of the uranium concentrates to uranium hexafluoride ("conversion services"); the enrichment of uranium hexafluoride ("enrichmentservices"); the fabrication of fuel assemblies ("fabrication services"); the utilization of the fuel assemblies in the reactors; and the storage and disposal ofthe spent fuel.

Pursuant to the ANPP Participation Agreement, the Company owns an undivided interest in nuclear fuel purchased in connection with Palo Verde.The Palo Verde Participants are continually identifying their future nuclear fuel resource needs and negotiating arrangements to fill those needs. ThePalo Verde Participants have contracted for 100% ofPalo Verde’s requirements for uranium concentrates and conversion services through 2018 and 45%of its requirements in 2019-2021. The participants have also contracted for 100% of Palo Verde’s enrichment services through 2020 and all of PaloVerde’s fuel assembly fabrication services through 2022.

Nuclear Fuel Financing. The Company’s financing of nuclear fuel is accomplished through Rio Grande Resources Trust ("RGRT"), a Texasgrantor trust, which is consolidated in the Company’s financial statements. RGRT has $110 million aggregate principal amount borrowed in the form ofsenior notes, of which $15 million will mature in August 2015. The Company will either repay or refinance the $15 million of senior notes uponmaturity. The Company guarantees the payment of principal and interest on the senior notes. The nuclear fuel financing requirements of RGRT are metwith a combination of the senior notes and short-term borrowings under the revolving credit facility (the "RCF").

Natural Gas

The Company manages its natural gas requirements through a combination of a long-term supply contract and spot market purchases. The long-term supply contract provides for firm deliveries of gas at market-based index prices. In 2014, the Company’s natural gas requirements at the Newmanand Rio Grande Power Stations were met with both short-term and long-term natural gas purchases from various suppliers, and this practice is expectedto continue in 2015. Interstate gas is delivered under a base firm transportation contract. The Company has expanded its firm interstate transportationcontract to include the MPS. The Company anticipates it will continue to purchase natural gas at spot market prices on a monthly basis for a portion ofthe fuel needs for the Newman, Rio Grande and the MPS. The Company will continue to evaluate the availability of short-term natural gas suppliesversus long-term supplies to maintain a reliable and economical supply for its local generating stations.

Natural gas for the Newman and Copper Power Stations is also supplied pursuant to an intrastate natural gas contract that became effectiveOctober 1, 2009 and continues through 2017.

7

Page 16 of 168

Table of Contents

Coal

APS, as operating agent for Four Comers, purchases Four Comers’ coal requirements from a supplier with a long-term lease of coal reservesowned by the Navajo Nation.

On December 30, 2013, APS and Southern California Edison ("SCE") closed their previously announced transaction whereby APS agreed topurchase SCE’s 48% interest in Units 4 and 5 of Four Comers. Concurrently with the closing of this transaction, the ownership of BHP Navajo CoalCompany, the coal supplier and operator of the mine that serves Four Comers, was transferred to Navajo Transitional Energy Company, LLC ("NTEC"),a company formed by the Navajo Nation to own the mine and develop other energy projects.

The Company notified the other participants in 2013 that it would not continue in Four Corners after the termination oftbe 50 -year contractualterm of the participation agreement but that it would offer to sell its interest to them in order to facilitate their decision to extend the life of the plant. OnFebruary 17, 2015, the Company and APS entered into an asset purchase agreement (the "Agreement"), providing for the purchase by A_PS of theCompany’s interests in Four Corners. The cash purchase price is equal to the net book value of the Company’s interest in Four Comers at the date ofclosing, which is expected to occur not later than July 2016, subject to the receipt of regulatory approvals. The purchase price will be adjusteddownward to reflect APS’s assumption in the Agreement of the Company’s obligation to pay for future plant decommissioning and mine reclamationexpenses. At the closing, APS will also reimburse the Company for the undepreciated value of certain capital expenditures made prior thereto. APS willassume responsibility for all capital expenditures made after July 2016 and, with certain exceptions, any pre-2016 capital expenditures to be put intoservice following the closing. In addition, APS will indemnify the Company against liabilities and costs related to the future operation of Four Comers.

Purchased Power

To supplement its own generation and operating reserves and to meet required renewable portfolio standards, the Company engages in powerpurchase arrangements which may vary in duration and amount based on evaluation of the Company’s resource needs, the economics oftbe transactionsand specific renewable portfolio requirements.

The Company has a firm 100 MW Power Purchase and Sale Agreement with Freeport-McMoran Copper and Gold Energy Services LLC("Freeport") which provides for Freeport to deliver energy to the Company from its ownership interest in the Luna Energy Facility (a natural gas-firedcombined cycle generation facility located in Luna County, New Mexico) and for the Company to deliver a like amount of energy at Greenlee, Arizona.The Company may purchase up to the contracted MW amount at a specified price at times when energy is not exchanged under the Power Purchase andSale Agreement. Upon mutual agreement, the contract allows the parties to increase the amount of energy that is purchased and sold under the PowerPurchase and Sale Agreement, The parties have agreed to increase the amount to 125 MW through December 2015. The contract was approved by theFERC and continues through December 31, 2021. On December 30, 2014, the FERC issued an order authorizing the disposition, i.e. sale, of Freeport’sinterest in the Luna facility to Samchully Power & Utilities 1, LLC. Freeport will retain the ability to purchase up to the full amount of its previousownership share of the Luna facility of approximately 190 MW, thereby continuing to fulfill its obligations pursuant to the Power Purchase and SaleAgreement.

The Company has a 25-year purchase power agreement with Hatch Solar Energy Center I, LLC for a 5 MW solar photovoltaic project located insouthern New Mexico which began commercial operation in July 2011. The Company entered into a 20-year contract with NRG Solar Roadrunner, LLC("NRG") for the purchase of all of the output of a 20 MW solar photovoltaic plant built in southern New Mexico which began commercial operation inAugust 2011. The Company has 25-year purchase power agreements to purchase all of the output of two additional solar photovoltaic projects located insouthern New Mexico, SunEdison 1 (10 MW) and SunEdison 2 (12 MVO which achieved commercial operation on June 25, 2012 and May 2, 2012,respectively. The Company entered into these contracts to help meet its renewable portfolio requirements. The Company has a 20-year purchase poweragreement with Macho Springs Solar, LLC to purchase the entire generation output delivered from the 50 MW Macho Springs solar photovoltaic projectlocated in Luna County, New Mexico which began commercial operation on May 23, 2014. The Company has a 30-year purchase power agreementwith PSEG El Paso Solar Energy Center ("PSEG") to purchase the total output of approximately 10 MW from a solar photovoltaic generation plant thatPSEG owns and operates on land subleased fi’om the Company in proximity to its Newman Generation Station. This solar project achieved commercialoperation on December 30, 2014.

The Company entered into an agreement in 2009 to purchase capacity of up to 40 MW and unit contingent energy during 2010 from Shell EnergyNorth America ("Shell"). Under the agreement, the Company provided natural gas to Pyramid Unit No. 4 where Shell had the right to convert naturalgas to electric energy. The Company entered into a contract with Shell on May 17, 2010 to extend the term of the capacity and unit contingent energypurchase from January 1,2011 through September 30, 2014.

Page 17 of 168

Table of Contents

Other purchases of shorter duration were made during 2014 to supplement the Company’s generation resources during planned and unplannedoutages and for economic reasons as well as to supply off-system sales.

Page 18 of 168

Table of Contents

Operating revenues (in thousands):Non-fuel base revenues:

Retail:ResidentialCommercial and industrial, smallCommercial and industrial, largeSales to public authorities

Total retail base revenuesWholesale:

Sales for resaleTotal non-fuel base revenues

Fuel revenues:Recovered from customers during the period

Under (over) collection of fuelNew Mexico fuel in base rates

Total fuel revenuesOff-system sales:

Fuel costShared marginsRetained margins

Total off-system salesOther

Total operating revenuesNumber of customers (end of year) (1):

ResidentialCommercial and industrial, smallCommercial and industrial, largeOther

Total

Average annual kWh use per residential customer

Energy supplied, net, kWh (in thousands):

GeneratedPurchased and interchanged

Total

Energy sales, kWh (in thousands):

Retail:Residential

Commercial and industrial, smallCommercial and industrial, largeSales to public authorities

Total retailWholesale:

Sales for resaleOff-system sales

Total wholesale

Total energy sales

Losses and Company useTotal

Native system:

Peak load, kW

Operating Statistics

Years Ended December 31.

2014 2013 2012

234,371 $ 236,651 $ 234,095

39,239 40,235 42,041~,066 ~96,132551,064 556,498 560,282

2,277 2,172 2,318553,341 55&670 562,~

161,052 133,481 130,1933,110 10.849 (18,539)

71,614 73,295 74,154235,776 217.625 185,808

74,716 68,241 62,48121,117 ~ ~ :9,191

2,147 !,549 1,098

97,980 82,8~ 72,77030,428 31,261 31,703

$ 890,362 $ 852,881

353,88540,038 39,164 38,494

49 50 50

5,017 5,043 4,896

398,989 , 393,88~, 389,007

7,496 7,701 7,712

9,477,129

10,867,619

9,288,773 9,262,1331,547,930 1,768,810

10,836,703 11,030,943=

2,357,846 2,349,148 2,366,5411,064,475 : _I 1,082,9731,562,784 1,622,607 1,617,606

61,729 6L232 64,2662,609,769 2,472,622 2,614,132

10,297,138 10,280,250 10,393,866570,481 556,453 637,077

10,867,619 10,836,703 11,030,943

Total system:

Peak load, kW(2)Net dependable generating capability for peak, kW 1,879,000 1,852,000 1,765,000

(2)The number of retail customers presented is based on the number of service locationsIncludes spot sales and net losses of 235.000 kW. 133,000 kW and 291.000 kW for 2014, 2013 and 2012. respectively.

l0

Page 20 of 168

Table of Contents

RegulationGeneral

The rates and services of the Company are regulated by incorporated municipalities in Texas, the PUCT, the NMPRC and the FERC. Municipalorders, ordinances and other agreements regarding rates and services adopted by Texas municipalities are subject to review and approval by the PUCT.The FERC has jurisdiction over the Company’s wholesale (sales for resale) transactions, transmission service and compliance with federally-mandatedreliability standards. The decisions of the PUCT, the NMPRC and the FERC are subject to judicial review.

Texas Regulatory Matters

2012 Texas Retail Rate Case. On April 17, 2012, the El Paso City Council approved the settlement of the Company’s 2012 Texas retail rate caseand fuel reconciliation in PUCT Docket No. 40094. The PUCT issued a final order approving the settlement on May 23, 2012 and rates were effective asof May 1, 2012. As part of the 2012 Texas retail rate settlement, the Company agreed to submit a future fuel reconciliation request covering the periodbeginning July 1, 2009 and ending no later than June 30, 2013 by December 31, 2013 or as part of its next rate case, if earlier. The Company filed a fuelreconciliation request coveting the period July 1, 2009 through March 31, 2013, as discussed below. The 2012 Texas retail rate settlement also providedfor the continuation of the energy efficiency cost recovery factor and the military base discount recovery factor. Both of these surcharges require annualfilings to reconcile and revise the recovery factors.

Energy Efficiency Cost Recovery Factor. The Company made its annual filing to establish its energy efficiency cost recovery factor for 2015 onMay 1, 2014. In addition to projected energy efficiency costs for 2015 and true-up to prior year actual costs, the Company requested approval of a $2.0million bonus for the 2013 energy efficiency program results in accordance with PUCT rules. In a proposal for decision issued on October 7, 2014, theAdministrative Law Judge ("ALJ") recommended approval of the Company’s requested cost recovery including the requested bonus. The PUCTapproved the ALJ’s recommendation at its November 14, 2014 open meeting. The PUCT decision was not appealed. The Company recorded the $2.0million bonus as operating revenue in the fourth quarter of 2014.

Fuel and Purchased Power Costs. The Company’s actual fuel costs, including purchased power energy costs, are recovered from customersthrough a fixed fuel factor. The PUCT has adopted a fuel cost recovery rule (the "Texas Fuel Rule") that allows the Company to seek periodicadjustments to its fixed fuel factor. The Company can seek to revise its fixed fuel factor based upon the approved formula at least four months after itslast revision except in the month of December. The Texas Fuel Rule requires the Company to request to refund fuel costs in any month when the over-recovery balance exceeds a threshold material amount and it expects fuel costs to continue to be materially over-recovered. The Texas Fuel Rule alsopermits the Company to seek to surcharge fuel under-recoveries in any month the balance exceeds a threshold material amount and it expects fuel costrecovery to continue to be materially under-recovered. Fuel over and under-recoveries are considered material when they exceed 4% of the previoustwelve months’ fuel costs. All such fuel revenue and expense activities are subject to periodic final review by the PUCT in fuel reconciliationproceedings.

On April 15, 2014, the Company filed a request, which was assigned PUCT Docket No. 42384, to increase its fixed fuel factor by $10.7 million or6.9% annually, pursuant to its approved formula. The revised fixed fuel factor reflected an expected increase in prices for natural gas over the twelvemonth period beginning March 2014. The increase in the fixed fuel factor received final approval on May 28, 2014 and was effective with May 2014billings. As of December 31, 2014, the Company had under-recovered fuel costs in the amount of $10.2 million for the Texas jurisdiction. The Companyhas been reducing the amount of the under-recovery since August 2014 and expects to continue to reduce the amount of under-recovery as long as theprice of natural gas remains below the cost of natural gas included in its current fixed fuel factor. If the price of natural gas increases above the cost ofnatural gas included in the current fixed fuel factor, the Company may request an increase to the fixed fuel factor and effectively mitigate an increase inthe under-recovery balance. If the under-recovered balance is above the materiality threshold at the time the fixed fuel factor increase is requested, thenthe Company will consider requesting a fuel surcharge to collect the remaining under-recovered balance.

Fuel Reconciliation Proceeding. Pursuant to the 2012 Texas retail rate settlement discussed above, on September 27, 2013, the Company filed anapplication with the PUCT, designated as PUCT Docket No. 41852, to reconcile $545.3 million of fuel and purchased power expenses incurred duringthe 45-month period from July 1, 2009 through March 31, 2013. A settlement was reached and a final order was issued by the PUCT on July 11, 2014.The twelve months ended December 31, 2014 financial results include a $2.1 million, pre-tax increase to income reflecting the settlement of the Texasfuel reconciliation proceeding. The settlement included the recognition of $3.4 million of Palo Verde performance rewards associated with the 2009 to2012 performance periods net of disallowed fuel and purchased power costs of $1.75 million of which $0.5 million had been previously reserved. PaloVerde performance rewards are not recognized in the Company’s financial results until the PUCT has ordered a final determination in a fuel proceedingor comparable evidence of collectability is obtained. In addition, the Company reimbursed the

11

Page 21 of 168

Table of Contents

City of El Paso approximately $0.1 million in incurred expenses. The settlement also provides that 100% of margins on non-arbitrage off-system sales(as defined by the settlement) and 50% of margins on arbitrage off-system sales be shared with its Texas customers beginning April 1, 2014. For theperiod April 1, 2014 through June 30, 2015, the Company’s total share of margins assignable to Texas retail jurisdiction, on arbitrage and non-arbitrageoff-system sales, may not exceed 10% of the total margins assignable to the Texas retail jurisdiction on all off-system sales. The Company also agreed tofile with the PUCT a proceeding to address the reasonableness of the Company’s decision to not continue to participate in the Four Comers coal-firedgenerating Units 4 and 5 after July 2016. It is expected that issues related to the final coal mine closing and reclamation costs will be addressed in thatproceeding as well as other issues related to post-participation events such as the asset retirement obligations of the Company related to those two units.The PUCT’s final order completes the regulatory review and reconciliation of the Company’s fuel expenses for the period through March 31, 2013.

Montana Power Station Approvals. As discussed further below, the Company has received a Certificate of Convenience and Necessity ("CCN")from the PUCT to construct all four units of the NIPS in E1 Paso County, Texas. The Company also obtained air permits from the Texas Commission onEnvironmental Quality ("TCEQ") and the EPA.

On June 23, 2014, the U.S. Supreme Court issued an opinion in the Utility Air Regulatory Group vs EPA regarding EPA’s authority to requireGHG PSD permits for stationary sources. The opinion concluded that the EPA erred in making applicability of the CAA permitting requirements basedon GHG emissions. As a result, the Company believes its EPA air permit is no longer required and could be rescinded, and it is eligible for a standard airpermit to replace the new source review permit issued by the TCEQ. Accordingly, on August 1, 2014, the Company submitted a request to the EPA torescind the EPA air permit which request remains pending. Also, on September 16, 2014, the Company applied for a standard air permit, which TCEQissued on October 2, 2014.

On December 13, 2012, in PUCT Docket No. 40301, the Company received CCN approval from the PUCT for MPS Units 1 and 2. On September6, 2013, the Company filed an application with the PUCT for issuance ofa CCN to construct, own and operate two additional 88 MW natural gas-firedgenerating units designated as the MPS Units 3 and 4. The case was designated PUCT Docket No. 41763. Hearings in this case were held before an ALJin February 2014. On July 11, 2014, the PUCT approved the CCN to construct MPS Units 3 and 4.

In 2013, the Company filed three transmission line CCN applications with the PUCT as part of the MPS Project:

¯ MPS to Caliente: a 115 -kV transmission line from the MPS to the existing Caliente Substation in east El Paso. (PUCT Docket No. 41360)¯ MPS In & Out: a 115 -kV transmission line from the MPS to intersect with the existing Caliente - Coyote 115 -kV transmission line. (PUCT

Docket No. 41359)¯ MPS to Montwood: a 115 -kV transmission line from the MPS to the existing Montwood Substation in east El Paso. (PUCT Docket No. 41809)

The Company requested to build these transmission lines to connect the new MPS to the electrical grid in order to meet expected customer growthand electric demand and to improve system reliability. On March 10, 2014, the PUCT issued a final order approving a tmanimous settlement in the MPSto Caliente transmission CCN filing. On August 18, 2014, the PUCT issued final orders approving unanimous settlements of the MPS In & Outtransmission CCN filing and the MPS to Montwood transmission CCN filing.

Other Required Approvals. The Company has obtained other required approvals for recovery of fuel costs through fixed fuel factors, other tariffsand approvals as required by the Public Utility Regulatory Act ( the "PURA") and the PUCT.

New Mexico Regulatory Matters

2009 New Mexico Stipulation. On December 10, 2009, the NMPRC issued a final order conditionally approving the stipulated rates in NMPRCCase No. 09-00171-UT. The stipulated rates went into effect with January 2010 bills. The stipulated rates provide for an Efficient Use of Energy FactorRate Rider to recover energy efficiency expenditures which requires an annual filing and approval of the related incentives and adjustment to therecovery factors.

Fuel and Purchased Power Costs. Fuel and purchased power costs are recovered through base rates and a Fuel and Purchased Power CostAdjustment Clause (the "FPPCAC") that corrects for changes in the costs of fuel included in base rates. On January 8, 2014, the NMPRC approved thecontinuation of the FPPCAC without modification in NMPRC Case No. 13-00380-UT. Fuel and purchased power costs are reconciled to actual costs ona monthly basis and recovered or refunded to customers the second succeeding month. The Company recovers its investment in Palo Verde Unit 3 inNew Mexico through the FPPCAC as purchased power using a proxy market price approved in the 2009 New Mexico rate stipulation.

12

Page 22 of 168

Table of Contents

Montana Power Station Approvals. The Company has received a CCN from the NMPRC to construct all four units of the MPS and associatedtransmission lines. The Company also obtained all necessary air permits from the TCEQ and EPA and has begun construction. A final order in NMPRCCase No. 13-00297-UT approving the CCN for MPS Units 3 and 4 was issued on June 11, 2014.

Other Required Approvals. The Company has obtained other required approvals for other tariffs, securities transactions, long-term resource plans,recovery of energy efficiency costs through a base rate alder and other approvals as required by the NMPRC.

Federal Regulatory Matters

Public Service Company of New Mexico’s ("PNM") 2010 Transmission Rate Case. On October 27, 2010, PNM filed a Notice of Transmission RateChange for transmission delivery services provided by PNM. These rates went into effect on June 1,2011. The Company takes transmission servicefrom PNM. On January 2, 2013, the FERC issued a letter order approving a Unanimous stipulation and agreement. Pursuant to the stipulation, onJanuary 31, 2013, PNM refunded $1.9 million for amounts that PNM collected since June 1,2011 in excess of settlement rates. This amount wasrecorded in the fourth quarter of 2012 as a reduction of transmission expense.

PNM Transmission Rate Case. On December 31, 2012, PNM filed with FERC to change its method of transmission rate recovery for itstransmission delivery services from stated rates to formula rates. The Company takes transmission service from PNM and is among the PNMtransmission customers affected by PNM’s shift to formula rates. On March 1, 2013, the FERC issued an order rejecting in part PNM’s filing, andestablishing settlement judge and heating procedures. The parties to the case, including the Company, have been participating in settlementnegotiations. The Company cannot predict the outcome of the case at this time.

Issuance of Long-Term Debt and Guarantee of Debt. In the fourth quarter of 2013, the Company received approval from the FERC toincrementally issue up to $300 million of long-term debt and to guarantee the issuance of up to $50 million of new long-term debt by RGRT to financefuture purchases of nuclear fuel and to refinance existing nuclear fuel debt obligations. The FERC approval was effective on November 15, 2013 andterminates two years thereafter. The $150 million in aggregate principal amount of 5.00% Senior Notes issued in December 2014 were issued pursuantto this approval. The authorization to issue up to an additional $150 million of long-term debt and up to $50 million of new long-term debt by RGRTprovides the Company with the flexibility to access the debt capital markets prior to the termination of the FERC approval on November 15, 2015.Additionally, the Company could request approval from the FERC to issue additional debt after November 15, 2015. The Company may decide to issuelong-term debt in the capital markets to finance capital requirements in late 2015 or early 2016.

Other Required Approvals. The Company has obtained required approvals for rates and tariffs, securities transactions and other approvals asrequired by the FERC.

Department of Energy. The DOE regulates the Company’s exports of power to the Comisi6n Federal de Electricidad in Mexico pursuant to alicense granted by the DOE and two presidential permits.

The DOE is authorized to assess operators of nuclear generating facilities a share of the costs of decommissioning the DOE’s uranium enrichmentfacilities and for the ultimate costs of disposal of spent nuclear fuel. See Facilities-Palo Verde Station for discussion of spent fuel storage and disposalcosts.

Sales for Resale

The Company provides firm capacity and associated energy to the Rio Grande Electric Cooperative ("RGEC") pursuant to an ongoing contractwith a two-year notice to terminate provision. The Company also provides network integrated transmission service to the RGEC pursuant to theCompany’s Open Access Transmission Tariff ("OATT"). The contract includes a formula-based rate that is updated annually to recover non-fuelgeneration costs and a fuel adjustment clause designed to recover all eligible fuel and purchased power costs allocable to the RGEC.

Power Sales Contracts

The Company has entered into several short-term (three months or less) off-system sales contracts throughout 2015.

13

Page 23 of 168

Table of Contents

Franchises and Significant Customers

El Paso and Las Cruces Franchises

The Company has a franchise agreement with El Paso, the largest city it serves. The franchise agreement allows the Company to utilize publicfights-of-way necessary to serve its retail customers within El Paso. The Company is also providing electric distribution service to Las Cruces under animplied franchise by satisfying all obligations under the franchise agreement that expired on April 30, 2009.

The franchise arrangements held between the Company and the cities of El Paso and Las Cruces are detailed below:

El Paso August 1, 2010 - Present 4.00% (b)

(a) Based on a percentage of revenue.(b) 0.75% of the El Paso franchise fee is to be placed in a restricted fund to be used solely for economic development and renewable

energy purposes.

Military Installations

The Company serves Holloman Air Force Base ("Holloman"), White Sands Missile Range ("White Sands") and Fort Bliss. The militaryinstallations represent approximately 5% of the Company’s annual retail revenues. In July 2014, the Company signed an agreement with Fort Bliss foran initial three -year term under which Fort Bliss takes retail electric service from the Company under the applicable Texas tariffs. The Company isserving White Sands under the applicable New Mexico tariffs. In March 2006, the Company signed a contract with Holloman that provides for theCompany to provide retail electric service and limited wheeling services to Holloman for a ten -year term which expires in January 2016.

Other Information

Investors should note that we announce material financial information in our filings with the SEC, press releases and public conference calls.Based on guidance from the SEC, we may also use the Investor Relations section of our websit¢ (www.epeleetric.com) to communicate with investorsabout our company, It is possible that the financial information we post there could be deemed to be material information. The information on ourwebsite is not part of this document.

14

Page 24 of 168

Table of Contents

Executive Officers of the R~gi~tr~ut

The executive officers of the Company are elected annually and serve at the discretion of the Board of Directors. The executive officers of theCompany as of February 27, 2015, were as follows:

Thomas V. Shockley III

Mary E. Kipp

Nathan T. Hirschi

Steven T. Buraczyk

Rocky R. Miracle

William A. Stiller

John R. Boomer

Russell G. Gibson

A~e Current Position and Bmine~ Experience

69 Chief Executive Officer since May 2012; Interim Chief Executive Officer from January 2012to May 2012; Non-Employee Member of the Board of Directors from May 2010 toJanuary 2012; Vice- Chairman and Chief Operating Officer for American Electric Powerfrom June 2000 to August 2004; retired in 2004.

47 President since September 2014; Senior Vice President, General Counsel and ChiefCompliance Officer from June 2010 to September 2014; Vice President - Legal and ChiefCompliance Officer from December 2009 to June 2010.

51 Senior Vice President and Chief Financial Officer since October 2013; VieePresident andController from March 2010 to October 2013; Vice President - Special Projects fromDecember 2009 to February 2010.

47 Senior Vice President - Operations since October 2013;Vice President of Regulatory Affairsfrom April 2013 to October 2013; Vice President of Power Marketing and Fuels andResource and Delivery Planning from August 2012 to April 2013; Vice President -System Operations and Planning from January 2011 to August 2012; Vice President -Power Marketing and Fuels from July 2008 to January 2011.

62 Senior Vice President - Corporate Planning & Development and Chief Compliance Officersince September 2014; Senior Vice President - Corporate Planning and Development fromAugust 2009 to September 2014.

63 Senior Vice President - Human Resources and Customer Care since October 2013; VicePresident and Chief Human Resources Officer from January 2013 to October 2013;Independent Human Resources consultant from 2005 to 2013.

53 Vice President - General Counsel since September 2014; Vice President and Treasurer fromApril 2014 to September 2014; Senior Vice President for Helen of Troy Limited fromFebruary 2012 to January 2014; Senior Vice President-International for Helen of TroyLimited from July 2008 to February 2012.

62 Vice President - Controller since September 2014; Chief Financial Officer - Vice Presidentfor ReadyOne Industries, Inc. from June 2006 to September 2014.

Item IA. Risk Factors

Like other companies in our industry, our financial results will be impacted by weather, the economy of our service territory, market prices forpower, fuel prices, and the decisions of regulatory agencies. Our common stock price and ereditworthiness will be affected by local, regional andnational macroeconomic trends, general market conditions and the expectations of the investment community, all of which are largely beyond ourcontrol. In addition, the following statements highlight risk factors that may affect our financial condition and results of operations. These are notintended to be an exhaustive discussion of all such risks, and the statements below must be read together with factors discussed elsewhere in thisdocument and in our other filings with the SEC.

Our Revenues and Profitability Depend upon Regulated Rates

Our retail rates are subject to regulation by incorporated municipalities in Texas, the PUCT, the NMPRC and the FERC. The settlement approvedin the Company’s 2012 Texas rate case, PUCT Docket No. 40094, established the Company’s eurrent retail base rates in Texas, effective May 1, 2012. Inaddition, the settlement in the Company’s 2009 New Mexico rate case, NMPRC Case No. 09-00171-UT, established rates in New Mexico that becameeffective on January 2010.

Our profitability depends on our ability to recover the costs, including a reasonable return on invested capital, of providing electric service to ourcustomers through base rates approved by our regulators. These rates are generally established based on an analysis of the expenses we incur in ahistorical test year, and as a result, the rates ultimately approved by our regulators may or may not match our expenses at any given time and recovery ofexpenses may lag behind the occurrence of those expenses. Rates in New Mexico may be established using projected costs and investment for a futuretest year period in certain instances. While rate regulation is based on the assumption that we will have a reasonable opportunity to recover our costs andearn a reasonable rate of return on our invested capital, there can be no assurance that our future Texas rate cases or New Mexico rate

15

Page 25 of 168

Table of Contents

cases will result in base rates that will allow us to fully recover our costs including a reasonable return on invested capital. There can be no assurancethat regulators will determine that all of our costs are reasonable and have been prudently incurred including costs associated with future plant retirementand asset retirement obligations. It is also likely that third parties will intervene in any rate cases and challenge whether our costs are reasonable andnecessary. If all of our costs are not recovered through the retail base rates ultimately approved by our regulators, our profitability and cash flow couldbe adversely affected which, over time, could adversely affect our ability to meet our financial obligations.

We May Not Be Able To Recover All Costs of New Generation and Transmission Assets

In 2013 and 2014, we received approval, both from the PUCT and the NMPRC, to construct four 88 MW simple-cycle aeroderivative combustionturbines at our Montana Power Station, a new plant site. During 2013, we completed the construction of Rio Grande Unit 9, an aeroderivative unit with agenerating capacity of 87 MW, which reached commercial operation in May 2013. We have risk related to recovering all costs associated with theconstruction of Rio Grande Unit 9, the Montana Power Station, and other new units and transmission assets.

In 2014, we issued $150 million in aggregate principal amount of 5.00% Senior Notes, due December 1, 2044. The net proceeds from the 5.00%Senior Notes along with borrowings under our revolving credit facility, which was amended and restated on January 14, 2014, could help fund theconstruction of the Montana Power Station and other capital additions. The costs of financing and constructing these assets will be reviewed in futurerate cases in both Texas and New Mexico. To the extent that the PUCT or the NMPRC determines that the costs of construction are not reasonablebecause of cost overruns, delays or other reasons, we may not be allowed to recover these costs from customers in base rates.

In addition, if these units are not completed on time, we may be required to purchase power or operate less efficient generating units to meetcustomer requirements. Any replacement purchased power or fuel costs will be subject to regulatory review by the PUCT and the NMPRC. We facefinancial risks to the extent that recovery is not allowed for any replacement fuel costs resulting from delays in the completion of these new units orother new units.

Weakness in the Economy and Uncertainty in the Financial Markets Could Reduce Our Sales, Hinder Our Capital Programs and Increase OurFunding Obligations for Pensions and Decommissioning

In recent years, the global credit and equity markets and the overall economy have been through a state of turmoil. These and future events couldhave a number of effects on our operations and our capital programs. For example, tight credit and capital markets could make it difficult and moreexpensive to raise capital to fund our operations and capital programs. If we are unable to access the credit markets, we could be required to defer oreliminate important capital projects in the future. In addition, declines in the stock market performance may reduce the value of our financial assets anddecommissioning trust investments. Such market results may also increase our funding obligations for our pension plans, other post-retirement benefitplans and nuclear decommissioning trusts. Changes in the corporate interest rates which we use as the discount rate to determine our pension and otherpost-retirement liabilities may have an impact on our funding obligations for such plans and trusts. Further, continued economic volatility may result inreduced customer demand, both in the retail and wholesale markets, and increases in customer delinquencies and write-offs. Similarly, actions orinaction of Congress and of governmental agencies can impact our operations. For example, during 2013, sales to public authorities and smallcommercial and industrial customers were negatively impacted by the federal govemment sequestration and shutdown.The credit markets and overalleconomy may also adversely impact the financial health of our suppliers. If that were to occur, our access to and prices for inventory, supplies andcapital equipment could be adversely affected. Our power trading counterparties could also be adversely impacted by the market and economicconditions which could result in reduced wholesale power sales or increased counterparty credit risk. Declines in revenues, earnings and cash flow fromthese events, could impact our ability to fund construction expenditures and impact the level of dividend payments. This is not intended to be anexhaustive list of possible effects, and we may be adversely impacted in other ways.

Our Costs Could Increase or We Could Experience Reduced Revenues ifThere are Problems at the Palo Verde Nuclear Generating Station

A significant percentage of our generating capacity, off-system sales margins, assets and operating expenses is attributable to Palo Verde. Our15.8% interest in each of the three Palo Verde units totals approximately 633 MW of generating capacity. Palo Verde represents approximately 34% ofour available net generating capacity and provided approximately 47% of our energy requirements for the twelve months ended December 31, 2014.Palo Verde comprises approximately 29% of our total net plant-in-service and Palo Verde expenses comprise a significant portion of operation andmaintenance expenses. APS is the operating agent for Palo Verde, and we have limited ability under the ANPP Participation Agreement to influenceoperations and costs at

16

Page 26 of 168

Table of Contents

Palo Verde. Palo Verde operated at a capacity factor of 93.7% and 91.1% in the twelve months ended December 31, 2014 and 2013, respectively.

Our ability to increase retail base rates in Texas and New Mexico is limited. We cannot assure that revenues will be sufficient to recover anyincreased costs, including any increased costs in connection with Palo Verde or other operations, whether as a result of inflation, changes in tax laws,regulatory requirements, the costs of securing the facilities against possible terrorist attacks, cyber attacks, or other causes.

We May Not Be Able to Recover All of Our Fuel Expenses from Customers On u Timely Basis Or at All

In general, by law, we are entitled to recover our reasonable and necessary fuel and purchased power expenses from our customers in Texas andNew Mexico. NMPRC Case No. 13-00380-UT provides for energy delivered to New Mexico customers from the deregulated Palo Verde Unit 3 to berecovered through fuel and purchased power costs based upon a previous purchased power contract. Fuel and purchased power expenses in New Mexicoand Texas are subject to reconciliation by the PUCT and NMPRC. Prior to the completion of a reconciliation, we record fuel and purchased power costssuch that fuel revenues equal recoverable fuel and purchased power expense including the repriced energy costs for Palo Verde Unit 3 in New Mexico.In the event that recovery of fuel and purchased power expenses is denied in any reconciliation proceeding, the amounts recorded for fuel and purchasedpower expenses could differ from the amounts we are allowed to collect from our customers, and we would incur a loss to the extent of thedisallowance.

In New Mexico, the FPPCAC allows us to reflect current fuel and purchased power expenses in the FPPCAC and to adjust for under-recoveriesand over-recoveries with a two-month lag. In Texas, fuel costs are recovered through a fixed fuel factor. In Texas, we can seek to revise our fixed fuelfactor based upon our approved formula at least four months after our last revision except in the month of December. If we materially under-recover fuelcosts, we may seek a surcharge to recover those costs at any time the balance exceeds a threshold material amount and is expected to continue to bematerially under-recovered. During periods of significant increases in natural gas prices, the Company realizes a lag in the ability to reflect increases infuel costs in its fuel recovery mechanisms in Texas. As a result, cash flow is impacted due to the lag in payment of fuel costs and collection of fuel costsfrom customers. To the extent the fuel and purchased power recovery processes in Texas and New Mexico do not provide for the timely recovery ofsuch costs, we could experience a material negative impact on our cash flow. At December 31, 2014 and 2013, the Company had a net under-collectionbalance of $9.3 million and $6.2 million, respectively.

Equipment Failures and Other External Factors Can Adversely Affect Our Results

The generation and transmission of electricity require the use of expensive and complex equipment. While we have a maintenance program inplace, generating plants are subject to unplanned outages because of equipment failure and severe weather conditions. The advanced age of several ofour gas-fired generating units in or near El Paso increases the vulnerability of these units. In the event of unplanned outages, we must acquire powerfrom others at unpredictable costs in order to supply our customers and comply with our contractual agreements. This additional purchased power costwould be subject to review and approval of the PUCT and the NMPRC in reconciliation proceedings. As noted above, in the event that recovery for fueland purchased power expenses could differ from the amounts we are allowed to collect from our customers, we would incur a loss to the extent of thedisallowance. This can materially increase our costs and prevent us from selling excess power at wholesale. In addition, actions of other utilities mayadversely affect our ability to use transmission lines to deliver or import power, thus subjecting us to unexpected expenses or to the cost and uncertaintyof public policy initiatives. Concems over physical security and cyber security of transmission lines and generation facilities is also increasing, whichmay require us to incur additional capital and operating costs. Damage to certain transmission and generation facilities due to vandalism or otherdeliberate acts, or damage due to severe weather could lead to outages or other adverse effects. We are particularly vulnerable to this because asignificant portion of our available energy (at Palo Verde and Four Corners) is located hundreds of miles from El Paso and Las Cruces and must bedelivered to our customers over long distance transmission lines. In addition, Palo Verde’s availability is an important factor in realizing off-systemsales margins. These factors, as well as interest rates, economic conditions, fuel prices and price volatility, are largely beyond our control, but may havea material adverse effect on our earnings, cash flow and financial position.

Competition and Deregulation Could Result in a Loss of Customers and Increased Costs

As a result of changes in federal law, our wholesale and large retail customers already have access to, in varying degrees, alternative sources ofpower, including co-generation of electric power. Deregulation legislation is in effect in Texas requiring us to separate our transmission and distributionfunctions, which would remain regulated, from our power generation and energy services businesses, which would operate in a competitive market, inthe future. In 2004, the PUCT approved a rule delaying retail competition in our Texas service territory. This rule was codified in the PURA in June2011. The PURA identifies various milestones

17

Page 27 of 168

Table of Contents

that we must reach before retail competition can begin. The first milestone calls for the development, approval by the FERC, and commencement ofindependent operation of a regional transmission organization in the area that includes our service territory. This and other milestones are not likely to beachieved for a number of years, if they are achieved at all. There is substantial uncertainty about both the regulatory fi’amework and market conditionsthat would exist if and when retail competition is implemented in our Texas service territory, and we may incur substantial preparatory, restructuring andother costs that may not ultimately be recoverable. There can be no assurance that deregulation would not adversely affect our future operations, cashflow and financial condition.

Future Costs of Compliance with Environmental Laws and Regulations CouldAdversely Affect Our Operations and Financial Results

We are or may become subject to extensive federal, state and local environmental laws and regulations relating to discharges into the air, airquality, discharges of effluents into water, water quality, the use of water, the handling, disposal and clean-up of hazardous and non-hazardoussubstances and wastes, natural resources, and health and safety. Compliance with these legal requirements, which change frequemly and often becomemore restrictive, could require us to commit significant capital and operating resources toward permitting, emission fees, environmental monitoring,installation and operation of pollution control equipment and purchases of air emission allowances and/or offsets. These could also result in limitationsin operating hours and/or changes in construction schedules for future generating units.

Costs of compliance with environmental laws and regulations or fines or penalties resulting from non-compliance, if not recovered in our rates,could adversely affect our operations and/or financial results, especially if emission and/or discharge limits are tightened, more extensive permittingrequirements are imposed, additional substances become regulated and the number and types of assets we operate increase. We cannot estimate ourcompliance costs or any possible fines or penalties with certainty, or the degree to which such costs might be recovered in our rates, due to our inabilityto predict the requirements and timing of implementation of environmental laws or regulations. For example, the EPA has issued in the recent pastvarious proposed regulations regarding air emissions, such as the proposed revision of the existing primary and secondary ground-level ozone NationalAmbient Air Quality Standards. If these regulations become finalized and survive legal challenges, the cost to us to comply could adversely affect ouroperations and our financial results.

Climate Change and Related Legislatiou and Regulatory Initiatives Could Affect Demand forElectricity or Availability of Resources, and Could Result in Increased Compliance Costs

The Company emits GHGs (including carbon dioxide) through the operation of its power plants. Federal legislation had been introduced in bothhouses of Congress to regulate the emission of GHGs and numerous states have adopted programs to stabilize or reduce GHG emissions. Additionally,the EPA is proceeding with regulation of GHG under the CAA. Under EPA regulations finalized in May 2010, formerly known as the "Tailoring Rule",the EPA can impose GHG best achievable control technology requirements for sources, including power plants already required to implementprevention of significant deterioration under the CAA for certain other pollutants.

In addition, in January 2014, the EPA published a proposal to establish new source performance standards limiting GHG emission from electricgenerating units on which construction commences after that date. Also, in June 2014, the EPA proposed carbon dioxide emissions standards forexisting and reconstructed /modified power plants. EPA expects to issue final rules for carbon dioxide emissions from new, existing andreconstructed/modified power plants by summer 2015. The potential impact of these rules (if and when finalized) on the Company is unknown at thistime, but they could result in significant costs, limitations on operating hours, and/or changes in construction schedules for future generating units.

It is not currently possible to predict how any pending, proposed or future GHG legislation by Congress, the states or multi-state regions or anyGHG regulations adopted by the EPA or state environmental agencies will impact our business. However, any legislation or regulation of GHGemissions or any future related litigation could result in increased compliance costs or additional operating restrictions or increased or reduced demandfor our services, could require us to purchase rights to emit GHG, and could have a material adverse effect on our business, f’mancial condition,reputation or results of operations.

Security Breaches, Criminal Activity, Terrorist Attacks and Other Disruptions to Our Infrastructure Could Interfere With Our Operations,Could Expose Us or Our Customers or Employees to a Risk of Loss, and Could Expose Us to Liability, Regulatory Penalties, Reputational

Damage and Other Harm to Our Business

We rely upon our infrastructure to manage or support a variety of business processes and activities, including the generation, transmission anddistribution of electricity, supply chain functions, and the invoicing and collection of payments from our customers. We also use information technologysystems for internal accounting purposes and to comply with financial reporting, legal and

18

Page 28 of 168

Table of Contents

tax requirements. Our information technology networks and infrastructure may be vulnerable to damage, disruptiom or shutdowns due to attacks byhackers, breaches due to employee error or malfeasance, system failures, natural disasters, a physical attack on our facilities, or other catastrophicevents. The occurrence of any of these events could impact the reliability of our generation, transmission and distribution systems and energy marketingand trading functions; could expose us or our customers or employees to a risk of loss or misuse of information; and could result in legal claims orproceedings, liability or regulatory penalties against us, damage our reputation or otherwise harm our business.

Additionally, we cannot predict the impact that any future information technology or terrorist attack may have on the energy industry in general.The effects of such attacks against us or others in the energy industry could increase the cost of regulatory compliance, increase the cost of insurancecoverage or result in a decline in the U.S. economy which could negatively affect our results of operatiom and financial condition. Ongoing and futuregovernmental efforts to regulate cybersecurity in the energy industry could lead to increased regulatory compliance costs.

The Effects of Technological Advancement, Energy Conservation Measures and Distributed Generation Could Adversely Affect OurOperations and Financial Results

New technologies may emerge that could be superior to, or may not be compatible with, some of our existing technologies, and may require us tomake significant expenditures to remain competitive. Our future success will depend, in part, on our ability to anticipate and adapt to technologicalchanges in a cost-effective manner and to offer, on a timely basis, services that meet customer demands and evolving industry standards.

Additionally, the electric utility industry is undergoing other technological advances such as the expanded cost effective utilization of energyefficiency measures and distributed generation including solar rooftop projects. Customers’ increased use of energy efficiency measures and distributedgeneration could result in lower demand. Reduced demand due to energy efficiency measures and the use of distributed generation, to the extent notsubstantially offset through ratemaking mechanisms, could have a material adverse impact on our financial condition, results of operations and cashflows.

19

Page 29 of 168

Table of Contents

Item lB. Unresolved StaffComments

None.

Item 2. Properties

The principal properties of the Company are described in Item 1, "Business," and such descriptions are incorporated herein by reference.Transmission lines are located either on company-owned land, private rights-of-ways, easements, or on streets or highways by public consent.

The Company owns an executive and administrative office building in E! Paso. The Company leases land in El Paso adjacent to the NewmanPower Station under a lease which expires in June 2033 with a renewal option of 25 years. The Company also leases certain warehouse facilities in ElPaso under a lease which expires in December 2015. The Company has several other leases for office and parking facilities which expire within the nextthree years.

Item 3. Legal Proceedings

The Company is a party to various legal actions. In many of these matters, the Company has excess casualty liability insurance that covers thevarious claims, actions and complaints. Based upon a review of these claims and applicable insurance coverage, the Company believes that none ofthese claims will have a material adverse effect on the financial position, results of operations or cash flows oftbe Company.

See Item 1, Business - "Environmental Matters" and "Regulation", and Part II, Item 8, "Financial Statements and Supplementary Data- Note K,Commitments, Contingencies and Uncertainties - Environmental Matters of Notes to Financial Statements" for discussion oftbe effects of governmentlegislation and regulation on the Company as well as certain pending legal proceedings.

Item4. Mine Safety Disclosures

Not Applicable.

20

Page 30 of 168

Table of Contents

PARTH

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

The Company’s common stock trades on the New York Stock Exchange ("NYSE") under the symbol "EEL The imraday high, intraday low andclose sales prices for the Company’s common stock, as reported in the consolidateA reporting system of the NYSE. and quarterly dividends per sharepaid by the Company for the periods indicatexl below were as follows:

First QuarterSecond QumerThird QuarterFourth Quarter

2014First QuarterSecond QuarterThird QumerFourth Quarter

Sales PriceHigh Low Close

(End of period)

Dividends

34.1838.91

39.1236.18

31.84 $ 33.65 $ 0.25032.47 35.31 0.26532.26 33.40 0.26532.43 35.1~ 0.265

37A6 $40.3340.4342.17

33.44 $ 35.73 $ 0.26535.21 40.21 0.28035.39 36.55 0.28035.34 40.06 0.280

21

Page 31 of 168

Performance Graph

The following graph compares the performance of the Company’s common stock to the performance of Edison Electric Institute’s ("EEl") indexof investor-owned electric utilities and the NYSE Composite, setting the value of each at December 31, 2009 to a base of 100. The table sets forth therelative yearly percentage change in the Company’s cumulative total shareholder return, assuming reinvestment of dividends, as compared to EEl andthe NYSE Composite, as reflected in the graph.

Total Return ComparisonEl Paso Electric, EEl, NYSE Index

12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014

EEEEl Index 100 107 128 131 148 191NYSE Composite 100

As of January 31, 2015, there were 2,560 holders of record of the Company’s common stock. The Company has been paying quarterly cashdividends on its common stock since June 30, 2011 and paid a total of $44.6 million in cash dividends during the twelve months ended December 31,2014. On January 29, 2015, the Board of Directors declared a quarterly cash dividend of $0.28 per share payable on March 31, 2015 to shareholders ofrecord on March 16, 2015. The Board of Directors plans to review the Company’s dividend policy annually in the second quarter of each year.Generally, we are targeting a payout ratio of approximately 45% to 55%. Declaration and payment of dividends is subject to compliance with certainfinancial ratios under Texas law. Since 1999, the Company has also returned cash to stockholders through a stock repurchase program pursuant to whichthe Company has bought approximately 25.4 million shares at an aggregate cost of $423.6 million, including commissions. Under the Company’sprogram, purchases can be made at open market prices or in private transactions and repurchased shares are available for issuance under employeebenefit and stock incentive plans, or may be retired. On March 21,2011, the Board of Directors authorized a repurchase of up to 2.5 million shares ofthe Company’s outstanding common stock (the "2011 Plan"). No shares of common stock were repurchased during the twelve months ended December31, 2014 under the 2011 Plan. The table below provides the amount of the fourth quarter issuer purchases of equity securities.

Period

Maximum Number ofTotal Average Price Total Number of Shares that May Yet Be

Number Paid per Share Shares Purchased as Purchasedof Shares (Including Part of a Pubhcly Under the Plans

Purchased (a) Commissions) Announced Program or Programs

November 1 to November 30, 2014 -- -- -- 393,816December 1 to December 31,2014

(a)Represents shares of common stock delivered to us as payment of withholding taxes due upon the vesting ofrestricted stock held by our employees, not considered part of the 2011 Plan.

22

Page 32 of 168

For Equity Compensation Plan Information see Part Ill, Item 12 - Security Ownership of Certain Beneficial Owners and Management.

23

Page 33 of 168

Table of Contents

Item 6. Selected Financial Data

As of and for the following periods (in thousands except for share and per share data):

Operating revenues

Operating incomeIncome before extraordinary items

Extraordinary gain, net of tax (a)Net incomeBasic earnings per share:

Income before extraordinary items

Extraordinary gain (a)Net income

Weighted average number of shares outstandingDiluted earnings per share:

Income before extraordinary itemsExtraordinary gain (a)

Net incomeWeighted average number of shares and dilutive

potential shares outstandingDividends declared per share of common stock

Year~ End¢d December

2014 2013 2012 201| 2010

917,525 $ 890362 $ 852,881 $ 918,013 $ 877,251151,163 $ 165,635 $ 168,658 $ 190.803 $ 168.96291,428 $ 88,583 $ 90,846 $ $ 90,317

-- $ -- $ -- $ -- $ 10,28691,428 $ 88,583 $ 90,846

$ Z27 $ 2.20 $ 2.27 $ 2.08$ -- $ -- $ -- $ -- $ 0.24$ 2.27 $ 2.20$ $ 2.32

40,190,991 40,114,594 39,974,022 41,349,883 43,129,735

2.27 $ 2.20 $ 2.26 $ 2.48 $ 2.07

-- $ -- $ -- $ -- $ 0.242.27 $ 2.20 $ 2.26 $ 2.48 $ 2.31

$$$

40,211,717 40,126,647 40,055,581$ 1.105 $ 1.045 $ 0.97 $ 0.66 $ --

Cash additions to utility property, plato and equipment $ 277,078 $ 237,411 $ 202,3875 $Total assets $ 3,059,301 $ 2,786,288 $ 2,669,050 $2,396,851 $ 2,364,766Long-term debt, net of current portion $ 1,134,179 $ 999,620 $ 999,535 $ $ 849,745Common stock equity $ 984254 $ 943,833 $ 824,999 $ 760,251 $ 810,375

(a) Extraordinary gain for 2010 represents a $ ! 0.3 million extraordinary gain or $0.24 earnings per share related to Texas regulatory assets.

24

Page 34 of 168

Table of Contents

Item 7. Managcment’s Discussion and Analysis of Financial Condition and Results of Operations

As you read this Management’s Discussion and Analysis, #ease refer to our Financial Statements and the accompanying notes, which contain ouroperating results.

Summary of Critical Accounting Policies and Estimates

Our financial statements have been prepared in conformity with Generally Accepted Accounting Principles ("GAAP"). Note A to the financialstatements contains a summary of our significant accounting policies, many of which require the use of estimates and assumptions. We believe that ofour significant accounting policies, the following are noteworthy because they are based on estimates and assumptions that require complex, subjectiveassumptions by management, which can materially impact reported results. Changes in these estimates or assumptions, or actual results that aredifferent, could materially impact our financial condition and results of operation.

Regulatory Accounting

We apply accounting standards that recognize the economic effects of rate regulation in our Texas, New Mexico and FERC jurisdictions. As aresult, we record certain costs or obligations as either assets or liabilities on our balance sheet and amortize them in subsequent periods as they arereflected in regulated rates. The deferral of costs as regulatory assets is appropriate only when the future recovery of such costs is probable. In assessingprobability, we consider such factors as specific regulatory orders, regulatory precedent and the current regulatory environment. As of December 31,2014, we had recorded regulatory assets currently subject to recovery in future rates of approximately $112.1 million and regulatory liabilities ofapproximately $26.1 million as discussed in greater detail in Note D of the Notes to the Financial Statements. In the event we determine that we can nolonger apply the FASB guidance for regulated operations to all or a portion of our operations or to the individual regulatory assets recorded, we could berequired to record a charge against income in the amount of the remaining unamortized net regulatory assets. Such an action could materially reduce ourshareholders’ equity.

Collection of Fuel Expense

In general, by law and regulation, our actual fuel and purchased power expenses are recovered from our customers. In times of rising fuel prices,we experience a lag in recovery of higher fuel costs. These costs are subject to reconciliation by the PUCT and the NMPRC. Prior to the completion of areconciliation proceeding, we record fuel transactions such that fuel revenues, including fuel costs recovered through base rates in New Mexico, equalfuel expense. In the event that a disallowance of fuel cost recovery occurs during a reconciliation proceeding, the amounts recorded for fuel andpurchased power expenses could differ from the amounts we are allowed to collect from our customers, and we could incur a loss to the extent of thedisallowance.

Decommissioning Costs and Estimated Asset Retirement Obligation

Pursuant to the ANPP Participation Agreement and federal law, we must fund our share of the estimated costs to decommission Palo Verde Units1, 2, 3 and associated common areas. The determination of the estimated liability requires the use of various assumptions pertaining to decommissioningcosts, escalation and discount rates. We determine how we will fund our share of those estimated costs by making assumptions about future investmentreturns and future decommissioning cost escalations. Decommissioning costs will be adjusted prospectively for future changes in estimateddecommissioning costs and when actual costs are incurred to decommission the plant. If the rates of return earned by the trusts fail to meet expectationsor if estimated costs to decommission the plant increase, we could be required to increase our funding to the decommissioning trust accounts.Historically, we have been permitted to collect in rates in Texas and New Mexico the costs of nuclear decommissioning.

Future Pension and Other Post-retirement Obligations

Our obligations to retirees under various benefit plans are recorded as a liability on the balance sheets. Our liability is calculated on the basis ofsignificant assumptions regarding discount rates, expected return on plan assets, rate of compensation increase, life expectancy of retirees and healthcare cost inflation. Changes in these assumptions could have a material impact on both net income and on the amount of liabilities reflected on thebalance sheets.

Tax Accruals

We use the asset and liability method of accounting for income taxes. Under this method, we recognize deferred tax assets and liabilities for thefuture tax consequences attributable to temporary differences between the financial statement carrying

25

Page 35 of 168

Table of Contents

amounts and the tax basis of existing assets and liabilities. The application of income tax law and regulations is complex and we must make judgmentsregarding income tax exposures. Changes in these judgments, due to changes in law, regulation, interpretation, or audit adjustments can materially affectamounts we recognize in our financial statements.

Overview

The following is an overview of our results of operations for the years ended December 31, 2014,2013 and 2012. Net income for the years endedDecember 31, 2014,2013 and 2012 is shown below:

Net income (in thousands)Basic earnings per share

26

Years Ended December 31,

2014 2013 2012

2.27 2.20 2.27

Page 36 of 168

Table of Contents

The following table and accompanying explanations show the primary factors affecting the after-tax change in income between the calendar yearsended 2014 and 2013. 2013 and 2012, and 2012 and 2011 (in thousands):

Prior year December 31 net incomeChange in (net of tax):Increased allowance for funds used during constructionIncreased investment and interest incomeIncreased (degreased) non-base revenue, net of energy expenseDecreased (increased) administrative and general expenseDecreased retail non-fuel base revenuesIncreased taxes other than income taxesDecreased (increased) depreciation and amortizationDecreased (increased) operations and maintenance at fossil fuel generatingplants

2014 2013 2012

6,157 (a) 8955,309 (c) 1.382 (c) (205)3,779 (d)1,536 (g) (2,011) (h) (5,643) (i)

(3,533) (j) (6(3.252) (m) (198) (1,223) (n)(2,415) (o) (696) 1,$04 (p)

(1,792) (q) 751 (1,508)

Decreased (increased) customer care expense (1,393) (0 1,087 (u) 2,159 (u)

Other 474 (1,712) 1,277Current year Decom~ 31 net income ....

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

0)

Allowance for funds used during construction ("AFUDC") increased, primarily due to higher balances of construction work in progress subjectto AFUDC, primarily reflecting construction work in progress on the Montana Power Station and Eastside Operations Center.AFUDC increased, primarily due to higher balances of construction work in progress subject to AFUDC, primarily reflecting construction ofRio Grande Unit 9, which was placed in service in May 2013.Investment and interest income increased, primarily due to increased gains on the sales of equity investments in our Palo Verdedecommissioning trust funds.Non-base revenues, net of energy expenses increased due to: (i) recognition of $2.2 million, in Palo Verde performance rewards associated withthe 2009 to 2012 performance periods, net of disallowed fuel and purchased power costs related to the resolution of the Texas fuelreconciliation proceeding designated as PUCT Docket No. 41852; (ii) a $2.0 million, Texas Energy Efficiency bonus awarded in the fourthquarter of 2014; and (iii) an increase of $3.6 million in deregulated Palo Verde Unit 3 revenues. The increase was partially offset by a decreaseof $3.3 million in transmission wheeling revenues.Non-base revenues, net of energy expenses increased due to an increase of $1.6 million in deregulated Palo Verde Unit 3 revenues and anincrease of $0.5 million in off-system sales retained margins.Non-base revenues, net of energy expenses decreased due to a decrease of $5.0 million in deregulated Palo Verde Unit 3 revenues and adecrease of $2.7 million in transmission wheeling revenues.Administrative and general expense decreased, primarily due to decreased employee pensions and benefits reflecting changes in actuarialassumptions used to calculate expenses for our employee pension and post-retirement benefit plans and plan modifications.Administrative and general expenses increased, primarily due to increased outside services related to software systems support andimprovements and increased consulting and legal services related to the analysis of our future involvement at Four Corners.Administrative and general expenses increased, primarily due to increased pension and benefits expense as a result of changes in actuarialassumptions used to calculate expenses for our retiree benefit plans.Retail non-fuel base revenues decreased, primarily due to a $3.0 million reduction in revenues from sales to public authorities reflectingincreased use of an interruptible rate at a military installation in our service territory as well as other energy saving programs at militaryinstallations; a $2.3 million decrease in sales to residential customers primarily due to milder weather; and a $1.0 million decrease in sales tolarge commercial and industrial customers.Retail non-fuel base revenues decreased, primarily due to a decrease in sales to small commercial and industrial customers and largecommercial and industrial customers, reflecting the reduction in non-fuel base rates in Texas effective on May 1, 2012, and a 1.1% decrease insales to public authorities.

27

Page 37 of 168

Table of Contents

(l)

(m)

(n)

(o)

(p)

(r)

(s)(t)(u)(v)

Retail non-fuel base revenues decreased, primarily due to a reduction in non-fuel base rates in Texas effective May 1, 2012, and for commercialand industrial customers increased use of lower interruptible rates and decreased consumption by several large commercial and industrialcustomers.Taxes other than income taxes increased, primarily due to higher property tax values and assessment rates. Additionally, in the first quarter of2014, the Arizona tax district in which Palo Verde operates adjusted its 2013 property tax rate resulting in an additional charge of $1,3 million.Taxes other than income taxes increased, primarily due to increased revenue related taxes in Texas and increased property taxes in NewMexico.Depreciation and amortization increased due to increased depreciable plant balances including Rio Grande Unit 9, which began commercialoperation on May 13, 2013.Depreciation and amortization decreased due to a reduction in depreciation rates for Palo Verde reflecting the approval of a license extensionfor Palo Verde by the NRC in April 2011, and reduced depreciation rates on gas-fired generating units and on transmission and distributionplant as a result of the Texas rate case settlement in 2012. The depreciation rate reductions were partially offset by higher depreciation expensedue to an increase in depreciable plant.Operations and maintenance at our fossil fuel generating plants increased, primarily due to maintenance at the Four Corners and Newmanpower stations in 2014 with a reduced level of maintenance expense in the same period last year, and increased payroll expense.Operations and maintenance at our fossil fuel generating plants increased primarily due to the timing of maintenance at the Newman and RioGrande power stations in 2012.Palo Verde operations and maintenance expense increased primarily due to increased payroll including incentive compensation.Customer care expense increased primarily due to an increase in uncollectible customer accounts and an increase in payroll costs.Customer care expense decreased primarily due to a decrease in the provision for uncollectible accounts reflecting improved collection efforts.Interest on long-term debt increased, primarily due to interest on $150 million of 3.3% Senior Notes issued in December 2012, partially offsetby the refunding and remarketing of two series of pollution control bonds at lower rates in August 2012.

28

Page 38 of 168

Table of Contents

Historical Results of Operations

The following discussion includes detailed descriptions of factors affecting individual line items in the results of operations. The amountspresented below are presented on a pre-tax basis.

Operating revenues

We recognize revenue from the sale of electricity to retail customers at regulated rates and the sale of energy in the wholesale power marketgenerally at market-based prices. Sales for resale, which are FERC-regulated cost-based wholesale sales within our service territory, accounted for lessthan 1% of revenues in each of 2014, 2013 and 2012.

Revenues from the sale of electricity include fuel costs that are recovered from our customers through fuel adjustment mechanisms. A significantportion of fuel costs are also recovered through base rates in New Mexico. We record deferred fuel revenues for the difference between actual fuel costsand recoverable fuel revenues until such amounts are collected from or refunded to customers. "Non-fuel base revenues" refers to our revenues from thesale of electricity excluding such fuel costs.

Retail non-fuel base revenue percentages by customer class are presented below:

Years Ended December 31,

2014 2013 2012

Commercial and industrial, small 34 33 34Commercial ~ indus~al~ largeSales to public authorities 17 17 17

No retail customer accounted for more than 4% of our non-fuel base revenues during such periods. As shown in the table above, residential andsmall commercial customers comprise 76% of our non-fuel base revenues. While this customer base is more stable, it is also more sensitive to changesin weather conditions. The current rate structure in New Mexico and Texas reflects higher base rates during the pe0k summer season of May throughOctober and lower base rates during November through April for our residential and small commercial and industrial customers. As a result, ourbusiness is seasonal, with higher kwh sales and revenues during the summer cooling season. The following table sets forth the percentage of our retailnon-fuel base revenues derived during each quarter for the periods presented:

Years Ended December 31,

2014 2013 2012

April 1 to June 30 27 27 27

October 1 to December 31 21 20 21Total

Weather significantly impacts our residential, small commercial and industrial customers, and to a lesser extent, our sales to public authorities.Heating and cooling degree days can be used to evaluate the effect of weather on energy use. For each degree the average outdoor temperature variesfrom a standard of 65 degrees Fahrenheit, a degree day is recorded. The table below shows heating and cooling degree days compared to a 10-yearaverage for 2014, 2013 and 2012.

He~ng degree daysCooling degree days

10-year2014 2013 2012 Average

2,671 2,695 2,876 2,667

29

Page 39 of 168

Table of Contents

Customer growth is a key driver in the growth of retail sales. The average number of retail customers grew 1.3% in both 2014 and 2013. See thetables presented on pages 32 and 33 which provide detail on the average number of retail customers and the related revenues and kWh sales.

Retail non-fuel base revenues. Retail non-fuel base revenues decreased by $5.4 million, or 1.0% for the twelve months ended December 31, 2014when compared to the same period in 2013. The decrease reflects a $3.0 million decrease from sales to public authorities, primarily due to an increaseduse of an interruptible rate by a military installation customer, as well as other energy savings from energ2� conservation and e~ciency programs and useof solar distributed generation at military installations. The decrease in retail non-fuel base revenues also resulted from a decline in sales to residentialcustomers of $2.3 million and reflects milder weather in 2014, primarily in the first quarter. The milder weather also suppressed sales to smallcommercial and industrial customers, and to a lesser extent public authority customers. Heating degree days decreased 21.7% when compared to thesame period last year, and were 12.9% below the 10-year average. Cooling degree days were relatively consistent with both the same period last yearand the 10-year average. KWh sales to residential customers decreased 1.4% while the average number of residential customers served increased 1.3%.Retail non-fuel base revenues from sales to small commercial and industrial customers increased slightly, when compared to the same period in 2013,due to a 2.0% increase in the average number of customers served partially offset by milder weather. KWh sales to, and retail non-fuel base revenuesfrom, large commercial and industrial customers decreased 2.8% and 2.5%, respectively, as several customers terminated operations.

Retail non-fuel base revenues decreased by $3.8 million, or 0.7% for the twelve months ended December 31, 2013 when compared to the sameperiod in 2012. The decrease in retail non-fuel base revenues was primarily due to decreased revenues from our commercial and industrial customers,which reflects the impact of the reduction in non-fuel base rates for our Texas customers that became effective May 1, 2012. Non-fuel base revenuesfrom sales to small commercial and industrial and large commercial and industrial customers decreased 1.8% and 4.3%, respectively. Retail non-fuelbase revenues from sales to public authorities decreased 1.1%. While the kWh sales to public authorities increased by 0.3% in 2013 compared to 2012,revenues from this customer class reflect the impacts of energy conservation and efficiency programs and use of solar distributed generation at militaryinstallations. Additionally, 2013 revenues were negatively impacted by the federal government sequestration and shutdown in October 2013. KWh salesto small commercial and industrial customers decreased 0.7%. The decrease in retail non-fuel base revenues was partially offset by an increase of 1.1%in non-fuel base revenues from sales to residential customers reflecting a 1.2% increase in kWh sales to our residential customer class. The increase inkWh sales to our residential customers reflects a 1.3% increase in the average number of residential customers served. We experienced less favorableweather during our summer cooling season. Cooling degree days decreased 6.3%, when compared to the same period in 2012, but were higher than the10-year average by 2.4%. Heating degree days increased 20.8% over 2012 and were 8.0% higher than the 10-year average,

Fuel revenues. Fuel revenues consist of." (i) revenues collected from customers under fuel recovery mechanisms approved by the state commissionsand the FERC; (ii) deferred fuel revenues which are comprised of the difference between fuel costs and fuel revenues collected from customers; and(iii) fuel costs recovered in base rates in New Mexico. In New Mexico and with our sales for resale customer, the fuel adjustment clause allows us torecover under-recoveries or refund over-recoveries of current fuel costs above the amount recovered in base rates with a two-month lag. In Texas, fuelcosts are recovered through a fixed fuel factor. We can seek to revise our fixed fuel factor based upon our approved formula at least four months afterour last revision, except in the month of December. In addition, if we materially over-recover fuel costs, we must seek to refund the over-recovery, andif we materially under-recover fuel costs, we may seek a surcharge to recover those costs. Fuel over and under recoveries are considered material whenthey exceed 4% of the previous twelve months’ fuel costs.

On July 10, 2014, the PUCT approved a settlement in the Texas fuel reconciliation proceeding designated as PUCT Docket No. 41852 andfinancial implications of the settlement were recorded in the second quarter of 2014, increasing fuel revenues by $2.2 million. This amount included$3.4 million of Palo Verde performance rewards associated with the 2009 to 2012 performance periods net of disallowed fuel and purchased power costsof $1.75 million as determined by the PUCT of which $0.5 million had been reserved. The settlement provided for the reconciliation of fuel costsincurred from July 1, 2009 to March 31, 2013.

We under-recovered fuel costs by $3.1 million in the twelve months ended December 31, 2014. Included in under-recovered fuel costs is $2.2million related to Palo Verde performance rewards, net of certain disallowed costs. In September 2014, $8.3 million was credited to customers throughthe applicable fuel adjustment clauses as the result of a reimbursement from the DOE related to spent nuclear fuel storage. We also under-recovered$10.8 million in fuel costs in the twelve months ended December 31, 2013, while we over-recovered fuel costs by $18.5 million in the twelve monthsended December 31, 2012. A refund of $6.9 million was returned to our Texas customers in the twelve months ended December 31, 2012. AtDecember 31, 2014, we had a net fuel under-recovery balance of $9.3 million, including an under-recovery balance of $10.3 million in Texas and FERCand an over-recovery balance of $0.9 million in New Mexico. Over-recoveries in New Mexico will be refunded through our fuel adjustment clauseduring 2015. Effective with May 2014 billings, we increased our Texas fixed fuel factor by 6.9% to reflect increases in prices for natural gas.

30

Page 40 of 168

Table of Contents

Off-system sales. Off-system sales are wholesale sales into markets outside our service territory, Off-system sales are primarily made in off-peakperiods when we have competitive generation capacity available after meeting our regulated service obligations. Beginning April l, 2014, we share100% of margins on non-arbitrage sales (as defined by the settlemen0 and 50% of margins on arbitrage sales with our Texas customers. For the periodApril l, 2014 through June 30, 2015, our total share of margins assignable to the Texas retail jurisdiction, on arbitrage and non-arbitrage off-systemsales, may not exceed 10% of the total margins assignable to the Texas retail jurisdiction on all off-system sales. Prior to April l, 2014, we shared 90%of off-system sales margins with our Texas customers, and we retained 10% of off-system sales margins. We are sharing 90% of off-system salesmargins with our New Mexico customers, and 25% of our off-system sales margins with our resale customers under the terms of their contract.

Typically, we realize a significant portion of our off-system sales margins in the first quarter of each calendar year when our native load is lowerthan at other times of the year, allowing for the sale in the wholesale market of relatively larger amounts of off-system energy generated from lower costgenerating resources. Palo Verde’s availability is an important factor in realizing these off-system sales margins.

The table below shows MWhs, sales revenue, fuel cost, total margins, and retained margins made on off-system sales for the twelve months endedDecember 31,2014,2013 and 2012 (in thousands except for MWhs).

Sales revenue

Years Ended December 31,

2014 2013 2012

$ 97,980 $ 82,806 $ 72,770

Total margins $ 23,264 $ 14,565 $ 10,289gmi ed mr S S

Off-system sales revenues increased $15.2 million or 18.3% and the related retained margins increased $0.6 million or 38.6% for the twelvemonths ended December 31, 2014 when compared to 2013 as a result of higher average market prices for power and a 5.5% increase in MWh sales. Off-system sales revenues increased $10.0 million or 13.8% and the related retained margins increased $0.5 million or 41.1% for the twelve months endedDecember 31, 2013 when compared to the same period in 2012, as a result of higher average market prices for power partially offset by a 5.4% declinein MWh sales.

31

Page 41 of 168

Table of Contents

Comparisons of kWh sales and operating revenues are shown below:

Years Ended December 31:

kwh sales (in thousands):Retail:

Residential

Commercial and industrial, smallCommercial and industrial, largeSales to public authorities

Total retail sales

Wholesale:Sales for resaleOff-system sales

Total wholesale salesTotal kWh sales

Operating revenues (in thousands):

Non-fuel base revenues:Retail:

Residential

Commercial and industrial, smallCommercial and industrial, largeSales to public authorities

Total retail non-fuel base revenuesWhol~e:

Sales for resaleTotal non-fuel base revenues

Fuel revenues:

Recovered from customers during the periodUnder collection of fuel (1)New Mexico fuel in base rates

Total fuel revenues (2)Off-system sales:

Fuel costShared marginsRetained margins

Total off-system sales

Increase [Decre~e)2014 2013 Amount Percent

2,640,535 2,679;2622,357,846 2,349,148 8,6981,064,475 1,095,3791,562,784 1,622,607 (59,823)

61,729 61,232 / 4972,609,769 2,472,622 137,147

10,297, ! 38 10,280,250 16,888

0.4

(2.8)(3.7)

(1.6)

0.85.55.4

0.2

$ 234,371 5; 236,651 $ (2,280)185,388 184,568 82039,239 40,235 (996)92,066 95,044 (2,978)

551.064 556,498 (5,434)

(1.0)%0.4

(2.5)(3.1)(1.o)

2,277 2,172 105 4.8

(1.0)

161,052 133,481 ~ 27,571 ~ ~3,110 10,849 (7,739) (71.3)

71,614 73,295 (1,681)235,776 217,625 18,151 8.3

74,716 68,241 6,475 9.521,117 13,016 ~ 8,101 62.22,147 1,549 598 38.6

18.3

other (3) (4)Total operating revenues

Average number of retail customers (5):

ResidentialCommercial and industrial, smallCommercial and industrial, largeSales to public authorities

Total

30,428 31;261 (833)$ 917,525 $ 890,362 $ 27,163

352,277 347,891 4,386393600 38,836 .... 764

49 50 (1)5,088 4,997 91

397,014 391,774 5,240

(l) 2014 includes a DOE reftmd related to spem fuel storage of $8.3 million offset in part by $2.2 million related to Palo Verde performance rewards, net.(2) Includes deregulated Palo Verde Unit 3 revenues for the New Mexico jurisdiction of $15.0 million and $11.4 million in 2014 and 2013, respeclJvely.(3) Includes an Energy Efficiency Bonus of $2.0 million and $0.5 million in 2014 and 2013, respectively.(4) Represents revenues with no related kWh sales.(5) The number of retail customers presented is based on the number of service locations.

(2.7)

3.1

1.3 %2.0

(2.0)1.8

1.3

32

Page 42 of 168

Table of Contents

Years Ended December 31:

kWh sales (in thousands):Retail:

Residential

Commercial and industrial, smallCommercial and industrial, largeSales to public authorities

Total retail salesWholesale:

Sales for resaleOff-system sales

Total wholesale salesTotal kWh sales

Operating revenues (in thousands):

Non-fuel base revenues:Retail:

ResidentialCommercial and industrial, smallCommercial and induslrial, largeSales to public authorities

Total retail non-fuel base revenuesWholesale:

Sales for resaleTotal non-fuel base revenues

Fuel revenues:Recovered from customers during the period (1)Under (over) collection of fuelNew Mexico fuel in base rates

Total fuel revenues (2)Off-system sales:

Fuel costShared marginsRetained margins

Total off-system sales

Increase (Decrease)

2013 2012 Amount Percent

2,679,2622,349,148 2,366,541 (17,393) (0.7)

1,095,379 1,082,973 12,406 1.1

1,622,607 1,617,606 5,001 0.3

0.4

61,232 64,266 (3,034) (4.7)

2,472,622 2,614,132 (141,510) (5.4)

(5.4)10,280,250 10,393,866 (113,616) (1.1)

236,651 $ 234,095 $ 2.556 1.1%

184,568 188,014 (1.8)40.235 42,041 (1,806) (4.3)

95,044 96,132 (1,088) (1.1)556,498 560,282 (3,784) (0.7)

2,172 2,318 (146) (6.3)

(0.7)

133,481 130,193 -- 2.510,849 (18,539) 29,388 --73,295 74,154 (859) (1.2)

217,625 185,808 31,817 17.1

68.241 62,481 5,760 9.213,016 ~ 9,191

1,549 1,098 451 41.1

82,806

Other (3)

Total operating revenuesAverage number of retail customers (4):

ResidentialCommercial and industrial, smallCommercial and industrial, largeSales to public authorities

Total

31,261 31,703 (~2)$ 890,362 $ 852,881 $ 37,481

(I.4)4.4

347,891 343,409 4,482 1.3%38,836 38,601 235 0.6

50 504,997 4,828 169 3.5

391,774 386,888 4,886 1.3

(1) Excludes $6.9 million of refunds m 2012 related to prior periods’ Texas deferred fuel revenues.(2) Includes deregulated Palo Verde Unit 3 revenues for the New Mexico jurisdiction of $11.4 million and $9.8 million in 2013 and 2012, respectively.(3) Represents revenues with no related kWh sales.(4) The number of retail customers presented is based on the number of service locations.

33

Page 43of168

Table of Contents

Energy expenses

Our sources of energy include electricity generated from our nuclear, natural gas and coal generating plants and purchased power. Palo Verderepresents approximately 34% of our available net generating capacity and approximately 54% of our Company-generated energy for the twelve monthsended December 3 l, 2014. Fluctuations in the price of natural gas, which also is the primary factor influencing the price of purchased power, have had asignificant impact on our cost of energy.

Energy expenses increased $26.7 million or 9.2% for the twelve months ended December 31, 2014 compared to 2013, primarily due to an increaseof $32.7 million in natural gas costs due to a 17.1% increase in the average costs of gas and a 2.4% increase in MWhs generated with natural gas, andincreased total purchased power of $2.4 million due to a 17.5% increase in the average price of power purchased partially offset by a 10.2% decrease inM Whs purchased. Photovoltaic purchased power costs per MWh decreased for the twelve months ended December 31, 2014, when compared to thesame period in 2013 primarily due to the lower priced purchases from Macho Springs solar photovoltalc project which began commercial operation inMay 2014. The increase in energy expense was partially offset by a decrease in nuclear fuel expense related to an $8.5 million settlement with the DOEfor reimbursement of spent fuel storage and management costs recorde~ I in 2014.

Energy expenses increased $37.8 million or 15.0% for the twelve months ended December 31, 2013 compared to 2012, primarily due to anincrease of $36.3 million in natural gas costs due to a 24% increase in the average costs of gas and a 3.5% increase in the MWhs generated with naturalgas, and increased total purchased power of $2.1 million resulting from an 18.3% increase in the average price of power purchased partially offset by a12.5% decrease in MWh purchased.

The table below details the sources and costs of energy for 2014, 2013 and 2012.

Fuel Tv~e

2014 2013

Cost per Cost perCost MWh MWh Cost MWh MWh

(in thousands) (in thousands)

Coal 12,883 596,252Nuclear .41,289 (a)

Total 251,005 9,477,129Purchase Power:

Photovoltaic 19,575 227,979

Total purchased power 64,804 1,390,490Total energy

21.61 13,680 635,717 21.52

27.39 226,768 9,288,773 24.41

85.86 13,863 120,926 114.64

39.80

47.35 62,363 1,547,930 40.29

Fuel Tvue

Natural GasCoalNuclear

TotalPurchase Power:

PhotovoltaicOther

Total purchased power

Total energy

Cost

(inthousands)

$ 127,83313,604

2012

MWhCost perMWh

655,108 20.77

191,076 9,262,133 20.63

11,776 103,189 114.1248,475 1,665,621 29.1060,251 1,768,810 34.06

(a) Costs includes a DOE settlement of $8.5 million recorded in 2014. Cost per MWh excludes this settlement.

34

Page 44 of 168

Table of Contents

Other operations expense

Other operations expense increased $1.7 million or 0.7% in 2014 compared to 2013 primarily due to a $5.6 million increase in other operationspayroll costs including a $2.7 million increase in incentive compensation, a $1.5 million increase in customer care expenses including an increase inuncollectible customer accounts, and a $1.5 million increase in Palo Verde operations expense. These increases were partially offset by $5.5 milliondecrease in employee pensions and benefits primarily due to changes in actuarial assumptions used to calculate expenses for our employee pension andpost-retirement benefit plans and plan modifications.

Other operations expense increased $0.6 million or 0.3% in 2013 compared to 2012 primarily due to increased administrative and general expenseof $2.9 million due to increased outside services of $3.8 million related to software systems support and improvements and consulting and legal servicesrelated to the analysis of our future involvement at the Four Corners Generating Station. These increases were partially offset by decreased customercare expenses of $1.7 million primarily related to a decrease in our provision for uncollectible customer accounts reflecting improved collection effortsand decreased power production operation expense at Palo Verde of $1.4 million.

Maintenance expense

Maintenance expenses increased $4.6 million or 7.5% in 2014 compared to 2013 due to an increase in maintenance expense at Four Comers andNewman generating plants and increased payroll expense. Maintenance expenses increased $0.7 million or 1.2% in 2013 compared to 2012 due to anincrease in maintenance expense for our distribution system.

Depreciation and amortization expense

Depreciation and amortization expense increased $3.7 million or 4.7% in 2014 compared to 2013, due to increases in depreciable plant balancesprimarily in our transmission and distribution plant and our local generating plant, including Rio Grande Unit 9 which began commercial operation onMay 13, 2013. Depreciation and amortization expense increased $1.1 million or 1.4% in 2013 compared to 2012 expense due to an increase indepreciable plant including Rio Grande Unit 9. The 2013 increase was partially offset by decreased depreciation expense due to reduced depreciationrates on gas-fired generating units and on transmission and distribution plant as a result of the Texas rate case settlement in May 2012.

Tares other than income tares

Taxes other than income taxes increased $5.0 million or 8.7% in 2014 compared to 2013, primarily due to higher property tax values andassessment rates and increases in revenue related taxes. Additionally, in the first qtm_rter of 2014, the Arizona tax district in which Palo Verde operatesadjusted its 2013 property tax rate, resulting in an additional charge of $1.3 million. Taxes other than income taxes increased $0.3 million or 0.5% in2013 compared to 2012, primarily due to increased property taxes which were partially offset by a reduction in revenue related taxes.

Other income (deductions)

Other income (deductions) increased $13.9 million in 2014 compared to 2013, primarily as a result of" (i) increased investment and interest incomedue to increased net realized gains on equity investments in our decommissioning trusts; (ii) increased allowance for equity funds used duringconstruction ("AEFUDC") due to higher balances of construction work in progress including the Montana Power Station and Eastside OperationsCenter; and (iii) an increase in miscellaneous other income due to a gain recognized on sale of assets in 2014 with a reduced level of activity in 2013.

Other income (deductions) increased $0.2 million or 1.5% in 2013 compared to 2012, primarily as a result of increased investment and interestincome, due to realized gains on equity investments in our decommissioning trusts in 2013 compared to net unrealized and realized losses On equityinvestments in our decommissioning trusts in 2012 and increased AEFUDC due to higher balances of construction work in progress in 2013. Thisincrease was partially offset by increased miscellaneous deductions in 2013 due to the timing and amount of charitable donations and gains recognizedon the sale of properties, plants and equipments in 2012 with no comparable amounts in 2013.

Interest charges (credits)

Interest charges (credits) decreased $0.9 million or 1.9% in 2014 compared to 2013, primarily due to increased allowance for borrowed funds usedduring construction, ("ABFUDC") as a result of higher balances of construction work in progress in 2014 partially offset by an increase in interest onshort-term borrowings for working capital purposes and interest expense on the $150 million of 5.00% Senior Notes due 2044 issued in December 2014.

35

Page 45 of 168

Table of Contents

Interest charges (credits) increased $2.8 million or 6.2% in 2013 compared to 2012 primarily due to interest on $150 million of 3.3% Senior Notesissued in December 2012 partially offset by (i) a decrease in interest on short-term borrowings for working capital purposes; (ii) the refunding andremarketing of two series of pollution control bonds at lower rates in August 2012; and (iii) increased ABFUDC as a result of higher balances ofconstruction work in progress in 2013.

Income tax expense

Income tax expense decreased by $2.6 million or 5.9% in 2014 compared to 2013 primarily due to (i) an increase in the AEFUDC, (ii) an increasein capital gains on equity investments in our decommissioning trusts which are taxed at a lower rate, and (iii) an increase in tax credits earned. Thesedecreases were partially offset by an increase in state income taxes. Income tax expense decreased by $3.3 million or 7.1% in 2013 compared to 2012primarily due to a decrease in pre-tax income and a decrease in state income taxes due to positive developments in state income tax audits andsettlements.

New accounting standards

In July 2013, the FASB issued new guidance ( ASU 2013-11, Income Taxes (Topic 740)) to eliminate the diversity in the financial statementpresentation of an unrecognized tax benefit when anet operating loss carryforward, a similar tax loss, or atax credit carryforward exists. ASU 2013-11requires an entity to present an unrecognized tax benefit in the financial statements as a reduction to a deferred tax asset for a net operating losscarryforward, a similar tax loss, or a tax credit earryforward, except in certain circumstances when it would be reflected as a liability. We implementedASU 2013-11 in the first quarter of 2014 on a prospective basis. This ASU did not have a significant impact on our statement of operations or statementsof cash flows.

In May 2014, the FASB issued new guidance (ASU 2014-09, Revenue from Contracts with Customers (Topic 606)) to provide a framework thatreplaces the existing revenue recognition guidance. ASU 2014-09 is the result of a joint effort by the FASB and the International Accounting StandardsBoard ("IASB") intended to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. Generally AcceptedAccounting Principles ("GAAP") and International Financial Reporting Standards. ASU 2014-09 provides that an entity should recognize the amount ofrevenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 is effective for annual periods andinterim periods within that reporting period beginning after December 15, 2016, for public business entities. Early adoption of ASU 2014-09 is notpermitted. We are currently assessing the future impact of this ASU.

Inflation

For the last several years, inflation has been relatively low and, therefore, has had little impact on our results of operations and financial condition.

Liquidity and Capital Resources

In December 2014, we issued $150 million in aggregate principal amount of 5.00% Senior Notes due December 1, 2044 to fund constructionexpenditures and to repay the outstanding balance of our revolving credit facility ("RCF") used for working capital and general corporate purposes. Wecontinue to maintain a strong balance of common stock equity in our capital structure which supports our bond ratings, allowing us to obtain financingfrom the capital markets at a reasonable cost. At December 31, 2014, our capital structure, including common stock, long-term debt, current maturitiesof long-term debt, and short-term borrowings under the RCF, consisted of 45.8% common stock equity and 54.2% debt. At December 31, 2014, we hadon hand $40.5 million in cash and cash equivalents. Based on current projections, we believe that we will have adequate liquidity through our currentcash balances, cash from operations, and available borrowings under the RCF to meet all of our anticipated cash requirements for the next twelvemonths. We may issue long-term debt in the capital markets to finance future capital requirements in late 2015 or early 2016.

Our principal liquidity requirements in the near-term are expected to consist of capital expenditures to expand and support electric serviceobligations, expenditures for nuclear fuel inventory, interest payments on our indebtedness, cash dividend payments, operating expenses including fuelcosts, maintenance costs, taxes, and payment of our $15 million Series A 3.67% Senior Note which matures in August 2015.

Capital Requirements. During the twelve months ended December 31, 2014, our capital requirements primarily consisted of expenditures for theconstruction and purchase of electric utility plant, cash dividend payments, and purchases of nuclear fuel. Projected utility construction expenditures areto expand and update our transmission and distribution systems, add new generation, and make capital improvements and replacements at Palo Verdeand other generating facilities. We are constructing Montana Power Station ("MPS") which will consist of four natural gas-fired 88 MW simple-cycleaeroderivative combustion turbines. Units 1 and 2 are expected to reach commercial operation during the first quarter of 2015. Units 3 and 4 areprojected to be

36

Page 46 of 168

Table of Contents

completed before the summer peak of 2016 and 2017, respectively. As of December 31, 2014, we had expended $234.7 million, of which $123.7 millionwas spent during 2014 for MPS including costs related to common facilities and transmission systems. These amounts include AFUDC. Estimated cashconstruction expenditures for the MPS in 2015 are approximately $100.9 million and estimated construction expenditures for all capital projects for2015 are approximately $271.0 million. See Part I, Item 1, "Business- Construction Program". Cash capital expenditures for new electric plant were$277.1 million in the twelve months ended December31, 2014 and $237.4 million in the twelve months ended December31, 2013. Capitalrequirements for purchases of nuclear fuel were $37.9 million for the twelve months ended December 31, 2014 and $30.5 million for the twelve monthsended December 31, 2013.

On December 30, 2014, we paid a quarterly cash dividend of $0.28 per share or $11.3 million to shareholders of record on December 12, 2014. Wepaid a total of $44.6 million in cash dividends during the twelve months ended December 31, 2014. On January 29, 2015, our Board of Directorsdeclared a quarterly cash dividend of $0.28 per share payable on March 31, 2015 to shareholders of record on March 16, 2015 which will require cash of$11.3 million. We expect to continue paying quarterly dividends during 2015 and we expect to review the dividend policy in the second quarter of2015.At the current payout rate, we would expect to pay total cash dividends of approximately $45.2 million during 2015. In addition, while we do notcurrently anticipate repurchasing shares in 2015, we may repurchase common stock in the future. Under our program, purchases can be made at openmarket prices or in private transactions, and repurchased shares are available for issuance under employee benefit and stock incentive plans, or may beretired. No shares of common stock were repurchased in 2014 or 2013. As of December 31, 2014, 393,816 shares remain eligible for repurchase.

We will continue to maintain a prudent level of liquidity as well as take market conditions for debt and equity securities into account. We primarilyutilize the distribution of dividends to maintain a balanced capital structure and supplement this effort with share repurchases when appropriate. Ourliquidi~ needs can fluctuate quickly based on fuel prices and other factors and we are continuing to make investments in new electric plant and otherassets in order to reliably serve our customers. In light of these factors, we expect it will be a number of years before we achieve a dividend payoutequivalent to industry average.

Our cash requirements for federal and state income taxes vary from year to year based on taxable income, which is influenced by the timing ofrevenues and expenses recognized for income tax purposes. Income tax payments in 2015 are expected to be minimal due to tax law changes whichaccelerated tax deductions and alternative minimum tax credit carry-forwards.

We continually evaluate our funding requirements related to our retirement plans, other post-retirement benefit plans, and decommissioning trustfunds. We contributed $10.9 million and $16.9 million to our retirement plans during the twelve months ended December 31, 2014 and 2013,respectively. We did not make any contributions to our other post-retirement benefit plans during the twelve months ended December 31, 2014, as weutilized excess contributions from the $3.1 million contributed during the twelve months ended December 31, 2013. We contributed $4.5 million to ourdecommissioning trust funds in both 2014 and 2013. We are in compliance with the funding requirements of the federal government for our benefitplans. In addition, with respect to our nuclear plant decommissioning trust, we are in compliance with the funding requirements of the federal law andthe Arizona Nuclear Power Project Participation Agreement. We will continue to review our funding for these plans in order to meet our futureobligations.

In 2010, the Company and RGRT, a Texas grantor trust through which we finance our portion of fuel for Palo Verde, entered into a note purchaseagreement with various institutional purchasers. Under the terms of the agreement, RGRT sold to the purchasers $110 million aggregate principalamount of senior notes. In August 2015, $15 million of these senior notes will mature.

Capital Resources. Cash provided by operations, $243.3 million in 2014 and $247.5 million in 2013, is a significant source for funding capitalrequirements. Cash from operations has been impacted by the timing of the recovery of fuel costs through fuel recovery mechanisms in Texas andNew Mexico and our sales for resale customer. We recover actual fuel costs from customers through fuel adjustment mechanisms in Texas,New Mexico, and from our sales for resale customer. We record deferred fuel revenues for the under-recovery or over-recovery of fuel costs until theycan be recovered from or refunded to customers. In Texas, fuel costs are recovered through a fixed fuel factor. We can seek to revise our fixed fuelfactor at least four months after our last revision except in the month of December based upon our approved formula which allows us to adjust fuel ratesto reflect changes in costs of natural gas. We are required to request to refund fuel costs in any month when the over-recovery balance exceeds athreshold material amount and we expect fuel costs to continue to be materially over-recovered. We are permitted to seek to surcharge fuel under-recoveries in any month the balance exceeds a threshold material amount that we expect fuel cost recovery to continue to be materially under-recovered.Fuel over and under-recoveries are considered material when they exceed 4% of the previous twelve months’ fuel costs. On May 1, 2014, we increasedour fixed fuel factor charged to our Texas retail customers by 6.9% to reflect the increased level of prices for natural gas that existed at the time.

The Company expects 2015 earnings to be adversely impacted by the regulatory lag resulting from the commercialization of Units land 2 of theMontana Power Station, the related transmission system and the Eastside Operations Center expected to be

37

Page 47 of 168

Table of Contents

placed in service during the first quarter of 2015. We expect to incur aggregate construction costs of approximately $260.6 million in construction ofthese facilities. With the introduction of these facilities into service, we will begin to incur increased expenses related to depreciation, property taxes,operations and maintenance. Furthermore, we will cease recognizing AFUDC on such facilities. Base rate increases to seek recovery of these costs areexpected to be filed in the second and third quarter of 2015 for our New Mexico and Texas jurisdictions, respectively, with new rates expected to beeffective in or about March 2016 for both jurisdictions.

During the twelve months ended December 31, 2014, net fuel recoveries resulted in increased cash from operations when compared to the sameperiod in 2013. During the twelve months ended December 31, 2014, the Company had a fuel under-recovery of $3.1 million compared to an under-recovery of fuel costs of $10.8 million during the twelve months ended December 31, 2013. At December 31, 2014, we had a net fuel under-recoverybalance of $9.3 million, including an under-recovery balance of $10.3 million for our Texas and FERC jurisdictions and an over-recovery balance oI$0.9 million in New Mexico.

In December 2014, we issued $150 million in aggregate principal amount of 5.00% Senior Notes due December 1, 2044. The gross proceeds fromthe issuance of the senior notes were $149.5 million, net of a $0.5 million discount before commissions and expenses and the effective interest rate was5.10%. The net proceeds from the sale of these senior notes were used to fund construction expenditures and to repay the outstanding balance of ourrevolving credit facility ("RCF") used for working capital and general corporate purposes.

We maintain an RCF for working capital and general corporate purposes and the financing of nuclear fuel through the RGRT. The RGRT is thetrust through which we finance our portion of nuclear fuel for Palo Verde and is consolidated in the Company’s financial statements. On January 14,2014, we amended and extended our $300 million RCF, which includes an option to expand the size to $400 million, upon the satisfaction of certainconditions including obtaining commitments from lenders or third party financial institutions. The amended facility extends the maturity fromSeptember 2016 to January 2019. In addition, we may extend the January 2019 maturity, subject to lenders’ approval, by two additional one yearperiods. The terms of the agreement provide that amounts we borrow under the RCF may be used for working capital and general corporate purposes.The total amount borrowed for nuclear fuel by the RGRT was $124.5 million at December 31, 2014, of which $14.5 million had been borrowed underthe RCF and $110 million was borrowed through senior notes. Borrowings by RGRT for nuclear fuel were $124.4 million at December 31, 2013, ofwhich $14.4 million had been borrowed under the RCF and $110 million was borrowed through senior notes. Interest costs on borrowings to financenuclear fuel are accumulated by the RGRT and charged to us as fuel is consumed and recovered from customers through fuel recovery charges. Noborrowings were outstanding at December 31, 2014 or December 31,2013, under the RCF for working capital and general corporate purposes.

We believe we have adequate liquidity through our current cash balances, cash from operations, available borrowings under the RCF, and ourfavorable access to capital markets to meet all of our anticipated cash requirements for the next twelve months. In the fourth quarter of 2013, wereceived approval from the NMPRC and the FERC to incrementally issue up to $300 million of long-term debt and to guarantee the issuance of up to$50 million of new long-term debt by RGRT to finance furore purchases of nuclear fuel and to refinance existing nuclear fuel debt obligations. TheFERC approval was effective on November 15, 2013 and terminates two years thereafter. The NMPRC approval was effective on October 30, 2013 andremains in effect until the debt is issued. The $150 million of 5.00% Senior Notes issued in December 2014 were issued pursuant to these approvals. Theauthorizations to issue up to an additional $150 million of long-term debt and up to $50 million of new long-term debt by RGRT provides us with theflexibility to access the debt capital markets prior to the termination of the FERC approval on November 15, 2015. Additionally, we could requestapproval from the FERC to issue additional debt after November 15, 2015. We may decide to issue long-term debt in the capital markets to financecapital requirements in late 2015 or early 2016.

38

Page 48 of 168

Table of Contents

Contractual Obligations. Our contractual obligations as of December 31, 2014 are as follows (in thousands)."

Long-Term Debt (including interest):

Senior notes (1) $Pollution control bonds (2)

RGRT Senior notes (3)Financing Obligations (including interest):

Revolving credit facility (4)Purchase Obligations:

Power contractsFuel contracts:

Coal (5)Gas (5)Nuclear fuel (6)

Retirement Plans and Other Post-retirement benefits(7)Nuclear decommissioning trust funds (8)Operating leases (9)

Total $

To~al

1,870,975455,420130,864

14,720

2,563

17,757

82,330

2015

47,700

20,054

14,720

2,563

11,172

22,873

Paymen~due by pe~od2016and 2018 and

2017 2019

$ 95,400 $ 95,400

59,006 4,536

6,585

28,123

2020 andBeyond

$ 1,632,475

47,268

21,857 9,477

148,101

3,104,223

4,535 9,071 9,071 125,424

$ 191,740 $ 331,147 $ 214,454 $ 2,366,882

(1)

(2)

(3)

(4)

(5)

(6)(7)

(8)(9)

We have four issuances of Senior Notes. In May 2005, we issued $400.0 million in aggregate principal amount of 6% Senior Notes dueMay 15, 2035. In June 2008, we issued $150.0 million in aggregate principal amount of 7.5% Senior Notes due March 15, 2038. In December2012, we issued $150.0 million in aggregate principal amount of 3.3% Senior Notes due December 15, 2022. In December 2014, we issued$150.0 million in aggregate principal amount of 5.00% Senior Notes due December 1, 2044.We have four series of pollution control bonds which are scheduled for remarketing and/or mandatory tender, one in 2017, two in 2040, andone in 2042.In 2010, the Company and RGRT entered into a Note Purchase Agreement for $110 million aggregate principal amount of senior notesconsisting of." (a)$15 million aggregate principal amount of 3.67% RGRT Senior Notes, Series A, due August 15, 2015; (b)$50 millionaggregate principal amount of 4.47% RGRT Senior Notes, Series B, due August 15, 2017; and (c) $45 million aggregate principal amount of5.04% RGRT Senior Notes, Series C, due August 15, 2020,This reflects obligations outstanding under the $300 million RCF. At December 31, 2014, $14.5 million was borrowed by RGRT for nuclearfuel. This balance includes interest based on actual interest rates at the end of 2014 and assumes this amount will be outstanding for the entireyear of 2015.Amount is based on the minimum volumes per the contract and market and/or contract price at the end of 2014. Gas obligation includes a gasstorage contract and a gas transportation contract.Some of the nuclear fuel contracts are based on a fixed price, adjusted for a market index. The index used here is the index at the end of 2014.This obligation is based on our expected contributions and includes our minimum contractual funding requirements for the non-qualifiedretirement income plan and the other post-retirement benefits for 2015. We have no mimmum cash contractual funding requirement related toour retirement income plan or other post-retirement benefits for 2015. However, we may decide to fund at higher levels and expect tocontribute $11.3 million to our retirement plans in 2015, as disclosed in Part II, Item 8, "Notes to Financial Statements, Note M, EmployeeBenefits". Minimum fimding requirements for 2015 and beyond are not included due to the uncertainty of interest rates and the related returnon assets.These obligations represent funding amounts approved in PUCT Docket No. 40094 and NMPRC Case No. 09-00171-UT.We lease land in El Paso adjacent to the Newman Power Station under a lease which expires in June 2033 with a renewal option of 25 years. Inaddition, we lease certain warehouse facilities in El Paso under a lease which expires in December 2015. We also have several other leases foroffice, parking facilities and equipment which expire within the next three years.

39

Page 49 of 168

Table of Contents

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or furore effect on our financial condition, changesin financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

40

Page 50 of 168

Table of Contents

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The following discussion regarding our market-risk sensitive instrumems contains forward-looking information involving risks and uncertainties.The statements regarding potential gains and losses are only estimates of what could occur in the future. Actual future results may differ materially fromthose estimates presented due to the characteristics of the risks and uncertainties involved.

We are exposed to market risk due to changes in interest rates, equity prices and commodity prices. Substantially all financial instruments andpositions we hold are for purposes other than trading and are described below.

Interest Rate Risk

Our long-term debt obligations are all fixed-rate obligations, except for the RCF, which is based on floating rates.

To the extent the RCF is utilized for nuclear fuel purchases, interest rate risk, if any, related to the RCF is substantially mitigated through theoperation of the PUCT and the NMPRC rules which establish energy cost recovery clauses. Under these rules, actual energy costs, including interestexpense on nuclear fuel financing, are recovered from our customers.

Our decommissioning trust funds consist of equity securities and fixed income instruments and are carried at fair value. We face interest rate riskon the fixed income instruments, which consist primarily of municipal, federal and corporate bonds and which were valued at $104.7 million and$85.3 million as of December 3 l, 2014 and 2013, respectively. A hypothetical 10% increase in interest rates would reduce the fair values of these fundsby $1.2 million on their fair values at both December 31, 2014 and 2013.

Equity Price Risk

Our decommissioning trust funds include marketable equity securities of approximately $123.4 million and $122.9 million at December 31, 2014and 2013, respectively. A hypothetical 20% decrease in equity prices would reduce the fair values of these funds by $24.7 million and $24.6 millionbased on their fair values at December 31, 2014 and 2013, respectively. Declines in market prices could require that additional amounts be contributedto our nuclear decommissioning trusts to maintain minimum funding requirements. We will not have a requirement to expend monies held in trustbefore 2044 or a later period when we begin to decommission Palo Verde.

Commodity Price Risk

We utilize contracts of various durations for the purchase of natural gas, uranium concentrates and coal to effectively manage our available fuelportfolio. These agreements contain variable pricing provisions and are settled by physical delivery. The fuel contracts with variable pricing provisions,as well as substantially all of our purchased power requirements, are exposed to fluctuations in prices due to unpredictable factors, including weatherand various other worldwide events, which impact supply and demand. However, our exposure to fuel and purchased power price risk is substantiallymitigated through the operation of the PUCT and NMPRC rules and our fuel clauses, as discussed previously,

In the normal course of business, we enter into contracts of various durations for the forward sales and purchases of electricity to effectivelymanage our available generating capacity and supply needs. Such contracts include forward contracts for the sale of generating capacity and energyduring periods when our available power resources are expected to exceed the requirements of our retail native load and sales for resale. We also enterinto forward contracts for the purchase of wholesale capacity and energy during periods when the market price of electricity is below our expectedincremental power production costs or to supplement our generating capacity when demand is anticipated to exceed such capacity. As of January 31,2015, we had entered into forward sales and purchase contracts for energy as discussed in Part I, Item 1, "Business - Energy Sources - PurchasedPower." These agreements are generally fixed-priced contracts which qualify for the "normal purchases and normal sales" exception provided in FASBguidance for accounting for derivative instruments and hedging activities and are not recorded at their fair value in our financial statements. Because ofthe operation of the PUCT and the NMPRC rules and our fuel clauses, these contracts do not expose us to significant commodity price risk.

41

Page 51 of 168

Table of Contents

Management Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal controlover financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, orunder the supervision of, the Company’s principal executive and principal financial officers and affected by the Company’s board of directors,management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

¯ Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of theCompany;

¯ Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles, and the receipts and expenditures of the Company are being made only in accordance withauthorizations of management and directors of the Company; and

¯ Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assetsthat could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2014. Inmaking this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the TreadwayCommission’s 2013 Internal Control - Integrated Framework.

Based on its assessment, management believes that, as of December 31, 2014, the Company’s internal control over financial reporting is effectivebased on those criteria.

The Company’s independent registered public accounting firm, KPMG LLP, has issued an audit report on the Company’s intemal control overfinancial reporting. This report appears on page 44 of this report.

42

Page 52 of 168

Table of Contents

Item 8. Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Balance Sheets as of December 31, 2014 and 2013

Statements of Operations for the years ended December 31, 2014, 2013 and 2012

Statements of Comprehensive Operations for the years ended December 31. 2014. 2013 and 2012

Statements of Changes in Common Stock Equity for the years ended December 31, 2014, 2013 and 2012

Statements of Cash Flows for the years ended December 31,2014, 2013 and 2012

Notes to Financial Statements

43

Page

44

47

48

49

50

51

Page 53 of 168

Table of Contents

Reuort of Indeuendent Registered Public Accountin~ Firm

The Board of Directors and ShareholdersEl Paso Electric Company:

We have audited the accompanying balance sheets of El Paso Electric Company as of December 31, 2014 and 2013, and the related statements ofoperations, comprehensive operations, changes in common stock equity, and cash flows for each of the years in the three-year period endedDecember 3 l, 2014. We also have audited El Paso Electric Company’s internal control over financial reporting as of December 31, 2014, based oncriteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the TreadwayCommission (COSO). El Paso Electric Company’s management is responsible for these financial statements, for maintaining effective internal controlover financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanyingManagement Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and anopinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whethereffective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimatesmade by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting includedobtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating thedesign and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as weconsidered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail.accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)provide reasonable assurance that transactions arerecorded as necessary to permit preparation of fmancial statements in accordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3)providereasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have amaterial effect on the financial statements.

Because of its inherent limitations, intemal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of E1 Paso Electric Company as ofDecember 31, 2014 and 2013, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31,2014, in conformity with U.S. generally accepted accounting principles. Also in our opinion, El Paso Electric Company maintained, in all materialrespects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/KPMG LLP

Kansas City, MissouriFebruary 27, 2015

44

Page 54 of 168

Table of Contents

EL PASO ELECTRIC COMPANYBALANCE SHEETS

ASSETS(In thousands)

Utility plant:Electric plant in serviceLess accumulated depreciation and amortizmion

Net plant in serviceConstruction work in progressNuclear fuel; includes fuel in process of $46.996 and $48,492, respectively

Less accumulated amortizationNet nuclear fuel

Net utility plantCurrent assets:

Cash and cash equivalentsAccounts receivable, principally trade, net of allowance for doubtful accounts of $2.253 and $2,261,respectively

Deeem~r 31,2014 2013

$ 3,229,255 $ 3,076,549(1,266,672) (1,214,088)

1,962,583 1,862,461

185,185 188,185

(73,701) (75,820)111.484 112,365

40,504

71,165 65,350Accumulated deferred income taxesInventories, at costUnder-collection of fuel revenuesPrepayments and other

Total current assetsDeferred charges and other assets:

Decommissioning trust fundsRegulatory assetsOther

Total deferred charges and other assets

Total assets

See accompanying notes to financial statements.

45,889 45,942

12,213 7,694

112,086 101,050

30,597 34,879376.969 350,024

45

Page 55 of 168

Table of Contents

EL PASO ELECTRIC COMPANYBALANCE SHEETS (Continued)

CAPITALIZATION AND LIABILITIES(in thomands except for share data)

Capitalization:Common stock, stated value $1 per share, 100,000.000 shares authorized, 65,725,246 and 65,639,091 sharesissued, and 124,297 and 120.534 restricted shares, respectivelyCapital in excessof stated valueRetained earnings

Accumulated other comprehensive income (loss), net of tax

Treasury stock, 25A92,919 shares at cost

Common stock equityLong-term debt, net of current portion

Total capitalizationCurrent liabilities:

Current maturities of long-term debtShort-term borrowings under the revolving credit facilityAccounts payable, principally tradeTaxes accruedInterest accruedOver-collection of fuel revenuesOther

Total current liabilitiesDeferred credits and other liabilities:

Accumulated deferred income taxesAccrued pension liabilityAccrued post-retirement benefit liabilityAsset retirement obligationRegulatory liabilities

OtherTotal deferred credits and other liabilities

Commitments and contingencies

Total capitalization and liabilities

I~eml~er 31,

2014 2013

$ 65,850 $ 65,760

!,032,537 985,665(8,001) 2,612

1,408,901 1,368,480(424,647) ¯ (424,64~984,254 943,833

1,134,179 , ~,6202,118,433 1,943,453

15,000

78.862 61,795

12,758 12,189

24,715 22,932

94,272 84,0120,655

74,577 65,214

37,415 29,091

See accompanying notes to financial statements.

46

Page 56of168

Table of Contents

EL PASO ELECTRIC COMPANYSTATEMENTS OF OPERATIONS

(In thousands except for share data)

Operating revenuesEnergy expenses:

FuelPurchased and interchanged power

Operating revenues net of energy expensesOther operating expenses:

Other operations

MaintenanceDepreciation and amortizationTaxes other than income taxes

Operating incomeOther income (deductions):

Allowance for equity funds used during constructionInvestment and interest income, netMiscellaneous non-operating incomeMiscellaneous non-operating deductions

Interest charges (credits):Interest on long-term debt and revolving credit facilityOther interestCapitalized interestAllowance for borrowed funds used during construction

Income before income taxesIncome tax expense

Net income

Years Ended December 31,

2014 2013 2012

251,00564,804 62,363 60,251

601,716 601,231 601,554

238,832 237,155 236,55865,62983,342 79,626 78,556

450,553 435,596 432,896

14,66213,633 7,033 5,2754,075

(4,199) (3,635) (2,013)

59,0281,250 431 1,190

(8,368) (6,055) (5,573)

132,516 132,238 137,825

$ 91,428 $ 88,583 $ 90,846

Basic earnings per share

Diluted earnings per share

$ 2.27 $ 2.20 $ 2.27

$ 2.27 $ 2.20 $ 2.26

Dividends declared per share of common stockWeighted average number of shares outstanding

Weighted average number of shares and dilutive potential shares outstanding

See accompanying notes to financial statements.

47

$ 1.105 $ 1.045 $ 0.97

40,211,717 40,126,647 40,055,581

Page 57 of 168

Table of Contents

EL PASO ELECTRIC COMPANYSTATEMENTS OF COMPREHENSIVE OPERATIONS

(In thousands)

2014

Years Ended 1)eeember 31,

2013Net incomeOther comprehensive income (loss):

Unrecognized pension and post-retirement benefit costs:Net gain (loss) arising during period (54,328)Prior service benefitReclassification adjustments included in net income for amortization of:

Prior service benefitNet loss 6,182

Net unrealized gains/losses on marketable securities:

Net holding gains arising during period 10,827Reclassification adjustments for net (gains) losses included in net income

Net losses on cash flow hedges:Reclassification adjustment for interest expense income

Total other comprehensive income (loss) before income taxes (17,690)

82,964

10,472

17,699

105,530

(33,566)

(168)

68,696

Unrecognized pension and post-retirement benefit costsNet unrealized gains on marketable securitiesLosses on cash flow hedges

Total income tax benefit (expense)Other �om prehensive income (loss), net of taxComprehensive income

See accompanying notes to financial statements.

8,051(760)(214)

(10,613)

48

2012

(2,1o9)

11,971

9,927

15,454

(1,464)

(131)

11,421

Page 58of168

Table of Contents

EL PASO ELECTRIC COMPANYSTATEMENTS OF CHANGES IN COMMON STOCK EQUITY

(In thousands except for share data)

AccumulatedOther

Common Stock Capital in Comprehensive Treasury StockExcess of Retained Income (Loss), Common

Shares Amount Stated Value Earnings Net of Tax Shares Amount Stock EquityBalances at December 31, 2011

Restricted common stock grants anddeferred compensation 87,428

Performance share awards vested 174,038Stock awards withheld for taxes (52,778)Forfeited restricted common stock (88,100)Deterred taxes on stock incentive plan

Stock options exercised 32,336Net income

Other comprehensive income

Dividends declared

Balances at December 31, 2012Restricted common stock grants and

deferred compensation 96.279Performance share awards vested 64,275Stock awards withheld for taxes (23,808)Forfeited restricted common stock (1.549)Deferred taxes on stock incentive plan

Stock options exercised 15,000Compensation paid in shares 4,431Net income

Other comprehensive income

Dividends declared

Balances at December 31. 2013 65,759,625Restricted common stock grants and

deferred compensation 103,672Stock awards withheld for taxes (4,696)Forfeited restricted common stock (19,162)Deferred taxes on stock incentive plan

Compensation paid in shares 10,104Net incomeOther comprehensive income

Dividends declared

Balances at December 31, 2014

87 1,691 1,778

174 1,019 !,193

(52) (1,770) (1,822)

(88) 11,206)

321,101 1,101

382 414

90,846 90,846

11,421 11,421(38,889) (38,889)

65,604,997 65,605 310,994 ¯ 939,i31 166,0U) 25,492,919 (424,647) 824,~

96 2,7O2

64 7851233 (788)

(1)427

15 177

4 146

65,760

2,798

849

1811)(I)

427

192

150

88,583 88,58368,696 68,696

(42,049) (42,049)

314.443 985,665 2,612 25,492,919 1424,6471 943,833

104 4,175 4,279(5) (183) 1188)

(19) (19)

1302) (302)

10 382 392

91,428 91,428

(44,556) (44,556)

$ 65,850 $ 318,515, $1,032,537 $ 18,~!) $ (424,647)See accompanying notes to financial statements.

49

Page 59 of 168

Table of Contents

EL PASO ELECTRIC COMPANYSTATEMENTS OF CASH FLOWS

(In thousands)

CashFlows From Oper~fingAelivifles:

Net income

Adjustments to reconcile net income to net cash provided by operating activities’.

Depreciation and amortization of electric plant in service

Amortization of nuclear fuel

Deferred income taxes, net

Allowance for equity funds used during construction

Other amortization and accretion

Gain on sale of property, plant and equipment

Net (gains) losses on sale of decommissioning trust funds

Other operating activities

Change m:

A~ receivable

Inventories

Net over-collection (tmder-colloction) of fuel revenuesPrepayments and other

Accounts payable

Taxes accrued

Other current liabilities

Deferred charges and credits

Net cash provided by operating acfiviti~

Cash Flows From Investing Activities:

Cash additions to utility property, plant and equipment

Cash additions to nuclear fuel

Capitalized interest and AFUI~:

Utility property, plant and equipment

Nuclear fuel

Allowance for equity funds used during construction

Decommissioning trust funds:

Purchases, including funding of $4.5 million

Sales and maturities

Proceeds from sale of property, plant and equipment

Other investing activities

Net cash nsed for investing activities

Cash Flows From Finnneing Activities:

Dividends paid

Borrowings under the revolving credit facility:

Proceeds

PaymentsPollution control bonds:

Payments

Proceeds from issuance of senior notes

Other financing activities

Net cash provided by (nsed for) fl~ancing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash eqnivalents at beginning of period

Cash and cash equivalents at end of period

2014

YcarsEndedDeeember31,

2013 2012

91,428 $ 88,583 $ 90,846

83,342 79,626 78,556

43,864

39,129 44,678 43,561

18,380 16,556 14,724

(7,350) (553) 1,042

(93) (175)

(786) (3,673) (1,926)

12,750) (4,295) (2,784)

(2,209) (627) (3,054)

1,198

(4,807) (822) (6,781)

(37,877) (30,535) (46,009)

(23,030) (16,063) (15,000)

(5,092)

14,662 10,008 9,427

(117,675) (65,491 ) (107,705)

108,311 56,148 98,542

2,395 112 1,757

4,192 5,767 633

(331,192) (282,764) (266,054)

(44,556) (42,049) (38,889)

231,399 44,883 234,575

-- (92,535)149,468(2,328) (324) (3,774)

14,912 (85,465) 102,849

25,5~ 111 ~057 8~208$ 40,504 $ 25,592 $ 111,057

See accompanying notes to financial statements. Page 60 of 168

Table of Contents

INDEX TO NOTES TO FINANCIAL STATEMENTS

Note A. Summary of Significant Accounting Policies

Note B. New Accounting Standards

Note C. Regulation

Note D. Regulatory Assets and Liabilities

Note E. Utility Plant, Palo Verde and Other Jointly-Owned Utility Plant

Note F. Accounting for Asset Retirement Obligations

Note G. Common Stock

Note H. Accumulated Other Comprehensive Loss

Note 1. Long-Term Debt and Financing Obligations

Note J. Income Taxes

Note K. Commitments, Contingencies and Uncertainties

Note L. Litigation

Note M. Employee Benefits

Note N. Franchises and Significant Customers

Note O. Financial Instruments and Investments

Note P. Supplemental Statements of Cash Flow Disclosures

Note Q. Selected Quarterly Financial Data (Unaudited)

51

Page

71

80

91

Page 62 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

A. Summary of Significant Accounting Policies

General El Paso Electric Company is a public utility engaged in the generation, transmission and distribution of electricity in an area ofapproximately 10,000 square miles in west Texas and southern New Mexico. The Company also serves a full requirements wholesale customer inTexas.

Basis of Presentation. The Company maintains its accounts in accordance with the Uniform System of Accounts prescribed by the Federal EnergyRegulatory Commission (the "FERC").

Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Application of FASB Guidance for Regulated Operations. Regulated electric utilities typically prepare their financial statements in accordance withthe Financial Accounting Standards Board ("FASB") guidance for regulated operations. FASB guidance for regulated operations requires the Companyto include an allowance for equity and borrowed funds used during construction ("AEFUDC" and "ABFUDC") as a cost of construction of electric plantin service. AEFUDC is recognized as income and ABFUDC is shown as capitalized interest charges in the Company’s statement of operations. FASBguidance for regulated operations also requires the Company to show certain recoverable costs as either assets or liabilities on a utility’s balance sheet ifthe regulator provides assurance that these costs will be charged to and collected from the utility’s customers (or has already permitted such costrecovery) or will be credited or refunded to the utility’s customers. The resulting regulatory assets or liabilities are amortized in subsequent periodsbased upon the respective amortization periods reflected in a utility’s regulated rates. See Note D. The Company applies FASB guidance for regulatedoperations for all three of the jurisdictions in which it operates.

Comprehensive Income. Certain gains and losses that are not recognized currently in the statements of operations are reported as othercomprehensive income in accordance with FASB guidance for reporting comprehensive income.

Utility Plant. Utility plant is generally reported at cost. The cost of renewals and betterments are capitalized and the costs of repairs and minorreplacements are charged to the appropriate operating expense accounts. Depreciation is provided on a straight-line basis over the estimated remaininglives of the assets (ranging in average from 5 to 48 years). The average composite depreciation rate utilized in 2014,2013 and 2012 was 2.60%,2.61%, and 2.64%, respectively. When property subject to composite depreciation is retired or otherwise disposed of in the normal course of business,its cost - together with the cost of removal, less salvage - is charged to accumulated depreciation. For other property dispositions, the applicable costand accumulated depreciation is removed from the balance sheet accounts and a gain or loss is recognized.

The cost of nuclear fuel is amortized to fuel expense on a units-of-production basis. The Company is also amortizing its share of costs associatedwith on-site spent fuel storage casks at Palo Verde over the burn period of the fuel that will necessitate the use of the storage casks. See Note E.

Impairment of Long-Lived Assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount ofan asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimatedundiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value ofthe asset.

AFUDC and Capitalized Interest. The Company capitalizes interest ("ABFUDC") and common equity (’,AEFUDC") costs to construction work inprogress and capitalizes interest to nuclear fuel in process in accordance with the FERC Uniform System of Accounts as provided for in FASB guidance.AFUDC is a non-cash component of income and is calculated monthly and charged to all new eligible construction and capital improvement projects.AFUDC is compounded on a semi-annual basis. The AFUDC rates used in 2014,2013 and 2012 were 8.15%, 8.10% and 8.53%, respectively.

Asset Retirement Obligation. FASB guidance sets forth accounting requirements for the recognition and measurement of liabilities associated withthe retirement of tangible long-lived assets. An asset retirement obligation CARO") associated with long-lived assets included within the scope of FASBguidance is that for which a legal obligation exists under enacted laws, statutes, written or oral contracts, including obligations arising under the doctrineof promissory estoppel and legal obligations to perform an asset retirement activity even if the timing and/or settlement are conditioned on a future eventthat may or may not be within

52

Page 63 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

the control of an entity. See Note F. Under FASB guidance, these liabilities are recognized as incurred if a reasonable estimate of fair value can beestablished and are capitalized as part of the cost of the related tangible long-lived assets. The Company records the increase in the ARO due to thepassage of time as an operating expense (accretion expense).

Cash and Cash Equivalents. All temporary cash investments with an original maturity of three months or less are considered cash equivalents.

Investments. The Company’s marketable securities, included in decommissioning tm..st funds in the balance sheets, are reported at fair value andconsist of cash, equity securities and municipal, federal and corporate bonds in trust funds established for decommissioning of its interest in Palo Verde.Such marketable securities are classified as "available-fur-sale" securities and, as such, unrealized gains and losses are included in accumulated othercomprehensive loss as a separate component of common stock equity. However, if declines in fair value of marketable securities below original costbasis are determined to be other than temporary, then the declines are reported as losses in the statement of operations and a new cost basis is establishedfor the affected securities at fair value. Gains and losses are determined using the cost of the security based on the specific identification basis. SeeNote O.

Derivative Accounting. Accounting for derivative instruments and hedging activities requires the recognition of derivatives as either assets orliabilities in the balance sheet with measurement of those instruments at fair value. Any changes in the fair value of these instruments are recorded inearnings or other comprehensive income. See Note O.

Inventories. Inventories, primarily parts, materials, supplies, fuel oil and natural gas are stated at average cost not to exceed recoverable cost.

Operating Revenues Net of Energy Expenses. The Company accrues revenues for services rendered, including unbilled electric service revenues.Energy expenses are stated at actual cost incurred. The Company’s Texas retail customers are billed under base rates and a fixed fuel factor approved bythe Public Utility Commission of Texas ("PUCT"). The Company’s New Mexico retail customers are billed under base rates and a fuel adjustmentclause which is adjusted monthly, as approved by the New Mexico Public Regulation Commission ("NMPRC"). The Company’s FERC sales for resalecustomers are billed under formula base rates and fuel factors and a fuel adjustment clause which is adjusted monthly. The Company’s recovery ofenergy expenses is subject to periodic reconciliations of actual energy expenses incurred to actual fuel revenues collected. The difference betweenenergy expenses incurred and fuel revenues charged to customers is reflected as over/under-collection of fuel revenues in the balance sheets. SeeNote C.

Revenues. Revenues related to the sale of electricity are generally recorded when service is rendered or electricity is delivered to customers. Thebilling of electricity sales to retail customers is based on the reading of their meters, which occurs on a systematic basis throughout the month. Unbilledrevenues are estimated based on monthly generation volumes and by applying an average revenue/kWh to the number of estimated kWhs delivered butnot billed. Accounts receivable included accrued unbilled revenues of $21.2 million and $19.8 million at December 31, 2014 and 2013, respectively.The Company presents revenues net of sales taxes in its statements of operations.

Allowance for DoubtfulAccounts. The allowance for doubtful accounts represents the Company’s estimate of existing accounts receivable that willultimately be uncollectible. The allowance is calculated by applying estimated write-off factors to various classes of outstanding receivables. The write-off factors used to estimate uncollectible accounts are based upon consideration of both historical collections experience and management’s bestestimate of future collections success given the existing collections environment. Additions. deductions and balances for allowance for doubtfulaccounts for 2014,2013 and 2012 are as follows (in thousands):

2014 2013 2012

Additions:Charged to costs and ex~Recovery of previous write-offs

Uncollectible receivables written off ....Balance at end of year

!,516 1,929 2,0414~79 4,672 5~237

$ 2,253 $ 2,261 $ 2.906

53

Page 64 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

Income Taxes. The Company accounts for federal and state income taxes under the asset and liability method of accounting for income taxes.Deferred income taxes are recognized for the estimated future tax consequences of "temporary differences" by applying enacted statutory tax rates foreach taxable jurisdiction applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assetsand liabilities. Certain temporary differences are accorded flow-through treatment by the Company’s regulators and impact the Company’s effective taxrate. FASB guidance requires that rate-regulated companies record deferred income taxes for temporary differences accorded flow-through treatment atthe direction of the regulatory commission. The resulting deferred tax assets and liabilities are recorded at the expected cash flow to be reflected infuture rates. Because the Company’s regulators have consistently permitted the recovery of tax effects previously flowed-through earnings, the Companyhas recorded regulatory liabilities and assets offsetting such deferred tax assets and liabilities. The effect on deferred tax assets and liabilities of a changein tax rate is recognized in income in the period that includes the enactmem date. The Company recognizes tax assets and liabilities for uncertain taxpositions in accordance with the recognition and measurement criteria of FASB guidance for uncertainty in income taxes. See Note J.

Earnings per Share. The Company’s restricted stock awards are participating securities and earnings per share must be calculated using the two-class method in both the basic and diluted earnings per share calculations. For the basic earnings per share calculation, net income is allocated to theweighted average number of restricted stock awards and to the weighted average number of shares outstanding. The net income allocated to theweighted average number of shares outstanding is then divided by the weighted average number of shares outstanding to derive the basic earnings pershare. For the diluted earnings per share, net income is allocated to the weighted average number of restricted stock awards and to the weighted averagenumber of shares and dilutive potential shares outstanding. The Company’s dilutive potential shares outstanding amount is calculated using the treasurystock method for the unvested performance shares. Net income allocated to the weighted average number of shares and dilutive potential shares is thendivided by the weighted average number of shares and dilutive potential shares outstanding to derive the diluted earnings per share, See Note G.

Stock-Based Compensation. The Company has a stock-based long-term incentive plan. The Company is required under FASB guidance tomeasure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Suchcosts are recognized over the period during which an employee is required to provide service in exchange for the award (the "requisite service period")which typically is the vesting period. Compensation cost is not recognized for anticipated forfeitures prior to vesting of equity instruments. See Note G.

Pension and Post-retirement Benefit Accounting. See Note M for a discussion of the Company’s accounting policies for its employee benefits.

Reclassification. Certain amounts in the financial statements for 2013 and 2012 have been reclassified to conform with the 2014 presentation.

54

Page 65 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

B. New Accounting Standards

In July 2013, the FASB issued new guidance ( Accounting Standards Update (" ASU ") 2013-11, Income Taxes (Topic 740)) to eliminate thediversity in the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax creditcarryforward exists. ASU 2013-11 requires an entity to present an unrecognized tax benefit in the financial statements as a reduction to a deferred taxasset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except in certain circumstances when it would be reflected asa liability. The Company implemented ASU 2013-11 in the first quarter of 2014 on a prospective basis. This ASU did not have a significant impact onthe Company’s statement of operations or statements of cash flows.

In May 2014, the FASB issued new guidance (ASU 2014-09, Revenue from Contracts with Customers (Topic 606)) to provide a framework thatreplaces the existing revenue recognition guidance. ASU 2014-09 is the result of a joint effort by the FASB and the International Accounting StandardsBoard ("IASB") intended to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. Generally AcceptedAccounting Principles ("GAAP") and International Financial Reporting Standards. ASU 2014-09 provides that an entity should recognize the amount ofrevenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 is effective for annual periods andinterim periods within that reporting period beginning after December 15, 2016, for public business entities. Early adoption of ASU 2014-09 is notpermitted. The Company is currently assessing the future impact of this ASU.

C. Regulation

General

The rates and services of the Company are regulated by incorporated municipalities in Texas, the PUCT, the NMPRC and the FERC. Municipalorders, ordinances and other agreements regarding rates and services adopted by Texas municipalities are subject to review and approval by the PUCT.The FERC has jurisdiction over the Company’s wholesale (sales for resale) transactions, transmission service and compliance with federally-mandatedreliability standards. The decisions of the PUCT, the NMPRC and the FERC are subject to judicial review.

Texas Regulatory Matters

2012 Texas Retail Rate Case. On April 17, 2012, the El Paso City Council approved the settlement of the Company’s 2012 Texas retail rate caseand fuel reconciliation in PUCT Docket No. 40094. The PUCT issued a final order approving the settlement on May 23, 2012 and rates were effective asof May 1, 2012. As part of the 2012 Texas retail rate settlement, the Company agreed to submit a future fuel reconciliation request coveting the periodbeginning July 1, 2009 and ending no later than June 30, 2013 by December 31, 2013 or as part of its next rate case, if earlier. The Company filed a fuelreconciliation request coveting the period July 1, 2009 through March 31,2013, as discussed below. The 2012 Texas retail rate settlement also providedfor the continuation of the energy efficiency cost recovery factor and the military base discount recovery factor. Both of these surcharges require annualfilings to reconcile and revise the recovery factors.

Energy Efficiency Cost Recovery Factor. The Company made its annual filing to establish its energy efficiency cost recovery factor for 2015 onMay 1, 2014. In addition to projected energy efficiency costs for 2015 and true-up to prior year actual costs, the Company requested approval of a $2,0million bonus for the 2013 energy efficiency program results in accordance with PUCT rules. In a proposal for decision issued on October 7, 2014, theAdministrative Law Judge ("ALJ") recommended approval of the Company’s requested cost recovery including the requested bonus. The PUCTapproved the ALJ’s recommendation at its November 14, 2014 open meeting. The PUCT decision was not appealed. The Company recorded the $2.0million bonus as operating revenue in the fourth quarter of 2014.

Fuel and Purchased Power Costs. The Company’s actual fuel costs, including purchased power energy costs, are recovered from customersthrough a fixed fuel factor. The PUCT has adopted a fuel cost recovery rule (the "Texas Fuel Rule") that allows the Company to seek periodicadjustments to its fixed fuel factor. The Company can seek to revise its fixed fuel factor based upon the approved formula at least four months after itslast revision except in the month of December. The Texas Fuel Rule requires the Company to request to refund fuel costs in any month when the over-recovery balance exceeds a threshold material amount and it expects fur costs to continue to be materially over-recovered. The Texas Fuel Rule alsopermits the Company to seek to surcharge fuel under-recoveries in any month the balance exceeds a threshold material amount and it expects fuel costrecovery to continue to be materially under-recovered. Fuel over and under-recoveries are considered material when they exceed 4% of the

55

Page 66 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

previous twelve months’ fuel costs. All such fuel revenue and expense activities are subject to periodic final review by the PUCT in fuel reconciliationproceedings.

On April 15, 2014, the Company filed a request, which was assigned PUCT Docket No. 42384, to increase its fixed fuel factor by $10.7 million or6.9% annually, pursuant to its approved formula. The revised fixed fuel factor reflected an expected increase in prices for natural gas over the twelvemonth period beginning March 2014. The increase in the fixed fuel factor received final approval on May 28, 2014 and was effective with May 2014billings. As of December 31,2014, the Company had under-recovered fuel costs in the amount of $10.2 million for the Texas jurisdiction. The Companyhas been reducing the amount of the under-recovery since August 2014 and expects to continue to reduce the amount of under-recovery as long as theprice of natural gas remains below the cost of natural gas included in its current fixed fuel factor. If the price of natural gas increases above the cost ofnatural gas included in the current fixed fuel factor, the Company may request an increase to the fixed fuel factor and effectively mitigate an increase inthe under-recovery balance, lftbe under-recovered balance is above the matefiality threshold at the time the fixed fuel factor increase is requested, thenthe Company will consider requesting a fuel surcharge to collect the remaining under-recovered balance.

Fuel Reconciliation Proceeding. Pursuant to the 2012 Texas retail rate settlement discussed above, on September 27, 2013, the Company filed anapplication with the PUCT, designated as PUCT Docket No. 41852, to reconcile $545.3 million of fuel and purchased power expenses incurred duringthe 45-month period from July 1, 2009 through March 31, 2013. A settlement was reached and a final order was issued by the PUCT on July 11, 2014.The twelve months ended December 31, 2014 financial results include a $2.1 million, pre-tax increase to income reflecting the settlement of the Texasfuel reconciliation proceeding. The settlement included the recognition of $3.4 million of Palo Verde performance rewards associated with the 2009 to2012 performance periods net of disallowed fuel and purchased power costs of $1.75 million of which $0.5 million had been previously reserved. PaloVerde performance rewards are not recognized in the Company’s financial results until the PUCT has ordered a final determination in a fuel proceedingor comparable evidence of coilectability is obtained. In addition, the Company reimbursed the City of E1 Paso approximately $0.1 million in incurredexpenses. The settlement also provides that 100% of margins on non-arbitrage off-system sales (as defined by the settlement) and 50% of margins onarbitrage off-system sales be shared with its Texas customers beginning April 1, 2014. For the period April 1, 2014 through June 30, 2015, theCompany’s total share of margins assignable to Texas retail jurisdiction, on arbitrage and non-arbitrage off-system sales, may not exceed 10% of thetotal margins assignable to the Texas retail jurisdiction on all off-system sales. The Company also agreed to file with the PUCT a proceeding to addressthe reasonableness of the Company’s decision to not continue to participate in the Four Comers coal-fired generating Units 4 and 5 after July 2016. It isexpected that issues related to the final coal mine closing and reclamation costs will be addressed in that proceeding as well as other issues related topost-participation events such as the asset retirement obligations of the Company related to those two units. The PUCT’s final order completes theregulatory review and reconciliation of the Company’s fuel expenses for the period through March 31, 2013.

Montana Power Station Approvals. As discussed further below, the Company has received a Certificate of Convenience and Necessity ("CCN")from the PUCT to construct all four units of the Montana Power Station ("the MPS") in El Paso County, Texas. The Company also obtained air permitsfrom the Texas Commission on Environmental Quality ("TCEQ") and the U.S. Environmental Protection Agency (" EPA ").

On June 23, 2014, the U.S. Supreme Court issued an opinion in the Utility Air Regulatory Group vs EPA regarding EPA’s authority to requiregreenhouse gas emissions (" GHG ") Prevention of Significant Deterioration (" PSD ") permits for stationary sources. The opinion concluded that theEPA erred in making applicability of the Clean Air Act (" CAA ") permitting requirements based on GHG emissions. As a result, the Company believesits EPA air permit is no longer required and could be rescinded, and it is eligible for a standard air permit to replace the new source review permit issuedby the TCEQ. Accordingly, on August 1, 2014, the Company submitted a request to the EPA to rescind the EPA air permit which request remainspending. Also, on September 16, 2014, the Company applied for a standard air permit, which TCEQ issued on October 2, 2014.

On December 13, 2012, in PUCT Docket No. 40301, the Company received CCN approval from the PUCT for MPS Units 1 and 2. On September6, 2013, the Company filed an application with the PUCT for issuance of a CCN to construct, own and operate two additional 88 MW natural gas-firedgenerating units designated as the MPS Units 3 and 4. The case was designated PUCT Docket No. 41763. Hearings in this case were held before an ALJin February 2014. On July 11, 2014, the PUCT approved the CCN to construct MPS Units 3 and 4.

56

Page 67 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

In 2013, the Company filed three transmission line CCN applications with the PUCT as part of the MPS Project:

¯ MPS to Caliente: a ! 15 -kV transmission line from the MPS to the existing Caliente Substation in east El Paso. (PUCT Docket No. 41360)¯ MPS In & Out: a 115 -kV transmission line from the MPS to intersect with the existing Caliente - Coyote 115 -kV transmission line. (PUCT

Docket No. 41359)¯ MPS to Montwood: a 115 -kV transmission line from the MPS to the existing Montwood Substation in east El Paso. (PUCT Docket No. 41809)

The Company requested to build these transmission lines to connect the new MPS to the electrical grid in order to meet expected customer growthand electric demand and to improve system reliability. On March 10, 2014, the PUCT issued a final order approving a unanimous settlement in the MPSto Caliente transmission CCN filing. On August 18, 2014, the PUCT issued final orders approving unanimous settlements of the MPS In & Outtransmission CCN filing and the MPS to Montwood transmission CCN filing.

Other Required Approvals. The Company has obtained other required approvals for recovery of fuel costs through fixed fuel factors, other tariffsand approvals as required by the Public Utility Regulatory Act ( the "PURA") and the PUCT.

New Mexico Regulatory Matters

2009 New Mexico Stipulation. On December 10, 2009, the NMPRC issued a final order conditionally approving the stipulated rates in NMPRCCase No. 09-00171-UT. The stipulated rates went into effect with January 2010 bills. The stipulated rates provide for an Efficient Use of Energy FactorRate Rider to recover energy efficiency expenditures which requires an annual filing and approval of the related incentives and adjustment to therecovery factors.

Fuel and Purchased Power Costs. Fuel and purchased power costs are recovered through base rates and a Fuel and Purchased Power CostAdjustment Clause (the "FPPCAC") that corrects for changes in the costs of fuel included in base rates. On January 8, 2014, the NMPRC approved thecontinuation of the FPPCAC without modification in NMPRC Case No. 13-00380-UT. Fuel and purchased power costs are reconciled to actual costs ona monthly basis and recovered or refunded to customers the second succeeding month. The Company recovers its investment in Palo Verde Unit 3 inNew Mexico through the FPPCAC as purchased power using a proxy market price approved in the 2009 New Mexico rate stipulation.

Montana Power Station Approvals. The Company has received a CCN from the NMPRC to construct all four units of the MPS and associatedtransmission lines. The Company also obtained all necessary air permits from the TCEQ and EPA and has begun construction. A final order in NMPRCCase No. 13-00297-UT approving the CCN for MPS Units 3 and 4 was issued on June 11, 2014.

Other Required Approvals . The Company has obtained other required approvals for other tariffs, securities transactions, long-term resource plans,recovery of energy efficiency costs through a base rate rider and other approvals as required by the NMPRC.

Federal Regulatory Matters

Public Service Company of New Mexico’s ("PNM") 2010 Transmission Rate Case. On October 27, 2010, PNM filed a Notice of Transmission RateChange for transmission delivery services provided by PNM. These rates went into effect on June 1,2011, The Company takes transmission servicefrom PNM. On January 2, 2013, the FERC issued a letter order approving a unanimous stipulation and agreement. Pursuant to the stipulation, onJanuary 31, 2013, PNM refunded $1.9 million for amounts that PNM collected since June 1, 2011 in excess of settlement rates. This amount wasrecorded in the fourth quarter of 2012 as a reduction of transmission expense.

PNM Transmission Rate Case. On December 31, 2012, PNM filed with FERC to change its method of transmission rate recovery for itstransmission delivery services from stated rates to formula rates. The Company takes transmission service from PNM and is among the PNMtransmission customers affected by PNM’s shift to formula rates. On March 1, 2013, the FERC issued an order rejecting in part PNM’s filing, andestablishing settlement judge and hearing procedures. The parties to the case, including the Company, have been participating in settlementnegotiations. The Company cannot predict the outcome of the case at this time.

57

Page 68 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

Other Required Approvals. The Company has obtained required approvals for rates and tariffs, securities transactions and other approvals asrequired by the FERC.

Department of Energy ("DOE"). The DOE regulates the Company’s exports of power to the Comisi6n Federal de Eleetricidad in Mexico pursuantto a license granted by the DOE and two presidential permits.

The DOE is authorized to assess operators of nuclear generating facilities a share of the costs of decommissioning the DOE’s uranium enrichmentfacilities and for the ultimate costs of disposal of spent nuclear fuel. See Note E for discussion of spent fuel storage and disposal costs,

Sales for Resale

The Company provides firm capacity and associated energy to the Rio Grande Electric Cooperative ("RGEC") pursuant to an ongoing comractwith a two-year notice to terminate provision. The Company also provides network integrated transmission service to the RGEC pursuant to theCompany’s Open Access Transmission Tariff ("OATT"). The contract includes a formula-based rate that is updated annually to recover non-fuelgeneration costs and a fuel adjustment clause designed to recover all eligible fuel and purchased power costs allocable to the RGEC.

D. Regulatory Assets and Liabilities

The Company’s operations are regulated by the PUCT, the NMPRC and the FERC. Regulatory assets represent probable future recovery ofpreviously incurred costs, which will be collected from customers through the ratemaking process. Regulatory liabilities represent probable futurereductions in revenues associated with amounts that are to be credited to customers through the ratemaking process. Regulatory assets and liabilitiesreflected in the Company’s balance sheets are presented below (in thousands):

Regulatory assetsRegulatory tax assets (a)Loss on reacquired debt (c)Final coal reclamation (d)Nuclear fuel postload daily financing chargeUnrecovered issuance costs due to reissuance ofPCBs (c)Texas energy efficiencyTexas 2012 rate case costsTexas 2015 rate case costsTexas military base discount and recovery factorNew Mexico procurement plan costsNew Mexico renewable energy credits

New Mexico 2010 FPPCAC auditNew Mexico Palo Verde deferred depreciationNew Mexico 2015 rate case costs

Total regulatory assetsRegulatory liabilities

Regulatory tax liabilities (a)Accumulated deferred investment tax credit(i)New Mexico energy efficiencyTexas energy efficiencyTexas military base discount and recovery factor

Total regulatory liabilities

Amortization December 31, December 31,Period Ends 2014 2013

(b) $ 66,134 $ 61,772May 2035

(e) 10,702 4,290

(d)August 2042 860 893

(0 i,817 ~April 2014 581

(h) 759(g)(g) 5,456 4,833(g)(b) 4,720 4,871

(g)$ 112,086 $ 101,050

(b) $ 17,252 $ 17,752(b) 4,334 4~656

(0 3,904 3,646

(0(h) 609

58

Page 69 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

(a) No specific return on investment is required since related assets and liabilities offset.(b) The amortization period for this asset is based upon the life of the associated assets or liabilities.(e) This item is recovered as a component of the weighted cost of debt and amortized over the life of the related debt issuance.(d) This item is recovered through fuel recovery mechanisms.(e) This item and the related final coal reclamation liability have been included or will be requested in rate base.(f) This item is recovered or credited through a recovery factor that is set annually.(g) Amortization period is anticipated to be established in next general rate case.(h) This item represents the net asset/net liability related to the military discount which is recovered from non-military customers through a recovery

factor.(i) This item is excluded from rate base.

Eo Utility Plant, Palo Verde and Other Jointly-Owned Utility Plant

The table below presents the balance of each major class of depreciable assets at December 31, 2014 (in thousands):

Gross Accumulated NetPlant Depreciation Plant

Steam and other 684,863 (284,764) 400,099Total pro on

Transmission 433,982 (250,941) 183,041DistributionGeneral 139,491 (56,412) 83,079

Total $ 3,229,255 $ (1,266,672~) $ 1,962,583

Amortization of intangible plant (software) is provided on a straight-line basis over the estimated useful life of the asset (ranging from 5 to 10years). The table below presents the actual and estimated amortization expense for intangible plant for the previous three years and for the next fiveyears (in thousands):

2012 7,18320132014 8,051

2016 (estimated) 7,030

2018 (estimated) 4,762

The Company owns a 15.8% interest in each of the three nuclear generating units and common facilities at Palo Verde, in Wintersburg, Arizona.The Palo Verde Participants include the Company and six other utilities: Arizona Public Service Company (’,APS"), Southern California EdisonCompany ("SCE"), Public Service Company of New Mexico ("PNM"), Southern California Public Power Authority, Salt River Project AgriculturalImprovement and Power District ("SRP") and the Los Angeles Department of Water and Power.

Other jointly-owned utility plant includes a 7% interest in Units 4 and 5 at Four Comers Generating Station ("Four Comers") and certain othertransmission facilities. A summary of the Company’s investment in jointly-owned utility plant, excluding fuel inventories, at December 31, 2014 and2013 is as follows (in thousands):

59

Page 70 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

Electric plant in serviceAccumulated depreciationConstruction work in progress

Total

December 31, 2014 December 31, 2013

Palo Verde Other Palo Verde Other

(286,585) (176,492) (27 l, 173) (173,819)

643,864 $ 49,726 $ 621,532 $ 45,665

Palo Verde

The operation of Palo Verde and the relationship among the Palo Verde Participants is governed by the Arizona Nuclear Power ProjectParticipation Agreement (the "ANPP Participation Agreement"). APS serves as operating agent for Palo Verde, and under the ANPP ParticipationAgrconent, the Company has limited ability to influence operations and costs at Palo Verde. Pursuant to the ANPP Participation Agreement, thePalo Verde Participants share costs and generating entitlements in the same proportion as their percentage interests in the generating units, and eachparticipant is required to fund its share of fuel, other operations, maintenance and capital costs. The Company’s share of direct expenses in Palo Verdeand other jointly-owned utility plants is reflected in fuel expense, other operations expense, maintenance expense, miscellaneous other deductions, andtaxes other than income taxes in the Company’s statements of operations. The ANPP Participation Agreement provides that ira participant fails to meetits payment obligations, each non-defaulting participant shall pay its proportionate share of the payments owed by the defaulting participant. Because itis impracticable to predict defaulting participants, the Company cannot estimate the maximum potential amount of future payment, if any, which couldbe required under this provision.

NRC . The NRC regulates the operation of all commercial nuclear power reactors in the United States, including Palo Verde. The NRCperiodically conducts inspections of nuclear facilities and monitors performance indicators to enable the agency to arrive at objective conclusions abouta licensee’s safety performance.

Palo Verde Operating Licenses. Operation of each of the three Palo Verde Units requires an operating license from the NRC. The NRC issued fullpower operating licenses for Unit 1 in June 1985, Unit 2 in April 1986 and Unit 3 in November 1987, and issued renewed operating licenses for each ofthe three units in April 2011, which extended the licenses for Units 1, 2 and 3 to June 2045, April 2046 and November 2047, respectively.

Decommissioning. Pursuant to the ANPP Participation Agreement and federal law, the Company must fund its share of the estimated costs todecommission Palo Verde Units 1, 2 and 3, including the Common Facilities, through the term of their respective operating licenses and is required tomaintain a minimum accumulation and funding level in its decommissioning account at the end of each annual reporting period during the life of theplant. The Company has established external trusts with an independent trustee, which enables the Company to record a current deduction for federalincome tax purposes for most of the amounts funded. At December 31, 2014, the Company’s decommissioning trust fund had a balance of $234.3million , which is above its minimum funding level. The Company monitors the status of its decommissioning funds and adjusts its deposits, ifnecessary.

Decommissioning costs are estimated every three years based upon engineering cost studies performed by outside engineers retained by APS. InDecember 2013, the Palo Verde Participants approved the 2013 Palo Verde decommissioning study (the "2013 Study"). The 2013 Study estimated thatthe Company must fund approximately $380.7 million (stated in 2013 dollars) to cover its share of decommissioning costs which was an increase indecommissioning costs of $23.3 million (stated in 2013 dollars) from the 2010 Palo Verde decommissioning study. However, because the cash flowsfrom the 2013 Study were less than the inflated amounts from the 2010 Study, the effect of this change lowered the asset retirement obligation by $1.9million which lowered annual expenses starting in January 2014. Although the 2013 Study was based on the latest available information, there can be noassurance that decommissioning cost estimates will not increase in the future or that regulatory requirements will not change. In addition, until a newlow-level radioactive waste repository opens and operates for a number of years, estimates of the cost to dispose of low-level radioactive waste aresubject to significant uncertainty.

Spent Nuclear Fuel and Waste Disposal. Pursuant to the Nuclear Waste Policy Act of 1982, as amended in 1987 (the "NWPA"), the DOE islegally obligated to accept and dispose of all spent nuclear fuel and other high-level radioactive waste generated by all domestic power reactors by 1998.The DOE’s obligations are reflected in a contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste (the "Standard Contract")with each nuclear power plant. The DOE failed to begin accepting spent nuclear fuel by 1998. On December 19, 2012, APS, acting on behalf of itselfand the participant owners of Palo Verde, filed a second breach of contract lawsuit against the DOE. This lawsuit sought to recover damages incurreddue to the DOE’s failure to accept Palo Verde’s spent nuclear fuel for the period beginning January 1, 2007 through June 30, 2011. On August 18, 2014,APS

60

Page 71 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

and the DOE entered into a settlement agreement, stipulating to a dismissal of the lawsuit and payment of $57.4 million by the DOE to the Palo Verdeowners for certain specified costs incurred by Palo Verde during the period January 1, 2007 through June 30, 2011. On October 8, 2014, the Companyreceived approximately $9.1 million, representing its share of the award. The majority of the award was refunded to customers through the applicablefuel adjustment clauses. On October 31, 2014, APS acting on behalf of itself and the participant owners of Palo Verde, submitted to the government anadditional request for reimbursement of spent nuclear fuel storage costs for the period July 1,2011 through June 30, 2014. The total submitted claimamount was $42.5 million, of which the Company’s portion is $6.7 million. The reimbursement is anticipated to be received in the first half of 2015,and the majority will be refunded to customers through the applicable fuel adjustment clauses.

DOE’s Construction Authorization Application for Yucca Mountain. The DOE had planned to meet its disposal obligations by designing, licensing,constructing, and operating a permanent geologic repository at Yucca Mountain, Nevada. In March 2010, the DOE filed a motion to dismiss withprejudice its Yucca Mountain construction authorization application that was pending before the NRC. Several interested parties have intervened in theNRC proceeding, and the proceeding has not been conclusively decided by the NRC or the courts. Additionally, a number of interested parties have fileda variety of lawsuits in different jurisdictions around the country challenging the DOE’s authority to withdraw the Yucca Mountain constructionauthorization application and NRC’s cessation of its review of the Yucca Mountain construction authorization application. The cases have beenconsolidated into one matter at the U.S. Court of Appeals for the District of Columbia Circuit (the "D.C. Circuit"). In August 2013, the D.C. Circuitordered the NRC to resume its review of the application with available appropriated funds.

On October 16, 2014, the NRC issued Volume 3 of the safety evaluation report developed as part of the Yucca Mountain constructionauthorization application. This volume addresses repository safety after permanent closure, and its issuance is a key milestone in the Yucca Mountainlicensing process. Volume 3 contains the NRC staff’s finding that the DOE’s repository design meets the requirements that apply after the repository ispermanently closed, including but not limited to the post-closure performance objectives in NRC’s regulations.

On December 18, 2014, the NRC issued Volume 4 of the safety evaluation report developed as part of the Yucca Mountain constructionauthorization application. This volume covers administrative and programmatic requirements for the repository. It documents the NRC staff’s evaluationof whether the DOE’s research and development and performance confirmation programs, as well as other administrative controls and systems, meetapplicable NRC requirements. Volume 4 contains the NRC staff’s finding that most administrative and programmatic requirements in NRC regulationsare met, except for certain requirements relating to ownership of land and water rights.

Publication of Volumes 3 and 4 does not signal whether or when the NRC might authorize construction of the repository. The Company cannotpredict when spent fuel shipments to the DOE will commence.

Waste Confidence. On June 8, 2012, the D.C. Circuit issued its decision on a challenge by several states and environmental groups of the NRC’srulemaking regarding temporary storage and permanent disposal of high level nuclear waste and spent nuclear fuel. The petitioners had challenged theNRC’s 2010 update to the agency’s Waste Confidence Decision and temporary storage rule ("Waste Confidence Decision").

The D.C. Circuit found that the agency’s 2010 Waste Confidence Decision update constituted a major federal action, which, consistent with theNational Environmental Policy Act ("NEPA"), requires either an environmental impact statement or a finding of no significant impact from the agency’sactions. The D.C. Circuit found that the NRC’s evaluation of the environmental risks from spent nuclear fuel was deficient, and therefore remanded the2010 Waste Confidence Decision update for further action consistent with NEPA.

On September 6, 2012, the NRC Commissioners issued a directive to the NRC staff to proceed directly with development of a genericenvironmental impact statement to support an updated Waste Confidence Decision. The NRC Commissioners also directed the NRC staff to establish aschedule to publish a final rule and environmental impact study within 24 months of September 6, 2012.

In September 2013, the NRC issued its draft Generic Environmental Impact Statement ("GEIS") to support an updated Waste ConfidenceDecision. On August 26, 2014, the NRC approved a final rule on the environmental effects of continued storage of spent nuclear fuel. The continuedstorage rule adopted the findings of the GElS regarding the environmental impacts of storing spent fuel a! any reactor site after the reactor’s licensedperiod of operations. As a result, those generic impacts do not need to be re-analyzed in the environmental reviews for individual licenses. AlthoughPalo Verde had not been involved in any licensing actions affected by the D.C. Circuit’s Jane 8, 2012, decision, the NRC lifted its suspension on finallicensing actions on all nuclear

61

Page 72 of 168

Table of ComentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

power plant licenses and renewals that went into effect when the D.C. Circuit issued its June 2012 decision. The August 24 final rule has been subject tocontinuing legal challenges before the NRC and the Court of Appeals.

Palo Verde has sufficient capacity at its on-site independent spent fuel storage installation ("ISFSI") to store all of the nuclear fuel that will beirradiated during the initial operating license period, which ends in December 2027. Additionally, Palo Verde has sufficient capacity at its on-site ISFSIto store a portion of the fuel that will be irradiated during the period of extended operation, which ends in November 2047. If uncertainties regarding theUnited States government’s obligation to accept and store spent fuel are not favorably resolved, APS will evaluate alternative storage solutions that mayobviate the need to expand the ISFSI to accommodate all oftbe fuel that will be irradiated during the period of extended operation.

The One-Mill Fee. In 2011, the National Association of Regulatory Utility Commissioners and the Nuclear Energy Institute challenged DOE’s2010 determination of the adequacy of the one tenth of a cent per kwh fee (the "one-mill fee") paid by the nation’s commercial nuclear power plantowners pursuant to their individual obligations under the Standard Contract. This fee was recovered by the Company through applicable fuel adjustmentclauses. In June 2012, the D.C. Circuit held that DOE failed to conduct a sufficient fee analysis in making the 2010 determination. The D.C. Circuitremanded the 2010 determination to the Secretary of the DOE ("Secretary") with instructions to conduct a new fee adequacy determination within sixmonths. In February 2013, upon completion of DOE’s revised one-mill fee adequacy determination, the court reopened the proceedings. On November19, 2013, the D,C. Circuit ordered the Secretary to notify Congress of his intent to suspend collecting annual fees for nuclear waste disposal fromnuclear power plant operators, as he is required to do pursuant to the NWPA and the court’s order. On January 3, 2014, the Secretary notified Congressof his intention to suspend collection of the one-mill fee, subject to Congress’ disapproval and on May 12, 2014, APS was notified by the DOE that,effective May 16, 2014, the one-mill fee would be suspended. Electricity generated and sold prior to May 16, 2014 remained subject to the one-mill fee.

NRC Oversight of the Nuclear Energy Industry in the Vdake of the Earthquake and Tsunami in Japan. The NRC regulates the operation of allcommercial nuclear power reactors in the United States, including Palo Verde. The NRC periodically conducts inspections of nuclear facilities andmonitors performance indicators to enable the agency to arrive at objective conclusions about a licensee’s safety performance. Following the March 11,2011 earthquake and tsunami in Japan, the NRC established a task force to conduct a systematic and methodical review of NRC processes andregulations to determine whether the agency should make additional improvements to its regulatory system. On March 12, 2012, the NRC issued thefirst regulatory requirements based on the recommendations of the NRC’s Near Term Task Force. With respect to Palo Verde, the NRC issued twoorders requiring safety enhancements regarding: (1) mitigation strategies to respond to extreme natural events resulting in the loss of power at plants;and (2) enhancement of spent fuel pool instrumentation.

The NRC has issued a series of interim staffguidance documents regarding implementation of these requirements. Due to the developing nature ofthese requirements, the Company cannot predict the ultimate financial or operational impacts on Palo Verde or the Company; however, the NRC hasdirected nuclear power plants to implement the first tier recommendations of the NRC’s Near Term Task Force. In response to these recommendations,Palo Verde expects to spend approximately $40 million for capital enhancements to the plant over the next two years (the Company’s share is $6.3million ) in addition to the approximate $80 million (the Company’s share is $12.6 million ) that has already been spent on capital enhancements as ofDecember 31, 2014.

Liability and Insurance Matters. The Palo Verde Participants have insurance for public liability resulting from nuclear energy hazards to the fulllimit of liability under federal law, which is currently at $13.6 billion. This potential liability is covered by primary liability insurance provided bycommercial insurance carriers in the amount of $375 million, and the balance is covered by an industry-wide retrospective assessment program. Ira lossat a nuclear power plant covered by the programs exceeds the accumulated funds in the primary level of protection, the Company could be assessedretrospective premium adjustments on a per incident basis. Under federal law, the maximum assessment per reactor under the program for each nuclearincident is approximately $127.3 million, subject to an annual limit of $19.0 million. Based upon the Company’s 15.8% interest in the three Palo Verdeunits, the Company’s maximum potential assessment per incident for all three units is approximately $60.4 million, with an annt~ payment limitationof approximately $9.0 million.

The Palo Verde Participants maintain $2.8 billion of "all risk" nuclear property insurance. The insurance provides coverage for property damageand decontamination at Palo Verde. For covered incidents involving property damage not accompanied by a release of radioactive material; the policy’scoverage limit is $2.3 billion. The Company has also secured insurance against portions of any increased cost of generation or purchased power andbusiness interruption resulting from a sudden and unforeseen outage of any of the three units. The insurance coverage discussed in this and the previousparagraph is subject to certain policy conditions and exclusions. A mutual insurance company whose members are utilities with nuclear facilities issuesthese policies.

62

Page 73 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

If losses at any nuclear facility covered by this mutual insurance company were to exceed the accumulated funds for these insurance programs, theCompany could be assessed retrospective premium adjustments of up to $10.9 million for the current policy period.

Four Corners

The Company owns a 7% interest in Units 4 and 5 at Four Comers and shares power entitlonents and allocated costs with APS, the operatingagent, and the other Four Comers participants. The Company notified the other participants in 2013 that it would not continue in Four Comers after thetermination of the 50 -year contractual term of the participation agreement but that it would offer to sell its interest to them in order to facilitate theirdecision to extend the life of the plant. On February 17, 2015, the Company and APS entered into an asset purchase agreement (the "Agreement"),providing for the purchase by APS of the Company’s interests in Four Comers. The cash purchase price is equal to the net book value of the Company’sinterest in Four Comers at the date of closing, which is expected to occur not later than July 2016, subject to the receipt of regulatory approvals. Thepurchase price will be adjusted downward to reflect APS’s assumption in the Agreement of the Company’s obligation to pay for future plantdecommissioning and mine reclamation ¢xponses. At the closing, APS will also reimburse the Company for the undepreciated value of certain capitalexpenditures made prior thereto. APS will assume responsibility for all capital expenditures made after July 2016 and, with certain exceptions, any pr¢-2016 capital expenditures to be put into service following the closing. In addition, APS will indemnify the Company against liabilities and costs relatedto the future operation of Four Comers. Included in the Company’s balance sheet at December 31, 2014 are obligations of $6.1 million and $19.3 millionfor plant decommissioning and mine reclamation costs, respectively, which the Company expects to pay at closing in accordance with the Agreement.

F. Accounting for Asset Retirement Obligations

The Company complies with FASB guidance for asset retirement obligations ("ARO"). This guidance affects the accounting for thedecommissioning of the Company’s Palo Verde and Four Comers Stations and the method used to report the decommissioning obligation. TheCompany also complies with FASB guidance for conditional asset retirement obligations which primarily affects the accounting for the disposalobligations of the Company’s fuel oil storage tanks, water wells, evaporative ponds and asbestos found at the Company’s gas-fired generating plants.The Company’s AROs are subject to various assumptions and determinations such as: (i)whether a legal obligation exists to remove assets;(ii) estimation of the fair value of the costs of removal; (iii) when final removal will occur; (iv) future changes in decommissioning cost escalation rates;and (v) the credit-adjusted interest rates to be utilized in discounting future liabilities. Changes that may arise over time with regard to these assumptionsand determinations will change amounts recorded in the future as an expense for AROs. The Company records the increase in the ARO due to thepassage of time as an operating expense (accretion expense). If the Company incurs or assumes any liability in retiring any asset at the end of its usefullife without a legal obligation to do so, it will record such retirement costs as incurred.

The ARO liability for Palo Verde is based upon the estimated cost of decommissioning the plant from the 2013 Palo Verde decommissioningstudy. See Note E. The ARO liability is calculated by adjusting the estimated decommissioning costs for spent fuel storage and a profit margin andmarket-risk premium factor. The resulting costs are escalated over the remaining life of the plant and finally discounted using a credit-risk adjusteddiscount rate. As Palo Verde approaches the end of its estimated useful life, the difference between the ARO liability and future current cost estimateswill narrow over time due to the accretion of the ARO liability. Because the DOE is obligated to assume responsibility for the permanent disposal ofspent fuel, spent fuel costs have not been included in the ARO calculation. The Company maintains six external trust funds with an independent trusteethat are legally restricted to settling its ARO at Palo Verde. The fair value of the funds at December 31, 2014 is $234.3 million.

FASB guidance requires the Company to revise its previously recorded ARO for any changes in estimated cash flows including changes inestimated probabilities related to timing of settlements. Any changes that result in an upward revision to estimated cash flows shall be treated as a newliability. Any downward revisions to the estimated cash flmvs result in a reduction to the previously recorded ARO. In December 2013, the Companyimplemented the 2013 Palo Verde decommissioning study, and as a restdt, revised its ARO related to Palo Verde to decrease its estimated cash flowsfrom the 2010 Study to the 2013 Study (see Note E). The assumptions used to calculate the Palo Verde ARO liability are as follows:

Credit-RiskEscalation Adjusted

Rate l)iseount Rate

Incremental ARO liability 3.60%

63

6.20%

Page74of168

Table of ContentsEL PASO ELECI’R1C COMPANY

NOTES TO FINANCIAL STATEMENTS

A roll forward of the Company’s total ARO liability from January 1, 2012 through December 31, 2014. including the effects of each year’sestimate revisions, is presented below. In 2014, the estimate revision includes an adjustment to Four Corners due to the early recognition of theobligation resulting from the purchase agreement with APS. In 2013, the estimate revision includes a change to the probability of extending FourCorners’ operating term and decreases in the estimated cash flows related to Palo Verde’s decommissioning due to implementing the 2013 Palo Verdedecommissioning study. In 2012, the estimate revision includes a change to the probability of extending Four Corners’ operating term.

Liabilities incurredLiabilities settledRevisions to estimateAccretion ex~

ARO liability at end of year

2014 2013 2012

$ 65214 $ 62,784 $ 56,140

(450)3,561 (3,401) 1,929

$ 74,577 $ 65,214$ 62,784

The Company has transmission and distribution lines which are operated under various property easement agreements. If the easements were to bereleased, the Company may have a legal obligation to remove the lines; however, the Company has assessed the likelihood of this occurring as remote.The majority of these easements include renewal options which the Company routinely exercises.

G. Common Stock

Overview

The Company’s common stock has a stated value of $1 per share, with no cumulative voting rights or preemptive rights. Holders of the commonstock have the right to elect the Company’s directors and to vote on other matters.

Long-Term Incentive Plan

On May 29, 2014, the Company’s shareholders approved an amended and restated stock-based long-term incentive plan (the "Amended andRestated 2007 LTIP") and authorized the issuance of up to 1.7 million shares of common stock for the benefit of directors and employees. Under theAmended and Restated 2007 LTIP, common stock may be issued through the award or grant of non-statutory stock options, incentive stock options,stock appreciation fights, restricted stock, bonus stock, performance stock, cash-based awards and other stock-based awards. The Company may issuenew shares, purchase shares on the open market, or issue shares from shares the Company has repurchased to meet the share requirements of theAmended and Restated 2007 LTIP. As discussed in Note A, the Company accounts for its stock-based long-term incentive plan under FASB guidancefor stock-based compensation.

Stock Options. Stock options have been granted at exercise prices equal to or greater than the market value of the underlying shares at the date ofgrant. The fair value for these options was estimated at the grant date using the Black-Scholes option pricing model. The options expired ten years fromthe date of grant unless terminated earlier by the Board of Directors (the "Board"). Stock options have not been granted since 2003.

The 15,000 options outstanding at December 31, 2012 were exercised during 2013 with a weighted average exercise price of $12.78 . TheCompany received $0.2 million in cash and realized a current tax benefit of $0.1 million . The Company had no stock options outstanding as ofDecember 31, 2013 and December 31, 2014.

The intrinsic value of stock options exercised in 2013 and 2012 were $0.3 million and $0.6 million, respectively. No options were forfeited, vestedor expired during 2014,2013 and 2012. No compensation cost was recognized in 2014,2013 and 2012 for stock options.

Restricted Stock and Other Stock-Based Awards. The Company has awarded restricted stock and other stock-based awards under its long-termincentive plan. Restrictions from resale on restricted stock awards generally lapse and awards vest over periods of one to three years. The market valueofthe unvested restricted stock at the date of grant is amortized to expense over the restriction period net of anticipated forfeitures.

Page 75 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

Other stock-based awards are fully vested and are expensed at fair value on the date of grant. Previously directors could elect to receive retainersand meeting fees in cash, restricted stock, or a combination of cash and stock. On May 29, 2014, the Board of Directors voted to revise the terms of therestricted stock awards granted to directors in lieu of cash for retainers and meeting fees. Stock elections by directors in lieu of cash for retainer andmeeting fees are now fully vested and are expensed at fair value on the date of grant. The modification to 13,863 outstanding restricted stock awardsgranted to directors resulted in forfeiture of those awards and the granting of new awards which were fully vested and expensed at $37.81 per share, thefair value on the date of grant,

The expense, deferred tax benefit, and current tax expense recognized related to restricted stock awards and other stock-based awards in 2014,2013 and 2012 is presented below (in thousands):

2014 2013 2012

Expense (a)Deferred tax benefitCurrent tax benefit recognized

3,471 $1,215

39860 528

(a) Any capitalized costs related to these expenses is less than $0.1 million for all years.

The aggregate intrinsic value and fair value at grant date of restricted stock and other stock-based awards which vested in 2014,2013 and 2012 ispresented below (in thousands):

2014 2013 2012

Aggregated in~micvalueFairvalue at grantdate 3,330 1,765 1,973

The unvested restricted stock and other stock-based award transactions for 2014 are presented below:

WeightedAverage Unrecognized

Total Grant Date Compensation Aggregate IntrinsicShares Fair Value Expense (a) Value

Restricted shares outstanding at December 31, 2013Stock awardsVestedForfeitures

Restricted shares outstanding at December 31, 2014

120,534 $ 35.19[13,776(90,851) 36.66

124,297 35.81 1,662 $ 4,979

(a) The unrecognized compensation expense is expected to be recognized over the weighted average remaining contractual term of the outstandingrestricted stock of approximately one year.

The weighted average fair value per share at grant date for restricted stock and other stock-base awards granted during 2014,2013 and 2012 were:

2014 2013 2012Weighted average fair value per share

The holder of a restricted stock award has fights as a shareholder of the Company, including the right to vote and receive cash dividends onrestricted stock.

65

Page 76 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

Performance Shares. The Company has granted performance share awards to certain officers under the Company’s Amended and Restated 2007LTIP, which provides for issuance of Company stock based on the achievement of certain performance criteria over a three -year period. The payoutvaries between 0% to 200% of performance share awards.

Detail of performance shares vested follows:

PayoutDate Vested Ratio

February 18, 2014 0%

Performance Period AggregatedShares Compensation Compensation Intrinsic

Awarded Costs ExpensedCosts Expensed Value(In

(In thousands) thousands)

0 954 2011-2013 --

January 1, 2012 175.0% 174,038 1,193 2009-2011 6,029

In 2015, 2016 and 2017, subject to meeting certain performance criteria, additional performance shares could be awarded. In accordance withFASB guidance related to stock-based compensation, the Company recognizes the related compensation expense by ratably amortizing the grant datefair value of awards over the requisite service period and the compensation expense is only adjusted for forfeitures. The actual number of shares to beissued can range from zero to 145,496 shares.

The fair value at the date of each separate grant of performance shares was based upon a Monte Carlo simulation. The Monte Carlo simulationreflected the structure of the performance plan which calculates the share payout on performance of the Company relative to a defined peer group over athree -year performance period based upon total return to shareholders. The fair value was determined as the average payout of one million simulationpaths discounted to the grant date using a risk-free interest rate based upon the constant maturity treasury rate yield curve at the grant date. The expectedvolatility of total return to shareholders is calculated in accordance with the plan’s term structure and includes the volatilities of all members of thedefined peer group.

The outstanding performance share awards at the 100% performance level is summarized below:

WeightedAverage Unrecognized

Number Grant Date Compensation Aggregate IntrinsicOutstanding Fair Value Expense (a) Value

Performance shares outstanding at December 31, 2013Performance share awardsPerformance shares lapsedPerformance shares forfeited

Performance shares outstanding at December 31, 2014 121,481

124,997 $ 31.38

(34,050) 28.03

30.71 $ 975 $ 4,867

(a) The unrecognized compensation expense is expected to be recognized over the weighted average remaining contractual term of the awards ofapproximately one year.

66

Page 77 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

A summary of information related to performance shares for 2014,2013 and 2012 is presented below:

Weighted average per share grant date fair value per sharesawardedFair value of performance shares vested (in thousands)Intrinsic value of performance shares vested (in thousands) (a)Compensation expense (in thousands) (b)Deferred tax benefit related to compensation expense (in thousands)

(a) Based on a 100% performance level.(b) Includes adjustments for forfeiture of performance share awards by certain executives.

2014 2013 2012

-- 849 1,193-- 1,450 3,464

1,181 1.188 170413 416 59

Repurchase Program

No shares of common stock were repurchased during the twelve months ended December 31, 2014 . Detail regarding the Company’s stockrepurchase program are presented below:

Shares repurchased (b)

Cost, including commission (in thousands)Total remaining shares available for repurchase at Deeember31,2014

Since 1999 Authorized(a) Shares

$ 423,647

(a) Represents repurchased shares and cost since inception of the stock repurchase program in 1999.(b) Shares repurchased does not include 86,735 treasury shares related to employee compensation arrangements outside of the Company’s repurchase

programs.

The Company may in the future make purchases of its common stock pursuant to its authorized program in open market transactions at prevailingprices and may engage in private transactions where appropriate. The repurchased shares will be available for issuance under employee benefit and stockincentive plans, or may be retired.

Dividend Policy

On December 30, 2014, the Company paid $11.3 million in quarterly cash dividends to shareholders. The Company paid a total of $44.6 million,$42.0 million and $38.9 million in cash dividends during the twelve months ended December 31, 2014,2013 and 2012, respectively. On January 29,2015, the Board of Directors declared a quarterly cash dividend of $0.28 per share payable on March 31,2015 to shareholders of record on March 16,2015.

67

Page 78 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

Basic and Diluted Earnings Per Share

FASB guidance requires the Company to include share-based compensation awards that qualify as participating securities in both basic and dilutedearnings per share to the extent they are dilutive. A share-based compensation award is considered a participating security if it receives non-forfeitabledividends or may participate in undistributed earnings with common stock. The Company awards unvested restricted stock which qualifies as aparticipating security. The basic and diluted earnings per share are presented below:

Weighted average number of common shares outstanding:Basic number of common shares outstanding

Dilutive effect of unvested performance awardsDilutive effect of stock options

Diluted number of common shares outstandingBasic net income per common share:

Net incomeIncome allocated to participating restricted stock

Net income available to common shareholdersDiluted net income per common share:

Net incomeIncome reallocated to participating restricted stock

Net income available to common shareholdersBasic net income per common share:

Distributed earningsUndistributed earnings

Basic net income per common shareDiluted net income per common share:

Distributed earningsUndistributed earnings

Diluted net income per common share

Years Ended December 31.

2014 2013 2012

40,190,991 40,114,594 39,974,02220,726

-- -- 14,803

$ 91,428(301) (254) (256)

$ ?(301) (254) (256)

0.97

1.165 1.155 1.30

$ ~ ~$ 1.045$ 0.971.165 1.155 1.29

The amount of restricted stock awards and performance shares at 100% performance level excluded from the calculation of the diluted number ofcommon shares outstanding because their effect was antidilutive is presented below:

(a)

Restricted stock awardsPerformance shares (a)

Year Ended December 31,

2014 2013 2012

96,208 115,044 57,625

Certain performance shares were excluded from the computation of diluted earnings per share as no payouts would have been required based uponperformance at the end of each corresponding period.

68

Page 79 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

H. Accumulated Other Comprehensive Income (Loss)

Changes in Accumulated Other Comprehensive Income (Loss) (net of tax) by component are presented below (in thousands):Unrecognized Net Unrealized

Pension and Post- Gains (Losses) on Net Losses on Accumulated Otherretirement Benefit Marketable Cash Flow Comprehensive

Costs Securities Hedges Income (Loss)

Balance at December 31, 2012Other comprehensive income before reclassificationsAmounts reclassified from accumulated other

comprehensive income (loss)

Balance at December 31, 2013Other comprehensive income (loss) before

reclassificationsAmounts reclassified from accumulated other

comprehensive income (loss)

Balance at December 31, 2014

$ (75,737) $51,371 14,482 -- 65,853

3,036

(21,330) 36,240 (12,298) 2,612

(12,628)

(926) (5,977) 224 (6,679)

$ 38,957 $ (12,074)

69

Page 80 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

Amounts reclassified from accumulated other comprehensive income (loss) for the twelve months ended December 31,2014 and 2013 are asfollows ( in thousands):

Details about Accumulated OtherComprehensive Income (Loss) Components 2014 2013

Affected Line Item inthe Statement of

Operations

Amortization of pension and post-retirementbenefit costs:Prior service benefit

Net loss

Income tax effect

7,659 $ 5,560 (a)(a)

1,477 (4,912)

926 (3,036) (a)

Marketable securities:

Net realized gain on sale of se.curities

Income tax ef�ect7,350 553

(1,373) (I 17)5,977 436

Income before incometaxes

Net income

Loss on cash flow hedge:

Amortization of loss

Income tax effect(438) (411)214 168

(224) (243)

Income before incometaxes

Net income

Total reclassifications $ 6,679 $ (2,8,~)’

(a) These items are included in the computation of net periodic benefit cost. See Note M, Employee Benefits, for additional information.

70

Page 81 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

I. Long-Term Debt and Financing Obligations

Outstanding long-term debt and financing obligations are as follows:

Long-Term Debt:Pollution Control Bonds (1):

7.25% 2009 Series A refunding bonds, due 2040 (7.46% effective $4.50% 2012 Series A refunding bonds, due 2042 (4.63% effective interest rate)

December 31,

2014 2013(In thousands)

59,235 59,2357.25% 2009 Series B refunding bonds, due 2040 (7.49°6 effective1.875% 2012 Series A refunding bonds, due 2032 ~2.35% effective interest rate) 33,300 33,300

Total Pollution Control Bonds

Senior Notes (2):6.00% Senior Notes, net ofdiseonnt, due 2035 (7.12% effective interest rate)7.50% Senior Notes. net of discount, due 2038 (7.67% effective interest rate) 148,818 148,8003.30% Senior Notes, net of discount, due 2022 (3.43% effective interest rate)5.00% Senior Notes, net of discount, due 2044 (5.10% effective interest rate)

Total Senior Notes

RGRT Senior Notes (3):

3.67% Senior Notes, Series A, due 2015 (3.87% effective interest rate)4.47% Senior Notes, Series B, due 2017 (4.62% effective interest rate)

5.04% Senior Notes, Series C, due 2020 (5.16% effective interest rate)Total RGRT Senior Notes

Total long-term debtFinancing Obligations:

Revolving Credit Facility ($14,532 due in 2015)(4)Total long-term debt and financing obligations

149,468

50,000 50,000

110,000 110,000

1,163,711 1,013,972

Current Portion (amount due within one year):

Current maturities of long term debtShort-term borrowings under the revolving credit facility

(15,000)

1,134,179 $ 999,620

(1) Pollution Control Bonds ("PCBs")

(2)

The Company has four series of tax exempt unsecured PCBs in aggregate principal amount of $193.1 million. The 1.875% 2012 Series A (El PasoElectric Company Four Corners Project) Pollution Control Refunding Revenue Bonds with an aggregate principal amount of $33.3 million aresubject to mandatory tender for purchase in September 2017.

Senior Notes

The Senior Notes are unsecured obligations of the Company. They were issued pursuant to bond covenants that provide limitations on theCompany’s ability to enter into certain transactions. The 6.00% Senior Notes have an aggregate principal amount of $400.0 million and wereissued in May 2005. The proceeds, net of a $2.3 million discount, were used to fund the retirement of the Company’s first mortgage bonds. TheCompany amortizes the loss associated with a cash flow hedge recorded in accumulated other comprehensive income to earnings as interestexpense over the life of the 6.00% Senior Notes. See Note O, "Financial Instruments and Investments - Treasury Rate Locks". This amortization isincluded in the effective interest rate of the 6.00% Senior Notes.

71

Page 82of168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

The 7.50°,6 Senior Notes have an aggregate principal amount of $150.0 million and were issued in June 2008. The proceeds, net of a $1,3 milliondiscount, were used to repay short-term borrowings of $44.0 million, fund capital expenditures and for other general corporate purposes.

The 3.30% Senior Notes have an aggregate principal amount of $150.0 million and were issued in December 2012. The proceeds, net of a $0.3million discount, were used to fund construction expenditures and for working capital and general corporate purposes.

The 5.00% Senior Notes have an aggregate principal amount of $150.0 million and were issued in December 2014. The proceeds, net of a $0.5million discount, were used to fund construction expenditures and for working capital and general corporate purposes.

(3) RGRT Senior Notes

In 2010, the Company and RGRT, a Texas grantor trust through which the Company finances its portion of fuel for Palo Verde, entered into a notepurchase agreement with various institutional purchasers. Under the terms of the agreement, RGRT sold to the purchasers $110 million aggregateprincipal amount of Senior Notes (the "Notes") of which $15.0 million will mature in August 2015. The Company will either repay or refinancethis $15.0 million of Notes upon maturity. The Company guarantees the payment of principal and interest on the Notes. In the Company’s financialstatements, the assets and liabilities of the RGRT are reported as assets and liabilities of the Company.

RGRT pays interest on the Notes on February 15, and August 15 of each year until maturity. RGRT may redeem the Notes, in whole or in part, atany time at a redemption price equal to 100% of the principal amount to be redeemed together with the interest on such principal amount accruedto the date of redemption, plus a make-whole amount based on the prevailing market interest rates. The agreement requires compliance withcertain covenants, including a total debt to capitalization ratio. The Company was in compliance with these requirements throughout 2014.

The sale of the Notes was made by RGRT in reliance on a private placement exemption from registration under the Securities Act of 1933, asamended. The proceeds of $109.4 million, net of issuance costs, from the sale of the Notes was used by RGRT to repay amounts borrowed underthe revolving credit facility and will enable future nuclear fuel financing requirements of RGRT to be met with a combination of the Notes andamounts borrowed from the RCF.

(4) Revolving Credit Facility

On January 14, 2014, the Company and RGRT entered into a second amended and restated credit agreement related to the RCF with JP MorganChase Bank, N.A., as administrative agent and issuing bank, and Union Bank, N.A., as syndication agent, and various lending banks party thereto.Under the terms of the agreement, the Company has available $300 million and the ability to increase the RCF by up to $100 million (up to a totalof $400 million ) upon the satisfaction of certain conditions, more fully set forth in the agreement, including obtaining commitments from lendersor third party financial institutions. The RCF has a term ending January 2019. The Company may extend the maturity date up to two times, in eachcase for an additional one year period upon the satisfaction of certain conditions.

The RCF provides that amounts borrowed by the Company may be used for, among other things, working capital and general corporate purposes.Any amounts borrowed by RGRT may be used, among other things, to finance the acquisition and processing of nuclear fuel. Amounts borrowedby RGRT are guaranteed by the Company and the balance borrowed under the RCF is recorded as short-term borrowings on the balance sheet. TheRCF is unsecured. The RCF requires compliance with certain covenants, including a total debt to capitalization ratio. The Company was incompliance with these requirements throughout 2014. As of December 31, 2014, the total amount borrowed by RGRT was $14.5 million fornuclear fuel under the RCF. As of December 31, 2014 , no borrowings were outstanding under this facility for working capital and generalcorporate purposes. The weighted average interest rate on the RCF was 1.3% as of December 31.2014.

72

Page 83 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

As of December 31. 2014, the scheduled maturities for the next five years of long-term debt are as follows (in thousands):

2015 $ 15,0002016 --2017 83,3002018 --2019 --

The $14.5 million outstanding on the RCF for nuclear fuel financing purposes is anticipated to be paid in 2015.

J. Income Taxes

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2014 and2013 are presented below (in thousands):

l~ferr, d t~x asstCs:Benefit of tax loss carryforwardsAlternative minimum tax credit carryforwardPensions and benefitsAsset retiremem obligationOther

Total gross deferred tax assets

Deferred tax liabilities:Plant, principally due to depreciation and basis differencesDecommissioningDeferred fuelOther

Total gross deferred tax liabilities

Net accumulated deferred income taxes

December 31,

2014 2013

$ 17,709

64,407 54,652

15,768 14~85

(40,373) (35,489)

(3,630) (5,664)

$ (460,197) $ (422,960)

Based on the average annual book income before taxes for the prior three years, excluding the effects of unusual or infrequent items, the Companybelieves that the deferred tax assets will be fully realized at current levels of book and taxable income.

73

Page 84 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

The Company recognized income tax expense for 2014,2013 and 2012 as follows (in thousands):

Income Lsx expense:Federal:

CurremDeferred

Total federal income taxSea�e:

DeferredTotal staIe income tax

Generation (amortization) of accumulated investmem tax creditsTotal income tax expense

Years Ended December 31,

2014 2013 2012

38,810 45,024 43,187

3,209 ,931641 (414) 697

(322) 68 (323)

As of December 31, 2014, the Company had $17.7 million of AMT credit earryforwards that have an unlimited life. As of December 31, 2014,the Company has utilized all of the federal and state tax loss carryfowards.

Income tax provisions differ from amounts computed by applying the statutory federal income tax rate of 35% to book income before federalincome tax as follows (in thousands):

Years Ended December 31.

Federal income tax expense computed on income at statutory rateDifference due to:

State taxes, net of federal benefitAEFUDCPermanent tax differencesOther

Total income tax expenseEffective income tax rate

2014 2013 2012

1,902 936 1,708(3,757) (2,149) (1,845)

(517) (262) (519)

31.0% 33.0% 34.1%

The Company files income tax returns in the United States ("U.S.") federal jurisdiction and in the states of Texas, New Mexico and Arizona. TheCompany is no longer subject to tax examination by the taxing authorities in the federal and New Mexico jurisdictions for years prior to 2010. TheCompany is currently under audit in Texas for tax years 2007 through 2011 and in Arizona for tax years 2009 through 2012. The Company reached asettlement agreement with the Arizona Department of Revenue ("ADOR") in March 2014 in their audit of income tax retums for the years 1998 through2007 which did not have a material effect on income tax expense. Additionally, the Company reached a settlement with ADOR in September of 2014 intheir audit of the income tax return for 2008 which did not have a material effect on income tax expense.

On December 19, 2014, the President signed the Tax Increase Prevention Act of 2014. This act included the extension of bonus depreciation whichimpacted the Company. The Company recorded the impact of the law change in December 2014, which resulted in an $0.8 million increase in incometax expense due to a decrease in the domestic production activities deduction which is limited by taxable income.

FASB guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a taxposition taken or expected to be taken in a tax return. In January 2010, the Company filed for a change of accounting method with the IRS related to theway in which units of property are determined for purposes of determining capitalized tax assets. The change was included in the 2009 federal incometax return, with additional amounts included in the 2010 to 2013 federal income tax returns. The Company recorded an unrecognized tax position of $1.6million in 2012, related to the change in accounting method in 2009 through 2012. In 2013, a $4.5 million decrease was made to the reserve related tothe change in accounting method. The decrease was primarily the result of the completion of IRS audits for tax years 2009 to 2012. In September

74

Page 85 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

2014, the Company received an Issue Resolution Agreement ("IRA") from IRS regarding the generation repairs deduction for all years. In the IRA, theIRS declared that the method used by the Company to calculate the generation repair deduction was substantially the same as the method outlined in theRevenue Procedure and declared that therefore no adjustment to the deduction taken in previous tax returns by the Company was required. As a result ofthe IRA, the Company recorded a $2.8 million decrease to eliminate the balance of the reserve related to the change in accounting method. TheCompany recorded an unrecognized tax position of $2.1 million, $0.5 million and $1.4 million in 2014,2013 and 2012, respectively, related todepreciation and other amounts deducted in current and prior year Texas franchise tax returns. The Company recorded a decrease of $1.3 million (net ofan increase of $0.4 million ) to its unrecognized tax position in 2014 and an increase of $1.3 million (nO of a decrease of $0.4 million ) in 2013 relatedto tax credits taken in prior year Arizona income tax returns, which have been settled through audit. A reconciliation of the December 31, 2014,2013and 2012 amount of unrecognized tax benefits is as follows (in thousands):

Balanc¢ at January 1Additions for tax positions related to the current yearReductions for tax positions related to the current yearAdditions for tax positions of prior yearsReductions for tax positions of prior years

Balance at December 31

2014 2013 2012

300 600 1,600-- -- (900)

2,200 i,700 1,400

5,200 $ 7,200 $ 9,800

If recognized, $3.0 million of the unrecognized tax position at December 31. 2014, would affect the effective tax rate. The Company recognizedincome tax expense for an unrecognized tax position of $0.5 million for the year ended December 31.2014.

The Company recognizes in tax expense interest and penalties related to tax benefits that have not been recognized. During the year endedDecember 31, 2012, the Company recognized a benefit of $0.3 million in interest. For the years ended December 31, 2014 and 2013, the Companyrecognized interest expense of $0.1 million and $0.2 million, respectively. The Company had approximately $0.5 million and $0.4 million accrued forthe payment of interest and penalties at December 31,2014 and 2013, respectively.

75

Page 86 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

K. Commitments, Contingencies and Uncertainties

Power Purchase and Sale ConCracts

To supplement its own generation and operating reserves and to meet required renewable portfolio standards, the Company engages in powerpurchase arrangements which may vary in duration and amount based on evaluation of the Company’s resource needs, the economics of thetransactions, and specific renewable portfolio requirements. The Company has entered into the following significant agreements with variouscounterparties for forward purchases and sales of electricity:

Type of Contract

Power Purchase and Sale Agreement

Power Purchase and Sale Agreement

Power Purchase Agreement

Power Purchase Agreement

Power Purchase Agreement

Power Purchase Agreement

Power Purchase Agreement

Power Purchase Agreement

Counterparty Quantity Term

Commercial

Operation

Date

Freeport 100 MW June 2006 through December 2021 N/AHatch Solar Energy Center I, LLC 5 ~ July 2011

NRG 20 MW August 2011 through August 2031 August 2011Sun Edison I IO MW June 2012Sun Edison 2 12 MW May 2012 through May 2037 May 2012

Macho Springs Solar, LLC 50 MW ~2014 2034PSEG El Paso Solar Energy

Center 10 MW December 2014 through November 2044 December 2014

The Company has a firm Power Purchase and Sale Agreement with Freeport-McMoran Copper and Gold Energy Services LLC ("Freeport") whichprovides for Freeport to deliver energy to the Company from its ownership interest in the Luna Energy Facility (a natural gas-fired combined cyclegeneration facility located in Luna County, New Mexico) and for the Company to deliver a like amount of energy at Greenlee, Arizona. The Companymay purchase the quantities noted in the table above at a specified price at times when energy is not exchanged under the Power Purchase and SaleAgreement. Upon mutual agreement, the contract allows the parties to increase the amount of energy that is purchased and sold under the PowerPurchase and Sale Agreement. The parties have agreed to increase the amount up to 125 MW through December 2015. The contract was approved bythe FERC and continues through December 31. 2021 . On December 30, 2014, the FERC issued an order authorizing the disposition, i.e. sale, ofFreepoffs interest in the Luna facility to Samchully Power & Utilities 1, LLC. Freeport will retain the ability to purchase up to the full amount of itsprevious ownership share of the Luna facility of approximately 190 MW, thereby continuing to fulfill its obligations pursuant to the Power Purchase andSale Agreement.

The Company has a 25 -year purchase power agreement with Hatch Solar Energy Center I, LLC to purchase all of the output from a solarphotovoltaic plant located in southern New Mexico which began commercial operation in July 2011. The Company entered into a 20 -year contract withNRG Solar Roadrunner LLC ("NRG") to purchase all of the output of a solar photovoltaic plant built in southern New Mexico which began commercialoperation in August 2011 . The Company has 25 -year purchase power agreements to purchase all of the output of two additional solar photovoltalcplants located in southern New Mexico, SunEdison 1 and SunEdison 2 which began commercial operation on June 25, 2012 and May 2, 2012 ,respectively. The Company entered into these contracts to help meet its renewable portfolio requirements. The Company has a 20 -year purchase poweragreement with Macho Springs Solar. LLC to purchase the entire generation output delivered from the 50 MW Macho Springs solar photovoltalc plantlocated in Luna County. New Mexico which began commercial operation on May 23, 2014. The Company has a 30 -year purchase power agreementwith PSEG El Paso Solar Energy Center ("PSEG") to purchase the total output of approximately 10 MW from a solar photovoltaic plant that PSEGowns and operates on land subleased from the Company in proximity to its Newman Power Station. This solar photovoltalc plant began commercialoperation on December 30, 2014.

The Company entered into an agreement in 2009 to purchase capacity and unit contingent energy during 2010 from Shell Energy North America("Shell"). Under the agreement, the Company provided natural gas to Pyramid Unit No. 4 where Shell had the right to convert natural gas to electricenergy. The Company entered into a contract with Shell on May 17, 2010 to extend the term of the capacity and unit contingent energy purchase fromJanuary 1. 2011 through September 30, 2014.

76

Page 87 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

Environmental Matters

General The Company is subject to extensive laws, regulations and permit requirements with respect to air and greenhouse gas emissions, waterdischarges, soil and water quality, waste management and disposal, natural resources and other environmental matters by federal, state, regional, tribaland local authorities. Failure to comply with such laws, regulations and requirements can result in actions by authorities or other third parties that mightseek to impose on the Company administrative, civil and/or criminal penalties or other sanctions. In addition, releases of pollutants or contaminants intothe environment can result in costly cleanup liabilities. These laws, regulations and requirements are subject to change through modification orreinterpretation, or the introduction of new laws and regulations and, as a result, the Company may face additional capital and operating costs to comply.Certain key environmental issues, laws and regulations facing the Company are described further below.

Air Emissions. The U.S. Clean Air Act ("CAA"), associated regulations and comparable state and local laws and regulations relating to airemissions impose, among other obligations, limitations on pollutants generated during the operations of the Company’s facilities and assets, includingsulfur dioxide ("SO2"), particulate matter ("PM"), nitrogen oxides ("NOx") and mercury.

Clean Air Interstate Rule/Cross State Air Pollution Rule. The EPA promulgated the Cross-State Air Pollution Rule ("CSAPR") in August 2011,which rule involves requirements to limit emissions of NOx and SO2 from certain of the Company’s power plants in Texas and/or purchase allowancesrepresenting other parties’ emissions reductions. CSAPR was intended to replace the EPA’s 2005 Clean Air Interstate Rule ("CAIR"). While the U.S.Court of Appeals for the District of Columbia Circuit ("D.C. Circuit") vacated CSAPR in August 2012 and allowed CAIR to stand until the EPA issueda proper replacement, on April 29, 2014, the U.S. Supreme Court reversed and upheld CSAPR, remanding certain portions of CSAPR to the D.C.Circuit for further consideration. On June 26, 2014, the EPA filed a motion asking the D.C. Circuit to lift its stay on CSAPR. On October 23, 2014, theD.C. Circuit lifted its stay of CSAP1L and while we are unable to determine the full impact of the reinstatement of CSAPR until the D.C. Circuit and theEPA take further action, the Company believes it is currently positioned to comply with CSAPR.

National Ambient Air Quality Standards. Under the CAA, the EPA sets National Ambient Air Quality Standards ("NAAQS") for six criteriapollutants considered harmful to public health and the environment, including PM, NOx, carbon monoxide ("CO"), ozone and SO2. NAAQS must bereviewed by the EPA at five -year intervals. In 2010, the EPA tightened the NAAQS for both NOx and SO2. The EPA is considering a 1 -hoursecondary NAAQS for NOx and SO2. In January 2013, the EPA tightened the NAAQS for f’me PM. On November 26, 2014, the EPA announced aproposal to tighten the 2008 primary and secondary ground-level ozone NAAQS. Ozone is the main component of smog. While not directly emitted intothe air, it forms from precursors, including NOx and volatile organic compounds, in combination with sunlight. EPA proposes to tighten the current 8 -hour primary (health-based) standard of 75 parts per billion ("ppb") to a level within its preferred range of 65 to 70 ppb, while also taking comment on apotential standard as low as 60 ppb and on retaining the current standard. The EPA intends to issue a final rule by October 2015.The Company continuesto evaluate what impact these final and proposed NAAQS could have on its operations. If the Company is required to install additional equipment tocontrol emissions at its facilities, the revised NAAQS could have a material impact on its operations and financial results.

Utility MACT. The operation of coal-fired power plants, such as Four Comers, results in emissions of mercury and other air toxics. In December2011, the EPA finalized Mercury and Air Toxics Standards (known as the "Utility MACT") for oil-and coal-fired power plants, which requiressignificant reductions in emissions of mercury and other air toxics. Several judicial and other challenges have been made to this rule, with a U.S.Supreme Court decision expected this year. These challenges notwithstanding, companies impacted by the new standards will generally have up to threeyears to comply. Information from the Four Corners plant operator, APS, indicates that APS currently believes Units 4 and 5 will require no additionalmodifications to achieve compliance with the Utility MACT standards.

Other Laws and Regulations and Risks. As stated above, the Company has entered into an agreement to sell its interest in Four Comers to APS atthe expiration of the 50 -year participation agreement in July 2016. The Company believes that it has better economic and cleaner alternatives forserving the energy needs of its customers than coal-fired generation, which is subject to extensive regulation and litigation. By ceasing its participationin Four Corners, the Company will avoid the significant cost required to install expensive pollution control equipment in order to continue operation ofthe plant as well as the risks of water availability that might adversely affect the amount of power available, or the price thereof, from Four Comers inthe future. The closing of the transaction is subject to the receipt of regulatory approvals.

Climate Change. The U.S. federal government has either considered, proposed and/or finalized legislation or regulations limiting GHG emissions,including carbon dioxide. In particular, the U.S. Congress has considered legislation to restrict or regulate GHG emissions. In the past few years, theEPA began using the CAA to regulate carbon dioxide and other GHG emissions, such as the 2009 GHG Reporting Rule and the EPA’s sulfurhexafluodde ("SF6") reporting rule, both of which apply to the Company,

77

Page 88 of 168

Table of ComentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

as well as the EPA’s 2010 actions to impose permitting requirements on new and modified sources of GHG emissions, After announcing his plan toaddress climate change in 2013, the President directed the EPA to issue proposals for GHG rulemaking addressing power plants. In January 2014, theEPA published a proposal to establish new source performance standards limiting carbon dioxide emissions from new electric generating units, and inJune 2014, a proposal to create carbon dioxide standards for existing and modified/reconstructed power plants. The Company participated in theassociated proposed rulemaking comment periods. On January 7, 2015, EPA announced it plans to issue final rules for new, existing andmodified/reconstructed power plants by this summer. Given the very significant remaining uncertainties regarding these EPA rules, the Companybelieves it is impossible to meaningfully quantify the costs of these potential requirements at present.

In addition, almost half the U.S. states, either individually and/or through multi-state regional initiatives, have begun to consider how to addressGHG emissions and have developed, or are actively considering the development of emission inventories or regional GHG cap and trade programs.While a significant portion of the Company’s generation assets are nuclear or gas-fired, and as a result, the Company believes that its greenhouse gasemissions are low relative to electric power companies who rely more on coal-fired generation, current and future legislation and regulation of GHGs orany future related litigation could impose significant costs and/or operating restrictions on the Company, reduced demand for the power the Companygenerates and/or require the Company to purchase rights to emit GHGs, any of which could be material to the Company’s business, financial condition,reputation or results of operations.

Climate change also has potential physical effects that could be relevant to the Company’s business. In particular, some studies suggest that climatechange could affect the Company’s service area by causing higher temperatures, less winter precipitation and less spring runoff, as well as by causingmore extreme weather events. Such developments could change the demand for power in the region and could also impact the price or ready availabilityof water supplies or affect maintenance needs and the reliability of Company equipment. The Company believes that material effects on the Company,sbusiness or results of operations may result from the physical consequences of climate change, the regulatory approach to climate change ultimatelyselected and implemented by governmental authorities, or both. Given the very significant remaining uncertainties regarding whether and how theseissues will be regulated, as well as the timing and severity of any physical effects of climate change, the Company believes it is impossible tomeaningfully quantify the costs of these potential impacts at present.

Environmental Litigation and Investigations. Since 2009, the EPA and certain environmental organizations have been scrutinizing, and in somecases, have filed lawsuits, relating to certain air emissions and air permitting matters related to Four Corners. In particular, since July 2011, the U.S.Department of Justice (the "DOJ"), on behalf of the EPA, and APS have been engaged in substantive settlement negotiations in an effort to resolvecertain of the pending matters. The allegations being addressed through settlement negotiations are that APS failed to obtain the necessary permits andinstall the controls necessary under the CAA to reduce SO2, NOx, and PM, and that defendants failed to obtain an operating permit under Title V of theCAA that reflects applicable requirements imposed by law. In November 2014, the DOJ provided APS with a draft consent decree to settle the EPAmatter, which decree contains specific provisions for the reduction and control of NOx, SO2, and PM, as well as provisions for a civil penalty, andexpenditures on environmental mitigation projects with an emphasis on projects that address alleged harm to the Navajo Nation. Settlement discussionsare on-going and the Company is unable to predict with certainty the final outcome of these settlement negotiations. The Company has accrued a total of$0.6 million as its estimated share of the loss contingency related to this matter.

Earthjustice filed a lawsuit in the United States District Court for New Mexico on October 4, 2011 for alleged violations of the Prevention ofSignificant Deterioration ("PSD") provisions of the CAA related to Four Comers. On January 6, 2012, Earthjustice filed a First Amended Complaintadding claims for violations of the CAA’s New Source Performance Standards ("NSPS") program. Among other things, the plaintiffs seek to have thecourt enjoin operations at Four Comers until APS applies for and obtains any required PSD permits and complies with the referenced NSPS program.The plaintiffs further request the court to order the payment of civil penalties, including a beneficial mitigation project. On April 2, 2012, APS and theother Four Comers participants filed motions to dismiss with the court. The case is being held in abeyance while the parties seek to negotiate asettlement. On March 30, 2013, upon joint motion of the parties, the court issued an order deeming the motions to dismiss withdrawn without prejudiceduring pendency of the stay. At such time as the stay is lifted, APS, the Company and the other Four Comers participants may reinstate the motions todismiss. Settlement discussions are ongoing. The Company is unable to predict the outcome of this litigation.

New Mexico Tax Matter Related to Coal Supplied to Four Corners

On May 23, 2013, the New Mexico Taxation and Revenue Department issued a notice of assessment for coal severance surtax, penalty, andinterest totaling approximately $30 million related to coal supplied under the coal supply agreement for Four Comers (the "Assessment"). TheCompany’s share of the assessment is approximately $1.5 million. On behalf of the Four Comers

78

Page 89 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

participants, the coal supplier made a partial payment of the Assessment and immediately filed a refund claim with respect to that partial payment inAugust 2013. The New Mexico Taxation and Revenue Department denied the refund claim. On December 19, 2013, the coal supplier and APS, on itsown behalf and as operating agent for Four Corners, filed complaints with the New Mexico District Court contesting both the validity of the Assessmentand the refund claim denial. APS believes the Assessment and the refund claim denial are without merit. The Company cannot predict the timing,results, or potential impacts of the outcome of this litigation.

Lease Agreements

The Company leases land in E! Paso adjacent to the Newman Power Station under a lease which expires in June 2033 with a renewal option of 25years. In addition, the Company leases certain warehouse facilities in El Paso under a lease which expires in December 2015. The Company also hasseveral other leases for office, parking facilities and equipment which expire within the next three years . The Company has transmission anddistribution lines which are operated under various property easement agreements. The majority of these easements include renewal options which theCompany routinely exercises. These lease agreements do not impose any restrictions relating to issuance of additional debt, payment of dividends orentering into other lease arrangements. The Company has no significant capital lease agreements.

The Company’s total annual rental expense related to operating leases was $1.8 million, $1.2 million, and $1.3 million for 2014,2013 and 2012,respectively. As of December 31,2014, the Company’s minimum future rental payments for the next five years are as follows (in thousands):

20152016201720182019 ....

838

512

L. Litigation

The Company is a party to various legal actions. In many of these matters, the Company has excess casualty liability insurance that covers thevarious claims, actions and complaints. Based upon a review of these claims and applicable insurance coverage, the Company believes that none ofthese claims will have a material adverse effect on the financial position, results of operations or cash flows of the Company. The Company expenseslegal costs, including expenses related to loss contingencies, as they are incurred.

See Note C and Note K for discussion of the effects of government legislation and regulation on the Company as well as certain pending legalproceedings.

79

Page 90 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

M. Employee Benefits

Retirement Plans

The Company’s Retirement Income Plan (the "Retirement Plan") is a qualified noncontributory defined benefit plan. Upon retirement or death of avested plan participant, assets of the Retirement Plan are used to pay benefit obligations under the Retirement Plan. Contributions from the Company areat least the minimum funding amounts required by the IRS, as actuarially calculated. The assets of the Retirement Plan are primarily invested incommon collective trusts which hold equity securities, debt securities and cash equivalents and are managed by a professional investment managerappointed by the Company.

The Company has two non-qualified retirement plans that are non-funded defined benefit plans. The Company’s Supplemental Retirement Plancovers certain former employees and directors of the Company. The Excess Benefit Plan, was adopted in 2004 and covers certain active and formeremployees of the Company, The benefit cost for the non-qualified retirement plans are based on substantially the same actuarial methods and economicassumptions as those used for the Retirement Plan.

During the quarter ended March 31,2014, the Company implemented certain amendments to the Retirement Plan and Excess Benefit Plan. In thefirst quarter of 2014, the Company offered a cash balance pension plan as an alternative to its current final average pay pension plan for employeeshired prior to January 1, 2014. The cash balance pension plan also included an enhanced employer matching contribution to the employee’s respective401(k) Defined Contribution Plan (discussed below). For employees that elected the new cash balance feature of the plans, the pension benefit earnedunder the existing final average pay feature of the plans was frozen as of March 31, 2014. Employees hired after January 1, 2014 are automaticallyenrolled in the cash balance pension plan. The amendments to the plans were effective April 1, 2014 . As a result of these actions, the Companyremeasured the assets and liabilities of the plans, based on actuadally determined estimates, using the close of the alternative choice election period ofFebruary 28, 2014, as the remeasurement date.

Prior to December 31, 2013, employees who completed one year of service with the Company and worked at least a minimum number of hourseach year were covered by the final average pay formula of the plan. For participants that continue to be covered by the final average pay formula,retirement benefits are based on the employee’s final average pay and years of service. The cash balance pension plan covers employees beginning ontheir employment commencement date or re-employment commencement date in any plan year in which the employee completes at least a minimumnumber of hours of service. Retirement benefits under the cash balance pension plan are based on the employee’s cash balance account, consisting ofpay credits and interest credits.

The Company complies with FASB guidance on disclosure for pension and other post-retirement plans that requires disclosure of investmentpolicies and strategies, categories of investment and fair value measurements of plan assets, and significant concentrations of risk.

8O

Page 91 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

The obligations and funded status of the plans are presented below (in thousands):

Change in projee~M benefit obligation:Benefit obligation at end of prior yearService costInterest costAmendments (a)Actuarial (gain) lossBenefits paid

Benefit obligation at end of year

Change in plan assets:Fair value of plan assets at end of prior yearActual return on plan assetsEmployer contribution

Benefits paidFair value of plan assets at end of yearFunded status at end of year

December 31.

2014 2013Retirement Non-Qualified Retirement Non-Qualif’ml

Income Retirement Income RetirementPlan Plans Plan Plans

$ 317,815 $ 25,898 $ 320,846 $ 27,241

8,284 303 190

14,001 1,041 12,742 872

(33,700) / ~ --50,741 3,508 (15,373) (533)

(16,008) (1,853) (9,53~ (1,872)

341,133 28,397 317,815 25,898

257,831 -- 220,568 --

22,116 --9,000 1,853 15.000 1,872

(16,008)272,939 257,831 --

(a) Amendments relate to the modification of the Company’s Retirement Plan and Excess Benefit Plan discussed above.

Amounts recognized in the Company’s balance sheets consist of the following (in thousands):

Current liabilitiesNoncurrent liabilities

Total

December 31,

2014 2013Retirement Non-Qualified Retirement Non-Qualified

Income Retirement Income RetirementPlan Plans Plan Plans

$ ~ $ (2;319) $ ~ $ (i,870)(68,194) (26,078) (59,984) (24,028)

The accumulated benefit obligation in excess of plan assets is as follows (in thousands):

Projected benefit obligationAccumulated benefit obligationFair value of plan assets

December 31,

2014 2013Retirement Non-Qualified Retirement Non-Qualified

Income Retirement Income RetirementPlan Plans Plan Plans

$ (341,133)$ (28,397) $ (317,8i5) $ (25,898)(312,762) (27,603) (275,555) (25,077)

81

Page 92 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

Amounts recognized in accumulated other comprehensive income consist of the following (in thousands):

Yenr~ Ended December 31,

2014

Retirement Non-Qualified RetirementIncome Retirement IncomePlan Plans Plan

Net lossPrior service cost (benefit)

Total

2013Non-Qualified

RetirementPlans

(30,81 l) (264) 219

The following are the weighted-average actuarial assumptions used to determine the benefit obligations:

RetirementIncome

Plan

Discount rate 4.0% ’Rate of compensation increase 4.5%

December 31.

2014 2013

Non-Qualified Non-QualifiedSupplemental Execs~ Retirement Supplemental Exce~s

Retirement Benefit Income Retirement BenefitPlan Plan Plan Plan Plan

N/A 4.5% 4.75% N/A 4.75%

The Company reassesses various actuarial assumptions at least on an annual basis. The discount rate is reviewed at each measurement date. Thediscount rate used to measure obligations is based on a spot rate yield curve that matches projected future payments with the appropriate interest rateapplicable to the timing of the projected future benefit payments. A 1% increase in the discount rate would decrease the December 31, 2014 retirementplans’ projected benefit obligation by 11.7%. A 1% decrease in the discount rate would increase the December 31, 2014 retirement plans’ projectedbenefit obligation by 14.6%.

The components of net periodic benefit cost are presented below (in thousands):

Service costInterest costExpected return on plan assetsAmortization of:

Net lossPrior service cost (benefi0

Years Ended December 31,

2014 201:3 2012Retirement Non-Qualified Retirement Non-Quafified Retirement Non-Qualified

Income Retirement Income Retirement Income RetirementPlan Plans Plan Plans Plan Plans

14,001 1,041 12,742 872 12,594 963(18,699) -- (17,108) ~ (14,443)

8,178 675 10,437 661 627(2,889) (17) 3 94 21 94

Net periodic benefit cost $ 8,875 $ 2,002 $ 15,211 $ L817 $ 17,431 $ 1,983

82

Page 93 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

The changes in benefit obligations recognized in other comprehensive income are presented below (in thousands):

Net (gain) loss

Prior service benefitAmortization of:

Net loss

Prior service (cost) benefitTotal recognized in othercomprehensive income

Years Ended Deeeml~er 31,

2014 2013

Retirement Non-Qualified Retirement Non-QualifiedIncome Retirement Income RetirementPlan Plans Plan Plans

2012

Retirement Non-QualifiedIncome RetirementPlan Plans

(33,700) (500)

(8,178) (675) (10,437) (661) (10,729) (627)2,889 17 (3) (94) (21) (94)

8,335 $ 2,350 $ (40,505) $ (1,288) $ (4,078) $ 616

The total amount recognized in net periodic benefit costs and other comprehensive income are presented below (in thousands):

Total recognized in net periodicbenefit cost and othercomprehensive income $

Years Ended lkeember 31,

2014 2013 2012

Retirement Non-Qualified Retirement Non-Qualified Retirement Non-QualifiedIncome Retirement Income Retirement Income RetirementPlan Plans Plan Plans Plan Plans

The following are amounts in accumulated other comprehensive income that are expected to be recognized as components of net periodic benefitcost during 2015 (in thousands):

Retirement Non-Qualifu~lIncome RetirementPlan Plans

Net lossPrior service benefit (3,470) (40)

The following are the weighted-average actuarial assumptions used to determine the net periodic benefit cost for the twelve months endedDecember 31 :

Discount rateExpected long-term return onplan assets

Rate ofcompensationincrease 4.75%

2014 (a) 2013 2012

Non-Qualified Non-Qualified Non-QualifiedRetirement Supplemental Excess Retirement Supplemental Excess Retirement Supplemental Excess

Income Retirement Benefit Income Retirement Benefit Income Retirement BenefitPlan Plan Plan Plan Plan Plan Plan Plan Plan

4:9% ......~

3!9%

7.5% N/A N/A 7.5% N/A N/A 7.5% N/A N/A

(a) The Retirement Plan and the Excess Benefit Plan were remeasured on February 28, 2014 due to the above mentioned plan amendment. Thediscount rate used to remeasure the benefit obligation was 4.6% for the Retirement Plan and 4.5% for the Excess Benefit Plan, compared to 4.9%for both plans as of January 1, 2014. All other assumptions remained consistent with assumptions used at January 1, 2014.

83

Page 94 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

The Company’s overall expected long-term rate of return on assets is 7.5% effective January 1, 2014, which is both a we-tax and after-tax rate aspension funds are generally not subject to income tax. The expected long-term rate of return is based on the weighted average of the expected returns oninvestments based upon the target asset allocation of the pension fund. The Company’s target allocations for the plan’s assets are presented below:

December 31, 2014

40%

100%

Fixed income

Total

The Retirement Plan invests the majority of its plan assets in common collective trusts which includes a diversified portfolio of domestic andinternational equity securities and fixed income securities. The Retirement Plan fund also invests in a real estate limited partnership. The ¢xpexted rateof returns for the funds are assessed annually and are based on long-term relationships among major asset classes and the level of incremental returnsthat can be earned by the successful implementation of different active investment management strategies. Equity returns are based on estimates of long-term inflation rate, real rate of return, 10-year Treasury bond premium over cash and equity risk premium. Fixed income returns are based on maturity,long-term inflation, real rate of return and credit spreads.

FASB guidance on disclosure for pension plans requires disclosure of fair value measurements of plan assets, To increase consistency andcomparability in fair value measurements, FASB guidance on fair value measurements established a fair value hierarchy that prioritizes the inputsvaluation techniques used to measure fair value into three levels as follows:

¯ Level 1 - Observable inputs that reflect quoted market prices for identical assets and liabilities in active markets. Prices or securities held in themutual funds and underlying portfolios of the Retirement Plan are primarily obtained from independent pricing services. These prices are basedon observable market data.

Level 2 - Inputs other than quoted market prices included in Level 1 that are observable for the asset or liability either directly or indirectly.The fair value of the Guaranteed Investment Contract was based on market interest rates of investments with similar terms and riskcharacteristics. The Common Collective Trusts are valued using the net asset value (’~qAV") provided by the administrator of the fund. TheNAV price is quoted on a restrictive market although the underlying investments are traded on active markets.

Level 3 - Unobservable inputs using data that is not corroborated by market data. The fair value of the real estate limited partnership is reportedat the NAV of the investment.

84

Page 95 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

The fair value of the Company’s Retirement Plan assets at December 31, 2014 and 2013, and the level within the three levels of the fair valuehierarchy defined by FASB guidance on fair value measurements are presented in the table below (in thousands):

Deserintion of Securities

Cash and Cash Equivalents

Common Collective Trusts (a)Equity fundsFixed income funds

Total Common Collective Trusts

Limited Partnership Interest in Real Estate (b)Total Plan Investments

Quoted Prices Significantin Active Other Significant

Fair Value as of Markets for Observable UnobservableDecember 31. Identical Assets Inputs Inputs

2014 (Level 1) (Level 2) (Level 3)

149,839 --- 149,839

113,115 113,115

8,748 -- -- 8,748

Descrintion of Securities

Cash and Cash Equivalents

Guaranteed Investment ContractCommon Collective Trust (a)

Equity funds

Fixed income fundsTotal Common Collective Trusts

Limited Partnership Interest in Real Estate (b)Total Plan Investments

Fair Value as ofDecember 31.

2013

Quoted Prices Significantin Active Other Significant

Markets for Observable UnobservableIdentical Assets Inputs Inputs

(Level 1) (Level 2) (Level 3)

1,126 1,126

142,960 142,960 --

103,948 --- 103,948 ~

246,908 246,9088,857 ~ -- 8,857

$ 257,831 $ 940 $ 248,034$ 8,857

(a)

(b)

The Common Collective Trusts are invested in equity or fixed income securities, or a combination thereof. The investment objective of each trustis to produce returns in excess of. or commensurate with, its predefmed index.This investment is a commercial real estate partnership that purchases land, develops limited infrastructure, and sells it for commercialdevelopment. The Company is restricted from selling its partnership interest during the life of the partnership which is generally 5 - 7 years. Returnon investment is realized as land is sold. The fair value of the limited partnership interest in real estate is based on the NAV of the partnershipwhich reflects the appraised value of the land.

The table below reflects the changes in the fair value of investments in real estate during the period (in thousands):

Balances at December 31, 2012Unrealized gain in fair value

Fair Value ofInvestments in

Real Estate

298

Sale of land (357)Unre~ ~

Balances at December 31, 2014 $ 8,748

There were no transfers in or out of Level 1 and Level 2 fair value measurements categories due to changes in observable inputs during the twelvemonth periods ending December 31, 2014 and 2013. Except as noted in the above table, there were no purchases, issuances, and settlements related tothe assets in the Level 3 fair value measurement category during the twelve month periods ending December 31,2014 and 2013.

85

Page 96 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

The Company adheres to the traditional capital market pricing theory which maintains that over the long term, the risk of owning equities shouldbe rewarded with a greater return than available from fixed income investments. The Company seeks to minimize the risk of owning equity securities byinvesting in funds that pursue risk minimization strategies and by diversifying its investments to limit its risks during falling markets. The investmentmanager has full discretionary authority to direct the investment of plan assets held in trust within the guidelines prescribed by the Company through theplan’s investment policy statement including the ability to hold cash equivalents. The investment guidelines of the investment policy statement are inaccordance with the Employee Retirement Income Security Act of 1974 ("ERISA") and Department of Lahor ("DOL") regulations.

The Company contributes at least the minimum funding amounts required by the IRS for the Retirement Plan, as actuarially calculated. TheCompany expects to contribute $11.3 million to its retirement plans in 2015.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):

Retirement Non-QualifiedIncome Retirement

Plan Plans

2016 17,153 2,248

2018 20,019 2,196

2020-2024 103,703 10,720

401(k) Defined Contribution Plans

The Company sponsors 401(k) defined contribution plans covering substantially all employees. Annual matching contributions made to thesavings plans for the years 2014,2013 and 2012 were $3.0 million, $1.9 million, and $1.8 million, respectively. Historically, the Company hadprovided a 50 percent matching contribution up to 6 percent of the employee’s compensation subject to certain other limits and exclusions. EffectiveApril 1, 2014 , for employees who enrolled in the cash balance pension plan (discussed above), the Company provided a 100 percent matchingcontribution up to 6 percent of the employee’s compensation subject to certain other limits and exclusions.

Other Post-retirement Benefits

The Company provides certain health care benefits for retired employees and their eligible dependents and life insurance benefits for retiredemployees only. Substantially all of the Company’s employees may become eligible for those benefits if they retire while working for the Company.Contributions from the Company are generally no more than the IRS tax deductible limit, as actuarially calculated. The assets of the plan are primarilyinvested in common collective trusts which hold equity securities, debt securities, and cash equivalents and are managed by a professional investmentmanager appointed by the Company.

86

Page 97 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

The following table contains a reconciliation of the change in the benefit obligation, the fair value of plan assets, and the funded status of the plan(in thousands):

Change in benefit obligation:Benefit obligation at end of prior yearService costInterest costActuarial loss (gain)

Amendment (a)Benefits paidRetiree contributions

Benefit obligation at end of yearChange in plan assets:

Fair value of plan assets at end of prior year

Actual return on plan assetsEmployer contributionBenefits paidRetiree contributions

Fair value of plan assets at end of yearFunded status at end of year

December 31,

201,1 2013

92.847 $ 135,680

4,463 5,156

-- (97)

1,111 1,056

2,086 5,539100

(4,031) (4,013 )

41,358 42,192

(a) Amendment relates to modification of the Company’s Other Post-retirement Benefit Plan which limits the Company’s premium contribution. Theamendment became effective October 3, 2013 and resulted in a remeasurement of the plan.

Amounts recognized in the Company’s balance sheets consist of the following (in thousands):

l~¢ember 31,

2014 2013

Current liabilities $ ~ $ ~Noncurrent liabilities (59,342) (50,655)

Total

Amounts recognized in accumulated other comprehensive income consist of the following (in thousands):

December 31,

2014 2013Net gain $ (31,943) $ (38,110)Prior service benefit (14,457) (19,210)

Total

87

Page 98 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

The following are the weighted-average actuarial assumptions used to determine the accrued post-retirement benefit obligations:

Discount rate at end of yearHealth care cost trend rates:

InitialUltimateYear ultimate reached

Describer 31,2014 2013

4 9o%

7.25% 7,50°44.50°6 4,50%

2026 2026

The discoum rate is reviewed at each measurement date. The discount rate used to measure obligations is based on a spot rate yield curve thatmatches projected future payments with the appropriate interest rate applicable to the timing of the projected future benefit payments. A 1% increase inthe discount rate would decrease the December 31, 2014 accumulated post-retirement benefit obligation by 13.5%. A 1% decrease in the disenunt ratewould increase the December 31, 2014 accumulated post-retirement benefit obligation by 17.2%.

Net periodic benefit cost is made up of the components listed below (in thousands):

Years Ended December 31.

2014 2013 2012

Service costInterest cost 4,463 5,156 5,651Expected return on plan assetsAmortization of:

Prior service benefitNet (gain) loss (2,671) (626) 615

Net periodic benefit cost

The changes in benefit obligations recognized in other comprehensive income are presented below (in thousands):

Net (gain) lossPrior service benefitAmortization of:

Prior service benefitNet gain (loss)

Total recognized in other comprehensive income

Years Ended December 31,

2014 2013 2012

(97)

4.753 5,657 5,8772;671 626 (615)

$ 10,920 $ (46,180) $ (638)

The total amount recognized in net periodic benefit cost and other comprehensive income are presented below (in thousands):

Years Ended December 31,

2014 2013Total recognized in net periodic benefit cost and other comprehensive income

2012

The amount in accumulated other comprehensive income that is expected to be recognized as a component of net periodiC benefit cost during 2015is a prior service benefit of $3.1 million and a net gain of $2.0 million.

88

Page 99 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

The following are the weighted-average actuarial assumptions used to determine the net periodic benefit cost for the twelve months endedDecember 31 :

Expected long-term return on plan assetsHealth care cost trend rates:

Initial

UltimateYear ultimate reached

2014 2012

5.2%

7.5%

2026

2ota

5.2%

7.75%

2026

5.2%

8.0%

2026

(a) The Other Post-retirement Benefits Plan was remeasured at October 3, 2013 due to a plan amendment. The discount rate increased from 4.1% as ofJanuary 1, 2013 to 4.9% at the rcmeasurement date. All other assumptions remained consistent with assumptions used at January 1, 2013.

For measurement purposes, a 7.5% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2014. The ratewas assumed to decrease gradually to 4.5% for 2026 and remain at that level thereafter. Assumed health care cost trend rates have a significant effect onthe amounts reported for the health care plan. The effect of a 1% change in these assumed health care cost trend rates would increase or decrease theDecember 31, 2014 benefit obligation by $16.1 million or $12.9 million, respectively. In addition, a 1% change in said rate would increase or decreasethe aggregate 2014 service and interest cost components of the net periodic benefit cost by $1.4 million or $1.1 million, respectively.

The Company’s overall expected long-term rate of return on assets, on an after-tax basis, is 5.2% effective January 1, 2014. The expected long-term rate of return is based on the after-tax weighted average of the expected returns on investments based upon the target asset allocation. TheCompany’s target allocations for the plan’s assets are presented below:

December 31, 2014

30°/5

100°/5

Fixed income

Total

The Other Post-retirement Benefit Plan invests the majority of its plan assets in common collective trusts which includes a diversified portfolio ofdomestic and international equity securities and ftxed income securities. The asset portfolio also includes cash equivalents and a real estate limitedparmership. The expected rates of return for the funds are assessed annually and are based on long-term relationships among major asset classes and thelevel of incremental returns that can be earned by the successful implementation of different active investment management strategies. Equity returns arebased on estimates of long-term inflation rate, real rate of return, 10-year Treasury bond premium over cash and equity risk premium. Fixed incomereturns are based on maturity, long-term inflation, real rate of return and credit spreads.

FASB guidance on disclosure for other post-retirement benefit plans requires disclosure of fair value measurements of plan assets. To increaseconsistency and comparability in fair value measurements, FASB guidance on fair value measurements established a fair value hierarchy that pdoritizesthe inputs to valuation techniques used to measure fair value into three levels as follows:

¯ Level 1 - Observable inputs that reflect quoted market prices for identical assets and liabilities in active markets. Prices or securities held in themutual funds and underlying portfolios of the Other Post-retirement Benefits Plan are primarily obtained from independent pricing services.These prices are based on observable market data.

¯ Level 2 - Inputs other than quoted market prices included in Level 1 that are observable for the asset or liability either directly or indirectly.The fair value of municipal securities-tax-exempt are reported at fair value based on evaluated prices that reflect observable marketinformation, such as actual trade information of similar securities, adjusted for

89

Page 100 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

observable differences. The Common Collective Trusts are valued using the NAV provided by the administrator of the fund. The NAV price isquoted on a restrictive market although the underlying investments are traded on active markets.

Level 3 - Unobservable inputs using data that is not corroborated by market data. The fair value of the real estate limited partnership is reportedat the NAV of the investment.

The fair value of the Company’s Other Post-retirement Benefits Plan assets at December 31, 2014 and 2013, and the level within the three levelsof the fair value hierarchy defined by FASB guidance on fair value measurements are presented in the table below (in thousands):

Description of SecuritiesCash and Cash Equivalents

Common Collective Trusts (a)Equity fundsFixed income funds

Total Common Collective Trusts

Limited Parmership Interest in Real Estate (b)Total Plan Investments

Quoted Prices Significantin Active Other Significant

Fair Value as of Markets for Observable UnobservableDecember 31, Identical Assets Inputs Inputs

2014 (Level 1) (Level 2) (Level 3)

26,399 --- 26,39912219 -- 12,219

1,640 -- 1,640

Des~rintion of SecuritiesCash and Cash Equivalents

Common Collective Trust (a)Equity fundsFixed income funds

Total Common Collective TrustsLimited Partnership Interest in Real Estate (b)

Total Plan Investments

Quoted Prices Significanti~ Active Other Significant

Fair Value as of Markets for Observable UnobservableDecember 31. Identical Assets Inputs Inputs

2013 (Level 1) (Level 2) (Level 3)

33 $ 33 $ -- $ --

28,077 28,077 --~ I2,421

40,498 40,498 --

1,661 --- -- 1,661$ 42,192 $ 33 $ 40,498 $ 1,661

(a)

(b)

The Common Collective Trusts are invested in equity or fixed income securities, or a combination thereof. The investment objective of each trustis to produce returns in excess of, or commensurate with, its predefined index..This investment is a commercial real estate partnership that purchases land, develops limited infrastructure, and sells it for commercialdevelopment. The Company is restricted from selling its partnership interest during the life of the partnership which is generally 5 - 7 years. Returnof investment is realized as land is sold. The fair value of the limited partnership interest in real estate is based on the NAV of the partnershipwhich reflects the appraised value of the land.

The table below reflects the changes in the fair value of the investments in real estate during the period (in thousands):

Fair Value ofInvestments in

Real Estate

Bal~ at ~ember 31~ 2012Unrealized gain in fair value 56

Balance at December 3 i, 2013Sale of land (67)

Balance at December 31, 2014 $ 1,640

90

Page 101 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

There were no transfers in or out of Level 1 and Level 2 fair value measurements categories due to changes in observable inputs during the twelvemonth periods ending December 31, 2014 and 2013. Except as noted in the above table, there were no purchases, issuances, and settlements related tothe assets in the Level 3 fair value measurement category during the twelve month periods ending December 31, 2014 and 2013.

The Company adheres to the traditional capital market pricing theory which maintains that over the long term, the risk of owning equities shouldbe rewarded with a greater return than available from fixed income investments. The Company seeks to minimize the risk of owning equity securities byinvesting in funds that pursue risk minimization strategies and by diversifying its investments to limit its risks during falling markets. The investmentmanager has full discretionary authority to direct the investment of plan assets held in trust within the guidelines prescribed by the Company through theplan’s investment policy statement including the ability to hold cash equivalents. The investment guidelines of the investment policy statement are inaccordance with the ERISA and DOL regulations.

The Company does not expect to contribute to its other post-retirement benefits plan in 2015. The following benefit payments, which reflectexpected future service, as appropriate, are expected to be paid (in thousands):

2016 3,528

2018 4,303

2020-2024 27,362

Annual Short-Term Incentive Plan

The Annual Short-Term Incentive Plan (the "Incentive Plan") provides for the payment of cash awards to eligible Company employees, includingeach of its named executive officers. Payment of awards is based on the achievement of performance measures reviewed and approved by theCompany’s Board of Directors’ Compensation Committee. Generally, these performance measures are based on meeting certain financial, operationaland individual performance criteria. The financial performance goals are based on earnings per share and the operational performance goals are based onsafety, compliance, customer satisfaction, and reliability. If a specified level of earnings per share is not attained, no amounts will be paid under theIncentive Plan. In 2014, the Company reached the required levels of earnings per share, safety, compliance, and customer satisfaction goals for anincentive payment of $7.4 million. In 2013 and 2012, the Company reached the required levels of earnings per share, safety, regulatory compliance,and customer satisfaction goals for an incentive payment of $4.0 million and $7.9 million, respectively. The Company has renewed the Incentive Planin 2015 with similar goals.

N. Franchises and Significant Customers

El Paso and Las Cruces Franchises

The Company has a franchise agreement with El Paso, the largest city it serves. The franchise agreement allows the Company to utilize publicrights-of-way necessary to serve its retail customers within El Paso. The Company is also providing electric distribution service to Las Cruces under animplied franchise by satisfying all obligations under the franchise agreement that expired on April 30, 2009.

The franchise arrangements held between the Company and the cities of El Paso and Las Cruces are detailed below:

El Paso August 1, 2010 - Present 4.00% (b)2.00°.6

(a) Based on a percentage of revenue.(b) 0.75% of the El Paso franchise fee is to be placed in a restricted fund to be used solely for economic development and renewable

energy purposes.

91

Page 102 of 168

Table of ContentsEL PASO ELECI’RIC COMPANY

NOTES TO FINANCIAL STATEMENTS

Military Installations

The Company serves Holloman Air Force Base ("Holloman"), White Sands Missile Range ("White Sands") and Fort Bliss. The militaryinstallations represent approximately 5% of the Company’s annual retail revenues. In July 2014, the Company signed an agreement with Fort Bliss foran initial three -year term under which Fort Bliss takes retail electric service from the Company under the applicable Texas tariffs, The Company isserving White Sands under the applicable New Mexico tariffs, In March 2006, the Company signed a contract with Holloman that provides for theCompany to provide retail electric service and limited wheeling services to Holloman for a ten -year term which expires in January 2016,

Page 103 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

O. Financial Instruments and Investments

FASB guidance requires the Company to disclose estimated fair values for its financial instruments. The Company has determined that cash andtemporary investments, investment in debt securities, accounts receivable, decommissioning trust funds, long-term debt, short-term borrowings underthe RCF, accounts payable and customer deposits meet the definition of financial instruments. The carrying amounts of cash and temporary investments,accounts receivable, accounts payable and customer deposits approximate fair value because of the short maturity of these items. Investments in debtsecurities and decommissioning trust funds are carried at fair value.

Long-Term Debt and Short-Term Borrowings Under the RCF. The fair values of the Company’s long-term debt and short-term borrowings underthe RCF are based on estimated market prices for similar issues and are presented below (in thousands):

December 31,

2014 2013

Carrying E~timated Carrying EstimatedAmount Fair Value Amount Fair Value

Pollution Control Bonds

Senior Notes 846,044 968,728 696,485 734,515RGRT Senior Notes (1) HO,O00RCF (l) 14,532 14,532 14,352 14,352

Total

(1) Nuclear fuel financing as of December 31, 2014 and December 31, 2013 is funded through the $110 million RGRT Senior Notes and $14.5 millionand $14.4 million, respectively under the RCF. As of December 31, 2014 and 2013, no amount was outstanding under the RCF for workingcapital or general corporate purposes. The interest rate on the Company’s borrowings under the RCF is reset throughout the period reflectingcurrent market rates. Consequently, the carrying value approximates fair value.

Treasury Rate Locks. The Company entered into treasury rate lock agreements in 2005 to hedge against potential movements in the treasuryreference interest rate pending the issuance of the 6% Senior Notes. The treasury rate lock agreements met the criteria for hedge accounting and weredesignated as a cash flow hedge. In accordance with cash flow hedge accounting, the Company recorded the loss associated with the fair value of thecash flow hedge, net of tax, as a component of accumulated other comprehensive loss and amortizes the accumulated comprehensive loss to earnings asinterest expense over the life of the 6% Senior Notes. In 2015, approximately $0.5 million of this accumulated other comprehensive loss item will bereclassified to interest expense.

Contracts and Derivative Accounting. The Company uses commodity contracts to manage its exposure to price and availability risks for fuelpurchases and power sales and purchases and these contracts generally have the characteristics of derivatives. The Company does not trade or use theseinstruments with the objective of eaming financial gains on the commodity price fluctuations. The Company has determined that all such contractsoutstanding at December 31, 2014 , except for certain natural gas commodity contracts with optionality features, that had the characteristics ofderivatives met the "normal purchases and normal sales" exception provided in FASB guidance for accounting for derivative instruments and hedgingactivities, and, as such, were not required to be accounted for as derivatives.

The Company determined that certain of its natural gas commodity contracts with optionality features are not eligible for the normal purchasesexception and, therefore, are required to be accounted for as derivative instruments pursuant to FASB guidance for accounting for derivative instrumentsand hedging activities. However, as of December 31, 2014, the variable, market-based pricing provisions of existing gas contracts are such that thesederivative instruments have no significant fair value.

Marketable Securities. The Company’s marketable securities, included in decommissioning trust funds in the balance sheets, are reported at fairvalue which was $234.3 million and $214.1 million at December 31, 2014 and 2013, respectively. These securities are classified as available for saleunder FASB guidance for certain investments in debt and equity securities and are valued using prices and other relevant information generated bymarket transactions involving identical or comparable securities. The reported fair values include gross unrealized losses on marketable securities whoseimpairment the Company has deemed to be temporary. The tables below present the gross unrealized losses and the fair value of these securities,aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

93

Page 104 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

Description of Securities (1) :

Federal Agency Mortgage Backed SecuritiesU.S. Government BondsMunicipal ObligationsCorporate Obligations

Total Debt SecuritiesCommon StockCommon Collective Trust-Equity Funds

Total Temporarily Impaired Securities

December 31, 2014

1~ than 12 Months 12 Months or Longer Total

Fair Unrealized Fair Unrealized Fair UnrealizedValue ~ Value Losses Value Lo~s¢~

$ -- $ $ 2.383 $ (57) $ 2,383 $ (57)1,552 (2) 20,0606,433 (65) 8,570 (410) 15,003 (475)

. 2,455 (24) 2,461 O11)10.440 (91) 33,474 (1,151) 43,914 (1,242)1,475 (229) ~

22,736 (821) -- 22,736 (821)

(1) Includes approximately 106 securities.

Deacription of Securiti~ (2) :

December 31, 2013

lx~ than 12 Month~ 12 Months or Longer Total

Fair Unrealized Fair Unrealized Fair UnrealizedValue Lo~�~ Value Lo~e~ Value Lo~�~

Federal Agency Mortgage Backed SecuritiesU.S. Government BondsMunicipal ObligationsCorporate Obligations

Total Debt SecuritiesCommon stock

Total Tem porarily Impaired Securities

$ 6,444 $ (169) $ 1,421 $ (119) $ 7,865 $ (288)8,114 (245) 10,866 (840) 18,980 (1,085)

12,286 (335) 7.782 (479) 20,068 (814)3,284 (96) 901 (54) 4,185 (150)

30,128 (845) 20,970 (1,492) 51,098 (2,337)2,305 (126) -- ~ 2,305, (126)

$ 32,433 S (971) $ 20,970 S(1,492) $ 53,403 $ (2,463)

(2) Includes approximately 122 securities.

The Company monitors the length of time the security trades below its cost basis along with the amount and percentage of the unrealized loss indetermining if a decline in fair value of marketable securities below recorded cost is considered to be other than temporary. In addition, the Companywill research the future prospects of individual securities as necessary. As a result of these factors, as well as the Company’s intent and ability to holdthese securities until their market price recovers, these securities are considered temporarily impaired. The Company does not anticipate expendingmonies held in trust before 2044 or a later period when the Company begins to decommission Palo Verde.

94

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

The reported fair values also include gross unrealized gains on marketable securities which have not been recognized in the Company’s netincome. The table below presents the unrecognized gross unrealized gains and the fair value of these securities, aggregated by investment category (inthousands):

Bmu:ri0tien of~arifi~:Federal Agency Mortgage Backed SecuritiesU.S. Government BondsMunicipal ObligationsCorporate Obligations

Total Debt SecuritiesCommon StockEquity Mutual FundsCash and Cash Equivalents

Total

December 31.2014 December 31, 2013Fair Unrealized Fair UnrealizedValue Gains Value Gains

15,388 $ 665 $ 9,929 $ 433

20,016 567 ~258 126

11,642 595 8,783 450

60,808 2,677 34,158 1,515

-- -- 16,802 3,081

6;193 -- 5,924 ~

$ 166,161 $ 50,930 $ 160,692 $ 47,741

The Company’s marketable securities include investments in municipal, corporate and federal debt obligations. Substantially all of the Company’smortgage-backed securities, based on contractual maturity, are due in ten years or more. The mortgage-backed securities have an estimated weightedaverage maturity which generally range from two years to six years and reflects anticipated future prepayments. The contractual year for maturity forthese available-for-sale securities as of December 31, 2014 is as follows (in thousands):

Municipal Debt ObligationsCorporate Debt ObligationsU.S. Government Bonds

2016through

Total 2015 2019 2020 through 2024 2025 and Beyond

18,678 720 5,163 6,517 6,278

41,628 3,050

The Company recognizes impairment losses on certain of its securities deemed to be other than temporary. In accordance with FASB guidance,these impairment losses are recognized in net income, and a lower cost basis is established for these securities. For the twelve months endedDecember 31, 2014,2013, and 2012 the Company recognized other than temporary impairment losses on its available-for-sale securities as follows (inthousands):

2014 2013 2012

Unrealized holding losses included in pre-tax income

95

Page 106 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

The Company’s marketable securities in its decommissioning trust funds are sold from time to time and the Company uses the specificidentification basis to determine the amount to reclassify out of accumulated other comprehensive income and into net income. The proceeds from thesale of these securities during the twelve months ended December 31, 2014,2013, and 2012 and the related effects on pre-tax income are as follows (inthousands):

2014 2013 2012Pro~ from sales or m~ties ofav~l~le-for-~ ~4~Gross realized gains included in pre-tax income $ 7,858 $ 986 $ 1,478

Gross unrealized losses included in pre-tax income __ m (479)Net gains (losses) in pr¢.~ income

Net unrealized holding gains included in accumulated other comprehensive income $ 10,827 $ 17,699 $ 9,927Net (gains) losses reclassified o~ of ~ulated

Net gains in other comprehensive income $ 3,477 $ 17,146 $ 10,969

Fair Value Measurements. FASB guidance requires the Company to provide expanded quantitative disclosures for financial assets and liabilitiesrecorded on the balance sheet at fair value. Financial assets carried at fair value include the Company’s decommissioning trust investments andinvestments in debt securities which are included in deferred charges and other assets on the balance sheets. The Company has no liabilities that aremeasured at fair value on a recurring basis. The FASB guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques usedto measure fair value into three levels as follows:

Level 1 - Observable inputs that reflect quoted market prices for identical assets and liabilities in active markets. Financial assets utilizing Level1 inputs include the nuclear decommissioning trust investments in active exchange-traded equity securities, mutual funds and U.S. Treasurysecurities that are in a highly liquid and active market.

Level 2 - Inputs other than quoted market prices included in Level 1 that are observable for the asset or liability either directly or indirectly.Financial assets utilizing Level 2 inputs include the nuclear decommissioning trust investments in fixed income securities. The fair value ofthese financial instruments is based on evaluated prices that reflect observable market information, such as actual trade information of similarsecurities, adjusted for observable differences. The Common Collective Trusts are valued using the net asset value ("NAV") provided by theadministrator of the fund. The NAV price is quoted on a restrictive market although the underlying investments are traded on active markets.

Level 3 - Unobservable inputs using data that is not corroborated by market data and primarily based on internal Company analysis usingmodels and various Other analysis. Financial assets utilizing Level 3 inputs include the Company’s investments in debt securities.

The securities in the Company’s decommissioning trust funds are valued using prices and other relevant information generated by markettransactions involving identical or comparable securities. FASB guidance identifies this valuation technique as the "market approach" with observableinputs. The Company analyzes available-for-sale securities to determine if losses are other than temporary.

96

Page 107 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

During the first quarter of 2014, the Company sold its nuclear decommissioning trust investments in equity mutual funds, classified as Level 1, andinvested those assets in common collective trusts which are classified as Level 2. The fair value of the Company’s decommissioning trust funds andinvestments in debt securities, at December 31, 2014 and 2013, and the level within the three levels of the fair value hierarchy defined by FASBguidance are presented in the table below (in thousands):

Descriufion of Securities

Trading Securiti~:

Investments in Debt Securities

Available for sale:U.S. Government BondsFederal Agency Mortgage Backed SecuritiesMunicipal ObligationsCorporate Obligations

Subtotal. Debt SecuritiesCommon StockCommon Collective Trust-Equity FundsCash and Cash Equivalents

Total available for sale

Quoted Prices Significantin Active Other

Fair Value as of Markets for Observablel~ember 31, Identical Assets Inputs

2014 (Level 1) (Level 2)

$ 1,653 $ -- $ --

$ 41,628 $ 41,628 $ --

17,77126,645 -- 26,645

104,722 41,628 63,094

22,736 -- 22,736

$ 234,286 $ 148i456 $ 85,830

SignificantUnobservable

Inputs(Level 3)

$ 1,653

$ --

$ --

Descriution of Securities

Trading Securities:Investments in Debt Securities

Available for sale:U.S. Government BondsFederal Agency Mortgage Backed SecuritiesMunicipal ObligationsCorporate Obligations

Subtotal, Debt SecuritiesCommon StockEquity Mutual FundsCash and Cash Equivalents

Total available for sale

Quoted Prices Significantin Active Other

Fair Value as of Markets for ObservableDecember 31, Identical Assets Inputs

2013 (Level 1) (Level 2)

$ 1,555 $ -- $

$ 25,238 $ 25,238 $ --

28,851 -- 28,851

85,256 25,238 60,018

16,802 16,802

$ 214,095 $ 154,077 $ 60,018

Below is a reconciliation of the beginning and ending balance of the fair value of the investment in debt securities (in thousands):

SignificantUnobservable

Inputs(Level 3)

$ 1,555

2014 2013Bfl~ at January 1

Net unrealized gains in fair value recognized in income (a) 98 260

Balance at December 31

(a) These amounts are reflected in the Company’s statement of operations as investment and interest income.

There were no transfers in or out of Level 1 and Level 2 fair value measurements categories due to changes in observable inputs during the twelvemonth periods ending December 31, 2014 and 2013. There were no purchases, sales, issuances, and settlements related to the assets in the Level 3 fairvalue measurement category during the twelve month periods ending December 3 l, 2014 and 2013.

97

Page 108 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

P. Supplemental Statements of Cash Flows Disdosures

Cash paid for:Interest on long-term debt and borrowing under the revolving credit facilityIncome taxes, net of refund

Non-cash financing activities:Grants of restricted shares of common stockIssuance of performance shares

2014

Years EndedDeeember31,

2013

(Inthousands)

2012

54,792 $6,876

53,752 $ 50,189

3,025-- 849 1,193

98

Page 109 of 168

Table of ContentsEL PASO ELECTRIC COMPANY

NOTES TO FINANCIAL STATEMENTS

Q. Selected Quarterly Financial Data (Unaudited)

The following table summarizes the Company’s unaudited results of operations on a quarterly basis. The quarterly earnings per share amounts fora year will not add to the earnings per share for that year due to the weighting of shares used in calculating per share data.

Operating revenues (1)Operating incomeNet income 4,241Basic earnings per share:

Net income 0.10Diluted earnings per share:

Net income 0.10Dividends declared per share ofcommon stock 0.280

2014 Quarters 2013 Quarters

4th 3rd 2nd I st 4th 3rd 2nd 1st

(In thousands except for share data)

$ 196,563 $ 283,645 $ 251,801 $185,516 $

8,871 81,496 51.131 9,665 6,050 85,896 54,344 19,345

52,476 30,096 4,615 1,191 7,634

1.30 0.75 0.11 0.03 ~.26

1.30 0.75 0.11 0.19

0.280 0.280 0.265 0.265 0.265 0.265 0.25

(1) Operating revenues are seasonal in nature, with the peak sales periods generally occurring during the summer months. Comparisons amongquarters of a year may not represent overall trends and changes in operations.

99

Page 110 of 168

Table of Contents

Item9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of disclosure controls and procedures. Under the supervision and with the participation of our management, including our chiefexecutive officer and our chief financial officer, we conducted an evaluation pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 ofour disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, our chiefexecutive officer and our chief financial officer concluded that, as of December 31. 2014. our disclosure controls and procedures are effective.

Management’s Annual Report on Internal Control Over Financial Reporting. Management’s Annual Report on Internal Control over FinancialReporting is included herein under the caption "Managemem Report on Internal Control Over Financial Reporting" on page 42 of this report.

Changes in internal control over financial reporting, There were no changes in our internal control over financial reporting in connection with theevaluation required by paragraph (d)of the Securities Exchange Act of 1934 Rules 13a-15 or 15d-15, that occurred during the quarter endedDecember 3 l, 2014, that materially affected, or that were reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

100

Page 111of168

Table of Contents

PART III

Item 10. Directors, Executive Officers of the Registrant and Corporate Governance

Information regarding directors is incorporated herein by reference from our definitive proxy statement for the 2015 Annual Meeting ofShareholders (the "2015 Proxy Statement") under the heading "Nominees and Directors of the Company." Information regarding executive officers,included herein under the caption "Executive Officers of the Registrant" in Part I, Item 1 above, is incorporated herein by reference.

The information concerning the identification of our standing audit committee required by this Item is incorporated by reference from the 2015Proxy Statement under the caption "Committees" under the heading "Directors’ Meetings, Compensation and Committees," and under the heading"Audit Committee Report."

The information concerning our audit committee financial experts required by this Item is incorporated by reference from the 2015 ProxyStatement under the caption "Committees" under the heading "Directors’ Meetings, Compensation and Committees."

The information concerning compliance with Section 16(a) of the Exchange Act required by this Item is incorporated by reference from the 2015Proxy Statement under the heading "Section 16(a) Beneficial Ownership Reporting Compliance."

We have adopted a Code of Ethics that is incorporated by reference from the 2015 Proxy Statement under the caption "Business Conduct Policies"under the heading "Corporate Governance."

Item 11. Executive Compensation

Incorporated herein by reference from the 2015 Proxy Statement under the heading "Summary of Compensation."

Item 12. Security Ownership of Certain Beneficial Management

Incorporated herein by reference from the 2015 Proxy Statement under the heading "Security Ownership of Certain Beneficial Owners andManagement."

Equity Compensation Plan Information

Plan Category

Number of securitiesNumber of securities remaining available for

to be issued upon Weighted-average future issuance underexercise of outstanding exercise price of equity compensation plans

options, warrants outstanding options, (excluding securitiesand rights warrants and rights reflected in column (a))

(a) (b) (c)

Equity compensation plansnot approved by security holders

Total,

~ $

Item 13. Certain Relationships and Related Transactions, and Director Independence

Incorporated herein by reference from the 2015 Proxy Statement under the heading "Certain Relationships and Related Party Transactions."

Item 14. Principal Accounting Fees and Services

Incorporated herein by reference from the 2015 Proxy Statement under the heading "Independent Registered Public Accounting Firm,"

101

Page 112 of 168

Table of Contents

Item15. Exhibits and Financial Statement Schedules

(a) Documents filed as a part of this report:

PART IV

Page1. Financial Statements:

See Index to Financial Statements 43

2. Financial Statement Schedules:

All schedules are omitted as the required information is not applicable or is included in the financialstatements or related notes thereto.

3. Exhibits

Certain of the following documents are filed herewith. Certain other of the following exhibits have heretofore been filed with the Securities andExchange Commission, and, pursuant to Rule 12b-32 and Regulation 201.24, are incorporated herein by reference.

102

Page 113of168

Table of Contents

Exh~it Number Title

Exhibit 3 - Articles oflncorporation and Bylaws:3.01 - Restated Articles of Incorporation of the Company, dated February 7, 1996 and effective February 12, 1996. (Exhibit 3.01 to

the Company’s Annual Report on Form 10-K for the year ended December 31, 1995)

3.02 - Bylaws of the Company, dated February 6, 1996. (Exhibit 3.02 to the Company’s Annual Report on Form 10-K for the yearended December 31, 1995)

Exhibit 4 - Instruments Defining the Rights of Security Holders, including Indentures:4.01 - General Mortgage Indenture and Deed of Trust, dated as of February l, 1996, and First Supplemental Indenture, dated as of

February l, 1996, including form of Seres A through H First Mortgage Bonds. (Exhibit 4.01 to the Company’s AnnualReport on Form 10-K for the year ended December 3 l, 1995)

4.01-01 - Second Supplemental Indenture, dated as of August 19, 1997, to Exhibit 4.01. (Exhibit 4.01 to the Company’s QuarterlyReport on Form 10-Q for the quarter ended September 30, 1997)

4.01-02 - Fifth Supplemental Indenture, dated as of December 17, 2004, to Exhibit 4.01. (Exhibit 4.01-02 to the Company’s AnnualReport on Form 10-K for the year ended December 3 l, 2004)

4.01-03 - Sixth Supplemental Indenture to Exhibit 4.01, dated as of May 5, 2005 to General Mortgage Indenture and Deed of Trustdated as of February l, 1996 between the Company and U.S. Bank National Association as trustee. (Exhibit 4.01 to theCompany’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005)

4.02 - Bond Purchase Agreement dated March 19, 2009, among El Paso Electric Company, J.P. Morgan Securities, Inc., BNYMellon Capital Markets, LLC, Maricopa County, Arizona Pollution Control Corporation, relating to the Pollution ControlBonds referred to in Exhibit 4.06 and 4.08. (Exhibit 4.05 to the Company’s Quarterly Report on Form 10-Q for the quarterended March 3 l, 2009)

4.03 - Indenture of Trust between Maricopa County, Arizona Pollution Control Corporation and Union Bank of California, N.A. asTrustee dated as of August 1, 2012 relating to $59,235,000 Maricopa County, Arizona Pollution Control CorporationPollution Control Refunding Revenue Bonds 2012 Series A (El Paso Electric Company Palo Verde Project). (Exhibit 4.05 tothe Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012)

4.04 - Loan Agreement dated August 1, 2012 between Maricopa County, Arizona Pollution Control Corporation and El PasoElectric Company relating to the Pollution Control Bonds referred to in Exhibit 4.03. (Exhibit 4.06 to the Company’sQuarterly Report on Form 10-Q for the quarter ended September 30, 2012)

4.05 - Reserved4.06 - Indenture of Trust between Maricopa County, Arizona Pollution Control Corporation and Union Bank, N.A. as Trustee dated

as of March 1, 2009 relating to $63,500,000 Maricopa County, Arizona Pollution Control Corporation Pollution ControlRefunding Revenue Bonds 2009 Series A (El Paso Electric Company Palo Verde Project). (Exhibit 4.01 to the Company’sQuarterly Report on Form 10oQ for the quarter ended March 31, 2009)

4.07 - Loan Agreement dated March 1, 2009 between Maricopa County, Arizona Pollution Control Corporation and El Paso ElectricCompany relating to the Pollution Control Bonds referred to in Exhibit 4.06. (Exhibit 4.02 to the Company’s QuarterlyReport on Form 10-Q for the quarter ended March 31, 2009)

4.08 - Indenture of Trust between Maricopa County, Arizona Pollution Control Corporation and Union Bank, N.A. as Trustee datedas of March 1, 2009 relating to $37,100,000 Maricopa County, Arizona Pollution Control Corporation Pollution ControlRefunding Revenue Bonds 2009 Series B (El Paso Electric Company Palo Verde Project). (Exhibit 4.03 to the Company’sQuarterly Report on Form 10-Q for the quarter ended March 31, 2009)

4.09 - Loan Agreement dated March 1, 2009 between Maricopa County, Arizona Pollution Control Corporation and E1 Paso ElectricCompany relating to the Pollution Control Bonds referred to in Exhibit 4.08. (Exhibit 4.04 to the Company’s QuarterlyReport on Form 10-Q for the quarter ended March 31, 2009)

4.10 - Remarketing and Purchase Agreement dated August 1, 2012 among El Paso Electric Company and U.S. BancorpInvestments, Inc. relating to the Pollution Control Bonds referred to in Exhibit 4.13. (Exhibit 4.02 to the Company’s QuarterlyReport on Form 10-Q for the quarter ended September 30, 2012)

4. i 1 - Tender Agreement dated August 1, 2012 between El Paso Electric Company and Union Bank, N.A., relating to the PollutionControl Bonds referred to in Exhibit 4.13. (Exhibit 4.03 to the Company’s Quarterly Report on Form 10-Q for the quarterended September 30, 2012)

103

Page 114 of 168

Table of Contents

Exhibit Number4.12

4.20

Exhibit 10 -10.01

10.01-01

10.01-02

10.02

10.02-01

10.02-02

10.02-03

10.0310.04

10.04-01

Title

- Amended and Restated Installment Sale Agreement, dated as of August 1, 2012, between El Paso Electric Company and theCity of Farmington, New Mexico, relating to the Pollution Control Bonds referred to in Exhibit 4.13. (Exhibit 4.04 to theCompany’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012)

4.13 - Ordinance No. 2012-1256 adopted by the City Council of Farmington, New Mexico on June 12, 2012 authorizing andproviding for the issuance by the City of Farmington, New Mexico of $33,300,000 in aggregate principal amount of itsPollution Control Revenue Refunding Bonds, 2012 Series A (El Paso Electric Company Four Comers Project). (Exhibit 4.01to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012)

4.14 - Debt Securities Indenture, dated as of May 1, 2005. (Exhibit 4.1 to the Company’s Current Report on Form 8-K, dated May17, 2005)

4.15 - First Supplemental Indenture, dated as of May 19, 2008. (Exhibit 4.4 to the Company’s Registration Statement on Form S-3,dated May 20, 2008)

4.16 - Securities Resolution No. 1, dated May 11, 2005, relating to the Company’s 6.00% Senior Notes due 2035. (Exhibit 4.2 to theCompany’s Current Report on Form 8-K dated May 17, 2005)

4.17 - Securities Resolution No. 2, dated May 29, 2008, relating to the Company’s 7.50% Senior Notes due 2038. (Exhibit 4.2 to theCompany’s Current Report on Form 8-K dated June 3, 2008)

4.18 - Securities Resolution No. 3, dated December 3, 2012, relating to the Company’s 3.30% Senior Notes due 2022. (Exhibit 4.01to the Company’s Current Report on Form 8-K dated December 6, 2012)

4.19 - Bond Purchase Agreement dated August 15, 2012, among Maricopa County, Arizona Pollution Control Corporation, U.S.Bancorp Investments, Inc., and Merrill Lynch, Pierce, Fenner & Smith Incorporated, relating to the Pollution Control Bondsreferred to in Exhibit 4.03. (Exhibit 4.07 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September30, 2012)

- Securities Resolution No. 4, dated December 1, 2014, relating to the Company’s 5.000% Senior Notes due 2044. (Exhibit 4. 1to the Company’s Current Report on Form 8-K dated December 1, 2014)

Material Contracts:- Co-Tenancy Agreement, dated July 19, 1966, and Amendments No. 1 through 5 thereto, between the Participants of the Four

Comers Project, defining the respective ownerships, rights and obligations of the Parties. (Exhibit 10.01 to the Company’sAnnual Report on Form 10-K for the year ended December 31, 1995)

- Amendment No. 6, dated February 3, 2000, to Exhibit 10.01. (Exhibit 10.01-01 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)

- Amendment No. 7, dated December 30, 2013, to Exhibit 10.01. (Exhibit 10.02 to the Company’s Quarterly Report on Form10-Q for the quarter ended March 31, 2014)

- Supplemental and Additional Indenture of Lease, dated May 27. 1966, including amendments and supplements to originalLease Four Comers Units 1, 2 and 3, between the Navajo Tribe of Indians and Arizona Public Service Company, andincluding new Lease Four Comers Units 4 and 5, between the Navajo Tribe of Indians and Arizona Public Service Company,the Company, Public Service Company of New Mexico, Salt River Project Agricultural Improvement and Power District,Southern California Edison Company and Tucson Gas & Electric Company. (Exhibit 4-e to Registration Statement No. 2-28692 on Form S-9)

- Amendment and Supplement No. 1, dated March 21, 1985, to Exhibit 10.02. (Exhibit 19.3 to the Company’s QuarterlyReport on Form 10-Q for the quarter ended June 30, 1985)

- Amendment and Supplement No. 2, dated March 7, 2011, to Exhibit 10.02. (Exhibit 10.07 to the Company’s QuarterlyReport on Form 10-Q for the quarter ended March 31, 2014)

- Amendment and Supplement No. 3, dated March 7, 2011, to Exhibit 10.02. (Exhibit 10.08 to the Company’s QuarterlyReport on Form 10-Q for the quarter ended March 31, 2014)

- Reserved- Four Comers Project Operating Agreement, dated May 15, 1969, between Arizona Public Service Company, the Company,

Public Service Company of New Mexico, Salt River Project Agricultural Improvement and Power District, SouthernCalifornia Edison Company and Tucson Gas & Electric Company, and Amendments 1 through 10 thereto. (Exhibit 10.04 tothe Company’s Annual Report on Form 10-K for the year ended December 31, 1995)

- Amendment No. 11, dated May 23, 1997, to Exhibit 10.04. (Exhibit 10.04-01 to the Company’s Quarterly Report on Form10-Q for the quarter ended June 30, 1997)

104

Page 115 of 168

Table of Contents

Exhibit Number

10.04-02

10.04-03

10.04-04

10.05

10.05-01

10.05-02

10.05-03

10.06

10.07

10.07-01

10.08

10.09

10.10

#10.11

10.12

10.13

10.13-01

10.14

10.14-01

Title

- Amendment No. 12, dated February 3, 2000, to Exhibit 10.04. (Exhibit 10.04-02 to the Company’s Annual Report on Forml 0-K for the year ended December 3 l, 2002)

- Amendment No. 13, dated December 1, 2010, to Exhibit 10.04. (Exhibit 10.03 to the Company’s Quarterly Report on Form10-Q for the quarter ended March 31, 2014)

- Amendment No. 14, dated December 30, 2013, to Exhibit 10.04. (Exhibit 10.04 to the Company’s Quarterly Report on Form10-Q for the quarter ended March 31, 2014)

- Arizona Nuclear Power Project Participation Agreement, dated August 23, 1973, between Arizona Public Service Company,Public Service Company of New Mexico, Salt River Project Agricultural Improvement and Power District, Tucson Gas &Electric Company and the Company, describing the respective participation ownerships of the various utilities havingundivided interests in the Arizona Nuclear Power Project and in general terms defining the respective ownerships, rights,obligations, major construction and operating arrangements of the Parties, and Amendments No. l through 13 thereto.(Exhibit 10.05 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1995)

- Amendment No. 14, dated June 20, 2000, to Exhibit 10.05. (Exhibit 10.05-01 to the Company’s Annual Report on Form 10-Kfor the year ended December 3 l, 2002)

- Amendment No. 15, dated January 13,2011. to Exhibit 10.05. (Exhibit 10.07 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012)

- Amendment No. 16, dated April 28, 2014, to Exhibit 10.05. (Exhibit 10.06 to the Company’s Quarterly Report on Form 10-Qfor the quarter ended March 31,2014)

- ANPP Valley Transmission System Participation Agreement. dated August 20, 1981, and Amendments No. 1 and 2 thereto.APS Contract No. 2253-419.00. (Exhibit 10.06 to the Company’s Annual Report on Form 10-K for the year ended December31, 1995)

- Arizona Nuclear Power Project High Voltage Switchyard Participation Agreement, dated August 20, 1981. APS Contract No.2252-419.00. (Exhibit 20.14 to the Company’s Annual Report on Form 10-K for the year ended December 3 l, 1981 )

- Amendment No. 1, dated November 20, 1986, to Exhibit 10.07. IExhibit 10.11-01 to the Company’s Annual Report on Form10-K for the year ended December 31, 1986)

- Firm Palo Verde Nuclear Generating Station Transmission Service Agreement, between Salt River Project AgriculturalImprovement and Power District and the Company, dated October 18, 1983. {Exhibit 19.12 to the Company’s Annual Reporton Form 10-K for the year ended December 31, 1983)

- Interconnection Agreement, as amended, dated December 8, 1981, between the Company and Southwestern Public ServiceCompany, and Service Schedules A through F thereto. (Exhibit 10.13 to the Company’s Annual Report on Form 10-K for theyear ended December 31, 1995)

- Amrad to Artesia 345 KV Transmission System and DC Terminal Participation Agreement, dated December 8, 1981,between the Company and Texas-New Mexico Power Company, and the First through Third Supplemental Agreementsthereto. (Exhibit 10.14 to the Company’s Annual Report on Form l 0-K for the year ended December 31, 1995)

- El Paso Electric Company Excess Benefit Plan, dated as of December 31, 2008. (Exhibit 10.04 to the Company’s QuarterlyReport on Form 10-Q for the quarter ended March 31, 2009)

- Interconnection Agreement and Amendment No. 1, dated July 19, 1966, between the Company and Public Service Companyof New Mexico. (Exhibit 19.01 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1982)

- Southwest New Mexico Transmission Project Participation Agreement, dated April 11, 1977, between Public ServiceCompany of New Mexico, Community Public Service Company and the Company, and Amendments 1 through 5 thereto.(Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1995)

- Amendment No. 6, dated as of June 17, 1999, to Exhibit 10.13. (Exhibit 10.09 to the Company’s Quarterly Report on Form10-Q for the quarter ended June 30, 1999)

- Tucson-El Paso Power Exchange and Transmission Agreement, dated April 19, 1982, between Tucson Electric PowerCompany and the Company. (Exhibit 19.26 to the Company’s Annual Report on Form 10-K for the year ended December 31,1982)

- Settlement Agreement between TEP and the Company, dated April 26, 2011, to Exhibit 10.14. (Exhibit 10.14-01 to theCompany’s Annual Report on Form 10-K for the year ended December 31,2011)

105

Page 116 of 168

Table of Contents

Exhibit Number

10.15

10.16

#10.17

10.18

10.19

10.20

10.20-01

10.20-02

10.20-03

10.21

10.22

10.23

10.24

10.25

10.25-01

10.25-02

Title

- Southwest Reserve Sharing Group Participation Agreement, dated January 1, 1998, between the Company, Arizona ElectricPower Cooperative, Arizona Public Service Company, City of Farmington, Los Alamos County, Nevada Power Company,Plains Electric G&T Cooperative, Inc., Public Service Company of New Mexico, Tucson Electric Power and Western AreaPower Administration. (Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31,1997)

- Arizona Nuclear Power Project Transmission Project Westwing Switchyard Amended Interconnection Agreement, datedAugust 14, 1986, between The United States of America; Arizona Public Service Company; Department of Water and Powerof the City of Los Angeles; Nevada Power Company; Public Service Company of New Mexico; Salt River ProjectAgricultural Improvement and Power District; Tucson Electric Power Company; and the Company. (Exhibit 10.72 to theCompany’s Annual Report on Form 10-K for the year ended December 31, 1986)

- Form of Indemnity Agreement, between the Company and its directors and officers. (Exhibit 10.17 to the Company’s AnnualReport on Form 10-K for the year ended December 31, 2012)

- Interchange Agreement, executed April 14, 1982, between Comisirn Federal de Electricidad and the Company. (Exhibit 19.2to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1991)

- Trust Agreement, dated as of February 12, 1996, between the Company and Texas Commerce Bank National Association, asTrustee of the Rio Grande Resources Trust II. (Exhibit 10.34 to the Company’s Annual Report on Form 10-K for the yearended December 31, 1995)

- Purchase Contract, dated as of February 12, 1996, between the Company and Texas Commerce Bank National Association, asTrustee of the Rio Grande Resources Trust II. (Exhibit 10.35 to the Company’s Annual Report on Form 10-K for the yearended December 31, 1995)

- Second Amendment, dated as of July 12, 2007, to the Purchase Contract referred to in Exhibit 10.20 to the Company’sAnnual Report on Form 10-K for the year ended December 31, 2006. (Exhibit 10.09 to the Company’s Quarterly Report onForm 10-Q for the quarter ended June 30, 2007)

- Third Amendment, dated as of August 17, 2010, to the Purchase Contract referred to in Exhibit 10.20 to the Company’sAnnual Report on Form 10-K for the year ended December 31, 2009. (Exhibit 10.05 to the Company’s Quarterly Report onForm 10-Q for the quarter ended September 30, 2010)

- Fourth Amendment, dated as of September 23, 2010, to the Purchase Contract referred to in Exhibit 10.20 to the Company’sAnnual Report on Form 10-K for the year ended December 31, 2009. (Exhibit 10.06 to the Company’s Quarterly Report onForm 10-Q for the quarter ended September 30, 2010)

- Note Purchase Agreement, dated as of August 17, 2010, between El Paso Electric Company, Rio Grande Resources Trust IIand the purchasers named therein. (Exhibit 10.1 to the Company’s Form 8-K, dated as of August 17, 2010)

- Decommissioning Trust Agreement, dated as of April 1, 2006, between the Company and Wells Fargo Bank, N.A., asdecommissioning trustee for Palo Verde Unit 1. (Exhibit 10.02 to the Company’s Quarterly Report on Form 10-Q for thequarter ended March 31, 2006)

- Decommissioning Trust Agreement, dated as of April 1, 2006, between the Company and Wells Fargo Bank, N.A., asdecommissioning trustee for Palo Verde Unit 2. (Exhibit 10.03 to the Company’s Quarterly Report on Form 10-Q for thequarter ended March 31, 2006)

- Decommissioning Trust Agreement, dated as of April 1, 2006, between the Company and Wells Fargo Bank, N.A., asdecommissioning trustee for Palo Verde Unit 3. (Exhibit 10.04 to the Company’s Quarterly Report on Form 10-Q for thequarter ended March 31, 2006)

- Credit agreement dated as of September 23, 2010, among the Company, The Bank of New York Mellon Trust Company,N.A., not in its individual capacity, but solely in its capacity as successor trustee of the Rio Grande Resources Trust II, thelenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent and issuing bank and Union Bank, N.A., assyndication agent. (Exhibit 10.07 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30,2010)

- Amended and Restated Credit Agreement dated as of November 15, 2011, among the Company, The Bank of New YorkMellon Trust Company, N.A., not in its capacity, but solely in its capacity as successor trustee of the Rio Grande ResourcesTrust II, the lenders party thereto, JP Morgan Chase Bank, N.A., as administrative agent and issuing bank and Union Bank,N.A., as syndication agent.(Exhibit 10.25-01 to the Company’s Annual Report on Form 10-K for the year ended December31, 2011)

- Incremental Facility Assumption Agreement dated as of March 29, 2012, related to the Amended and Restated CreditAgreement, referred to in Exhibit 10.25-01, among the Company and The Bank of New York Mellon Trust Company, N.A.,not in its individual capacity, but solely in its capacity as successor trustee of the Rio Grande Resources Trust II, the lendersfrom time to time party thereto, JPMorgan Chase Bank, N.A., as issuing bank and as administrative agent and Union Bank,N.A., as syndication agent. (Exhibit 10.02 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,2012)

106

Page 117 of 168

Table of Contents

Exhibit Number10.25-03

#*~’10.2610.27

10.28#10.29

10.3010.3110.32

10.33

#10.34

10.35

10.35-01

10.36

10.36-01

10.3710.3810.39

10.4010.41

10.42

10.42-01

10.42-02

10.42-03

10.42-04

* 10.42-05* 10.42-06

10.43

10.44

Title

- Second Amended and Restated Credit agreement dated as of January 14, 2014, among the Company, The Bank of New YorkMellon Trust Company, N.A., not in its individual capacity, but solely in its capacity as trustee of the Rio Grande ResourcesTrust II, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent and issuing bank and Union Bank ofCalifornia, N.A., as syndication agent. (Exhibit 10,25-03 to the Company’s Annual Report on Form 10-K for the year endedDecember 31, 2013)

- Change in Control Agreement between the Company and certain key officers of the Company.- Purchase and Sale Agreement between the Company and Arizona Public Service Company, dated February 17, 2015.

(Exhibit 10.1 to Current Report on Form 8-K filed on February 19, 2015)ReservedForm of Directors’ Restricted Stock Award Agreement between the Company and certain directors of the Company. (Exhibit10.07 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999)ReservedReservedSettlement Agreement, dated as of February 24, 2000, with the City of Las Cruces. (Exhibit 10.01 to the Company’sQuarterly Report on Form 10-Q for the quarter ended March 31. 2000)

- Franchise Agreement, dated April 3, 2000, between the Company and the City of Las Cruces. (Exhibit 10.02 to theCompany’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000)

- Employment Agreement for Hector Puente, dated April 23, 2001. (Exhibit 10.07 to the Company’s Quarterly Report on Form10-Q for the quarter ended June 30, 2001 )

- Shiprock - Four Comers Project 345 kV Switchyard Interconnection Agreement, dated March 6, 2002. APS Contract No.51999. (Exhibit 10.06 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002)

- Amendment No. 1, dated December 30, 2013, to Exhibit 10.35. (Exhibit 10.05 to the Company’s Quarterly Report on Form10-Q for the quarter ended March 31, 2014)

- Interconnection Agreement dated as of May 23, 2002, between the Company and the Public Service Company of NewMexico. (Exhibit 10.09 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002)

- First Amended and Restated Interconnection Agreement, dated October 9, 2003, to Exhibit 10.36. (Exhibit 10.52.01 to theCompany’s Annual Report on Form 10-K for the year ended December 31, 2003)ReservedReservedEight Treasury Rate Lock agreements between the Company and Credit Suisse First Boston International. (Exhibit 10.02 tothe Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005)ReservedReservedPower Purchase and Sale Agreement, dated as of December 16, 2005, between the Company and Phelps Dodge EnergyServices, LLC. (Exhibit 10.42 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005)

- Letter Agreement, dated June 3, 2008, to Exhibit 10.42. (Exhibit 10.42-01 to the Company’s Annual Report on Form 10-K forthe year ended December 31,2010)

- Letter Agreement, dated November 26, 2008, to Exhibit 10.42. (Exhibit 10.42-02 to the Company’s Annual Report on Form10-K for the year ended December 31, 2010)

- Letter Agreement, dated November 12, 2010, to Exhibit 10.42. (Exhibit 10.42-03 to the Company’s Annual Report on Form10-K for the year ended December 31, 2010)

- Letter Agreement, dated April 29, 2011, to Exhibit 10.42. {Exhibit 10.04 to the Company’s Quarterly Report on Form 10-Qfor the quarter ended June 30, 2011)

- Letter Agreement, dated May 13, 2013, to Exhibit 10.42.- Letter Agreement, dated September 17, 2014, to Exhibit 10.42.- Settlement Agreement between the State of Texas and the Company, dated as of October 17, 2006. (Exhibit 10.08 to the

Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)- Reserved

107

Page 118 of 168

Table of Contents

Exhibit Number Title

10.45 - Reserved#10.46

#10.46-01

#10.47

#10.47-01

#10.47-02

10.48

10.49

Exhibitl2 -"12.01 -

Exhibit23 -’23.01

Exhibit24-*24.01*24.02

Exhibit31and32-"31.01"32.01

Exhibit99 -99.01

99.0299.03

99.04

99.05

99.06

99.07

Exhibitl01 -*I01.INS

- El Paso Electric Company 2007 Long-Term Incentive Plan. (Exhibit 10.1 to the Company’s Form 8-K, dated as of May 2,2007)

- Amended and Restated 2007 Long-Term Incentive Plan to Exhibit 10.46. (Exhibit 99.1 to the Registration Statement No.333-196628 on Form S-8)

- Employment Agreement between the Company and Thomas V. Shockley, III, dated June 1, 2012. (Exhibit 10.05 to theCompany’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012)

- Amendment to Employment Agreement between the Company and Thomas V. Shockley, III dated May 2, 2013. (Exhibit No.1 to the Company’s Form 8-K, dated May 2, 2013.)

- Amended and Restated Employment Agreement between the Company and Thomas V. Shockley, I11, dated November 20,2013. (Exhibit 10.47.02 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013)

- Employment Transition Agreement between the Company and David G. Carpenter, dated November 20, 2013. (Exhibit 10.48to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013)

- Employment Transition Agreement between the Company and Hector R. Puente, dated November 20, 2013. (Exhibit 10.49 tothe Company’s Annual Report on Form 10-K for the year ended December 31,2013)

Computation of Ratios:Computation of Ratios of Earnings to Fixed Charges

Consent of Experts:

- Consent ofKPMG LLP (set forth on page 112 of this report)Power of Attorney:- Power of Attorney (set forth on page 110 of the Original Form 10-K)- Certified copy of resolution authorizing signatures pursuant to Power of AttorneyCertifications:- Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002- Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002Additional Exhibits:- Agreed Order, entered August 30, 1995, by the Public Utility Commission of Texas. (Exhibit 99.31 to Registration Statement

No. 33-99744 on Form S-l)- Reserved- Final Order, entered September 24, 1998, by the New Mexico Public Utility Commission. (Exhibh 99.31 to the Company’s

Annual Report on Form 10-K for the year ended December 31, 1998)- Final Order, entered June 8, 1999, by the Public Utility Commission of Texas. (Exhibit 99.01 to the Company’s Quarterly

Report on Form 10-Q for the quarter ended June 30, 1999)- Final Order, entered January 8, 2002, by the New Mexico Public Utility Commission. (Exhibit 99.05 to the Company’s

Annual Report on Form 10-K for the year ended December 31,2002)- News Release, dated as of December 5, 2002, by the E1 Paso Electric Company announcing settlement with the FERC Trial

Staff. (Exhibit 99.01 to the Company’s Form 8-K, dated as of December 6, 2002)"Stipulated Facts and Remedies," dated as of December 5, 2002, to be filed by the FERC Trial Staff as part of its writtentestimony. (Exhibit 99.02 to the Company’s Form 8-K, dated as of December 6, 2002)

XBRL - Related Documents:- XBRL Instance Linkbase Document

108

Page 119 of 168

Table of Contents

Exhibit Number

*101.SCH* 101.CAL* 101.DEF* 101 .LAB*I01.PRE

Title

- XBRL Taxonomy Extension Schema Linkbase Document- XBRL Taxonomy Extension Calculation Linkbase Document- XBRL Taxonomy Extension Definition Linkbase Document- XBRL Taxonomy Extension Label Linkbase Documem- XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.# Management contracts or compensatory plans or arrangements required to be identified by Item 15(a)(3) of Form 10-K.

Agreements substantially identical in all material respects to this exhibit have been entered into between theCompany and its Section 16 officers.

Confidential treatment has been requested and received for the redacted portions of these Exhibits. The copies filed omit theinformation subject to the confidentiality request. Omissions are designated as "****." A complete version of these Exhibitshas been filed separately with the Securities and Exchange Commission.

109

Page 120 of 168

Table of Contents

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of El Paso Electric Company, a Texas corporation, and the undersigned directors andofficers of El Paso Electric Company, hereby constitutes and appoints Thomas V. Sbockley III, Nathan T. Hirschi, Mary E. Kipp and John R. Boomer,its, his or her true and lawful attorneys-in-fact and agents, for it, him or her and its, his or her name, place and stead, in any and all capacities, with fullpower to act alone, to sign this report and any and all amendments to this report, and to file each such amendment to this report, with all exhibits thereto,and any and all documents in eormection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact andagents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about thepremises, as fully to all intents and purposes as it, he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-factand agents, or any of them, may lawfully do or cause to be done by virtue hereof.

110

Page 121 of 168

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized, on the 27th day of February 2015.

EL PASO ELECTRIC COMPANY

By: /s/THOMAS V. SHOCKLEY IIIThomas V. Shocldey III

Chief Executive Officer(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the date indicated.

/s/THOMAS V. SHOCKLEY III(Thomas V. Shockley III)

/s/NATHAN T. HIRSCHI(Nathan T. Hirschi)

/s/RUSSELL G. GIBSON

(Russell G. Gibson)

/s/ CATHERINE A. ALLEN

(Catherine A. Allen)

/S/JOHN ROBERT BROWN

(John Robert Brown)

/s/JAMES W. CICCONI

(James W. Cicconi)

/s/EDWARD ESCUDERO(Edward Escudero)

/S/JA_~IES W. HARRIS

(James W. Harris)

/s/PATRICIA Z. HOLLAND-BRANCH

(Patricia Z. Holland-Branch)

/s/WOODLEY L. HUNT(Woodley L. Hunt)

/s/ERIC B. SIEGEL

(Eric B. Siegel)

/s/STEPHEN N. WERTHEIMER

(Stephen N. Wertheimer)

/s/CHARLES A. YAMARONE

(Charles A. Yamarone)

Chief Executive Officer(Principal Executive Officer and Director)

Senior Vice President and Chief Financial Officer(Principal Financial Officer)

Vice President and Controller

Date

February 27, 2015

February 27, 2015

February 27, 2015

Director February 27, 2015

Director February 27, 2015

Director February 27, 2015

Director February 27, 2015

Director February 27, 2015

Director February 27, 2015

Director February 27, 2015Page 122 of 168

Director February 27, 2015

Director February 27, 2015

Director February 27, 2015

Exhibit 10.26

EL PASO ELECTRIC COMPANYCHANGE OF CONTROL AGREEMENT

FOR EXECUTIVE OFFICERS

AGREEMENT by and between El Paso Electric Company, a Texas corporation (the "Company’), and(the "Executive"), dated as of the ~ day of

WITNESSETH

WHEREAS, the Executive currently serves as a key employee of the Company and his or herservices and knowledge are valuable to the Company in connection with the management of the Company; and

WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the bestinterests of the Company and its stockholders to secure the Executive’s continued services and to ensure theExecutive’s continued dedication and objectivity in the event of any threat or occurrence of, or negotiation or otheraction that could lead to, or create the possibility of, a Change in Control (as defined in Attachment 1) of theCompany, without concern as to whether the Executive might be hindered or distracted by personal uncertaintiesand risks created by any such possible Change in Control, and to encourage the Executive’s full attention anddedication to the Company, the Board has authorized the Company to enter into this Agreement.

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants andagreements herein contained, the Company and the Executive hereby agree as follows:

1. Employment Period. (a) The Company hereby agrees to employ the Executive and the Executive herebyagrees to accept employment with and remain in the employment of the Company, subject to the terms andconditions of this Agreement, for the period commencing upon the occurrence of a Change in Control and endingon the second anniversary thereof, or such later date as may be mutually agreed upon by the Company and theExecutive. Notwithstanding the foregoing, the Executive’s employment hereunder may be eadier terminated,subject to Section 4 of this Agreement. The period of time between the commencement of a Change in Control andthe termination of the Executive’s employment hereunder shall be referred to herein as the "Employment Pedod’.

(b) Prior to the occurrence of a Change in Control, the Executive’s employment by the Company shall bedeemed at will (or shall be governed by any current contract of em ployment), and this Agreement shall not conferupon the Executive any right to continued employment by the Company in his or her current position or otherwisenor affect in any manner the right of the Company to change the Executive’s duties and responsibilities in anymanner, or to reduce Executive’s compensation or terminate the

Page 124 of 168

employment of the Executive at any time prior to the occurrence of a Change in Control and/or to cancel thisAgreement at any time prior to the occurrence of a Change in Control. In particular, the Executive shall not haveany rights under this Agreement for any such change, reduction or termination of employment or of this Agreement"in anticipation of" any "change of control" that shall occur prior to the occurrence of a Change in Control.

2. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive shallserve as of the Company or his or her then current position at the time of aChange in Control (or the equivalent position in the division, subsidiary or other portion of any post-merger or post-acquisition successor that is operationally responsible for the electric business conducted by the Company prior tothe merger or acquisition), with such authority, duties and responsibilities as are commensurate with such positionand as may be consistent with such position as may be assigned to him or her by the Board and (B) the Executive’sservices shall be performed at the Company’s offices in El Paso, Texas. Notwithstanding the foregoing, theCompany and the Executive may mutually agree to such changes in the Executive’s position, reporting or locationof employment as are in the best interest of the Company without violating the provisions of this paragraph.

(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which theExecutive is entitled, the Executive agrees to devote substantially all of his or her attention and time during normalbusiness hours to the business and affairs of the Company and, to the extent necessary to discharge theresponsibilities assigned to the Executive hereunder, to use the Executive’s best efforts to perform faithfully andefficiently such responsibilities. During the Employment Period, it shall not be a violation of this Agreement for theExecutive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speakingengagements, or teach at educational institutions, and (C) manage personal investments, so long as such activitiesdo not significantly interfere with the performance of the Executive’s responsibilities as an employee of theCompany in accordance with this Agreement.

(b) Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive an annualbase salary ("Annual Base Salary"), payable biweekly, at least equal to the annual base salary paid or payable,including any base salary which has been earned but deferred, to the Executive by the Company in respect of thetwelve-month period immediately preceding the occurrence of a Change in Control. During the Employment Period,the Annual Base Salary shall be reviewed no more than 12 months after the last salary increase awarded to theExecutive prior to the occurrence of a Change in Control and thereafter at least annually. Any increase in AnnualBase Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. AnnualBase Salary shall not be reduced after any such increase and the term Annual Base Salary shall refer to AnnualBase Salary as so increased. As used in this Agreement, the term "affiliated companies" shall include any companycontrolled by, controlling or under common control with the Company.

Page 125of168

(ii) Annual Bonus. In addition to Annual Base Salary, for each fiscal year ending during the EmploymentPeriod the Executive shall be eligible, based upon the Executive’s achievement of performance goals, and theCompany’s achievement of financial and other operating goals, in each case set by the Compensation Committeeof the Board, in consultation with the Executive, at levels substantially consistent with past practice, during suchfiscal year, to receive a bonus (the "Annual Bonus") at a target level of not less than ~ of the Annual BaseSalary (the "Target Bonus Amount") with the opportunity, substantially consistent with past practice, to earn inexcess of such amount based upon the attainment of agreed upon performance goals. Each such Annual Bonusshall be paid no later than the last business day of the third month of the fiscal year next following the fiscal year forwhich the Annual Bonus is awarded (the "Last Payment Date").

(iii) Long-Term Incentive Compensation. During the Employment Period, the Executive shall be entitled toparticipate in all long-term incentive plans, practices, policies and programs applicable generally to other peerexecutives of the Company.

(iv) Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled toparticipate in all savings and retirement plans, practices, policies and programs on an aggregate basis that is noless favorable than in effect immediately prior to the commencement of the Employment Period.

(v) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive’s dependents,as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans,practices, policies and programs provided by the Company on an aggregate basis that is no less favorable than ineffect immediately prior to the commencement of the Employment Period.

(vi) Expenses. During the Employment Period, the Executive shall be entitled to receive promptreimbursement for all reasonable expenses incurred by the Executive in accordance with the Company’s policies.

(vii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordancewith the plans, policies, programs and practices of the Company on a basis no less favorable than that in effectimmediately prior to the commencement of the Employment Period but, in any event, shall be entitled to no lessthan four weeks of vacation per year during the Employment Period.

3. Termination of Employment. (a) Death or Disability. The Executive’s employment shall terminateautomatically upon the Executive’s death during the Employment Period. If the Disability of the Executive occursduring the Employment Period pursuant to the definition of Disability set forth below, the Company may give theExecutive written notice, in accordance with Section 10(b) of this Agreement, of its intention to terminate theExecutive’s employment. In such event, the Executive’s employment with the Company shall terminate effective onthe 60th day after receipt of

Page 126of168

such notice by the Executive (the "Disability Effective Date"); provided that, within the 60 days after such receipt,the Executive shall not have returned to substantially full time performance of the Executive’s duties. For purposesof this Agreement, "Disability" shall mean the absence of the Executive from the performance of the Executive’sduties with the Company on a full time basis for an aggregate of 120 out of any 180 consecutive business days asa result of incapacity due to mental or physical illness which is determined to be total and permanent by anindependent physician selected by the Company or its insurers and reasonably acceptable to the Executive or theExecutive’s legal representative.

(b) Cause. The Company may terminate the Executive’s employment during the Employment Period forCause. For purposes of this Agreement, "Cause" shall mean (i) the Executive’s conviction, plea of "guilty" or plea of"no contest" to any crime constituting a felony in the jurisdiction in which it is committed or to any crime involvingdishonesty, (ii) the willful and continued failure by the Executive to perform his or her duties, or (iii) the engaging bythe Executive in misconduct in connection with Executive’s employment that is materially injurious to the Company,in each case following written notice and a reasonable opportunity (which shall be no less than 30 days) to cure thefailure or cease any non-criminal misconduct to the extent such failure or misconduct is capable of cure withoutmaterial harm to the Company. The cessation of employment of the Executive shall not be deemed to be for Causeunless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by theaffirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Boardcalled and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given anopportunity, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board,the Executive is guilty of the conduct described above, and specifying the particulars thereof in detail.

(c) Good Reason. The Executive’s employment may be terminated by the Executive for Good Reason. Forpurposes of this Agreement, "Good Reason" shall mean:

(i) a material reduction in Executive’s duties or responsibilities, excluding for these purposes, (A) an isolatedand insubstantial action not taken in bad faith and which is remedied by the Company promptly after receipt ofnotice thereof given by the Executive, and (B) any action to which the Executive has given his or her writtenconsent;

(ii) any failure by the Company to comply with any of the provisions of Section 2(b) of this Agreement, otherthan an isolated and insubstantial failure not occurring in bad faith and which is remedied by the Company promptlyafter receipt of notice thereof given by the Executive;

(iii) the Company’s requiring the Executive without the Executive’s written consent to be based at any officeor location located more than 50 miles from the office

4

Page 127 of 168

or location provided in Section 2(a)(i)(B) hereof or the Company’s requiring the Executive to travel on Companybusiness to a substantially greater extent than required immediately prior to the occurrence of a Change in Control;

(iv) any failure by the Company to comply with and satisfy Section 9(c) of this Agreement;

(v) the Company’s purported termination of this Agreement other than in accordance with its terms; or

(vi) any other breach by the Company of a material provision of this Agreement.

(d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason,shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(b) ofthis Agreement. In the case of a Good Reason termination, such Notice of Termination shall be given within 90days of the occurrence of the event that provides the basis for the termination as a condition of such claim beingtreated as a Good Reason termination hereunder. For purposes of this Agreement, a "Notice of Termination"means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to theextent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis fortermination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (asdefined below) is other than the date of receipt of such notice, specifies the termination date (which date shall benot more than 30 days after the giving of such notice). The failure by the Executive or the Company to set forth inthe Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shallnot waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or theCompany, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’srights hereunder.

(e) Date of Termination. "Date of Termination" means (i) if the Executive’s employment is terminated by theCompany for Cause, or by the Executive for any reason (including Good Reason), the date of receipt of the Noticeof Termination or any later date specified therein that is within 30 days of such Notice, as the case may be, (ii) if theExecutive’s employment is terminated by the Company other than for Cause or Disability, the Date of Terminationshall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive’semployment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of theExecutive or the Disability Effective Date, as the case may be.

4. Obligations of the Company upon Termination. (a) Good Reason; Other than for Cause, Death orDisability. If, during the Employment Period, the Company shall terminate the Executive’s employment other thanfor Cause or Disability or the Executive shall terminate employment for Good Reason:

5

Page 128of168

(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date ofTermination the aggregate of the following amounts:

A. the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the extent nottheretofore paid; (2) the product of (x) the target bonus of the Executive for the year of termination under theCompany’s Annual Short-Term Bonus Plan (the "Target Bonus") and (y) a fraction, the numerator of which is thenumber of days in the current year through the Date of Termination, and the denominator of which is 365; and (3)any accrued vacation pay to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2),and (3) shall be hereinafter referred to as the "Accrued Obligations");

B. the amount equal to the product of (i) [two] [three] 1, and (ii) the sum of (x) the Executive’s Annual BaseSalary and (y) the Target Bonus; and

C. if the Executive is a member, other than a cash balance member, under the Retirement Income Plan forEmployees of El Paso Electric Company or any successor plan that is put into effect prior to a Change in Control(the "Qualified Retirement Plan"), a benefit equal to the actuarial equivalent of the amounts by which theExecutive’s total vested benefits under the Qualified Retirement Plan, computed as if Executive had threeadditional years of benefit accrual service, exceed the Executive’s actual pension benefits under the QualifiedRetirement Plan with the Executive’s average monthly earnings for purposes of this calculation being one-twelfth ofthe Executive’s annualized rate of basic compensation (excluding bonuses, overtime pay, expense allowances,profit sharing and any other extra compensation such as supplemental payments and other extra compensation inany form, but not excluding deductions from the Executive’s annualized rate of basic compensation under Sections125 and 401 (k) of the Internal Revenue Code of 1986, as amended) in effect immediately prior to the time a Noticeof Termination is given, and the benefit and accrual formulas and actuarial assumptions being no less favorablethan those in effect under the Qualified Retirement Plan at such time; provided, however, that if the Executive is acash balance member under the Qualified Retirement Plan and is vested in his benefits, a benefit equal to theproduct of (1) the percentage, as determined for the Executive under the Qualified Retirement Plan’s Pay CreditChart, as of the time a Notice of Termination is given, and (2) three times the Executive’s annual base pay, asdetermined for the Executive under the Qualified Retirement Plan as of the time a Notice of Termination is given.

(ii) for two years after the Executive’s Date of Termination, or such longer period as may be provided by theterms of the appropriate plan, program, practice or policy, the Company shall continue the medical, dental,accidental death and dismemberment and life insurance benefits to the Executive and/or the Executive’sdependents at least equal to those which would have been provided to them in accordance with the plans,programs, practices and policies in effect under Section 2(b)(v) of this Agreement (the "Continuing Benefit Plans")as if the Executive’s employment had not been terminated (either by permitting the Executive and/or theExecutive’s dependents to participate in

1 3X for the President and Senior Vice Presidents; and 2X for all other Vice Presidents.,

6

Page 129of168

the Continuing Benefit Plans on an after-tax basis to the extent necessary under sections 105 or 106 of the Code,paying Executive’s premiums for COBRA coverage under the applicable plans and, to the extent necessary undersection 105 of the Code, imputing the amount of such premiums to Executive as income, by providing theExecutive and/or the Executive’s dependents with equivalent benefits outside the Continuing Benefit Plans on anafter-tax basis to the extent necessary under section 105 or 106 of the Code or by providing Executive a lump sumcash payment within 30 days of his Date of Termination sufficient for the Executive to purchase equivalent benefits,as the Company may elect, so long as to the extent permitted under section 409A of the Code the net after-taxbenefit to him is the same as if the Executive had remained an employee of the Company participating in theContinuing Benefit Plans); provided, however, that if the Executive becomes reemployed with another employerand is eligible to receive medical, dental, accidental death and dismemberment or life insurance benefits underanother employer-provided plan, the medical, dental, accidental death and dismemberment and life insurancebenefits described herein shall be secondary to those provided under such other plan during such applicable periodof eligibility, meaning that the total benefits payable to the Executive under the other employer’s plan and thisAgreement will not exceed the benefits that would be payable to the Executive under this Agreement. Executive willnotify the Company of his eligibility for such other employer-provided benefits within 30 days of attaining of sucheligibility. For purposes of determining eligibility (but not the time of commencement of benefits) of the Executive forCOBRA continuation coverage and/or retiree benefits pursuant to the Continuing Benefit Plans and any otherwelfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies, theExecutive shall be considered to have remained employed until two years after the Date of Termination and to haveretired on the last day of such period;

(iii) for one year after the Executive’s Date of Termination, the Company shall provide outplacement servicesfor the Executive. No cash payment will be made in lieu of outplacement services under this Agreement; and

(iv) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executiveany other amounts or benefits required to be paid or provided or which the Executive is eligible to receive underany plan, program, policy or practice or contract or agreement of the Company, as of the Date of Termination (suchother amounts are benefits shall be thereinafter referred to as the "Other Benefits").

(b) Death. If the Executive’s employment is terminated by reason of the Executive’s death during theEmployment Period, this Agreement shall terminate without further obligation to the Executive’s LegalRepresentatives under this Agreement, other than for payment of Accrued Obligations and the timely payment orprovision of Other Benefits. Accrued Obligations shall be paid to the Executive’s estate or beneficiary, asapplicable, in a lump sum in cash within 30 days of the Date of Termination. The term Other Benefits as utilized inthis Section 4(b) shall include death benefits as in effect on the date of the Executive’s death.

Page 130of168

(c) Disability. If the Executive’s employment is terminated by reason of the Executive’s Disability during theEmployment Period, this Agreement shall terminate without further obligation to the Executive, other than forpayment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shallbe paid to the Executive in a lump sum in cash within 30 days of the Date of Termination.

(d) Cause; Other than for Good Reason. If the Executive’s employment shall be terminated for Cause or theExecutive terminates his or her employment without Good Reason during the Employment Period, this Agreementshall terminate without further obligation to the Executive other than the obligation to pay to the Executive (x) his orher Annual Base Salary through the Date of Termination and (y) Other Benefits, in each case to the extenttheretofore unpaid.

5. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive’s continuing orfuture participation in any plan, program, policy or practice provided by the Company or any of its affiliatedcompanies and for which the Executive may qualify, nor, subject to Section 10(f), shall anything herein limit orotherwise affect such rights as the Executive may have under any contract or agreement with the Company or anyof its affiliated Companies. Any rights that are vested and any benefits that the Executive is otherwise entitled toreceive under any plan, policy, practice or program of or any contract or agreement with the Company or any of itsaffiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan,policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

6. Full Settlement; Dispute Resolution.

(a) In no event shall the Executive be obligated to seek other employment or take any other action by wayof mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, except asprovided in section 4(a)(ii) of this Agreement, such amounts shall not be reduced whether or not the Executiveobtains other employment.

(b) The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees andexpenses (including costs of arbitration) which the Executive may reasonably incur as a result of any contestregardless of the outcome thereof by the Company, the Executive or others of the validity or enforceability of, orliability under, any provision of this Agreement or any guarantee of performance thereof including as a result of anycontest by the Executive about the amount of any payment pursuant to this Agreement; provided, however, that theforegoing shall not apply in connection with any such contest in which the finder of fact determines that the contestis frivolous or was brought by the Executive in bad faith.

(c) Any dispute arising hereunder between Executive and the Company which cannot be resolved by themto their mutual satisfaction within a period of 14 days,

Page 131of168

unless mutually extended, shall first be submitted to mediation in El Paso, Texas (or if Executive’s primary worklocation immediately prior to the Date of Termination is not in El Paso, Texas, within 25 miles of such primary worklocation), to a mediator selected pursuant to the rules of the American Arbitration Association ("AAA"). All costs ofmediation incurred by Executive will be paid by the Company. If such mediation shall not result in an agreedsettlement between the parties within 90 days, the dispute will be promptly submitted to binding arbitration(conducted by a panel of three arbitrators in El Paso, Texas, or if Executive’s primary work location immediatelyprior to the Date of Termination is not in El Paso, Texas, within 25 miles of such primary work location) inaccordance with the rules of the AAA then in effect. The results of such arbitration, which shall be concluded withinone year, and shall be binding and conclusive upon the parties hereto, and judgment on the award may be enteredat the instance of either party in any court of competent jurisdiction. The dispute resolution procedure set forth inthis Section may be initiated by either party upon five business days prior written notice to the other and after failureto resolve the dispute after the expiration of the 14-day time period referred to in first sentence of this Section.

7. Limitations on Amounts Payable to Executive.

(a) Section 280G Limitation. If the payments and benefits provided to Executive under this Agreement (the"Agreement Payments"), either alone or together with other payments to Executive from the Company (togetherwith the Agreement Payments, the "Total Payments"), would constitute a "parachute payment" (as defined inSection 280G of the Code) and be subject to the excise tax (the "Excise Tax") imposed under Section 4999 of theCode, such Total Payments shall be reduced if and to the extent that a reduction in the Total Payments wouldresult in Executive retaining a larger amount than if Executive received all of the Total Payments (such reducedamount is hereinafter referred to as the "Limited Benefit Amount"), in each case measured on an after-tax basis(taking into account federal, state and local income taxes and, if applicable, the Excise Tax). The determination ofany reduction in the Total Payments shall be made by the Company’s independent public accountants or anothercertified public accounting firm designated by the Company, and may be determined using reasonable assumptionsand approximations concerning applicable taxes and relying on reasonable, good faith interpretations concerningthe application of Sections 280G and 4999 of the Code. Unless Executive shall have given prior written noticespecifying a different order to the Company, the Company shall reduce or eliminate the Total Payments by firstreducing or eliminating those payments or benefits which are not payable in cash and then by reducing oreliminating cash payments.

(b) Section 409A.

(i) Notwithstanding anything to the contrary in this Agreement, no Deferred Compensation SeparationBenefits (as defined below) payable under this Agreement will be considered due or payable until and unlessExecutive has a "separation from service" within the meaning of Section 409A of the Code and the final regulationsand any guidance promulgated thereunder, as each may be amended from time to time (together,

Page 132of168

"Section 409A"). Notwithstanding anything to the contrary in this Agreement, if Executive is a ,’specified employee"within the meaning of Section 409A at the time of Executive’s "separation from service" other than due toExecutive’s death, then any severance benefits payable pursuant to this Agreement and any other severancepayments or separation benefits, that in each case when considered together may be considered deferredcompensation under Section 409A (together, the "Deferred Compensation Separation Benefits") and are otherwisedue to Executive on or within the six (6) month period following Executive’s "separation from service" will accrueduring such six (6) month period and will instead become payable (without interest) in a lump sum payment on thedate six (6) months and one (1) day following the date of Executive’s "separation from service." All subsequentDeferred Compensation Separation Benefits, if any, will be payable in accordance with the payment scheduleapplicable to each payment or benefit. Each payment and benefit payable under this Agreement is intended toconstitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

(ii) Notwithstanding anything herein to the contrary, if Executive dies following his or her "separation fromservice" but prior to the six (6) month anniversary of the date of his or her "separation from service," then anyDeferred Compensation Separation Benefits delayed in accordance with this Section will be payable in a lump sumas soon as administratively practicable after the date of Executive’s death, but not later than ninety (90) days afterthe date of Executive’s death, and all other Deferred Compensation Separation Benefits will be payable inaccordance with the payment schedule applicable to each payment or benefit.

(iii) Payments with respect to reimbursements of expenses, including COBRA premiums, shall be made orprovided in accordance with the requirements of Section 409A, including, where applicable, the requirement thatthe reimbursement be made on or before the last day of the calendar year following the calendar year in which therelevant expense is incurred. The amount of expenses eligible for reimbursement during a calendar year may notaffect the expenses eligible for reimbursement in any other calendar year. In no event will any reimbursement bemade following the last day of the third calendar year following the year in which termination of employmentoccurred.

(iv) It is the intent of this Agreement to comply with the requirements of Section 409A so that none of theseverance payments and benefits to be provided hereunder will be subject to the additional tax imposed underSection 409A, and any ambiguities herein will be interpreted to so comply; provided that in no event shall thisclause increase the cost to the Company of providing any Agreement Payments to Executive.

8. (a) Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of theCompany all secret or confidential information, knowledge or data relating to the Company or any of its affiliatedcompanies, and their respective businesses, which shall have been obtained by the Executive during theExecutive’s employment by the Company or any of its affiliated companies and which shall not be or become publicknowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement).The Executive shall not, at any time during

10

Page 133of168

his or her employment with the Company or at any time thereafter, for any reason, in any fashion, form or manner,either directly or indirectly, communicate, divulge, copy or permit to be copied (without the prior written consent ofthe Company or as may otherwise be required by law or legal process or in order to enforce his or her rights underthis Agreement or as necessary to defend himself or herself against a claim asserted directly or indirectly by theCompany or any of its affiliated companies) any secret or confidential information, knowledge or data relating to theCompany or any of its affiliated companies, and their respective businesses, in any manner whatsoever, to, or forthe benefit of, any person, firm, corporation or other entity, other than the Company and those designated by it or inthe course of his or her employment with the Company and its affiliated companies. As used herein, the term "allsecret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, andtheir respective businesses" shall include, without limitation, the Company’s plans, strategies, proposals to potentialcustomers and/or partners, costs, prices, proprietary systems for buying and selling, client and customer lists,identity of prospects, proprietary computer programs, policy or procedure-manuals, proprietary training andrecruiting procedures, proprietary accounting procedures, and the status and contents of the Company’s contractswith its suppliers, clients, customers or prospects. The Executive shall not be required to maintain the confidentialityof information or data that is in the public domain at the time of disclosure; or following disclosure, becomesgenerally known or available through no act or omission on the part of the Executive; or is known, or becomesknown, to the Executive from a source other than the Company provided that the disclosure by such source is notin breach of a confidentiality agreement with the Company; or is independently developed by the Executive withoutviolating any of the Executive’s obligations under this Agreement. In the event that the Executive is required (byoral question, interrogatories, requests for information or documents, subpoena, civil investigative demand orsimilar process) to disclose any information or data, the Executive shall promptly notify the Company in writing ofsuch requirement so that the Company may seek an appropriate protective order or waive in writing the Executive’scompliance with the provisions of this agreement. In the event that such protection is not obtained or the Companywaives in writing the Executive’s compliance, Executive agrees that the Executive may furnish only that portion ofthe information or data which the Executive is advised by counsel is legally required to be disclosed. The Executivefurther agrees to maintain in confidence any confidential information of third parties received as a result of his orher employment with the Company.

(b) Enforcement. In the event of a breach or threatened breach of this Section 8, the Executive agrees thatthe Company shall be entitled, in addition to any other remedies available to it to specific performance andinjunctive relief in a court of appropriate jurisdiction to remedy any such breach or threatened breach, and theExecutive acknowledges that damages would be inadequate and insufficient. In no event shall an asserted violationof the provisions of this Section 8 constitute a basis for deferring or withholding any amounts otherwise payable tothe Executive under this Agreement.

11

Page 134of168

(c) Survival. Any termination of the Executive’s employment or of this Agreement shall have no effect on thecontinuing operation of this Section 8.

9. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of theCompany shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution.This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives,

(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors andassigns.

(c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidationor otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly andagree to perform this Agreement in the same manner and to the same extent that the Company would be requiredto perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean theCompany as hereinbefore defined and any successor to its business and/or assets as aforesaid (whether or not theCompany ceases to exist) which assumes and agrees to perform this Agreement by operation of law, or otherwise.In the event of any such succession, "Board" shall mean the board of directors or similar managing body of thesuccessor to the Company.

10. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws ofthe State of Texas, without reference to principles of conflict of laws. The captions of this Agreement are not part ofthe provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwisethan by a written agreement executed by the parties hereto or their respective successors and legalrepresentatives.

(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery tothe other party or by registered or certified mail, retum receipt requested, postage prepaid, addressed as follows:

If to the Executive:

To the most recent address in the Company’s employment records

If to the Company:

El Paso Electric Company100 North StantonEl Paso, Texas 79901Attention: Chief Executive Officer

12

Page 135of168

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Noticeand communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity orenforceability of any other provision of this Agreement.

(d) The Company may withhold from any amounts payable under this Agreement such Federal, state, localor foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(e) Subject to Section 3(d) of this Agreement, the Executive’s or the Company’s failure to insist upon strictcompliance with any provision of this Agreement or the failure to assert any right the Executive or the Companymay have hereunder, including, without limitation, the right of the Executive to terminate employment for GoodReason pursuant to Section 3(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision orright or any other provision or right of this Agreement.

(f) This Agreement constitutes the entire agreement between the parties and is intended to be an integrationof all agreements between the parties with respect to the Executive’s employment by the Company on and after theoccurrence of a Change in Control, the terms and conditions of such employment or the termination of suchemployment. Any and all prior agreements, understandings or commitments between the Company and theExecutive with respect to any such matter are hereby superseded and revoked.

(g) The Company shall indemnify and hold the Executive and his or her legal representatives harmless to thefullest extent permitted by applicable law, from and against all judgments, fines, penalties, excise taxes, amountspaid in settlement, losses, expenses, costs, liabilities and legal fees if the Executive is made, or threatened to bemade a party to any threatened or pending or completed action, suit, proceeding, whether civil, criminal,administrative or investigative, including an action by or in the right of the Company or any of its affiliatedcompanies to procure a judgment in its favor, by reasons of the fact that the Executive is or was serving in anycapacity at the request of the Company or any of its affiliated companies for any other corporation, partnership, jointventure, trust, employee benefit plan or other enterprise. The right to indemnification provided, in this paragraph (g)shall not be deemed exclusive under any law or the charter or by-laws of the Company or any of its affiliatedcompanies or otherwise, both as to action in the Executive’s official capacity and as to action in another capacitywhile holding such office, and shall continue after the Executive has ceased to be a director or officer and shallinure to the benefit of the Executive’s heirs, executors and administrators. Any reimbursement obligation arisinghereunder shall be satisfied on an as-incurred basis. In addition, the Company agrees to continue to maintaincustomary and appropriate directors and liability insurance during the Employment Period and the Executive shallbe entitled to the protection of any such

13

Page 136 of 168

insurance policies on no less favorable a basis than is provided to any other officer or director of the Company orany of its affiliated companies.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to theauthorization from its Board of Directors, the Company has caused these presents to be executed in its name on itsbehalf, all as of the day and year first above written.

"EXECUTIVE"

EL PASO ELECTRIC COMPANY

By:.Thomas V. Shockley, IIIChief Executive Officer

14

Page 137 of 168

Attachment 1

"Change in Control" shall mean:

(1) the acquisition by any individual, entity or group (a "Person"), including any "person" within themeaning of Section 13(d) (3) or 14(d) (2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 30% more ofeither (i) the then outstanding shares of common stock of the Company (the " Outstanding Company CommonStock ") or (ii) the combined voting power of the then outstanding securities of the Company entitled to votegenerally in the election of directors (the " Outstandin~l Company Voting Securities "); excluding, however, thefollowing: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of anexercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged wasacquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by an employeebenefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by theCompany, or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii)and (iii) of subsection (3) of this definition;

(2) individuals who, as of the date of this Agreement (the "Effective Date’,), constitute the Board ofDirectors (the " Incumbent Board .") cease for any reason to constitute at least a majority of such Board; providedthat any individual who becomes a director of the Company subsequent to the Effective Date whose election, ornomination for election by the Company’s stockholders, was approved by the vote of at least a majority of thedirectors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and providedfurther, that any individual who was initially elected as a director of the Company as a result of an actual orthreatened election contest, as such terms are used in Rule 14a-ll of Regulation 14A promulgated under theExchange ACt, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Personother than the Board shall not be deemed a member of the Incumbent Board;

(3) Consummation of a shareholder-approved reorganization, merger or consolidation or sale orother disposition of all or substantially all of the assets of the Company (a " Corporate Transaction "); excluding,however, a Corporate Transaction pursuant to which (i) all or substantially all of the individual or entities who arethe beneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding CompanyVoting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, morethan 60% of, respectively, the outstanding shares of common stock, and the combined voting power of theoutstanding securities of such corporation entitled to vote generally in the election of

A-1

Page 138of168

directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, withoutlimitation, a corporation which as a result of such transaction owns the Company or all or substantially all of theCompany’s assets either directly or indirectly) in substantially the same proportions relative to each other as theirownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and theOutstanding Company Voting Securities, as the case may be, (ii) no Person (other than: the Company; anyemployee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled bythe Company; the corporation resulting from such Corporate Transaction; and any Person which beneficiallyowned, immediately prior to such Corporate Transaction, directly or indirectly, 30% or more of the OutstandingCompany Common Stock or the Outstanding Company Voting Securities, as the case may be) will beneficially own,directly or indirectly, 30% or more of, respectively, the outstanding shares of common stock of the corporationresulting from such Corporate Transaction or the combined voting power of the outstanding securities of suchcorporation entitled to vote generally in the election of directors and (iii) individuals who were members of theIncumbent Board will constitute at least a majority of the members of the board of directors of the corporationresulting from such Corporate Transaction; or

(4) approval by the stockholders of the Company of a plan of complete liquidation or dissolution ofthe Company.

Notwithstanding the foregoing, in no event shall a "Change in Control" be deemed to have occurred as aresult of the formation of a Holding Company. For the purposes hereof, "Holding Company" shall mean an entitythat becomes a holding company for the Company or its businesses as a part of any reorganization, merger,consolidation or other transaction, provided that the outstanding shares of common stock of such entity and thecombined voting power of such entity entitled to vote generally in the election of directors is, immediately after suchreorganization, merger, consolidation or other transaction, beneficially owned, directly or indirectly, by all orsubstantially all of the individuals and entities who were the beneficial owners, respectively, of the OutstandingCompany Voting Securities immediately prior to such reorganization, merger, consolidation or other transaction insubstantially the same proportions as their ownership, immediately prior to such reorganization, merger,consolidation or other transaction, of such Outstanding Company Voting Securities.

A-2

Page 139of168

Exhibit 10.42-05

El Paso Electric

P. O. Box 982El Paso, Texas79960-0982(g]5) 543-5711

Emmanuel VillalobosForward Marketer, Long-Term TradingEl Paso Electric Company

May13,2013

Mr. Don StonebergerFreeport-McMoRan Copper & Gold Energy Services333 North Central Avenue Suite 21.021Phoenix, AZ 85004

Re: Power Purchase and Sale Agreement between Freeport-McMoRan Copper & Gold Energy Services, LLC and ElPaso Electric Company

Dear Mr. Stoneberger,

Pursuant to Section 3.4 of the Power Purchase and Sale Agreement ("Agreement") between Freeport-McMoRan Copper & Gold Energy Services, LLC("FMES") (formerly, Phelps Dodge Energy Services, LLC) and El Paso Electric Company ("EPE"), FMES and EPE (collectively the "Parties") herebyagree to maintain the quantity for energy to be purchased and sold under Sections 3.1 and 3.2 of the Agreement at 125 MW per hour through 11:59 p.m.Mountain Standard Time on December 31, 2014. This is in accordance with our recent phone conversations, and subsequent acceptance of FMES’ offerfor an additional 25 MW for the period of one year. The parties further agree that the quantity of firm energy that may be dispatched by EPE pursuant toSection 3.6 of the Agreement is 125 MW per hour, less the quantity of energy sold and delivered by FMES pursuant to Section 3.1. The amount ofenergy to be purchased and sold under the Agreement was set to revert to the original base contract amount of 100 MW per hour, on 11:59 p.m.Mountain Standard Time on December 31, 2013, based on an April 29, 2011 agreement between the Parties.

Please indicate FMES’ acknowledgment of the foregoing agreement by signing this letter in the place indicated below and returning the original or acopy thereof to my attention at your earliest convenience.

Sincerely,

/s/ Emmanuel Villalobos

Emmanuel Villalobos

El Paso Electric Company

/s/David C. HawkinsVP, Power Marketing & Fuels and Resource Delivery Planning

Freeport-McMoRan Copper & Gold Energy Services, LLC

/s/Don StonebergerPresident, Freeport-McMoRan Copper & Gold Energy Services, LLC

Page 140 of 168

Exhibit 10.42-06

El Paso ElectriC

P. O. Box 982El Paso, Texas799600982(915) 543-57:ll

Emmanuel VillalobosForward Marketer, Long-Term TradingEl Paso Electric Company

September 17, 2014

Mr. Don StonebergerFreeport-McMoRan Copper & Gold Energy Services333 North Central Avenue Suite 21.021Phoenix, AZ 85004

Re: Power Purchase and Sale Agreement between Freeport-McMoRan Copper & Gold Energy Services, LLC And E! Paso Electric Company

Dear Mr. Stoneberger,

Pursuant to Section 3.4 of the Power Purchase and Sale Agreement ("Agreement") between Freeport-McMoRan Copper & Gold Energy Services, LLC("FMES") (formerly, Phelps Dodge Energy Services, LLC) and El Paso Electric Company ("EPE"), FMES and EPE (collectively the "Parties") herebyagree to maintain the quantity for energy to be purchased and sold under Sections 3.1 and 3.2 of the Agreement at 125 MW per hour through 11:59 p.m.Mountain Standard Time on December 31, 2015. This is in accordance with our recent phone conversations, and subsequent acceptance of FMES’ offerfor an additional 25 MW for the period of one year. The parties further agree that the quantity of firm energy that may be dispatched by EPE pursuant toSection 3.6 of the Agreement is 125 MW per hour, less the quantity of energy sold and delivered by FMES pursuant to Section 3.1. The amount ofenergy to be purchased and sold under the Agreement was set to revert to the original base contract amount of 100 MW per hour, on 11:59 p.m.Mountain Standard Time on December 31, 2014, based on a May 13, 2013 agreement between the Parties.

Please indicate FMES’ acknowledgement of the foregoing agreement by signing this letter in the place indicated below and retuming the original or acopy thereof to my attention at your earliest convenience.

Sincerely,

Emmanuel Villalobos

/s/ Emmanuel Villalobos

[AUTHORIZING SIGNATURES]El Paso Electric Company

APPROVED AS TO FORMOFFICE OF THE GENERAL COUNSEL/s/Cvnthia Henrv

/s/David C. HawkinsVP System Operations Resource Planning & Management

Freeport-McMoRan Copper & Gold Energy Services, LLC

/s/Don StonebergerPresident, Freeport-McMoRan Copper & Gold Energy Services, LLC

Page 141 of 168

El Paso Electric CompanyComputation of Ratios of Earnings to Fixed Charges

(Dollars in Thousands)

EXHIBIT 12.01

Earnings from Continuing~ions (a)

Fixed Charges (b)Interest chargeslnterest portion of rent expense

Years Ended December 31,2014 2013 2012 2011 2010

$ 132,516 $ 132~38 $137,825 $ 157,247$ 14L333

60,278 59,066 55,822 55,1~ 51,0~829 823 939 908 830

Capitalized Interest (28,122) (21,362) (20,312) ( 18,186) ( ! 9,974)

Ratio of Earnings to Fixed Charges 2.7 2.9 3.1 3.5 3.3

(a) Earnings from continuing operations consist of income from continuing operations before income taxes, extraordinary item and cumulative effects ofaccounting changes.

(b) Fixed charges consist of all interest on indebtedness, amortization of debt discount and expense and the estimated portion of rental expense thatrepresents an interest factor.

(c) Earnings consist of earnings from continuing operations and fixed charges less AFUDC and capitalized interest.

Page 142 of 168

EXHIBIT 23.01

Consent of Independent Registered Public Accountin~ Firm

The Board of DirectorsE1 Paso Electric Company:

We consent to the incorporation by reference in the registration statements (Nos. 333-142557, and 333-196628) on Form S-8and (No. 333-198989) on Form S-3 of El Paso Electric Company of our report dated February 27, 2015, with respect to thebalance sheets of El Paso Electric Company as of December 31, 2014 and 2013, and the related statements of operations,comprehensive operations, changes in common stock equity, and cash flows for each of the years in the three-year periodended December 31, 2014 and the effectiveness of internal control over financial reporting as of December 31, 2014, whichreport appears in the December 3 l, 2014 annual report on Form 10-K of El Paso Electric Company.

/s/KPMG LLP

Kansas City, MissouriFebruary 27, 2015

Page 143 of 168

EL PASO ELECTRIC COMPANYCERTIFICATE OF RESOLUTION

EXHIBIT 24.02

I, Jessica Goldman, Corporate Secretary of El Paso Electric Company, a Texas corporation (the "Company"), do herebycertify that attached hereto is a true, correct and complete copy of the resolution authorizing signatures pursuant to a Power ofAttorney for the 2014 Annual Report on Form 10-K, duly adopted by the Board of Directors of the Company at a meeting ofsaid Board duly convened and held on January 29, 2015.

IN WITNESS THEREOF, I have hereunto set my hand and have affixed the seal of the Company this 29 ~ day ofJanuary 2015.

Jessica GoldmanCorporate Secretary

/s/JESSICA GOLDMAN

(Corporate Seal)

Page 144of168

EL PASO ELECTRIC COMPANYRESOLUTION TO THE BOARD OF DIRECTORS

January 29, 2015

EXHIBIT 24.02

RESOLVED, that Thomas V. Shockley III, Mary E. Kipp, Nathan T. Hirschi and John Boomer arehereby duly appointed the Company’s, and its Officers’ and Directors’, true and lawful attorneys-in-fact and agents, fortheir place and stead, in any and all capacities, with full power to act alone, to sign the Company’s Annual Report on2014 Form 10-K, and in any and all amendments thereto, and to file such 2014 Form 10-K and each such amendment,with all exhibits thereto, and any and all documents in connection therewith, with the Securities and ExchangeCommission, hereby granting unto each of the said attorneys-in-fact and agents, full power and authority to do andperform any and all acts and things requisite and necessary to be done in and about the premises, as fully to all intentsand purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact andagents, or any of them, may lawfully do or cause to be done by virtue hereof.

Page 145 of 168

EXHIBIT 31.01

CERTIFICATIONS

I, Thomas V. Shockley III, certify that:

1. I have reviewed this annual report on Form 10-K of El Paso Electric Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-l 5(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(0 and15d-l 5(0) for the Company and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared:

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of f’mancialstatements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the Company’s internal comrol over financial reporting that occurred during the Company’smost recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,to the Company’s

Page 146of168

auditors and the audit committee of the Company’s board of direclors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’sinternal control over financial reporting.

Dated: February 27, 2015

EL PASO ELECTRIC COMPANY

By: /s/Thomas V. Shockley IIIThomas V. Shockley IIIChief Executive Officer(Principal Executive Officer)

Page 147of168

I, Nathan T. Hirschi, certify that:

1. I have reviewed this annual report on Form 10-K of El Paso Electric Company;

2. Based on my knowledge, this report does not contain any untrue statonent of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the Company as of, and for, the pofiods presented in this report;

4. The Company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-I 5(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the Company and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is lacing prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’smost recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,to the Company’s auditors and the audit committee of the Company’s board of directors (or persom performing the equivalent functions):

Page 148of168

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’sinternal control over financial reporting.

Dated: February 27, 2015

EL PASO ELECTRIC COMPANY

By: /s/Nathan T. Hirschi

Nathan T. HirschiSenior Vice President -Chief Financial Officer(Principal Financial Officer)

Page 149 of 168

EXHIBIT 32.01

February 27, 2015

The certification set forth below is being submitted in connection with the Annual Report on Form 10-K for the fiscal year ended December 31,2014 (the "Report") of El Paso Electric Company (the "Company") for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) oftbeSecurities Exchange Act of 1934 (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Thomas V. Shockley III and Nathan T. Hirschi, each certifies that, to the best of his knowledge:

1. such Report fully complies with the requirements of Section 13(a) of the Exchange Act; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.

/s/Thomas V. Shockley II1Thomas V. Shockley IIIChief Executive Officer

/s/Nathan T. HirschiNathan T. HirschiSenior Vice President.Chief Financial Officer

Page 150of168

Demand and Energy

Forecast

Page 151 of 168

E0

FILED

NMPRC Rule

510.12 (B) (1) - (3) Information

Page 154 of 168

NMPRC Rule 510.12 (B)(1) - (3)

(s)(1)(a)

(S)(1)(b)

(B)(1)(c)

(B)(1)(d)

(B)(1)(g)

(S)(1)(h)

!(B)(1)(i)

(B)(1)U)

(B)(1)(k)

(B)(1)(I)

(B)(1)(e)

(B)(1)(~

(B)(2)

Revenues Current

Case No. 09-00171Earnings Current

Case No. 09-00171Return on Equity Current

Case No. 09-00171

Amount of Debt Current

Case No. 09-00171Average Cost of Debt Current

Case No. 09-00171Transmission PIS Current

Case No. 09-00171Distribution PIS Current

Case No. 09-00171

O&M Less Fuel & PP Current

Case No. 09-00171Fuel Expense & PP Current

Case No. 09-00171Deferred Tax Reserves Current

Case No. 09-00171

Peak Demand (MW) Current

Case No. 09-00171Net Energy Sales (MWh) Current

Case No. 09-00171

Total ElectricUtility

(Sooo’s)917,525

1,038,755

95,247

116,937

70,143

71,531

1,027,657

730,539

5.90%

6.69%

400,606

313,061

998,506

673,171

298,649

262,932

316,084

500,451457,950

179,023

1,764

1,518

7,670,6877,142,229

Attached

New MexicoJurisdiction

(Sooo’s)192,303

253,507

27,215

45,216

20,042

20,439

293,631

208,736

5.90%

6.69%

94,344

69,139

300,593

217,808

85,333

56,481

74,384

107,800

106,SSO

10,420

367

339

1,640,9961,680,768

Attached

For current year, EPE used unadjusted data from the 2014 FERC Form 1.

For NMPRC Case No. 09-00171, EPE used unadjusted data as filed.

Allocators as filed in NMPRC Case No. 09-00171 were used to calculate the NewMexico Jurisdiction amounts.

(B)(3) No adjustments were made to the current year data.

Page 155of168

El Paso Electric CompanyCapital Structure and Cost of Capital

As of December 31, 2014NMPRC Rule 510 (B)(1)(e)

(A) (B) (C) (D) (E)

CapitalComponent

AggregateCapitalization

Percentage of Component WeightedTotal Capitalization Capital Cost Average Cost

Common Equity $ 998,848,394 49.29% 10.125% 4.99%Long-term Debt 1,027,657,052 50.71% 5.90% 2.99%

$ 2,026,505,446Total 100.00%

El Paso Electric CompanyCapital Structure and Cost of Capital

As of December 31, 2008

(A) (B) (C) (D) (E)

Capital AggregateComponent Capitalization

Common Equity $ 711,785,012Long-term Debt 730,538,793

Total $1,442,323,805

Percentage of Component WeightedTotal Capitalization Capital Cost Average Cost

(1) 49.35% 11.50% 5.68%50.65% 6.69% 3.39%

100.00% 9.06%

Note: (1) As filed in Case 09-00171-UT, removed effect of the Interest Rate Lock and reflected it inthe cost of L-T debt.

Page 156 of 168

LineNo.

12345

789

10

1112

13

14

1516171819

20

21

Plant Name

Newman 1Newman 2Newman 3Newman 4Newman 5

Total Newman

Rio Grande 6Rio Grande 7Rio Grande 8Rio Grande 9

Total Rio Grande

Four Comers 4Four Comers 5

Total Four Comers

Copper I

Palo Verde IPalo Verde 2Palo Verde 3

Pato Verde CommonPalo Verde WRF

Total Palo Verde

Total Production Plant

EL PASO ELECTRIC COMPANYPRODUCTION BY POWER PLANT

AT DECEMBER 31, 2013NMPRC Rule 610 (B)(1)(f)

Installed In-ServiceCost Date

$ 26,023,060 196022,066,451 196319,933,702 1966

110,677,691 1975239,691,194 2009/2011

418,392,098

12,010,434 195712,109,900 195834,435,744 197294,491,681 2013

153,047,759

47,461,30745,487,795

92,949.102

15,696,027

450,406,839545,524,392496,576,168150,023,356130,615,862

1,773,146,617

$ 2,453,231,603

19691970

1980

19861986198819861986

Type

SteamSteamSteam

Combined CycleCombined Cycle

Pdma~Fuel

Source

Natural GasNatural GasNatural GasNatural GasNatural Gas

SteamSteamSteam

Combu~onTurbine

Natural GasNatural GasNatural GasNatural Gas

SteamSteam

CoalCoal

Combustion Turbine

SteamSteamSteamSteamSteam

Natural Gas

NuclearNuclearNuclearNuclearNuclear

Page 157 of 168

FtLEL

Addendum in Compliance with

Rule 450.10 (B) (2) and 450.11

Page 158 of 168

El Paso Electric Company ("EPE") hereby submits to the New Mexico Public RegulationCommission (NMPRC) the addendum to its Annual Report required pursuant toNMPRC Rules 450.10(B)(2) and 450.11 and as required by the Final Order ApprovingStipulation in NMPRC Case No. 2074 and the Final Order in NMPRC Case No. 3506.

INFORMATION REQUIRED BY SUBSECTION A OF 17.6.450.13 NMACCLASS II TRANSACTIONS REPORT

Ao Any declaration, filing, petition, prospectus, application, offering memorandum, orregistration statement pertaining to a Class II transaction which is filed with anycourt of competent jurisdiction, the United States Securities and ExchangeCommission, or other federal or state administrative agency shall be filed with theCommission: pursuant to 17.6.450.13A(1) NMAC.

Not applicable.

Concurrent notification of all new or expanded lines of business or venturesentered into by the utility or any affiliate and any change or transfer of rights,obligations, or assets between the utility and any affiliate: pursuant to17.6.450.13A(2)(a) NMAC.

Not applicable.

Co Explanation and description of all affiliates, their relationship to each other andthe utility, the types of business in which they are involved and a listing of theirnames and home office addresses: pursuant to 17.6.450.13A(2)(b)(i) NMAC.

Not applicable.

D. Total investment in each affiliate: pursuant to 17.6.450.13A(2)(b)(ii) NMAC.

Not applicable.

So Joint officers, directors, employees and facilities and an explanation of theirfunctions and how they are divided: pursuant to 17.6.450.13A(2)(b)(iii) NMAC.

Not applicable.

Agreements or contracts required to implement and/or continue the Class IItransaction(s) and any amendments thereto: pursuant to 17.6.450.13A(2)(b)(iv)NMAC.

Not applicable.

Page 159 of 168

Go

Ho

Ko

A summary and explanation of any transactions or agreements between theutility and its affiliates, corporate subsidiaries, and holding company: pursuant to17.6.450.13A (2)(b)(v) NMAC,

Not applicable.

Allocation factors utilized, the dollar amounts involved, and an explanation of howthe factors are computed, why that methodology is appropriate, and why theallocation is required: pursuant to 17.6.450.13A(2)(b)(vi) NMAC.

Not applicable.

Explanation and justification of any changes to any part of the utility’s generaldiversification plan or any representations made to the Commission in connectiontherewith: pursuant to 17.6.450.13A(2)(b)(vii) NMAC.

Not Applicable.

Immediate and projected long-term (up to five (5) years) impact of the Class IItransaction(s) on the capital structure of the public utility:pursuant to17.6.450.13A(2)(b)(viii) NMAC.

Not applicable.

Identification and detailed complete explanation of the method by which anyClass II transaction or any action related thereto that has a utility accountingimpact is or will be accounted for by the utility: pursuant to 17.6.450.13A(2)(b)(ix)NMAC.

Not applicable.

Page 160 of 168

Names of the officers and managers of the utility and its affiliates: pursuant to17.6.450.13,~,(2)(b)(x) NMAC as of December 31,2014.

EPE Officers and Managers:

Senior Officers:

Blanchard, MichaelBoomer, JohnBuraczyk, StevenCarpenter, DavidDoyle, RobertGibson, RussellGutierrez, EduardoHawkins, DavidHirschi, NathanKipp, MaryLore, KerryMiracle, RockyPuente, HectorRamirez, AndresShockley, ThomasSilva, GuillermoSoza, HenryStiller, WilliamTurner, Richard

Page 161of168

Assistant Vice Presidents, Directors and Managers:

Acosta, RicardoAguirre Lozano, AdrianAlmanzan, RobertAranda, JohnBarker, LindaBarrett, RhondaBernal lii, EnriqueBlough, BarbaraBorden, JenniferBruner, GaryBudtke, LisaCardona-Sanchez, CynthiaChacon, RogerChagnon, LeslieClifton, KirkConnor, WilliamCordova, JuanDuran, DebraEckles, StephenFenton, MichelleGallegos, OmarGarcia, ArturoGarcia, PaulGaribay, JoeGoldman, JessicaGonzales, RicardoGraniczny, MichaelGray, BarryGreen, RoyceGuaderrama, JoseHancock, LarryHarlas, RandalHenry, CynthiaHernandez, JoelHemandez, EnriqueHernandez, Mario

Holmes, AudieHood, KathrynKelley, MayraKinson, FrancisLopez, MarcosLudwig, MaximillianMarcus, FrankMartinez, ErnestoMasters, PatriciaNevarez, JoseNieto, LorenzoNovela, GeorgeOnate, JesusPatton, WilliamPaulk, RyanPowell, NadiaPrado, ManuelPrieto, CynthiaReinhart, PatrickReza, JulissaRios, DavidRodriguez, DavidRodriguez, LuisRodriguez, AdrianSahs, MichaelSchichtl, JamesShaffer, GeorgeSimon, WilliamStevens, MaryStone, SusanneTapia, LourdesTovar, DavidVan Slyke, TracyVicuna, MariaViramontes, JaimeWeikert, Jeffrey

Page 162 of 168

Most recent balance sheet and income statement from each of the utility’saffiliates, corporate subsidiaries and holding company which have been providedto or are in the possession of the utility: pursuant to 17 .6.450.13A(2)(b )(xi)NMAC.

Not applicable.

Effect of the Class II transactions or any action related thereto on the financialperformance of the utility and the utility’s ability to provide reasonable and properservice at fair, just and reasonable rates: pursuant to 17.6.450.13A(2)(b )(xii)NMAC.

Not applicable.

Costs and fees related to the Class II transaction(s) and any necessary corporaterestructuring: pursuant to 17.6.450.13A(2)(b)(xiii) N MAC.

Not applicable.

Year-by-year, annual five-year projection using pro forma financial statementsshowing the effects of the utility’s decision to enter into Class II transactionscompared with a decision not to enter into Class II transactions and showing theexpected impact of the Class II transactions and their resulting effect on utilityrates and/or other matters relating to the public interest pursuant to17.6.450.13A(2)(b )(xiv) NMAC.

Not applicable.

End-of-year capital structure 17.6.450.13A(2)(b)(xv) NMAC.

Not applicable.

Explanation of how the utility’s capital structure, cost of capital and ability to raisecapital have been impacted by Class II transactions and their resulting effect:pursuant to 17.6.450.13A(2)(b)(xvi) NMAC.

Not applicable.

Amount of dollars transferred between the utility and each affiliate during theannual period and the purpose of each transfer: pursuant to17.6.450.13A(2)(b)(xvii) N MAC.

Not applicable.

Page 163 of 168

Explanation of how the utility’s taxes and their calculation have been impacted,both on a stand-alone basis and consolidated basis, by Class II transactions andtheir resulting effect: pursuant to 17.6.450.13A(2)(b)(xviii) N MAC.

Not applicable.

Five-year, year-by-year projection of new utility capital requirements categorizedand identified to the extent the utility is able, and the projected sources andamounts of capital that will be used to meet these requirements. Pursuant to17.6.450.13A(2)(b)(xix) NMAC.

EPE PROJECTED NEW UTILITY CAPITAL REQUIREMENTS (in thousands):

DESCRIPTION 2015 2016 2017 2018 2019GENERATION $143,594 $88,009 $49,235 $85,983 $148,791DISTRIBUTION 59,264 62,967 70,411 74,042 54,728TRANSMISSION 42,303 35,231 28,334 20,797 29,132GENERAL 16,201 5,381 3,842 4,982 4,517INTANGIBLE 1111,1,,,9 11 ~629 171957 13~386 16~468TOTAL $272.481 $203.217 $169.779 $199.190 $253.636

The projected sources of capital that will be used to meet the Company’s newutility capital requirements in 2015 are derived from internally generated funds,borrowings on the $300 million Revolving Credit Facility (RCF) previouslyapproved by the NMPRC, and funds raised in the capital markets. In the fourthquarter of 2013, EPE received approval from the NMPRC and the FERC toincrementally issue up to $300 million of long-term debt, and to amend andextend the RCF including the option to increase the facility to $400 million. InDecember 2014, EPE issued $150 million of 5.00% Senior Notes pursuant tothese approvals. The authorization to issue up to an additional $150 million ofnew long-term debt, from time to time, provides EPE with the flexibility to accessthe debt capital markets when needed and when conditions are favorable. EPEmay decide to access the capital markets in the second half of 2015. The timingand type of debt instrument(s) related to the additional financings necessary foryears 2015-2019 have not been determined at the time of this filing.

Explanation of any impacts on new utility capital requirements from Class IItransactions and their resulting effect: pursuant to 17.6.450.13A(2)(b)(xx)NMAC.

Not applicable.

Page 164 of 168

INFORMATION REQUIRED BY SUBSECTION B OF 17.6.450.13 NMACCLASS I TRANSACTIONS REPORT

The following is a statement of all monies, securities, or other items of value paid ortransferred by EPE to any affiliate or by an affiliate to EPE showing the dollar amount ofeach Class I transaction by account and broken down by the type of good or serviceprovided, the quantity, and the price paid or received: pursuant to 17.6.450.13B NMAC.

Administrative and Accounting Services

EPE has no Class I Administrative and Accounting Services to report for the year 2014.

Certain Business Relationships

During 2014, EPE paid $138,112.07 to AT&T for telephone services and $86,280 toAT&T Services, Inc. for energy efficiency lighting rebates and load managementinterruptions. Mr. James W. Cicconi is Senior Executive Vice President, External andLegislative Affairs of AT&T Inc.

In addition during 2014, EPE refunded $578,716.71 to Hunt Companies ("Hunt"), Inc.Mr. Woodley L. Hunt is the Executive Chairman for Hunt. The refunds were madepursuant to certain line extension agreements, between EPE and Hunt (which arestandard documents used in connection with all new commercial and residentialdevelopments) to secure the cost of extending EPE’s facilities to Hunt’s developments.Refunds of the security are made as income from electric sales (less fuel and taxes) arereceived from the applicable development.

Page 165 of 168

ANNUAL INFORMATION REGARDINGEL PASO ELECTRIC COMPANY’S

NUCLEAR FUEL TRUST

EPE entered into a lease arrangement with a third party grantor trust, Rio GrandeResources Trust ("RGRT I1"), with respect to the nuclear fuel purchases for the PaloVerde Nuclear Generating Station. Under the Purchase and Sale Agreement betweenEPE and RGRT II, EPE purchases nuclear fuel from Arizona Public Service Company(the operator of the Palo Verde Nuclear Generating Station) and sells this fuel to RGRTII. EPE entered into the trust agreement in order to pass through fuel costs related tothe Palo Verde Nuclear Generating Station. EPE does not have any analysis availablethat would compare the effects of entering into or not entering into this transaction sinceEPE, in order to pass through fuel costs, was required to enter into this transaction.However, the Nuclear Fuel Trust allows EPE to finance nuclear fuel at debt cost, whichis lower than the average weighted cost of capital.

On January 14, 2014, the Company and RGRT entered into a second amended andrestated credit agreement related to the RCF with JP Morgan Chase Bank, N.A., asadministrative agent and issuing bank, and Union Bank, N.A., as syndication agent, andvarious lending banks party thereto. Under the terms of the agreement, the Companyhas available $300 million and the ability to increase the RCF by up to $100 million (upto a total of $400 million) upon the satisfaction of certain conditions, more fully set forthin the agreement, including obtaining commitments from lenders or third party financialinstitutions. The RCF has a term ending January 2019. The Company may extend thematurity date up to two times, in each case for an additional one year period upon thesatisfaction of certain conditions. The RCF provides that amounts borrowed by theCompany may be used for, among other things, working capital and general corporatepurposes. Any amounts borrowed by RGRT II may be used, among other things, tofinance the acquisition and processing of nuclear fuel. Amounts borrowed by RGRT IIare guaranteed by the Company.

EPE accounts for the RGRT II lease arrangement as a capital lease. The capital leasewas not requested in rate base in the EPE’s Case No. 09-00171-UT. EPE makesquarterly lease payments based on units of heat production. EPE pays all expensesrelating to RGRT II transactions in the quarterly lease payment. This includes paymentfor the fuel burned to produce heat units, the trustee fee, interest on the Notes andamounts borrowed under the RCF and any other costs submitted to EPE by the trustee.During 2014, EPE made four quarterly lease payments totaling $44,295,062. Thesepayments are reflected as fuel expense.

The Nuclear Fuel Trust is included in EPE’s capital structure due to the nature of EPE’sobligations under the RGRT II and GAAP reporting requirements. Refer to EPE°s Form10-K for EPE’s end-of-year capital structure. EPE does not believe there is a materialimmediate or projected long-term impact by the Nuclear Fuel Trust on EPE’s capitalstructure. The total amount borrowed for nuclear fuel by RGRT II at December 31,2014 was $126.4 million which includes $14.5 million borrowed under the amended and

Page 166 of 168

restated RCF; $110 million borrowed through the senior notes and accrued interest of$1.9 million related to the notes.

INFORMATION REQUIRED BY NMPRC CASE NO. 2074

Pursuant to Paragraph 10 of the Final Stipulation in NMPRC Case No. 2074, during theperiod January 1, 2014 through December 31, 2014, the business entities in which EPEheld an ownership interest for 180 days or longer and which were outstanding onDecember 31,2014 are listed below.

The interests were acquired by EPE as a result of proof of claim filings in customerbankruptcies and have little or no market value.

CompanyCounty Seat Stores, Inc.

Core-Mark Holding Co., Inc.Fairpoint Communications Inc.

Gentek, Inc.Gentek, Inc.

InQBateLotsoff Corp.Lotsoff Corp.

Rock-Tenn CompanyRBS Acquisitions Corp.

RCM Interests, Inc.Real Estate For Lease.Com,

Inc.Roomstore, Inc.

Number ofShares

1081728231

1,3361,270895107

Classof StockCommonCommonCommonCommonWarrantsCommonCommonPreferredCommonCommonCommon

5 Common3,306 Common

Page 167 of 168

INFORMATION REQUIRED BY NMPRC CASE NO. 3506

Pursuant to Paragraph G of the Final Order in NMPRC Case No. 3506, EPE shallinform the Commission of any requests by a lender to have EPE assume or guaranteeany financial obligation of an Affiliate and inform the Commission of any transfer ofemployees between EPE and an Affiliate in its EPE’s Annual Class II TransactionReport filed pursuant to Rule 450.10(b)(2).

Not Applicable.

ATTACHMENT A TO RULE 450 ADDENDUM - AFFILIATE STATEMENT OFOPERATIONS

Not Applicable.

ATTACHMENT B TO RULE 450 ADDENDUM - INTERCOMPANY ACTIVITY

Not Applicable.

Page 168of168

STATE OF TEXAS

COUNTY OF EL PASO

I, James Schichtl, Director- Regulatory Affairs for El Paso Electric Company ("EPE") hereby state:

I am employed by EPE as the Director of Regulatory Affairs. My business address is 100 N.Stanton Street, El Paso, Texas 79901. I have been employed by EPE since February 2012 andhave been actively involved in various aspects of cost of service and annual regulatory reportpreparation since that time.

2. In my present capacity as Director of Regulatory Affairs, I am responsible for various filings withregulatory commissions made in compliance with state and federal laws, commission rules andorders issued pursuant to commission proceedings.

With respect to cost of service and annual report filing before the New Mexico Public RegulationCommission ("NMPRC") and other regulatory commissions, I am responsible for planning,scheduling, coordinating, reviewing and filing all required schedules, workpapers and documents.I am personally acquainted with the facts herein stated.

To the best of my knowledge, information, and belief, the information contained in the foregoingAddendum to the Annual Report required pursuant to Rule 450.10(B)(2) and 450.11 and asrequired by the Final Orders Approving Stipulation in NMPRC Case No. 2074 and Case No.3506 is true and correct.

On this of (-~ ,2015, before me, a Notary Public for the State of Texas,personally appeared James Schichtl known by me, or proved to me, to be the person whose name issubscribed above, and acknowledged to me that he executed the same.

My Commission Expires:

Notary Public in and for the State of Texas

THIS FILING IS

Item 1: [] An Initial (Original) OR []Submission

Resubmission No.

Form 1 ApprovedOMB No. 1902-0021(Expires 11/30/2016)Form 1-F ApprovedOMB No. 1902-0029(Expires 11/30/2016)

Form 3-Q ApprovedOMB No. 1902-0205(Expires 11/30/2016)

FERC FINANCIAL REPORTFERC FORM No. 1: Annual Report of

Major Electric Utilities, Licenseesand Others and Supplemental

Form 3-Q: Quarterly Financial Report

These reports are mandatory under the Federal Power Act, Sections 3, 4(a), 304 and 309, and18 CFR 141.1 and 141.400. Failure to report may result in cdminal fines, civil penalties andother sanctions as provided by law. The Federal Energy Regulatory Commission does notconsider these reports to be of confidential nature

Exact Legal Name of Respondent (Company)

El Paso Electric Company

YearlPeriod of Report

End of 2014/Q4

FERC FORM No.1/3-Q (REV. 02-04)

KPMG LLPSuite 10001000 Walnut StreetKansas City, MO 64106-2162

Report of Independent Registered Public Accounting Firm

The Board of DirectorsEl Paso Electric Company:

We have audited the accompanying financial statements of El Paso Electric Company, which comprise thebalance sheets as of December 31, 2014 and 2013, and the related statements of income, retained earnings,cash flows, and accumulated comprehensive income, and hedging activities for the years then ended,included on pages 110 through 123 of the accompanying Federal Energy Regulatory Commission FormNo. 1 and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordancewith the accounting requirements of the Federal Energy Regulatory Commission as set forth in its applicableUniform System of Accounts and published accounting releases described in note I; this includes the design,implementation, and maintenance of internal control relevant to the preparation and fair presentation offinancial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibil~,

Our responsibility is to express an opinion on these financial statements based on our audits. We conductedour audits in accordance with auditing standards generally acceptable in the United States of America. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditors’ judgment, including the assessment ofthe risks of material misstatement of the financial statements, whether due to fraud or error, in making thoserisk assessments, the auditor considers internal control relevant to the entity’s preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internalcontrol. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the significant accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion.

N US membe~ finn of KPMG International Cooperative

Opinion

in our opinion, the financial statements referred to above present fairly, in all material respects, the financialposition of El Paso Electric Company as of December 31, 2014 and 2013, and the results of its operationsand cash flows for the years then ended in accordance with the accounting requirements of the Federal EnergyRegulatory Commission as set forth in its applicable Uniform System of Aecounts and published accountingreleases described in note I.

Basis of Accounting

We draw attention to note I of the financial statements, which describes the basis of accounting. As describedin note l to the financial statements, the financial statements are prepared by El Paso Electric Company onthe basis of the accounting requirements of the Federal Energy Regulatory Commission as set forth in itsapplicable Uniform System of Accounts and published accounting releases, which is a basis of accountingother than U.S. generally accepted accounting principles. Our opinion is not modified with respect to thismatter.

Restriction on Use

Our report is intended solely for the information and use of the board of directors and management of ElPaso Electric Company and for filing with the Federal Energy Regulatory Commission, the Public UtilityCommission of Texas, and the New Mexico Public Regulatory Commission, and is not intended to be andshould not be used by anyone other than these specified parties.

Kansas City, MOApril 9, 2015

INSTRUCTIONS FOR FILING FERC FORM NOS. 1 and 3-Q

GENERAL INFORMATION

I. Purpose

FERC Form No. 1 (FERC Form 1) is an annual regulatory requirement for Major electric utilities, licensees and others(18 C.F.R. § 141.1). FERC Form No. 3-Q ( FERC Form 3-Q)is a quarterly regulatory requirement which supplements theannual financial reporting requirement (18 C.F.R. § 141.400). These reports are designed to collect financial andoperational information from electric utilities, licensees and others subject to the jurisdiction of the Federal EnergyRegulatory Commission. These reports are also considered to be non-confidential public use forms.

II. Who Must Submit

Each Major electric utility, licensee, or other, as classified in the Commission’s Uniform System of AccountsPrescribed for Public Utilities and Licensees Subject To the Provisions of The Federal Power Act (18 C.F.R. Part 101),must submit FERC Form 1 (18 C.F.R. § 141.1), and FERC Form 3-Q (18 C.F.R. § 141.400).

Note: Major means having, in each of the three previous calendar years, sales or transmission service thatexceeds one of the following:

(1) one million megawatt hours of total annual sales,(2) 100 megawatt hours of annual sales for resale,(3) 500 megawatt hours of annual power exchanges delivered, or(4) 500 megawatt hours of annual wheeling for others (deliveries plus losses).

III. What and Where to Submit

(a) Submit FERC Forms 1 and 3-Q electronically through the forms submission software. Retain one copy of each reportfor your files. Any electronic submission must be created by using the forms submission software provided free by theCommission at its web site: http://www.ferc.qov/docs-filing/eforms/form-1/elec-subm-soft, asp. The software isused to submit the electronic filing to the Commission via the Internet.

(b) The Corporate Officer Certification must be submitted electronically as part of the FERC Forms 1 and 3-Q filings.

(c) Submit immediately upon publication, by either eFiling or mail, two (2) copies to the Secretary of the Commission, thelatest Annual Report to Stockholders. Unless eFiling the Annual Report to Stockholders, mail the stockholders report tothe Secretary of the Commission at:

SecretaryFederal Energy Regulatory Commission888 First Street, NEWashington, DC 20426

(d) For the CPA Certification Statement, submit within 30 days after filing the FERC Form 1, a letter or report (notapplicable to filers classified as Class C or Class D prior to January 1, 1984). The CPA Certification Statement can beeither eFiled or mailed to the Secretary of the Commission at the address above.

FERC FORM 1 & 3-Q (ED. 03-07) i

The CPA Certification Statement should:

a) Attest to the conformity, in all material aspects, of the below listed (schedules and pages) with theCommission’s applicable Uniform System of Accounts (including applicable notes relating thereto and theChief Accountant’s published accounting releases), and

b) Be signed by independent certified public accountants or an independent licensed public accountantcertified or licensed by a regulatory authority of a State or other political subdivision of the U. S. (See 18C.F.R. §§ 41.10-41.12 for specific qualifications.)

Reference Schedules

Comparative Balance SheetStatement of IncomeStatement of Retained EarningsStatement of Cash FlowsNotes to Financial Statements

110-113114-117118-119120-121122-123

e) The following format must be used for the CPA Certification Statement unless unusual circumstances or conditions,explained in the letter or report, demand that it be varied. Insert parenthetical phrases only when exceptions arereported.

"In connection with our regular examination of the financial statements of ~ for the year ended on which we havereported separately under date of , we have also reviewed schedules

of FERC Form No. 1 for the year filed with the Federal Energy Regulatory Commission, forconformity in all material respects with the requirements of the Federal Energy Regulatory Commission as set forth in itsapplicable Uniform System of Accounts and published accounting releases. Our review for this purpose included suchtests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

Based on our review, in our opinion the accompanying schedules identified in the preceding paragraph(except as noted below) conform in all material respects with the accounting requirements of the Federal EnergyRegulatory Commission as set forth in its applicable Uniform System of Accounts and published accounting releases."

The letter or report must state which, if any, of the pages above do not conform to the Commission’s requirements.Describe the discrepancies that exist.

(f) Filers are encouraged to file their Annual Report to Stockholders, and the CPA Certification Statement using eFiling.To further that effort, new selections, "Annual Report to Stockholders," and "CPA Certification Statement" have beenadded to the dropdown "pick list" from which companies must choose when eFiling. Further instructions are found on theCommission’s website at http:llwww.ferc.qovlhelplhow-to.asp.

(g) Federal, State and Local Governments and other authorized users may obtain additional blank copies ofFERC Form 1 and 3-Q free of charge from http:llwww.ferc.govldocs-filin.qleformslform-llform-1 .pdf andhttp :llwww.ferc..qovldocs-filinqleforms.asp#3Q-gas .

IV. When to Submit:

FERC Forms 1 and 3-Q must be filed by the following schedule:

FERC FORM I & 3-Q (ED. 03-07) ii

a) FERC Form 1 for each year ending December 31 must be filed by April 18th of the following year (18 CFR § 141.1), and

b) FERC Form 3-Q for each calendar quarter must be filed within 60 days after the reporting quarter (18 C.F.R. §141.400).

V. Where to Send Comments on Public Reporting Burden.

The public reporting burden for the FERC Form 1 collection of information is estimated to average 1,144hours per response, including the time for reviewing instructions, searching existing data sources, gathering andmaintaining the data-needed, and completing and reviewing the collection of information. The public reporting burden forthe FERC Form 3-Q collection of information is estimated to average 150 hours per response.

Send comments regarding these burden estimates or any aspect of these collections of information, includingsuggestions for reducing burden, to the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC20426 (Attention: Information Clearance Officer); and to the Office of Information and Regulatory Affairs, Office ofManagement and Budget, Washington, DC 20503 (Attention: Desk Officer for the Federal Energy RegulatoryCommission). No person shall be subject to any penalty if any collection of information does not display a valid controlnumber (44 U.S.C. § 3512 (a)).

FERC FORM 1 & 3-Q (ED. 03-07) iii

GENERAL INSTRUCTIONS

I. Prepare this report in conformity with the Uniform System of Accounts (18 C FR Part 101) (USofA), Interpretall accounting words and phrases in accordance with the USofA.

II. Enter in whole numbers (dollars or MWH) only, except where otherwise noted. (Enter cents for averages andfigures per unit where cents are important. The truncating of cents is allowed except on the four basic financial statementswhere rounding is required.) The amounts shown on all supporting pages must agree with the amounts entered on thestatements that they support. When applying thresholds to determine significance for reporting purposes, use for balancesheet accounts the balances at the end of the current reporting period, and use for statement of income accounts thecurrent year’s year to date amounts.

III Complete each question fully and accurately, even if it has been answered in a previous report. Enter theword "None" where it truly and completely states the fact.

IV. For any page(s) that is not applicable to the respondent, omit the page(s) and enter "NA," "NONE," or "NotApplicable" in column (d) on the List of Schedules, pages 2 and 3.

V. Enter the month, day, and year for all dates. Use customary abbreviations. The "Date of Report" included in theheader of each page is to be completed only for resubmissions (see VII. below).

VI. Generally, except for certain schedules, all numbers, whether they are expected to be debits or credits, mustbe reported as positive. Numbers having a sign that is different from the expected sign must be reported by enclosing thenumbers in parentheses.

VII For any resubmissions, submit the electronic filing using the form submission software only. Please explainthe reason for the resubmission in a footnote to the data field.

VIII. Do not make references to reports of previous periods/years or to other reports in lieu of required entries,except as specifically authorized.

IX. Wherever (schedule) pages refer to figures from a previous period/year, the figures reported must be basedupon those shown by the report of the previous period/year, or an appropriate explanation given as to why the differentfigures were used.

Definitions for statistical classifications used for completing schedules for transmission system reporting are as follows:

FNS - Firm Network Transmission Service for Self. "Firm" means service that can not be interrupted for economic reasonsand is intended to remain reliable even under adverse conditions. "Network Service" is Network Transmission Service asdescribed in Order No. 888 and the Open Access Transmission Tariff. "Self’ means the respondent.

FNO - Firm Network Service for Others. "Firm" means that service cannot be interrupted for economic reasons and isintended to remain reliable even under adverse conditions. "Network Service" is Network Transmission Service asdescribed in Order No. 888 and the Open Access Transmission Tariff.

LFP - for Long-Term Firm Point-to-Point Transmission Reservations. "Long-Term" means one year or longer and" firm"means that service cannot be interrupted for economic reasons and is intended to remain reliable even under adverseconditions. "Point-to-Point Transmission Reservations" are described in Order No. 888 and the Open AccessTransmission Tariff. For all transactions identified as LFP, provide in a footnote the

FERC FORM 1 & 3-Q (ED. 03-07) iv

termination date of the contract defined as the earliest date either buyer or seller can unilaterally cancel the contract.

OLF - Other Long-Term Firm Transmission Service. Report service provided under contracts which do not conform to theterms of the Open Access Transmission Tariff. "Long-Term" means one year or longer and "firm" means that servicecannot be interrupted for economic reasons and is intended to remain reliable even under adverse conditions. For alltransactions identified as OLF, provide in a footnote the termination date of the contract defined as the earliest date eitherbuyer or seller can unilaterally get out of the contract.

SFP - Short-Term Firm Point-to-Point Transmission Reservations. Use this classification for all firm point-to-pointtransmission reservations, where the duration of each period of reservation is less than one-year¯

NF - Non-Firm Transmission Service, where firm means that service cannot be interrupted for economic reasons and isintended to remain reliable even under adverse conditions.

OS - Other Transmission Service. Use this classification only for those services which can not be placed in theabove-mentioned classifications, such as all other service regardless of the length of the contract and service FERC Form.Describe the type of service in a footnote for each entry.

AD - Out-of-Period Adjustments. Use this code for any accounting adjustments or "true-ups" for service provided in priorreporting periods¯ Provide an explanation in a footnote for each adjustment¯

:)EFINITIONSCommission Authorization (Comm. Auth.) -- The authorization of the Federal Energy Regulatory Commission, or any

)ther Commission. Name the commission whose authorization was obtained and give date of the authorization.

II. Respondent - The person, corporation, licensee, agency, authority, or other Legal entity or instrumentality in whose)ehalf the report is made.

FERC FORM 1 & 3-Q (ED. 03-07) v

EXCERPTS FROM THE LAW

Federal Power Act, 16 U.S.C. § 791a-825r

Sec. 3. The words defined in this section shall have the following meanings for purposes of this Act, to with:

(3) ’Corporation’ means any corporation, joint-stock company, partnership, association, business trust,organized group of persons, whether incorporated or not, or a receiver or receivers, trustee or trustees of any of theforegoing. It shall not include ’municipalities, as hereinafter defined;

(4) ’Person’ means an individual or a corporation;

(5) ’Licensee, means any person, State, or municipality Licensed under the provisions of section 4 of this Act,and any assignee or successor in interest thereof;

(7) ’municipality means a city, county, irrigation district, drainage district, or other political subdivision oragency of a State competent under the Laws thereof to carry and the business of developing, transmitting, unitizing, ordistributing power; ......

(11) "project’ means, a complete unit of improvement or development, consisting of a power house, all waterconduits, all dams and appurtenant works and structures (including navigation structures) which are a part of said unit, andall storage, diverting, or fore bay reservoirs directly connected therewith, the primary line or lines transmitting power therefrom to the point of junction with the distribution system or with the interconnected primary transmission system, allmiscellaneous structures used and useful in connection with said unit or any part thereof, and all water rights,rights-of-way, ditches, dams, reservoirs, Lands, or interest in Lands the use and occupancy of which are necessary orappropriate in the maintenance and operation of such unit;

"Sec. 4. The Commission is hereby authorized and empowered

(a) To make investigations and to collect and record data concerning the utilization of the water ’resources of any region tobe developed, the water-power industry and its relation to other industries and to interstate or foreign commerce, andconcerning the location, capacity, development -costs, and relation to markets of power sites; ... to the extent theCommission may deem necessary or useful for the purposes of this Act."

"Sec. 304. (a) Every Licensee and every public utility shall file with the Commission such annual and other periodic orspecial* reports as the Commission may be rules and regulations or other prescribe as necessary or appropriate to assistthe Commission in the -proper administration of this Act. The Commission may prescribe the manner and FERC Form inwhich such reports salt be made, and require from such persons specific answers to all questions upon which theCommission may need information. The Commission may require that such reports shall include, among other things, fullinformation as to assets and Liabilities, capitalization, net investment, and reduction thereof, gross receipts, interest dueand paid, depreciation, and other reserves, cost of project and other facilities, cost of maintenance and operation of theproject and other facilities, cost of renewals and replacement of the project works and other facilities, depreciation,generation, transmission, distribution, delivery, use, and sale of electric energy. The Commission may require any suchperson to make adequate provision for currently determining such costs and other facts. Such reports shall be made underoath unless the Com mission otherwise specifies*. 10

FERC FORM 1 & 3-Q (ED. 03-07) vi

"Sec. 309. The Commission shall have power to perform any and all acts, and to prescribe, issue, make, and rescind suchorders, rules and regulations as it may find necessary or appropriate to carry out the provisions of this Act. Among otherthings, such rules and regulations may define accounting, technical, and trade terms used in this Act; and may prescribethe FERC Form or FERC Forms of all statements, declarations, applications, and reports to be filed with the Commission,the information which they shall contain, and the time within which they shall be field..."

General Penalties

The Commission may assess up to $1 million per day per violation of its rules and regulations. SeeFPA § 316(a) (2005), 16 U.S.C. § 825o(a).

FERC FORM 1 & 3-Q (ED. 03-07) vii

FERC FORM NO. 113-Q:REPORT OF MAJOR ELECTRIC UTILITIES, LICENSEES AND OTHER

IDENTIFICATION01 Exact Legal Name of Respondent 02 Year/Period of Report

El Paso Electric Company End of 2014/Q403 Previous Name and Date of Change (if name changed during year)

II04 Address of Principal Office at End of Period (Street, City, State, Zip Code)

P.O. Box 982, El Paso, TX 79960-0982; 100 North Stanton; El Paso, TX 7990105 Name of Contact Person 06 Title of Contact Person

Russell G. Gibson Vice President & Controller

07 Address of Contact Person (Street, City, State, Zip Code)P.O. Box 982, El Paso, TX 79960-0982; 100 North Stanton; El Paso, TX 79901

08 Telephone of Contact Person,Including 09 This Report IsArea Code (1) [] An Odginal

(915) 351-4222(2) [] A Resubmission

The undersigned officer cefl~fies that:ANNUAL CORPORATE OFFICER CERTIFICATION

10 Date of Report(Mo, Da, Yr)II

I have examined this report and to the best of my knowledge, information, and belief all statements of fact contained in this report are correct statementsof the business affairs of the respondent and the financial statements, and other financial information contained in this report, conform in all materialrespects to the Uniform System of Accounts.

/s/Russell G. Gibson (Mo, Da, Yr)02 Tdle ¯

Vice President & Controller Isl Russell G, Gibson 04/09/2015Title 18, U.S.C. 1001 makes it a crime for any person to knowingly and willingly to make to any Agency or Department of the United States anyfalse, fictitious or fraudulent statements as to any matter within its jurisdiction.

FERC FORM No.ll3-Q (REV. 02-04) Page I

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [~]An Original (Mo, Da, Yi’)(2)

[] A Resubmission/ /

LIST OF SCHEDULES (Electric Utility)

Year/Period of ReportEnd of 2014/Q4

Enter in column (c) the terms "none," "not applicable," or "NA," as appropriate, where no information or amounts have been reported forcertain pages. Omit pages where the respondents are "none," "not applicable," or "NA".

Line Title of ScheduleNo.

(a)1 General Information

2 Control Over Respondent

3 Corporations Controlled by Respondent

4 Officers

5 Directors

6 Information on Formula Rates

7 Important Changes During the Year

8 Comparative Balance Sheet

9 Statement of Income for the Year

10 Statement of Retained Earnings for the Year

11 Statement of Cash Flows

12 Notes to Financial Statements

13 Statement ofAccum Comp Income, Comp Income, and Hedging Activities

14 Summary of Utility Plant & Accumulated Provisions for Dep, Amort & Dep

15 Nuclear Fuel Materials

16 Electric Plant in Service

17 Electric Plant Leased to Others

18 Electric Plant Held for Future Use

19 Construction Work in Progress-Electric

20 Accumulated Prevision for Depreciation of Electric Utility Plant

21 Investment of Subsidiary Companies

22 Materials and Supplies

23 Allowances

24 Extraordinary Property Losses

25 Unrecovered Plant and Regulatory Study Costs

26 Transmission Service and Generation Interconnection Study Costs

27 Other Regulatory Assets

28 ! Miscellaneous Deferred Debits

29 Accumulated Deferred Income Taxes

30 Capital Stock

31 Other Paid-in Capital

32 Capital Stock Expense

33 Long-Term Debt

34 Reconciliation of Reported Net Income with Taxable Inc for Fed Inc Tax

35 Taxes Accrued, Prepaid and Charged During the Year

36 Accumulated Deferred Investment Tax Credits

ReferencePage No.

(b)lol

lO2

lO3

lO4

105

106(a)(b)

108-109

110-113

114-117

118-119

120-121

122-123

122(a)(b)

200-201

202-203

204-207

213

214

216

219

224-225

227

228(ab)-229(ab)

230

230

231

232

233

234

250-251

253

254

256-257

261

262-263

266-267

Remarks

(c)

Not Applicable

Not Applicable

None

None

None

None

None

FERC FORM NO. 1 (ED. 12-96) Page 2

Name of RespondentEl Paso Electric Company

This Report Is:(1) [~]An Original(2) [] A Resubmission

LI~T OF SCHEDULES (Electric Utility)

Date of Report(Mo, Da, Yr)II

(continued)

Year/Period of ReportEnd of 2014/Q4

Enter in column (c) the terms "none," "not applicable," or "NA," as appropriate, where no information or amounts have been reported forcertain pages. Omit pages where the respondents are "none," "not applicable," or "NA".

Line Title of Schedule Reference RemarksNo. Page No.

(a) (b) (c)37 Other Deferred Credits 269

38 Accumulated Deferred Income Taxes-Accelerated Amortization Property 272-273 Not Applicable

39 Accumulated Deferred Income Taxes-Other Property 274-275

40 Accumulated Deferred Income Taxes-Other 276-277

41 Other Regulatory Liabilities 27842 Electric Operating Revenues 300-301

43 Regional Transmission Service Revenues (Account 457.1) 302 Not Applicable

44 Sales of Electricity by Rate Schedules 30445 Sales for Resale 310-311

46 Electric Operation and Maintenance Expenses 320-32347 Purchased Power 326-327

48 Transmission of Electricity for Others 328-33049 Transmission of Electricity by ISO/RTOs 331 Not Applicable

50 Transmission of Electricity by Others 33251 Miscellaneous General Expenses-Electric 335

52 Depreciation and Amortization of Electric Plant 336-337

53 Regulatory Commission Expenses 350-351

54 Research, Development and Demonstration Activities 352-353 None55 Distribution of Salaries and Wages 354-355

56 Common Utility Plant and Expenses 356 None

57 Amounts included in ISO/RTO Settlement Statements 397 Not Applicable

58 Purchase and Sale of Ancillary Services 398

59 Monthly Transmission System Peak Load 40060 Monthly ISO/RTO Transmission System Peak Load 400a Not Applicable

61 Electric Energy Account 40162 Monthly Peaks and Output 401

63 Steam Electric Generating Plant Statistics 402-40364 Hydroelectric Generating Plant Statistics 406-407 Not Applicable

65 Pumped Storage Generating Plant Statistics 408-409 Not Applicable

66 Generating Plant Statistics Pages 410-411

FERC FORM NO. 1 (ED. 12-96) Page 3

Name of Respondent

El Paso Electdc CompanyThis Report Is: Date of Report(1) I~]An Original (Mo, Da, Yr)(2) []A Resubmission / /

LI~;T OF SCHEDULES (Electric Utility) (continued)

Year/Period of ReportEnd of 2014/Q4

Enter in column (c) the terms "none," "not applicable," or "NA," as appropriate, where no information or amounts have been reported forcertain pages. Omit pages where the respondents are "none," "not applicable," or "NA".

Line Title of ScheduleNo.

(a)67 Transmission Line Statistics Pages

68 Transmission Lines Added During the Year

69 Substations

70 Transactions with Associated (Affiliated) Companies

71 Footnote Data

Stockholders’ Reports Check appropriate box:[] Two copies will be submitted

[] No annual report to stockholders is prepared

Reference RemarksPage No.

(b) (c)422-423

424-425 None

426-427

429 None

450

FERC FORM NO. 1 (ED. 12-96) Page 4

Name of Respondent

El Paso Electric Company

This Report Is:(1) [] An Original(2) [] A Resubmission

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

End of 2014/Q4

GENERAL INFORMATION

1. Provide name and title of officer having custody of the general corporate books of account and address ofoffice where the general corporate books are kept, and address of office where any other corporate books of accountare kept, if different from that where the general corporate books are kept.

Russell G. Gibson

Vice President & Controller

Stanton Tower, i00 North Stanton

E1 Paso, Texas 79901

Mailing Address:Russell G. Gibson

Post Office Box 982

E1 Paso, Texas 79960-0982

2. Provide the name of the State under the laws of which respondent is incorporated, and date of incorporation.If incorporated under a special law, give reference to such law. If not incorporated, state that fact and give the typeof organization and the date organized.

Texas - August 30, 1901

3. If at any time during the year the property of respondent was held by a receiver or trustee, give (a) name ofreceiver or trustee, (b) date such receiver or trustee took possession, (c) the authority by which the receivership ortrusteeship was created, and (d) date when possession by receiver or trustee ceased.

Not applicable.

4. State the classes or utility and other services furnished by respondent during the year in each State in whichthe respondent operated.

Electric power generation, transmission and distribution for sale at retail in the states of Texas andNew Mexico; and wholesale sales including sales for resale to other electric utilities primarily in thestates of Texas, New Mexico and Arizona and sales for resale to power marketers.

5. Have you engaged as the principal accountant to audit your financial statements an accountant who is notthe principal accountant for your previous year’s certified financial statements?

(1) [] Yes...Enter the date when such independent accountant was initially engaged:(2) [] No

FERC FORM No.1 (ED. 12-87) PAGE 101

Name of Respondent

El Paso Electric CompanyThis Report Is:(1) [] An Original(2) [] A Resubmission

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

End of 2014/Q4

CONTROL OVER RESPONDENT1. If any corporation, business trust, or similar organization or a combination of such organizations jointly held

control over the repondent at the end of the year, state name of controlling corporation or organization, manner inwhich control was held, and extent of control. If control was in a holding company organization, show the chainof ownership or control to the main parent company or organization. If control was held by a trustee(s), statename of trustee(s), name of beneficiary or beneficiearies for whom trust was maintained, and purpose of the trust.

FERC FORM NO. 1 (ED. 12-96) Page 102

Name of Respondent

El Paso Electdc CompanyThis Report Is: Date of Report(1) [~An Original (Mo, Da, Yr)(2) [~]A Resubmission / /

CORPORATIONS CONTROLLED BY RI~SPONDENT

Year/Period of ReportEnd of 2014/Q4

1. Report below the names of all corporations, business trusts, and similar organizations, controlled directly or indirectly by respondentat any time during the year. If control ceased prior to end of year, give particulars (details) in a footnote.2. If control was by other means than a direct holding of voting rights, state in a footnote the manner in which control was held, namingany intermediaries involved.3. If control was held jointly with one or more other interests, state the fact in a footnote and name the other interests.

Definitions1. See the Uniform System of Accounts for a definition of control.2. Direct control is that which is exercised without interposition of an intermediary.3. Indirect control is that which is exercised by the interposition of an intermediary which exercises direct control.4. Joint control is that in which neither interest can effectively control or direct action without the consent of the other, as where thevoting control is equally divided between two holders, or each party holds a veto power over the other. Joint control may exist by mutualagreement or understanding between two or more parties who together have control within the meaning of the definition of control in theUniform System of Accounts, regardless of the relative voting rights of each party.

Line Name of Company ControlledNO.

(a)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

Kind of Business

(b)

Percent VotingStock Owned

(c)

FootnoteRef.(d)

FERC FORM NO. 1 (ED. 12-96) Page 103

Name of RespondentEl Paso Electric Company

This Report Is:(1) [~]An Original(2) [~A Resubmission

OFFICERS

Date of Report(Mo, Da, YP)II

Year/Period of ReportEnd of 2014/Q4

1. Report below the name, title and salary for each executive officer whose salary is $50,000 or more. An "executive officer" of arespondent includes its president, secretary, treasurer, and vice president in charge of a principal business unit, division or function(such as sales, administration or finance), and any other person who performs similar policy making functions.2. If a change was made during the year in the incumbent of any position, show name and total remuneration of the previousincumbent, and the date the change in incumbency was made.LineNo.

123456789

101112131415161718192021222324252627282930313233

353637383940414243

Title(a)

Chief Executive OfficerPresidentExecutive Vice PresidentExecutive Vice PresidentSenior Vice President - OperationsSenior Vice President and Chief Financial OfficerSenior Vice President - Corporate Planning and

Development and Chief Compliance OfficerSenior Vice President - Human Resources

and Customer CareVice President - Regulatory AffairsVice President - General CounselVice President - Transmission and Distribution

and System PlanningVice President - ControllerVice President - External and Public AffairsVice President - System Operations, Resource

Planning and Management

Name of Officer(b)

Thomas V. Shockley III

,

Steven T. BuraczykNathan T. Hirschi

Rocky R. Miracle

William A. Stiller

Vice President - Customer CareVice President - Power GenerationVice President - Community OutreachVice President - Compliance and Chief Risk OfficerVice President - Corporate DevelopmentCorporate SecretaryVice President - Treasurer

Kerry B. LoreAndres R. RamirezGuillermo Silva, Jr.Henry W. Soza

I Jessica M. Goldman

foSa.laryr Year(C)

669,231344,423370,302324,062282,077298,269

293,385

282,077155,769154,519

232,077

47,596134,538

184,808204,423248,846

154,631214,423160,611119,130

76,962

FERC FORM NO. 1 (ED. 12-96) Page 104

Name of Respondent

El Paso Electdc Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

~chedule Page: 104 LMe No.: 2 Column: bOn September 16, 2014, the Company appointed Mary E. Kipp as President. Ms. Kipp hadpreviously served as the Company’s Senior Vice President, General Counsel and ChiefCompliance Officer.~chedule Page: 104 L~e No.: 3 Column: bOn January 31, 2015, Mr. David G. Carpenter, Executive Vice President, retired from theCompany.~chedule Page: 104 LMe No.: 4 Column: bOn January 31, 2015, Mr. Hector R. Puente, Executive Vice President, retired from theCompany.

~chedule Page: 104 L~e No.: 11 Column: bOn April 7, 2014, the Company appointed Michael D. Blanchard as Vice President ofRegulatory Affairs. Prior to joining the Company, Mr. Blanchard served as AssistantGeneral Counsel at Nebraska Public Power district.ISchedule Page: 104 L~e No.: 12 Column: bOn September 16, 2014, the Company appointed John R. Boomer as Vice President, GeneralCounsel. Mr. Boomer had served as the Company’s Vice President, Treasurer since April 21,2014. Prior to joining the Company, Mr. Boomer was Senior Vice President at Helen of TroyLimited. He previously served as the Company’s Assistant General Counsel from 1998 to1999.~chedu~ Pag~ 104 L~e No.: 14 Column: bOn June 9, 2014, the Company appointed Robert C. Doyle as Vice President of Transmissionand Distribution and System Planning. Mr. Doyle had previously served as the Company’sVice President Trasmission and Distribution and Systems Operations and Planning.~chedule Page: 104 LMe No.: 15 Column: bOn September 16, 2014, the Company appointed Russell G. Gibson as Vice President,Controller. Prior to joining the Company, Mr. Gibson was Chief Financial Officer, VicePresident of ReadyOne Industries, Inc. He previously served as the Company’s VicePresident, Controller from 1989 to 1995.~chedule Page: 104 LMe No.: 16 Column: bOn July 15, 2014, the Company appointed Eduardo Gutierrez as Vice President, External andPublic Affairs. Mr. Gutierrez had previously served as the Company’s Manager of PublicRelations.~chedule Page: 104 L~e N~: 18 Column: b.On June 9, 2014, the Company appointed David C. Hawkins as Vice President of SystemOperations, Resource Planning and Management. Mr. Hawkins had previously served as theCompany’s Vice President of Power Marketing and Fuels and Resource and Delivery Planning.~chedu~ Page: 104 LMe No.: 23 Column: bOn November 20, 2014, the Company appointed Richard E. Turner as Vice President ofCorporate Development. Mr. Turner had previously served as the Company’s Assistant VicePresident and Director of Corporate Development.~chedule Page: 104 LMe No.: 25 Column: bOn April 17, 2014, Steven P. Busser resigned from his position as Vice President,Treasurer.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of RespondentEl Paso Electric Company

This Report Is:(1) [~An Original(2) ~ A Resubmission

DIRECTORS

Date of Report Year/Period of Report(Mo, Da, Yr) End of 2014/Q4II

1. Report below the information called for concerning each director of the respondent who held office at any time during the year. Include in column (a), abbreviatedtitles of the directors who are officers of the respondent.2. Designate members of the Executive Committee by a triple asterisk and the Chairman of the Executive Committee by a double asterisk.LineNo.

123456789

101112131415161718192021222324252627282930313233

35363738394O414243

45

4748

Name (an~a~litle) of Director

Catherine A. Allen - Director

Principal Business Address(b)

The Santa Fe Group3 Chamisa Drive North, Suite 2Santa Fe, New Mexico 87508

John Robert Brown - Director Brownco Capital, LLC123 W. Mills, Suite 610El Paso, Texas 79901

James W. Cicconi - Director*** AT&T, Inc.1120 20th Street, N.W., Suite 1000Washington, D.C. 20036

High Desert Capital, LLC6080 Surety DriveEl Paso, Texas 79905

James W. Hards - Director*** OP Food Products, LLC andHarris Financial Advisors, LLCPost Office Box 38Manns Harbor, North Carolina 27953

Patdcia Z. Holland-Branch - Director The Facilities Connection, Inc.240 East SunsetEl Paso, Texas 79922

Woodley L. Hunt - Director Hunt Companies, Inc.4401 N. Mesa Street, Suite 201El Paso, Texas 79901

Chairman of the Board**El Paso Electdc Company100 N. StantonEl Paso, Texas 79901

Thomas V. Shockley III - Director andCEO

El Paso Electric Company100 N. StantonEl Paso, Texas 79901

11100 Santa Monica Blvd., Suite 2000Los Angeles, California 90025

Stephen N. Wertheimer - Director*** W Capital PartnersOne East 52nd StreetNew York, New York 10022

Houlihan Lokey10250 Constellation Blvd., 5th FloorLos Angeles, California 90067

FERC FORM NO. 1 (ED. 12-95) Page 105

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

i Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

~chedu~ Page: 105 LMe No.: 13 Column: aOn February 5, 2015, the Board of Directors appointed Mr. Escudero as Vice Chairman of theBoard.~chedule Page: 105 L~e No.: 30 Column: a ]On February 5, 2015, Mr. Parks resigned from the Board of Directors and as Chairman of theBoard of Directors, and as Chairman of the Executive Committee. The Board of Directorsappointed Mr. Yamarone as Chairman of the Board and Mr. Escudero as Vice Chairman of theBoard.~chedu~ Page: 105 L~e No.: 38 Column: aOn March 18, 2015, Mr. Siegel was appointed Chairman of the Executive Committee.~chedule Page: 105 L~e No.: 45 Column: aOn February 5, 2015, Mr. Parks resigned from the Board of Directors and as Chairman of theBoard of Directors, and as Chairman of the Executive Committee. The Board of Directorsappointed Mr. Yamarone as Chairman of the Board.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report(1) [] An Original (Mo, Da, Yr)El Paso Electric Company(2) [] A Resubmission / /

INFORMATION ON FORMULA RATESFERC Rate Schedule/Tariff Number FERC Proceeding

Does the respondent have formula rates? [] Yes[] No

1. Please list the Commission accepted formula rates including FERC Rate Schedule or Tariff Number and FERC proceeding (i.e. Docket No)accepting the rate(s) or changes in the accepted rate.

LineNO.

12345678

91011121314

1516171819202122232425262728293O313233

35

3738394041

Year/Period of ReportEnd of 2014/Q4

FERC Rate Schedule or Tadff NumberRate Schedule FERC No. 18

FERC ProceedingER08-742-001

FERC FORM NO. 1 (NEW. 12-08) Page 106

Name of Respondent

El Paso Electdc Company IThis Report Is: Date of Report(1) [] An Original (Mo, Da, Yr)(2) [] A Resubmission / /

INFORMATION ON FORMULA RATESFERC Rate Schedule/Tariff Number FERC Proceeding

Does the respondent file with the Commission annual (or more frequent)filings containing the inputs to the formula rate(s)?

2. If yes, provide a listing of such filings as contained on the Commission’s eLibrary website

DocumentLineNo.

123456789

101112131415161718192021222324252627282930313233

353637383940414243

4546

[] Yes[] No

Year/Period of ReportEnd of 2014/Q4

Formula Rate FERC Rate

Accession No.20141001-5099

Date\ Filed Date09/30/201410/01/2014

Docket No.ER08-742-000

DescriptionSchedule Number orTariff Number

18

FERC FORM NO. 1 (NEW. 12-08) Page 106a

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

~chedule Page: 1061 LMe No.: 1 Column: dThe 2014 annual update is to the cost-based formula rate included in the Power SalesAgreement under ER08-742.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [] An Original (Mo, Da, Yr)(2) [] A Resubmission / /

INFORMATION ON FORMULA RATESFormula Rate Variances

Year/Period of ReportEnd of 2014/Q4

1. If a respondent does not submit such filings then indicate in a footnote to the applicable Form 1 schedule where formula rate inputs differ fromamounts reported in the Form 1.

2. The footnote should provide a narrative description explaining how the "rate" (or billing) was derived if different from the reported amount in theForm 1.

3. The footnote should explain amounts excluded from the ratebase or where labor or other allocation factors, operating expenses, or other itemsimpacting formula rate inputs differ from amounts reported in Form 1 schedule amounts.

4. Where the Commission has provided guidance on formula rate inputs, the specific proceeding should be noted in the footnote.

LineNo.

123456789

101112131415161718192021222324252627282930313233

353637383940414243

Page No(s). ScheduleN/A

Column Line No

FERC FORM NO. 1 (NEW. 12-08) Page 106b

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [] An Original(2) [] A Resubmission / /

IMPORTANT CHANGES DURING THE QUARTER/YEAR

Year/Period of ReportEnd of 2014/Q4

Give particulars (details) concerning the matters indicated below. Make the statements explicit and precise, and number them inaccordance with the inquiries. Each inquiry should be answered. Enter "none," "not applicable," or "NA" where applicable. Ifinformation which answers an inquiry is given elsewhere in the report, make a reference to the schedule in which it appears.1. Changes in and important additions to franchise rights: Describe the actual consideration given therefore and state from whom thefranchise rights were acquired. If acquired without the payment of consideration, state that fact.2. Acquisition of ownership in other companies by reorganization, merger, or consolidation with other companies: Give names ofcompanies involved, particulars concerning the transactions, name of the Commission authorizing the transaction, and reference toCommission authorization.3. Purchase or sale of an operating unit or system: Give a brief description of the property, and of the transactions relating thereto,and reference to Commission authorization, if any was required. Give date journal entries called for by the Uniform System of Accountswere submitted to the Commission.4. Important leaseholds (other than leaseholds for natural gas lands) that have been acquired or given, assigned or surrendered: Giveeffective dates, lengths of terms, names of parties, rents, and other condition. State name of Commission authorizing lease and givereference to such authorization.5. Important extension or reduction of transmission or distribution system: State territory added or relinquished and date operationsbegan or ceased and give reference to Commission authorization, if any was required. State also the approximate number ofcustomers added or lost and approximate annual revenues of each class of service. Each natural gas company must also state majornew continuing sources of gas made available to it from purchases, development, purchase contract or otherwise, giving location andapproximate total gas volumes available, period of contracts, and other parties to any such arrangements, etc.6. Obligations incurred as a result of issuance of securities or assumption of liabilities or guarantees including issuance of short-termdebt and commercial paper having a maturity of one year or less. Give reference to FERC or State Commission authorization, asappropriate, and the amount of obligation or guarantee.7. Changes in articles of incorporation or amendments to charter: Explain the nature and purpose of such changes or amendments.8. State the estimated annual effect and nature of any important wage scale changes during the year.9. State briefly the status of any materially important legal proceedings pending at the end of the year, and the results of any suchproceedings culminated during the year.10. Describe briefly any materially important transactions of the respondent not disclosed elsewhere in this report in which an officer,director, security holder reported on Page 104 or 105 of the Annual Report Form No. 1, voting trustee, associated company or knownassociate of any of these persons was a party or in which any such person had a material interest.11. (Reserved.)12. If the important changes during the year relating to the respondent company appearing in the annual report to stockholders areapplicable in every respect and furnish the data required by Instructions 1 to 11 above, such notes may be included on this page.13. Describe fully any changes in officers, directors, major security holders and voting powers of the respondent that may haveoccurred during the reporting period.14. In the event that the respondent participates in a cash management program(s) and its proprietary capital ratio is less than 30percent please describe the significant events or transactions causing the proprietary capital ratio to be less than 30 percent, and theextent to which the respondent has amounts loaned or money advanced to its parent, subsidiary, or affiliated companies through acash management program(s). Additionally, please describe plans, if any to regain at least a 30 percent proprietary ratio.

PAGE 108 INTENTIONALLY LEFT BLANKSEE PAGE 109 FOR REQUIRED INFORMATION.

FERC FORM NO. 1 (ED. 12-96) Page 108

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / !

IMPORTANT CHANGES DURING THE QUARTER/YEAR (Continued)

Year/Period of Report

2014/Q4

1. Changes in and Important Additions to Franchise Rights:

None

2.Acquisition of Ownership in Other Companies:

None

3.Purchase or Sale of an Operating Unit or System:

The Company owns a 7% interest in Units 4 and 5 at Four Comers and shares power entitlements and allocated costswith APS, the operating agent, and the other Four Comers participants. The Company notified the other participants in2013 that it would not continue in Four Comers after the termination of the 50-year contractual term of the participationagreement but that it would offer to sell its interest to them in order to facilitate their decision to extend the life of theplant. On February 17, 2015, the Company and APS entered into an asset purchase agreement (the "Agreement"),providing for the purchase by APS of the Company’s interests in Four Comers. The cash purchase price is equal to thenet book value of the Company’s interest in Four Comers at the date of closing, which is expected to occur not later thanJuly 2016, subject to the receipt of regulatory approvals. The purchase price will be adjusted downward to reflect APs’sassumption in the Agreement of the Company’s obligation to pay for future plant decommissioning and mine reclamationexpenses. At the closing, APS will also reimburse the Company for the undepreciated value of certain capitalexpenditures made prior thereto. APS will assume responsibility for all capital expenditures made after July 2016 and,with certain exceptions, any pre-2016 capital expenditures to be put into service following the closing. In addition, APSwill indemnify the Company against liabilities and costs related to the future operation of Four Comers. Included in theCompany’s regulatory-basis balance sheet at December 31, 2014 are obligations of $6.1 million and $19.3 million forplant decommissioning and mine reclamation costs, respectively, which the Company expects to pay at closing inaccordance with the Agreement.

4.Important Leaseholds That Have Been Acquired or Given, Assigned or Surrendered:

None

5.Important Extension or Reduction of Transmission or Distribution System:

None

6.Obligations Incurred as a Result of Issuance of Securities or Assumption of Liabilities or Guarantees:

Revolving Credit Facility. On January 14, 2014, the Company and Rio Grande Resouces Trust ("RGRT") entered intoa second amended and restated credit agreement related to the revolving credit facility ("RCF") with JP Morgan ChaseBank, N.A., as administrative agent and issuing bank, and Union Bank, N.A., as syndication agent, and various lendingbanks party thereto. Under the terms of the agreement, the Company has available $300 million and the ability to increasethe RCF by up to $100 million (up to a total of $400 million) upon the satisfaction of certain conditions, more fully setforth in the agreement, including obtaining commitments from lenders or third party financial institutions. The RCF has aterm ending January 2019. The Company may extend the maturity date up to two times, in each case for an additional oneyear period upon the satisfaction of certain conditions. Authorization for this transaction was received in FERC DocketNo. ES 13-59-000 and New Mexico Public Regulation Commission ("NMPRC") Case No. 13-00317-UT.

Issuance of $150 million of Senior Notes. On December 1, 2014, the Company issued $150 million in aggregate

[FERC FORM NO. 1 (ED. 12-96) Page lO9.1

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

IMPORTANT CHANGES DURING THE QUARTER/YEAR (Continued)

Year/Period of Report

2014/Q4

principal amount of 5.00% Senior Notes due December l, 2044. Authorization for this transaction was received in FERCDocket No. ES13-59-000 and from the New Mexico Regulation Commission ("NMPRC") in Case No. 13-00317-UT.The gross proceeds from the issuance of the senior notes were $149.5 million, net of $0.5 million discount beforecommissions and expenses and the effective interest rate was 5.10%. The senior notes were issued to fund constructionexpenditures and for working capital and general corporate purposes.

7.Changes in Articles of Incorporation:

None

8.Important Wage Scale Changes:

Base salaries for non-union employees were increased by an average of approximately 3.5% effective in January 2014compared to 2013 through the merit award process. The annual effect of this increase was approximately $1.7 million.

Base salaries for union employees under contract were increased by 3.0% effective September 2014 compared to 2013.The annual effect of this increase was approximately $0.8 million.

9. Materially Important Legal Proceedings (see also Notes C, J and K of "Notes to Financial Statements"):

The Company is a party to various legal actions. In many of these matters, the Company has excess casualty liabilityinsurance that covers the various claims, actions and complaints. Based upon a review of these claims and applicableinsurance coverage, the Company believes that none of these claims will have a material adverse effect on the financialposition, results of operations or cash flows of the Company.

Fuel Reconciliation Proceeding. Pursuant to the 2012 Texas retail rate settlement, on September 27, 2013, theCompany filed an application with the Public Utility Commission of Texas ("PUCT"), designated as PUCT Docket No,41852, to reconcile $545.3 million of fuel and purchased power expenses incurred during the 45-month period from July1, 2009 through March 31, 2013. A settlement was reached and a final order was issued by the PUCT on July 11, 2014.The twelve months ended December 31, 2014 financial results include a $2.1 million, pre-tax increase to incomereflecting the settlement of the Texas fuel reconciliation proceeding. The settlement included the recognition of $3.4million of Palo Verde performance rewards associated with the 2009 to 2012 performance periods net of disallowed fueland purchased power costs of $1.75 million of which $0.5 million had been previously reserved. Palo Verde performancerewards are not recognized in the Company’s financial results until the PUCT has ordered a final determination in a fuelproceeding or comparable evidence of collectability is obtained. In addition, the Company reimbursed the City of E1 Pasoapproximately $0.1 million in incurred expenses. The settlement also provides that 100% of margins on nonarbitrageoff-system sales (as defined by the settlement) and 50% of margins on arbitrage off-system sales be shared with its Texascustomers beginning April 1, 2014. For the period April 1, 2014 through June 30, 2015, the Company’s total share ofmargins assignable to Texas retail jurisdiction, on arbitrage and non-arbitrage off-system sales, may not exceed 10% ofthe total margins assignable to the Texas retail jurisdiction on all off-system sales. The Company also agreed to file withthe PUCT a proceeding to address the reasonableness of the Company’s decision to not continue to participate in theFour Comers coal-fired generating Units 4 and 5 after July 2016. It is expected that issues related to the final coal mineclosing and reclamation costs will be addressed in that proceeding as well as other issues related to post-participationevents such as the asset retirement obligations of the Company related to those two units. The PUCT’s final ordercompletes the regulatory review and reconciliation of the Company’s fuel expenses for the period through March 31,2013.

10. Materially Important Transactions:

IFERC FORM NO. 1 (ED. 12-96) Page 109.2 I

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

IMPORTANT CHANGES DURING THE QUARTER/YEAR (Continued)

Year/Period of Report

2014/Q4

None

11. Reserved

12. Important changes during the year:

See response to items 1 to 11 and 13 to 14.

13. Changes in officers, directors, major security holders and voting powers of the respondent that may have occurredduring the reporting period:

On April 7, 2014, the Company appointed Michael D. Blanchard as Vice President of Regulatory Affairs. Prior tojoining the Company, Mr. Blanchard served as Assistant General Counsel at Nebraska Public Power District.

On April 17, 2014, Steven P. Busser resigned from his position as Vice President, Treasurer.

On June 9, 2014, David C. Hawkins, formerly Vice President of Power Marketing and Fuels and Resource andDelivery Planning, was appointed Vice President of System Operations, Resource Planning & Management.

On June 9, 2014, Robert C. Doyle, formerly Vice President Transmission and Distribution and Systems Operationsand Planning, was appointed Vice President of Transmission and Distribution and System Planning.

On July 15, 2014, Eduardo Gutierrez, formerly Manager of Public Relations, was appointed Vice President, Externaland Public Affairs.

On September 16, 2014, the Company appointed Mary E. Kipp as President. Ms. Kipp had served as the Company’sSenior Vice President, General Counsel and Chief Compliance Officer since June 2010.

On September 16, 2014, the Company appointed John R. Boomer as Vice President, General Counsel. Mr. Boomerhad served as the Company’s Vice President, Treasurer since April 21, 2014. Prior to joining the Company, Mr. Boomerwas Senior Vice President at Helen of Troy Limited. He previously served as the Company’s Assistant General Counselfrom 1998 to 1999.

On September 16, 2014, the Company appointed Russell G. Gibson as Vice President, Controller. Prior to joining theCompany Mr. Gibson was Chief Financial Officer, Vice President of ReadyOne Industries, Inc. He previously served asthe Company’s Vice President, Controller from 1989 to 1995.

On November 20, 2014, Richard Turner, formerly Assistant Vice President and Director of Corporate Development,was appointed Vice President of Corporate Development.

On January 31, 2015, David G. Carpenter, Executive Vice President, retired fom the Company.

On January 31, 2015, Hector R. Puente, Executive Vice President, retired fom the Company.

On February 5, 2015, the Company Board of Directors announced the election of board members Charles A.Yamarone as the new Chairman of the Board of Directors and Edward Escudero as Vice Chairman of the Board. Mr.Yamarone replaced departing Chairman, Michael K. Parks, who resigned on February 5, 2015.

[FERC FORM NO. 1 (ED. 12-96) Page 109.3

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

IMPORTANT CHANGES DURING THE QUARTER/YEAR (Continued)

Year/Period of Report

2014/Q4

14. Cash management programs and events causing the proprietary capital to be less than 30 percem.

Not applicable

IFERC FORM NO. 1 lED. 12-96) Page 109.4 I

Name of Respondent

El Paso Electric Company

LineNo.

This Report Is: Date of Report(1) [] An Original (Mo, Da, Yr)(2) [] A Resubmission / / End of

COMPARATIVE BALANCE SHEET (ASSETS AND OTHER DEBITS)

Ref.Page No.

(b)

200-201200-201

200-201

202-203

202-203

224-225

228-229

227227227227227227

202-203/227228-229

Title of Account(a)

1 UTILITY PLANT2 Utility Plant (101-106, 114)3 Construction Work in Progress (107)4 TOTAL Utility Plant (Enter Total of lines 2 and 3)5 (Less) Accum. Prov. for Depr. Amort. Depl. (108, 110, 111, 115)6 Net Utility Plant (Enter Total of line 4 less 5)7 Nuclear Fuel in Process of Ref., Conv.,Enrich., and Fab. (120.1)8 Nuclear Fuel Materials and Assemblies-Stock Account (120.2)9 Nuclear Fuel Assemblies in Reactor (120.3)

10 Spent Nuclear Fuel (120.4)11 Nuclear Fuel Under Capital Leases (120.6)12 (Less) Accum. Prov. for Amort. of Nucl. Fuel Assemblies (120.5)13 Net Nuclear Fuel (Enter Total of lines 7-11 less 12)14 Net Utility Plant (Enter Total of lines 6 and 13)15 Utility Plant Adjustments (116)16 Gas Stored Underground - Noncurrent (117)17 OTHER PROPERTY AND INVESTMENTS18 Nonutility Property (121)19 (Less) Accum. Prov. for Depr. and Amort. (122)20 Investments in Associated Companies (123)21 Investment in Subsidiary Companies (123.1)22 (For Cost of Account 123.1, See Footnote Page 224, line 42)23 Noncurrent Portion of Allowances24 Other Investments (124)25 Sinking Funds (125)26 Depreciation Fund (126)27 Amortization Fund - Federal (127)28 Other Special Funds (128)29 Special Funds (Non Major Only) (129)30 Long-Term Portion of Derivative Assets (175)31 Long-Term Portion of Derivative Assets - Hedges (176)32 TOTAL Other Property and Investments (Lines 18-21 and 23-31)33 CURRENT AND ACCRUED ASSETS34 Cash and Working Funds (Non-major Only) (130)35 Cash (131)36 Special Deposits (132-134)37 Working Fund (135)38 Temporary Cash Investments (136)39 Notes Receivable (141)40 Customer Accounts Receivable (142)41 Other Accounts Receivable (143)42 (Less) Accum. Prov. for Uncollectible Acct.-Credit (144)43 Notes Receivable from Associated Companies (145)44 Accounts Receivable from Assoc. Companies (146)45 Fuel Stock (151)46 Fuel Stock Expenses Undistributed (152)47 Residuals (Elec) and Extracted Products (153)48 Plant Materials and Operating Supplies (154)49 Merchandise (155)50 Other Materials and Supplies (156)51 Nuclear Materials Held for Sale (157)52 Allowances (158.1 and 158.2)

Year/Period of Report

2014/Q4

Current YearEnd of Quarter/Year

Balance(c)

4,095,848,314414,284,207

4,510,132,5212,125,210,5462,384,921,975

0000

186,416,44772,863,120

113,553,3272,498,475,302

460,5940

692,126000

01,653,064

000

241,390,445000

243,735,635

040,119,429

0271,140113,267

048,463,1923,838,1242,333,113

00

1,397,71900

44,514,6050

-22,280

Prior YearEnd Balance

12/31(d)

3,937,846,897282,646,861

4,220,493,7582,069,281,3492,151,212,409

0000

189,389,90574,610,066

114,779,8392,265,992,248

762,8420

405,743000

01,554,750

000

221,440,666000

223,401,159

o24,805,566

o413,172373,325

o47,116,799

715,5772,261,241

oo

1,297,394oo

44,688,673ooo

-34,975

FERC FORM NO. I (REV. 12-03) Page 110

Name of Respondent

El Paso Electric Company

LineNo.

This Report Is: Date of Report Year/Period of Report(1) [] An Original (Mo, Da, Yr)(2) [] A Resubmission ! ! End of

COMPARATIVE BALANCE SHEET (ASSETS AND OTHER DEBITS}Continued)

Page No.(b)

227

230a230b232

233

352-353

Current YearEnd of Quarter/Year

Balance(c)

-1,08~

1 I, 569, 50c~

5,83(~

21,191,001~1,034,393

170,161,72c~

13,183,60~

152,445,15~773,683

¢

-134,745

6,473,271

18,345,01C203,294,226

394,380,2113,307,213,471

2014/Q4

Prior YearEnd Balance

12/31(d)

o-8,972

oo

Title of Account(a)

53 ’ (Less) Noncurrent Portion of Allowances54 Stores Expense Undistributed (163)55 Gas Stored Underground - Current (164.1)56 Liquefied Natural Gas Stored and Held for Processing (164.2-164.3)57 Prepayments (165)58 Advances for Gas (166-167)59 Interest and Dividends Receivable (171)60 Rents Receivable (172)61 Accrued Utility Revenues (173)62 Miscellaneous Current and Accrued Assets (174)63 Derivative Instrument Assets (175)64 (Less) Long-Term Portion of Derivative Instrument Assets (175)65 Derivative Instrument Assets - Hedges (176)66 I (Less) Long-Term Portion of Derivative Instrument Assets - Hedges (17667 Total Current and Accrued Assets (Lines 34 through 66)68 DEFERRED DEBITS69 Unamortized Debt Expenses (181)70 Extraordinary Property Losses (182.1)71 Unrecovered Plant and Regulatory Study Costs (182.2)72 Other Regulatory Assets (182.3)73 Prelim. Survey and Investigation Charges (Electric) (183)74 Preliminary Natural Gas Survey and Investigation Charges 183.1)75 Other Preliminary Survey and Investigation Charges (183.2)76 Clearing Accounts (184)77 Temporary Facilities (185)78 Miscellaneous Deferred Debits (186)79 Def. Losses from Disposition of Utility Pit. (187)80 Research, Devei. and Demonstration Expend. (188)81 Unamortized Loss on Reaquired Debt (189)82 Accumulated Deferred Income Taxes (190)83 Unrecevered Purchased Gas Costs (191)84 Total Deferred Debits (lines 69 through 83)85 TOTAL ASSETS (lines 14-16, 32, 67, and 84)

234

8,398,8360

5,3200

19,774,000796,962

0000

146,080,436

11,914,58400

137,672,4694,904,452

00

-182,6140

6,834,14500

19,230,934204,266,691

0384,640,661

3,020,877,346

FERC FORM NO. 1 (REV. 12-03) Page 111

Name of Respondent

El Paso Electric Company

LineNo. Title of Account

1 PROPRIETARY CAPITAL2 Common Stock Issued (201)3 Preferred Stock Issued (204)4 Capital Stock Subscribed (202, 205)5 Stock Liability for Conversion (203, 206)6 Premium on Capital Stock (207)7 Other Paid-In Capital (208-211)8 Installments Received on Capital Stock (212)9 (Less) Discount on Capital Stock (213)

10 (Less) Capital Stock Expense (214)11 Retained Earnings (215, 215.1,216)12 Unappropdated Undistributed Subsidiary Earnings (216.1)13 (Less) Reaquired Capital Stock (217)14 Noncerporete Proprietorship (Non-major only) (218)15 Accumulated Other Comprehensive Income (219)16 Total Proprietary Capital (lines 2 through 15)17 LONG-TERM DEBT18 Bonds (221)19 (Less) Reaquired Bonds (222)20 Advances from Associated Companies (223)21 Other Long-Term Debt (224)22 Unamortized Premium on Long-Term Debt (225)23 (Less) Unamortized Discount on Long-Term Debt-Debit (226)24 Total Long-Term Debt (lines 18 through 23)25 OTHER NONCURRENT LIABILITIES26 Obligations Under Capital Leases - Noncurrent (227)27 Accumulated Provision for Property Insurance (228.1)28 Accumulated Provision for Injuries and Damages (228.2)29 Accumulated Provision for Pensions and Benefits (228.3)30 Accumulated Miscellaneous Operating Provisions (228.4)31 Accumulated Provision for Rate Refunds (229)32 Long-Term Portion of Derivative Instrument Liabilities33 Long-Term Portion of Derivative Instrument Liabilities - Hedges34 Asset Retirement Obligations (230)35 Total Other Noncurrent Liabilities (lines 26 through 34)36 CURRENT AND ACCRUED LIABILITIES37 Notes Payable (231)38 Accounts Payable (232)39 Notes Payable to Associated Companies (233)40 Accounts Payable to Associated Companies (234)41 Customer Deposits (235)42 Taxes Accrued (236)43 Interest Accrued (237)44 Dividends Declared (238)45 Matured Long-Term Debt (239)

This Report is: Date of Report

(1) [] An Original (mo, da, yr)

(2) [] A Resubmission / ! end ofCOMPARATIVE BALANCE SHEET (LIABILITIES AND OTHER CREDITS)

Current YearRef. End of Quarter/Year

Page No. Balance(b) (c)

250-251250-251

253252254254b

118-119118-119250-251

122(a)(b)

256-257256-257256-257256-257

262-263

65,784,977000

306,119,4362,432,300

00

340,9391,057,500,972

0424,646,957

0-8,001,395

998,848,394

193,135,00000

850,000,0000

3,955,4021,039,179,598

95,000,00000

153,613,9480000

74,576,650323,190,598

078,862,366

00

6,696,29824,650,65010,848,852

00

Year/Period of Report

2014/Q4

Prior YearEnd Balance

12/31(d)

65,695,588000

302,273,5082,205,552

00

340,9391,006,809,842

0424,646,957

02,611,733

954,608,327

193,135,00000

700,000,0000

3,514,806889,620,194

110,000,00000

134,666,3860

581,75200

65,213,986310,462,124

061,794,541

00

5,858,43620,281,17410,280,428

00

FERC FORM NO. 1 (rev. 12-03) Page 112

Name of Respondent

El Paso Electric Company

LineNo.

This Report is: Date of Report(1) [] An Original (mo, da, yr)(2) [] A Resubmission / / end of

COMPARATIVE BALANCE SHEET (LIABILITIES AND OTHER CREDIT(S)ntinued)

Title of Account(a)

Ref.Page No.

(b)

266-267

269278

272-277

46 Matured Interest (240)47 Tax Collections Payable (241)48 , Miscellaneous Current and Accrued Liabilities (242)49 ! Obligations Under Capital Leases-Current (243)50 I Dedvative Instrument Liabilities (244)51 (Less) Long-Term Portion of Derivative Instrument Liabilities52 Derivative Instrument Liabilities - Hedges (245)53 (Less) Long-Term Portion of Derivative Instrument Liabilities-Hedges54 Total Current and Accrued Liabilities (lines 37 through 53)55 DEFERRED CREDITS56 Customer Advances for Construction (252)57 Accumulated Deferred Investment Tax Credits (255)58 Deferred Gains from Disposition of Utility Plant (256)59 Other Deferred Credits (253)60 Other Regulatory Liabilities (254)61 Unamortized Gain on Reaquired Debt (257)62 !Accum. Deferred Income Taxes-Accel. Amort.(281)63 Accum. Deferred Income Taxes-Other Property (282)64 Accum. Deferred Income Taxes-Other (283)65 Total Deferred Credits (lines 56 through 64)66 TOTAL LIABILITIES AND STOCKHOLDER EQUITY (lines 16, 24, 35, 54 and 65)

Year/Period of Report

2014/Q4

Current YearEnd of Quarter/Year

Balance(c)

-526,64418,544,86731,441,075

(~O

170,517,464

15,005,67222,483,761

22,409,82754,333,963

583,109,43178,134,763

775,477,4173,307,213,471

Prior YearEnd Balance

12/31(d)

o-586,267

17,659,33216,261,519

oooo

131,549,163

13,345,21923,640,795

015,164,10255,544,263

00

548,208,98178,734,178

734,637,5383,020,877,346

FERC FORM NO. 1 (rev. 12-03) Page 113

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) [~]A Resubmission ! /

STATEMENT OF INCOMEQuarterly1. Report in column (c) the current year to date balance. Column (c) equals the total of adding the data in column (g) plus the data in column (i) plus thedata in column (k). Report in column (d) similar data for the previous year. This information is reported in the annual filing only.2. Enter in column (e) the balance for the reporting quarter and in column (f) the balance for the same three month pedod for the prior year.3. Report in column (g) the quarter to date amounts for electric utility function; in column (i) the quarter to date amounts for gas utility, and in column (k)the quarter to date amounts for other utility function for the current year quarter.4. Report in column (h) the quarter to date amounts for electric utility function; in column (j) the quarter to date amounts for gas utility, and in column (I)the quarter to date amounts for other utility function for the prior year quarter.5. If additional columns are needed, place them in a footnote.

, Annual or Quarterly if applicable5. Do not report fourth quarter data in columns (e) and (f)6. Report amounts for accounts 412 and 413, Revenues and Expenses from Utility Plant Leased to Others, in another utility columnin a similar manner toa utility department. Spread the amount(s) over lines 2 thru 26 as appropriate. Include these amounts in columns (c) and (d) totals.7. Report amounts in account 414, Other Utility Operating Income, in the same manner as accounts 412 and 413 above.

LineNo.

Title of Account(a)

1 UTILITY OPERATING INCOME2 Operating Revenues (400)3 Operating Expenses4 Operation Expenses (401)5 Maintenance Expenses (402)6 Depreciation Expense (403)7 Depredation Expense for Asset Retirement Costs (403.1)8 Amort. & Depl. of Utility Plant (404-405)9 Amort. of Utility Plant Acq. Adj. (406)

10 Amort. Property Losses, Unrecov Plant and Regulatory Study Costs (407)11 Amort. of Conversion Expenses (407)12 Regulatory Debits (407.3)13 (Less) Regulatory Credits (407.4)14 Taxes Other Than Income Taxes (408.1)15 Inceme Taxes - Federal (409.1)16 - Other (409.1)17 Provision for Deferred Income Taxes (410.1)18 (Less) Provision for Deferred Income Taxes-Cr. (411.1)19 Investment Tax Credit Adj. - Net (411.4)20 (Less) Gains from Disp. of Utility Plant (411.6)21 Losses from Disp. of Utility Plant (411.7)22 (Less) Gains from Disposition of Allowances (411.8)23 Losses from Disposition of Allowances (411.9)24 Accretion Expense (411.10)25 TOTAL Utility Operating Expenses (Enter Total of lines 4 thru 24)26 Net Util Oper Inc (Enter Tot line 2 less 25) Carry to Pg117,line 27

(Ref.)Page No.

(b)

TotalCurrent Year to

Date Balance forQuarter/Year

(c)

TotalPrior Year to

Date Balance forQuarter/Year

(d)

300-301 917,525,428 890,361,710

549,103,96365,629,26174,462,928

-1,067,8368,051,001

320-323

320-323336-337

336-337336-337336-337

520,616,951

61,068,03270,251,454-1,225,5197,682,899

152,184 152,184

262-263 62,749,863 57,747,007

262-263 -2,690,265 -2,122,021262-263 -37,978 -128,693

234, 272-277 122,323,648 120,301,627

234, 272-277 87,915,349 79,675,531

266 -1,191,034 -737,115

12 8

5,802,474 5,867,284

795,372,848 759,798,551

122,152,580 130,563,159

Current 3 MonthsEnded

Quarterly OnlyNo 4th Quarter

(e)

Prior 3 MonthsEnded

Quarterly OnlyNo 4th Quarter

(~

FERC FORM NO. 113-Q (REV. 02-04) Page 114

Name of Respondent T This Report Is: T Date of Report [ Year/Period of Report

/ (1) I~An Original | (ao, Da, Yr) /El Paso Electdc Company (2) [] A Resubmission/

/ /End of 2014/Q4

STATEMENT OF INCOME FOR THE YEAR (Continued)9. Use page 122 for important notes regarding the statement of income for any account thereof.10. Give concise explanations concerning unsettled rate proceedings where a contingency exists such that refunds of a material amount may need to bemade to the utility’s customers or which may result in material refund to the utility with respect to power or gas pumhases. State for each year effectedthe gross revenues or costs to which the contingency relates and the tax effects together with an explanation of the major factors which affect the rightsof the utility to retain such revenues or recover amounts paid with respect to power or gas purchases.11 Give concise explanations concerning significant amounts of any refunds made or received during the year resulting from settlement of any rateproceeding affecting revenues received or costs incurred for power or gas purches, and a summan] of the adjustments made to balance sheet, income,and expense accounts.12. If any notes appearing in the report to stokholders are applicable to the Statement of Income, such notes may be included at page 122.13. Enter on page 122 a concise explanation of only those changes in accounting methods made during the year which had an effect on net income,including the basis of allocations and apportionments from those used in the preceding year. Also, give the appropriate dollar effect of such changes.14. Explain in a footnote if the previous year’s/quarter’s figures are different from that reported in prior reports.15. If the columns are insufficient for reporting additional utility departments, supply the appropriate account titles report the information in a footnote tothis schedule.

ELECTRIC UTILITY GAS UTILITY OTHER UTILITYCurrent Year to Date Previous Year to Date Current Year to Date Previous Year to Date Current Year to Date Previous Year to Date Line

(in dollars) (in dollars) (in dollars) (in dollars) (in dollars) (in dollars) No.(g) (h) (i) (j) (k) (I)

917,525,428 890,361,710’

549,103,963 520,616,95165,629,261 61,068,03274,462,928 70,251,454-1,067,836 -1,225,5198,051,001 7,682,899

152,184 152,184i

62,749,863 57,747,007

-2,690,265 -2,122,021-37,978 -128,693

122,323,648 120,301,62787,915,349 79,675,531;-1,191,034 -737,115i

12

5,802,474 5,867,264i795,372,848 759,798,551122,152,580 130,563,159

23456789

1011121314151617181920212223242526

FERC FORM NO. 1 (ED. 12-96) Page 115

Name of RespondentEl Paso Electric Company

LineNo.

This Report Is:(1) [~]An Original(2) [] A Resubmission

STAtI’EMENT OF INCOME FOR

Title of Account(a)

27 Net Utitity Operating Income (Canied forward from page 114)28 Other Income and Deductions29 Other Income30 Nonutilty Operating Income31 Revenues From Merchandising, Jobbing and Contract Work (415)32 (Less) Costs and Exp. of Merchandising, Job. & Contract Work (416)33 Revenues From Nonutility Operations (417)34 (Less) Expenses of Nonutility Operations (417.1)35 Nonoperating Rental Income (418)36 Equity in Earnings of Subsidiary Companies (418.1)37 Interest and Dividend Income (419)38 Allowance for Other Funds Used During Construction (419.1)39 Miscellaneous Nonopera~ng Income (421)40 Gain on Disposition of Property (421.1)41 TOTAL Other Income (Enter Total of lines 31 thru 40)42 Other Income Deductions43 Loss on Disposition of Property (421.2)44 Miscellaneous Amortization (425)45 Donations (426.1)46 Ufe Insurance (426.2)47 Penalties (426.3)48 Exp. for Certain Civic, Political & Related Activities (426.4)49 Other Deductions (426.5)50 TOTAL Other Income Deductions (Total of lines 43 thru 49)51 Taxes Applic. to Other Income and Deductions52 Taxes Other Than Income Taxes (408.2)53 Income Taxes-Federal (409.2)54 Income Taxes-Other (409.2)55 Provision for Deferred Inc. Taxes (410.2)56 (Less) Provision for Deferred Income Taxes-Cr. (4112)57 Investment Tax Credit Adj.-Net (411.5)58 (Less) Investment Tax Credits (420)59 TOTAL Taxes on Other Income and Deductions (Total of lines 52-58)60 Net Other Income and Deductions (Total of lines 41, 50, 59)61 Interest Charges62 Interest on Long-Term Debt (427)63 Amort. of Debt Disc. and Expense (428)64 Amortization of Loss on Reaquired Debt (428.1)65 (Less) Amort. of Premium on Debt-Credit (429)66 (Less) Amortization of Gain on Reaquired Debt-Credit (429.1)67 Interest on Debt to Assoc. Companies (430)68 Other Interest Expense (431)69 (Less) Allowance for Borrowed Funds Used During Construction-Cr. (432)70 Net Interest Charges (Total of lines 62 thru 69)71 Income Before Extraordinary Items (Total of lines 27, 60 and 70)72 Extraordinary Items73 Extraordinary Income (434)74 (Less) Extraordinary Deductions (435)75 Net Extraordinary Items (Total of line 73 less line 74)76 Income Taxes-Federal and other (409.3)77 Extraordinary Items After Taxes (line 75 less line 76)78 Net Income (Total of line 71 and 77)

(Ref.)Page No.

(b)

119

262-263262-263262-263

234,272-277234,272-277

262-263

THE YE,a

Date of Report(Mo, Da, Yr)II

R (continued)TOTAL

Current Year(c)

122,152,580

Previous Year(d)

130,563,159

Year/Period of ReportEnd of 2014/Q4

Current 3 MonthsEnded

Quarterly OnlyNo 4th Quarter

(e)

1,931,378 763,8941,637,155 476,225

6,184,92014,662,19614,024,049

2,096,36337,261,751

4,522302,248

1,552,983233,040

12,459677,351

1,268,5024,051,105

9,2805,798,120

154,2032,817,276

706,411

-34,0008,106,468

25,104,178

57,122,5931,019,223

885,924

1,349,7698,367,807

52,009,70295,247,056

6,220,07910,008,5176,380,053

111,60022,999,654

302,2482,249,257

164,07215,209

668,95242,151

3,441,889

10,4104,110,094

182,643807,851

1,034,B93

-33,9954,110,100

15,447,665

56,687,7391,061,218

885,924

651,2126,055,220

53,230,87392,779,951

92,779,95195,247,056

Prior 3 MonthsEnded

Quarterly OnlyNo 4th Quarter

(f)

FERC FORM NO. 113-Q (REV. 02-04) Pa ~e 117

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report YeadPeriod of Report(Mo, Da, Yr)

/ / 2014/Q4

~chedule Page: 114 L~e No.: 36 Column: dMiraSol Energy Services, Inc. ("MiraSol"), a formerly wholly owned subsidiary, providedenergy efficiency products and discontinued these activities in 2002. The Companydissolved MiraSol in the fourth quarter of 2013. At the time it was dissolved, MiraSol~snet assets and stockholders’ equity totaled less than $0.i million

IFERC FORM NO, 1 (ED. 12-87) Page 450.1

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [~An Original (Mo, Da, Yr)(2) [--IA Resubmission / /

STATEMENT OF RETAINED EARNINGS

Year/Period of ReportEnd of 2014/Q4

1. Do not report Lines 49-53 on the quarterly version.2. Report all changes in appropriated retained earnings, unappropriated retained earnings, year to date, and unappropriatedundistributed subsidiary earnings for the year.3. Each credit and debit during the year should be identified as to the retained earnings account in which recorded (Accounts 433, 436- 439 inclusive). Show the contra primary account affected in column (b)4. State the purpose and amount of each reservation or appropriation of retained earnings.5. List first account 439, Adjustments to Retained Earnings, reflecting adjustments to the opening balance of retained earnings. Followby credit, then debit items in that order.6. Show dividends for each class and series of capital stock.7. Show separately the State and Federal income tax effect of items shown in account 439, Adjustments to Retained Earnings.8. Explain in a footnote the basis for determining the amount reserved or appropriated. If such reservation or appropriation is to berecurrent, state the number and annual amounts to be reserved or appropriated as well as the totals eventually to be accumulated.9. If any notes appearing in the report to stockholders are applicable to this statement, include them on pages 122-123.

Line ItemNo. (a)

UNAPPROPRIATED RETAINED EARNINGS (Account 216)1 Balance-Beginning of Period2 Changes3 Adjustments to Retained Earnings (Account 439)456789 TOTAL Credits to Retained Earnings (Acct. 439)

101112131415 TOTAL Debits to Retained Earnings (Acct. 439)16 Balance Transferred from Income (Account 433 less Account 418.1)17 Appropriations of Retained Earnings (Acct. 436)1819202122 TOTAL Appropriations of Retained Earnings (Acct. 436)23 Dividends Declared-Preferred Stock (Account 437)242526272829 TOTAL Dividends Declared-Preferred Stock (Acct. 437)30i Dividends Declared-Common Stock (Account 438)31 Class Common Stock $1 par value3233

35~36i TOTAL Dividends Declared-Common Stock (Acct. 438)37 Transfers from Acct 216.1, Unapprop. Undistrib. Subsidiary Earnings38 Balance - End of Period (Total 1,9,15,16,22,29,36,37)

APPROPRIATED RETAINED EARNINGS (Account 215)3940

Contra Primary~,ccount Affected

(b)

CurrentQuarter/YearYear to Date

Balance(c)

PreviousQuarter/YearYear to Date

Balance(d)

1,006,809,842

..... !lf!l r.,

95,247,056

-44,555,926

-44,555,926

1,057,500,972

959,965,047

92,788,215

( 42,049,111

( 42,049,111(3,894,309)1,006,809,842

FERC FORM NO. 113-Q (REV. 02-04) Page 118

Name of RespondentEl Paso Electric Company

This Report Is: ]" Date of Report(1) [~]An Original | (io, Da, Yr)(2) r-’lA Resubmission

/ / /STATEMENT OF RETAINED EARNINGS

Year/Period of ReportEnd of 2014/Q4

1. Do not report Lines 49-53 on the quarterly version.i2. Report all changes in appropriated retained earnings, unappropriated retained earnings, year to date, and unappropriatedundistributed subsidiary earnings for the year.3. Each credit and debit dudng the year should be identified as to the retained earnings account in which recorded (Accounts 433, 436- 439 inclusive). Show the contra primary account affected in column (b)4. State the purpose and amount of each reservation or appropriation of retained earnings.5. List first account 439, Adjustments to Retained Earnings, reflecting adjustments to the opening balance of retained earnings. Followby credit, then debit items in that order.6. Show dividends for each class and series of capital stock.7. Show separately the State and Federal income tax effect of items shown in account 439, Adjustments to Retained Earnings.8. Explain in a footnote the basis for determining the amount reserved or appropriated. If such reservation or appropriation is to berecurrent, state the number and annual amounts to be reserved or appropriated as well as the totals eventually to be accumulated.9. If any notes appearing in the report to stockholders are applicable to this statement, include them on pages 122-123.

LineNo.

414243

45

495O515253

Item(a)

TOTAL Appropriated Retained Earnings (Account 215)APPROP. RETAINED EARNINGS- AMORT. Reserve, Federal (Account 215.1)TOTAL Approp. Retained Earnings-Amort. Reserve, Federal (Acct. 215.1)TOTAL Approp. Retained Earnings (Acct. 215, 215.1) (Total 45,46)TOTAL Retained Earnings (Acct. 215, 215.1,216) (Total 38, 47) (216.1)UNAPPROPRIATED UNDISTRIBUTED SUBSIDIARY EARNINGS (AccountReport only on an Annual Basis, no Quarterly

Contra PrimaryAccount Affected

(b)

CurrentQuarter/YearYear to Date

Balance(c)

PreviousQuarter/YearYear to Date

Balance(d)

1,057,500,972 1,006,809,842

Balance-Beginning of Year (Debit or Credit)Equity in Earnings for Year (Credit) (Account 418.1)(Less) Dividends Received (Debit)Transfers to Acct 216, Unapprop. Undistrib. Subsidiary EarningsBalance-End of Year (Total lines 49 thru 52)

(3,886,045)( 8,264)

FERC FORM NO. 113-Q (REV. 02-04) Page 119

Name of Respondent

El Paso Electdc Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

~chedule Paq~ 118 LMe No.:52 Column:dMiraSol Energy Services, Inc. ("MiraSol"), a formerly wholly owned subsidiary, providedenergy efficiency products and discontinued these activities in 2002. The Companydissolved MiraSol in the fourth quarter of 2013. At the time it was dissolved, MiraSol’snet assets and stockholders’ equity totaled less than $0.i million.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report(1) [~An Original (Mo, Da, Yr)El Paso Electric Company(2) [] A Resubmission / /

STATEMENT OF CASH FLOV~ ’$

Year/Period of ReportEnd of 2014/Q4

(1) Codes to be used:(a) Net Proceeds or Payments;(b)Bonds, debentures and other long-term debt; (c) Include commercial paper; and (d) Identify separately such items asinvestments, fixed assets, intangibles, etc.(2) Information about noncash investing and financing activities must be provided in the Notes to the Financial statements. Also provide a reconciliation between "Cash and CashEquivalents at End of Pedod" with related amounts on the Balance Sheet.(3) Operating Activities - Other: Include gains and losses pertaining to operating activities only. Gains and losses pertaining to investing and financing activities should be reportedin those activities. Show in the Notes to the Financials the amounts of interest paid (net of amount capitalized) and income taxes paid.(4) Investing Activities: Include at Other (line 31) net cash outflow to acquire other companies. Provide a reconciliation of assets acquired with liabilities assumed in the Notes tothe Financial Statements. Do not include on this statement the dollar amount of leases capitalized per the USofA General Instruction 20; instead provide a reconciliation of thedollar amount of leases capitalized with the plant cost.

LineNo.

Deferred Income Taxes (Net)Investment Tax Credit Adjustment (Net)Net (Increase) Decrease in ReceivablesNet (Increase) Decrease in InventoryNet (Increase) Decrease in Allowances InventoryNet Increase (Decrease) in Payables and Accrued ExpensesNet (Increase) Decrease in Other Regulatory AssetsNet Increase (Decrease) in Other Regulatory Liabilities(Less) Allowance for Other Funds Used During Construction(Less) Undistributed Earnings from Subsidiary Companies

Current Year to DateQuarter/Year

(b)

Description (See Instruction No. 1 for Explanation of Codes)

1 Net Cash Flow from Operating Activities:2 Net Income (Line 78(c) on page 117)3 Noncash Charges (Credits) to Income:4 Depreciation and Depletion5 Amortization of Other6 Amortization of Nuclear Fuel789

101112131415161718192O2122232425262728293O31323334 Cash Outflows for Plant (Total of lines 26 thru 33)35

361 Acquisition of Other Noncurrent Assets (d)37 Proceeds from Disposal of Noncurrent Assets (d)3839 Investments in and Advances to Assoc. and Subsidiary Companies40 Contributions and Advances from Assoc. and Subsidiary Companies41 Disposition of Investments in (and Advances to)421 Associated and Subsidiary Companies4344 Purchase of Investment Securities (a)45 Proceeds from Sales of Investment Securities (a)

FERC FORM NO. 1 (ED. 12-96) Page 120

95,247,056

74,462,92821,553,03844,128,974

36,519,164-1,157,034-5,814,578

-773,795-12,695

10,039,087-11,835,945

-115,79714,662,196

-5,424,500

Previous Year to DateQuarter/Year

(~

92,779,951

70,251,46419,820,55442,769,529

40,399,053-703,120

-2,450,236-3,695,960

22,64411,771,317-2,919,871-3,595,21510,008,517

-8,2642,570,949

2,394,569

-328,655,552 -279,563,407

111,600

11,426

Deferred Charges and Credits 4,176,509 -4,997,865Net (Increase) Decrease in Prepayments and Other -2,749,596 -4,295,263Net Cash Provided by (Used in) Operating Activities (Total 2 thru 21) 243,580,620 247,727,668

Cash Flows from Investment Activities:Construction and Acquisition of Plant (including land):Gross Additions to Utility Plant (less nuclear fuel) -300,107,529 -253,474,672Gross Additions to Nuclear Fuel -43,210,219 -36,097,252Gross Additions to Common Utility PlantGross Additions to Nonutility Plant(Less) Allowance for Other Funds Used During Construction -14,662,196 -10,008,517Other (provide details in footnote):

Name of Respondent This Report Is: Date of Report(1) [~]An Original (Mo, Da, ¥r)El Paso Electric Company(2) [~A Resubmission / /

STATEMENT OF CASH FLOV ’S

Year/Period of ReportEnd of 2014/Q4

(1) Codes to be used:(a) Net Proceeds or Payments;(b)Bonds, debentures and other long-term debt; (c) Include commercial paper; and (d) Identify separately such items asinvestments, fixed assets, intangibles, etc.(2) Information about noncash investing and financing activities must be provided in the Notes to the Financial statements. Also provide a reconciliation between "Cash and CashEquivalents at End of Pedod" with related amounts on the Balance Sheet.(3) Operating Activities - Other: Include gains and losses pertaining to operating activities only. Gains and losses pertaining to investing and financing activities should be reportedin those activities. Show in the Notes to the Financials the amounts of interest paid (net of amount capitalized) and income taxes paid.(4) Investing Activities: Include at Other (line 31) net cash outflow to acquire other companies. Provide a reconciliation of assets acquired with liabilities assumed in the Notes tothe Financial Statements. Do not include on this statement the dollar amount of leases capitalized per the USofA General Instruction 20; instead provide a reconciliation of thedollar amount of leases capitalized with the plant cost.

Line Description (See Instruction No. 1 for Explanation of Codes) Current Year to Date Previous Year to DateNo. Quarter/Year Quarter/Year

(a) (b) (c)Loans Made or PurchasedCollections on Loans

-117,674,743108,310,703

4,191,830

-331,433,193rlrll

III

149,467,500

231,398,938

-65,491,33056,148,0155,767,572

-283,016,124

44,884,164

380,866,438

191,700

14,911,773 -85,465,015

464748i491 Net (Increase) Decrease in Receivables501 Net (Increase) Decrease in Inventory51 Net (Increase) Decrease in Allowances Held for Speculation52 Net Increase (Decrease) in Payables and Accrued Expenses53 Investment in Decommissioning Trust Fund (Purchases)54 Investment in Decommissioning Trust Fund (Sales and Maturities)5556 Net Cash Provided by (Used in) Investing Activities57 Total of lines 34 thru 55)5859 Cash Flows from Financing Activities:60 Proceeds from Issuance of:61 Long-Term Debt (b)62 Preferred Stock63 i Common Stock

~55 i Other: Financing and Other Capital Lease Obligations-ProceedsExercise of Stock Options66 Net Increase in Short-Term Debt (c)67 Other (provide details in footnote):

6970 Cash Provided by Outside Sources (Total 61 thru 69)7172 Payments for Retirement of:73 Long-term Debt (b)74 Preferred Stock75 Common Stock76 Other Financing Activities77 Financing and Capital Lease Obligations78 Net Decrease in Short-Term Debt (c)79 Tax (Obligations) Benefits from Long-Term Incentive Plans80 Dividends on Preferred Stock81 Dividends on Common Stock82 Net Cash Provided by (Used in) Financing Activities83 (Total of lines 70 thru 81)

85 Net Increase (Decrease) in Cash and Cash Equivalents86 (Total of lines 22,57 and 83)8788 Cash and Cash Equivalents at Beginning of Period8990 Cash and Cash Equivalents at End of period

FERC FORM NO. 1 (ED. 12-96) Page 12t

25,592,063

40,503,836

111,057,078

25,592,063

-2,024,364-231,219,382

-302,400

-44,555,926

102,764,346

-945,522-52,686,377

428,587

-42,049,111

-50,176,559

45,075,864

Name of Respondent

El Paso Electric Company

This Report is: Date of Report Year/Period of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / / 2014/Q4

FOOTNOTE DATA

ISchedule Page: 120 Line No.: 18 Column: a2014 2013

Other:Net Gain on Sale of Property, Plant and EquipmentNet Gains on Equity InvestmentsAmortization of Unearned CompensationUnrealized Gains on Investments

in Debt SecuritiesOther Operating Activities

$ (2,091,841(7,349,6404,264,999

(98,314(149,704)

Total~chedule Page: 120 L~e No.: 55 Column: a

Other:Customer Advances for ConstructionProperty Salvage Value

Total

$ (5,424,500)

2014

$ 1,660,4522,531,378

$ 4,191,830

(111,600)(553,401)

3,647,661

(259,528)(152,183)

2,570,949

2013

$ 4,506,0381,261,534

$ 5,767,572

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [] An Original End of 2014/Q4

!(2) [] A Resubmission / /

NOTES TO FINANCIAL STATEMENTS1. Use the space below for important notes regarding the Balance Sheet, Statement of Income for the year, Statement of RetainedEarnings for the year, and Statement of Cash Flows, or any account thereof. Classify the notes according to each basic statement,

I providing a subheading for each statement except where a note is applicable to more than one statement.2. Furnish particulars (details) as to any significant contingent assets or liabilities existing at end of year, including a brief explanation ofany action initiated by the Internal Revenue Service involving possible assessment of additional income taxes of material amount, or ofa claim for refund of income taxes of a material amount initiated by the utility. Give also a brief explanation of any dividends in arrearson cumulative preferred stock.3. For Account 116, Utility Plant Adjustments, explain the origin of such amount, debits and credits during the year, and plan ofdisposition contemplated, giving references to Cormmission orders or other authorizations respecting classification of amounts as plantadjustments and requirements as to disposition thereof.4. Where Accounts 189, Unamortized Loss on Reacquired Debt, and 257, Unamortized Gain on Reacquired Debt, are not used, givean explanation, providing the rate treatment given these items. See General Instruction 17 of the Uniform System of Accounts.5. Give a concise explanation of any retained earnings restrictions and state the amount of retained earnings affected by suchrestrictions.6. If the notes to financial statements relating to the respondent company appearing in the annual report to the stockholders areapplicable and furnish the data required by instructions above and on pages 114-121, such notes may be included herein.7. For the 3Q disclosures, respondent must provide in the notes sufficient disclosures so as to make the interim information notmisleading. Disclosures which would substantially duplicate the disclosures contained in the most recent FERC Annual Report may beomitted.8. For the 3Q disclosures, the disclosures shall be provided where events subsequent to the end of the most recent year have occurredwhich have a material effect on the respondent. Respondent must include in the notes significant changes since the most recentlycompleted year in such items as: accounting principles and practices; estimates inherent in the preparation of the financial statements;status of long-term contracts; capitalization including significant new borrowings or modifications of existing financing agreements; andchanges resulting from business combinations or dispositions. However were material contingencies exist, the disclosure of suchmatters shall be provided even though a significant change since year end may not have occurred.9. Finally, if the notes to the financial statements relating to the respondent appearing in the annual report to the stockholders areapplicable and furnish the data required by the above instructions, such notes may be included herein.

PAGE 122 INTENTIONALLY LEFT BLANKSEE PAGE 123 FOR REQUIRED INFORMATION.

FERC FORM NO. 1 (ED. 12-96) Page 122

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

Note 1. Regulatory-Basis Financial Statements

The accompanying regulatory-basis financial statements are presented in accordance with the accounting requirements of theFederal Energy Regulatory Commission (the "FERC") as set forth in its applicable Uniform System of Accounts and publishedaccounting releases which is a comprehensive basis of accounting other than generally accepted accounting principles ("GAAP") usedin the 2014 Form 10-K filed by El Paso Electric Company with the Securities and Exchange Commission. Notes A through O of theregulatory-basis f’mancial statements are from the 2014 Form 10-K and have been revised where the presentation of regulatory-basisfinancial statements, in accordance with requirements under the Uniform System of Accounts and published accounting releases of theFERC, result in different financial statement amounts or disclosures than under GAAP. Because many types of transactions aresusceptible to varying interpretations, the amounts and classifications reported in the accompanying regulatory-basis financialstatements may be subject to change at a later date upon final determination by the FERC. In the remainder of this Note 1, informationcontained in Notes A through O is supplemented for additional regulatory-basis disclosures.

Regulatory-Basis Financial Statements Compared to GAAP

The significant differences between the Company’s regulatory-basis financial statements and those prepared in accordancewith GAAP include the application of fresh-start reporting to the GAAP f’mancial statements and the discontinuance and subsequentre-application of the provisions of Financial Accounting Standards Board ("FASB") accounting guidance for regulated operations. In1996, the Company adopted flesh-start reporting for its GAAP financial statements in accordance with the FASB guidance related tof’mancial reporting by entities in reorganization under the bankruptcy code. The adoption of fresh-start reporting resulted in thecreation of a new reporting entity having no retained earnings or accumulated deficit and significantly altered, compromised, ormodified the Company’s historical capital structure.

GAAP requires earnings per share information on the income statement and the classification of tax assets related to theaccounting guidance for "Uncertainty in Income Taxes" as a tax benefit rather than a reduction to current liabilities. GAAP alsorequires the classification of interest and penalties related to uncertain tax positions as tax expense rather than as interest and penaltyexpense.

In addition, certain items in the accompanying regulatory-basis financial statements are classified differently under FERCrequirements than in the Company’s GAAP financial statements. If GAAP were followed, items in the accompanying regulatory-basisfinancial statements would be increased (decreased) as follows (in thousands):

IFERC FORM NO. 1 (ED. 12-88) Page 123.1 I

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) -- A Resubmission

NOTES TO FINANCIAL STATEMENTS (Continued)

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

LineNo__

Assets and Other Debits (Pages 110-111)2 Utility plant5 Accumulated provision for depreciation, amortization and depletion11 Nuclear fuel under capital lease12 Accumulated provision for amortization of nuclear fuel15 Utility plant adjustments18 Nonutility property24 Other investments28 Other special funds67 Total current and accrued assets84 Total deferred debits

Liabilities and Other Credits (Pages 112-113)2 Common stock issued6 Premium on capital stock7 Other paid-in capital10 Capital stock expense11 Retained earnings24 Total long-term debt35 Total other noncurrent liabilities54 Total current and accrued liabilities65 Total deferred credits

Statements of Income for the Year (Pages 114-117)2526 Net utility operating income60 Net other income and deductions70 Net interest charges

Income tax expense78 Net income

Statement of Retained Earnings (Pages 118-119)1 Balance - beginning of period48 Total retained earnings

Statement of Cash Flows (Pages 120-121)22 Net cash provided by (used in) operating activities57 Net cash provided by (used in) investing activities

2014

$ ((858,539)

0~232)838

(461)(692)

(241,390)9,862(3,454)

6512,396(2;432)

(341)(24,964)95.000

(324,492

(9,619)

(29,010)29,0103,067(5,192)41,088(3,819)

(24,964)

$ (241)241

2013

(855,193)

1,210

(406)

(221,441)

(7,652)

12,170

(341)

110,000

5,972

35,072

(5,519)

(4,197)

(21,145)

252

[FERC FORM NO. 1 (ED. 12-88) Page 123.2 I

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

YeadPeriod of Report

2014/Q4

Statement of Cash Flows

Cash and cash equivalents and amortization of other presented on the statement of cash flows for the years ended December 31,2014 and 2013 consist of the following (in thousands):

Cash and Cash Equivalents:Cash (131)Working funds (135)Temporary cash investments (136)

Cash and cash equivalents at end of period

2014 2013

271 413113

40~504 $ 25,592

Amortization of Other:ARO depreciation (403.1)Other utility plant (404)Regulatory assets (407.3)ARO accretion expense (411.10)Miscellaneous amortization (425)Debt expense (428)Loss on reacquired debt (428.1)Interest rate lock lossesRCF issuance costsDry cask storage amortizationCoal reclamation amortizationTexas rate case expense amortization

Utility Plant Adjustments

$8,051 7,683

152 1525,803 5,867

302 3021.019 1,061

886 886438 411166 179

4,042 1,5671,181 1,I83

581 1,755$ 21.553 $ 19~821

The following table summarizes amounts reflected as Utility Plant Adjustments for the New Mexico jurisdiction as ofDecember 31, 2014 and 2013 (in thousands):

2014 ActivityDecember 31, Additions Amortization December 31,

2013 (Debits) (Credits) 2014New Mexico (a)

Utility Plant Adjustment ....$ 17i848 $Accumulated Amortization (17,085) - (302) (17,387)

$

(a) Represents the New Mexico jurisdictional difference between FERC regulatory-basis values and GAAP values related to Steamand Other Production assets. Established in 1998 by the Stipulation and Settlement Agreement in New Mexico Public RegulationCommission Case No. 2722. FERC account 116 was utilized to maintain the original cost concept for utility plant and is consistentwith FERC’s policy on plant write ups. The Company is amortizing this asset over the remaining lives of each respectiveproduction unit.

Accounting and Reporting for New Electric Storage Operations

The Company does not have electric storage assets and therefore does not have any operation and maintenance expense orpurchased power expense to report in accordance with the interim guidance in FERC Docket No. AI14-1-000 issued on February 20,2014, for reporting energy storage assets, operation and maintenance expense and purchased power expense in the Notes to FinancialStatements.

]FERC FORI~! NO. 1 (ED. 12-88) Page 123.3

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

A. Summary of Significant Accounting Policies

General El Paso Electric Company is a public utility engaged in the generation, transmission and distribution of electricity in anarea of approximately 10,000 square miles in west Texas and southern New Mexico. The Company also serves a full requirementswholesale customer in Texas.

Basis of Presentation. The Company maintains its accounts in accordance with the accounting requirements of the FERC as setforth in its applicable Uniform System of Accounts and published accounting releases, and applies such principles in its regulatorybooks of account to the rate treatment as ordered by each of the Company’s three regulators (the Public Utility Commission of Texas(the "PUCT"), the New Mexico Public Regulation Commission (the "NMPRC") and the FERC), which is a comprehensive basis ofaccounting other than accounting principles generally accepted in the United States of America.

Use of Estimates. The preparation of financial statements in conformity with regulatory accounting principles requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the regulatory-basis financial statements and the reported amounts of revenues and expenses duringthe reporting period. Actual results could differ from those estimates.

Comprehensive Income. Certain gains and losses that are not recognized currently in the statements of operations are reflected inthe accompanying regulatory-basis balance sheet in Accumulated Other Comprehensive Income in accordance with FERC guidancefor reporting comprehensive income.

Utility Plant. Utility plant is reported at original cost, less regulatory disallowances and impairments. Costs include labor,materials, construction overheads and allowance for funds used during construction ("AFUDC"). Depreciation is provided on astraight-line basis at annual rates which will generally amortize the undepreciated cost of depreciable property over the estimatedremaining lives of the assets (ranging in average from 5 to 48 years). The average composite depreciation rate utilized in 2014 and2013 was 2.84%. When property subject to composite depreciation is retired or otherwise disposed of in the normal course ofbusiness, its cost - together with the cost of removal, less salvage - is charged to accumulated depreciation. For other propertydispositions, the applicable cost and accumulated depreciation is removed from the balance sheet accounts and a gain or loss isrecognized.

The cost of nuclear fuel is amortized to fuel expense on a units-of-production basis. The Company is also amortizing its share ofcosts associated with on-site spent fuel storage casks at Palo Verde over the burn period of the fuel that will necessitate the use of thestorage casks. See Note E.

Impairment of Long-Lived Assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by acomparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. Ifthe carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for theamount by which the carrying amount of the asset exceeds the fair value of the asset.

AFUDC and Capitalized Interest. AFUDC is determined by applying an accrual rate to the balance of certain ConstructionWork in Progress ("CW1P"). The FERC has promulgated procedures for the computation (a prescribed formula) of the accrual rate.The AFUDC rates used in 2014 and 2013 were 8.15% and 8.10%, respectively. The Company capitalizes interest on nuclear fuel inaccordance with the FERC Uniform System of Accounts as provided for in FASB guidance for regulated operations.

Asset Retirement Obligation. The Company complies with FERC Order No. 631, "Accounting, Financial Reporting, and RateFiling Requirements for Asset Retirement Obligations" which set forth accounting requirements for the recognition and measurementof liabilities associated with the retirement of tangible long-lived assets. An asset retirement obligation ("ARO") associated withlong-lived assets included within the scope of FERC Order No. 631 is that for which a legal obligation exists under enacted laws,statutes, written or oral contracts, including obligations arising under the doctrine of promissory estoppel and legal obligations toperform an asset retirement activity even if the timing and/or settlement are conditioned on a future event that may or may not bewithin the control of an entity. See Note F. Under the order, these liabilities are recognized as incurred ifa reasonable estimate of fairvalue can be established and are capitalized as part of the cost of the related tangible long-lived assets. The Company records theincrease in the ARO due to the passage of time as an operating expense (accretion expense).

IFERC FORI~I NO. 1 (ED. 12-88) Page 123.4

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

Cash and Cash Equivalents. All temporary cash investments with an original maturity of three months or less are consideredcash equivalents.

Investments. The Company’s marketable securities, included in decommissioning trust funds which are reflected in Other SpecialFunds in the regulatory-basis balance sheets, are reported at fair value and consist of cash, equity securities and municipal, federal andcorporate bonds in trust funds established for decommissioning of its interest in Palo Verde. Such marketable securities are classifiedas "available-for-sale" securities and, as such, unrealized gains and losses are included in Accumulated Other Comprehensive Income.However, if declines in fair value of marketable securities below original cost basis are determined to be other than temporary, then thedeclines are reported as losses in the regulatory-basis statement of operations and a new cost basis is established for the affectedsecurities at fair value. Gains and losses are determined using the cost of the security based on the specific identification basis. SeeNote N.

Derivative Accounting. Accounting for derivative instruments and hedging activities requires the recognition of derivatives aseither assets or liabilities in the regulatory-basis balance sheet with measurement of those instruments at fair value. Any changes in thefair value of these instruments are recorded in earnings or other comprehensive income. See Note N.

Inventories. Inventories, primarily parts, materials, supplies, fuel oil and natural gas are stated at average cost not to exceedrecoverable cost.

Operating Revenues Net of Energy Expenses. The Company accrues revenues for services rendered, including unbilled electricservice revenues. Energy expenses are stated at actual cost incurred. The Company’s Texas retail customers are billed under baserates and a fixed fuel factor approved by the PUCT. The Company’s New Mexico retail customers are billed under base rates and afuel adjustment clause which is adjusted monthly, as approved by the NMPRC. The Company’s FERC sales for resale customers arebilled under formula base rates and fuel factors and a fuel adjustment clause which is adjusted monthly. The Company’s recovery ofenergy expenses is subject to periodic reconciliations of actual energy expenses incurred to actual fuel revenues collected. Thedifference between energy expenses incurred and fuel revenues charged to customers is reflected in the accompanying regulatory-basisbalance sheets in Other Regulatory Assets and Other Regulatory Liabilities, as appropriate. See Note C and D.

Revenues. Revenues related to the sale of electricity are generally recorded when service is rendered or electricity is delivered tocustomers. The billing of electricity sales to retail customers is based on the reading of their meters, which occurs on a systematicbasis throughout the month. Unbilled revenues (or "Accrued Utility Revenues") are estimated based on monthly generation volumesand by applying an average revenue/kWh to the number of estimated kWhs delivered but not billed and recorded as Accrued UtilityRevenues. The Company presents revenues net of sales taxes in its regulatory-basis statements of operations.

Allowance for Doubtful Accounts. The allowance for doubtful accounts represents the Company’s estimate of existing accountsreceivable that will ultimately be uncollectible. The allowance is calculated by applying estimated write-off factors to various classesof outstanding receivables. The write-off factors used to estimate uncollectible accounts are based upon consideration of bothhistorical collections experience and management’s best estimate of future collections success given the existing collectionsenvironment. Additions, deductions and balances for allowance for doubtful accounts for 2014 and 2013 are as follows (in thousands):

2014 2013

Additions:

Recovery of previous write-offs

Balance at end of year

1,516 1,929

2,333 $ 2,261

Income Taxes. The Company accounts for federal and state income taxes under the asset and liability method of accounting for

IFERC FORM NO. 1 (ED. 12-88) Page 123.5 J

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

income taxes. Deferred income taxes are recognized for the estimated future tax consequences of "temporary differences" by applyingenacted statutory tax rates for each taxable jurisdiction applicable to future years to differences between the financial statementcarrying amounts and the tax basis of existing assets and liabilities. Certain temporary differences are accorded flow-through treatmentby the Company’s regulators and impact the Company’s effective tax rate. FASB guidance requires that rate-regulated companies’record deferred income taxes for temporary differences accorded flow-through treatment at the direction of the regulatory commission.The resulting deferred tax assets and liabilities are recorded at the expected cash flow to be reflected in future rates. Because theCompany’s regulators have consistently permitted the recovery of tax effects previously flowed-through earnings, the Company hasrecorded regulatory liabilities and assets offsetting such deferred tax assets and liabilities. The effect on deferred tax assets andliabilities of a change in tax rate is recognized in income in the period that includes the enactment date. The Company recognizes taxassets and liabilities for uncertain tax positions in accordance with the recognition and measurement criteria of FASB guidance foruncertainty in income taxes as modified by FERC Docket No. AI07-2-000. See Note I.

Stock-Based Compensation. The Company has a stock-based long-term incentive plan. The Company is required under FASBguidance to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fairvalue of the award. Such costs are recognized over the period during which an employee is required to provide service in exchange forthe award (the "requisite service period") which typically is the vesting period. Compensation cost is not recognized for anticipatedforfeitures prior to vesting of equity instruments. See Note G.

Pension and Post-retirement Benefit Accounting. See Note L for a discussion of the Company’s accounting policies for itsemployee benefits.

Reclassification. Certain amounts in the regulatory-basis financial statements for 2013 have been reclassified to conform withthe 2014 presentation.

B. New Accounting Standards

In May 2014, the FASB issued new guidance (ASU 2014-09, Revenue from Contracts with Customers (Topic 606)) to provide aframework that replaces the existing revenue recognition guidance. ASU 2014-09 is the result of a joint effort by the FASB and theInternational Accounting Standards Board ("IASB") intended to clarify the principles for recognizing revenue and to develop acommon revenue standard for U.S. Generally Accepted Accounting Principles ("GAAP") and International Financial ReportingStandards. ASU 2014-09 provides that an entity should recognize the amount of revenue to which it expects to be entitled for thetransfer of promised goods or services to customers. ASU 2014-09 is effective for annual periods and interim periods within thatreporting period beginning after December 15, 2016, for public business entities. Early adoption of ASU 2014-09 is not permitted.The Company is currently assessing the future impact of this ASU.

C. Regulation

General

The rates and services of the Company are regulated by incorporated municipalities in Texas, the PUCT, the NMPRC and theFERC. Municipal orders, ordinances and other agreements regarding rates and services adopted by Texas municipalities are subject toreview and approval by the PUCT. The FERC has jurisdiction over the Company’s wholesale (sales for resale) transactions,transmission service and compliance with federally-mandated reliability standards. The decisions of the PUCT, the NMPRC and theFERC are subject to judicial review.

Texas Regulatory Matters

IFERC FORM NO. 1 (ED. 12-88) Page 123.6 [

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

NOTES TO FINANCIAL STATEMENTS (Continued)

Date of Report iYeadPeriod of Report(Mo, Da, Yr)

/ / 2014/Q4

2012 Texas Retail Rate Case. On April 17, 2012, the El Paso City Council approved the settlement of the Company’s 2012 Texasretail rate case and fuel reconciliation in PUCT Docket No. 40094. The PUCT issued a final order approving the settlement onMay 23, 2012 and rates were effective as of May 1, 2012. As part of the 2012 Texas retail rate settlement, the Company agreed tosubmit a future fuel reconciliation request covering the period beginning July 1, 2009 and ending no later than June 30, 2013 byDecember 31, 2013 or as part of its next rate case, if earlier. The Company filed a fuel reconciliation request covering the periodJuly 1, 2009 through March 31, 2013, as discussed below. The 2012 Texas retail rate settlement also provided for the continuation ofthe energy efficiency cost recovery factor and the military base discount recovery factor. Both of these surcharges require annualfilings to reconcile and revise the recovery factors.

Energy Efficiency Cost Recovery Factor. The Company made its annual filing to establish its energy efficiency cost recoveryfactor for 2015 on May 1, 2014. In addition to projected energy efficiency costs for 2015 and true-up to prior year actual costs, theCompany requested approval of a $2.0 million bonus for the 2013 energy efficiency program results in accordance with PUCT rules.In a proposal for decision issued on October 7, 2014, the Administrative Law Judge ("ALJ") recommended approval of the Company’srequested cost recovery including the requested bonus. The PUCT approved the ALJ’s recommendation at its November 14, 2014 openmeeting. The PUCT decision was not appealed. The Company recorded the $2.0 million bonus as operating revenue in the fourthquarter of 2014.

Fuel and Purchased Power Costs. The Company’s actual fuel costs, including purchased power energy costs, are recovered fromcustomers through a fLxed fuel factor. The PUCT has adopted a fuel cost recovery rule (the "Texas Fuel Rule") that allows theCompany to seek periodic adjustments to its f’txed fuel factor. The Company can seek to revise its fixed fuel factor based upon theapproved formula at least four months after its last revision except in the month of December. The Texas Fuel Rule requires theCompany to request to refund fuel costs in any month when the over-recovery balance exceeds a threshold material amount and itexpects fuel costs to continue to be materially over-recovered. The Texas Fuel Rule also permits the Company to seek to surcharge fuelunder-recoveries in any month the balance exceeds a threshold material amount and it expects fuel cost recovery to continue to bematerially under-recovered. Fuel over and under-recoveries are considered material when they exceed 4% of the previous twelvemonths’ fuel costs. All such fuel revenue and expense activities are subject to periodic final review by the PUCT in fuel reconciliationproceedings.

On April 15, 2014, the Company filed a request, which was assigned PUCT Docket No. 42384, to increase its fixed fuel factor by$10.7 million or 6.9% annually, pursuant to its approved formula. The revised fixed fuel factor reflected an expected increase in pricesfor natural gas over the twelve month period beginning March 2014. The increase in the fixed fuel factor received final approval onMay 28, 2014 and was effective with May 2014 billings. As of December 31, 2014, the Company had under-recovered fuel costs inthe amount of $10.2 million for the Texas jurisdiction. The Company has been reducing the amount of the under-recovery since August2014 and expects to continue to reduce the amount of under-recovery as long as the price of natural gas remains below the cost ofnatural gas included in its current fixed fuel factor. If the price of natural gas increases above the cost of natural gas included in thecurrent fixed fuel factor, the Company may request an increase to the fixed fuel factor and effectively mitigate an increase in theunder-recovery balance. If the under-recovered balance is above the materiality threshold at the time the fLxed fuel factor increase isrequested, then the Company will consider requesting a fuel surcharge to collect the remaining under-recovered balance.

Fuel Reconciliation Proceeding. Pursuant to the 2012 Texas retail rate settlement discussed above, on September 27, 2013, theCompany filed an application with the PUCT, designated as PUCT Docket No. 41852, to reconcile $545.3 million of fuel andpurchased power expenses incurred during the 45-month period from July 1, 2009 through March 31, 2013. A settlement was reachedand a f’mal order was issued by the PUCT on July 11, 2014. The twelve months ended December 31, 2014 financial results include a$2.1 million, pre-tax increase to income reflecting the settlement of the Texas fuel reconciliation proceeding. The settlement includedthe recognition of $3.4 million of Palo Verde performance rewards associated with the 2009 to 2012 performance periods net ofdisallowed fuel and purchased power costs of $1.75 million of which $0.5 million had been previously reserved. Palo Verdeperformance rewards are not recognized in the Company’s financial results until the PUCT has ordered a final determination in a fuelproceeding or comparable evidence of collectability is obtained. In addition, the Company reimbursed the City of E1 Pasoapproximately $0.1 million in incurred expenses. The settlement also provides that 100% of margins on non-arbitrage off-system sales(as defmed by the settlement) and 50% of margins on arbitrage off-system sales be shared with its Texas customers beginning April 1,2014. For the period April 1, 2014 through June 30, 2015, the Company’s total share of margins assignable to Texas retail jurisdiction,on arbitrage and non-arbitrage off-system sales, may not exceed 10% of the total margins assignable to the Texas retail jurisdiction on

IFERC FORM NO. 1 (ED. 12-88) Page 123.7

Name of Respondent

El Paso Electdc Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

all off-system sales. The Company also agreed to file with the PUCT a proceeding to address the reasonableness of the Company’sdecision to not continue to participate in the Four Comers coal-fired generating Units 4 and 5 after July 2016. It is expected that issuesrelated to the final coal mine closing and reclamation costs will be addressed in that proceeding as well as other issues related topost-participation events such as the asset retirement obligations of the Company related to those two units. The PUCT’s final ordercompletes the regulatory review and reconciliation of the Company’s fuel expenses for the period through March 3 l, 2013.

Montana Power Station Approvals. As discussed further below, the Company has received a Certificate of Convenience andNecessity ("CCN") from the PUCT to construct all four units of the Montana Power Station ("the MPS") in El Paso County, Texas.The Company also obtained air permits from the Texas Commission on Environmental Quality (’!TCEQ") and the U.S. EnvironmentalProtection Agency ("EPA").

On June 23, 2014, the U.S. Supreme Court issued an opinion in the Utility Air Regulatory Group vs EPA regarding EPA’sauthority to require greenhouse gas emissions ("GHG") Prevention of Significant Deterioration ("PSD") permits for stationary sources.The opinion concluded that the EPA erred in making applicability of the Clean Air Act ("CAA") permitting requirements based onGHG emissions. As a result, the Company believes its EPA air permit is no longer required and could be rescinded, and it is eligiblefor a standard air permit to replace the new source review permit issued by the TCEQ. Accordingly, on August 1, 2014, the Companysubmitted a request to the EPA to rescind the EPA air permit which request remains pending. Also, on September 16, 2014, theCompany applied for a standard air permit, which TCEQ issued on October 2, 2014.

On December 13, 2012, in PUCT Docket No. 40301, the Company received CCN approval from the PUCT for MPS Units 1 and2. On September 6, 2013, the Company filed an application with the PUCT for issuance of a CCN to construct, own and operate twoadditional 88 MW natural gas-fired generating units designated as the MPS Units 3 and 4. The case was designated PUCT Docket No.41763. Hearings in this case were held before an ALJ in February 2014. On July 11, 2014, the PUCT approved the CCN to constructMPS Units 3 and 4.

In 2013, the Company filed three transmission line CCN applications with the PUCT as part of the MPS Project:

[] MPS to Caliente: a 115-kV transmission line from the MPS to the existing Caliente Substation in east El Paso. (PUCT DocketNo. 41360)

[] MPS In & Out: a 115-kV transmission line from the MPS to intersect with the existing Caliente - Coyote 115-kV transmissionline. (PUCT Docket No. 41359)

[] MPS to Montwood: a 115-kV transmission line from the MPS to the existing Montwood Substation in east El Paso. (PUCTDocket No. 41809)

The Company requested to build these transmission lines to connect the new MPS to the electrical grid in order to meet expectedcustomer growth and electric demand and to improve system reliability. On Marchl0, 2014, the PUCT issued a fmal order approving aunanimous settlement in the MPS to Caliente transmission CCN filing. On August 18, 2014, the PUCT issued f’mal orders approvingunanimous settlements of the MPS In & Out transmission CCN filing and the MPS to Montwood transmission CCN filing.

Other Required Approvals. The Company has obtained other required approvals for recovery of fuel costs through fixed fuelfactors, other tariffs and approvals as required by the Public Utility Regulatory Act ( the "PURA") and the PUCT.

New Mexico Regulatory Matters

2009 New Mexico Stipulation. On December 10, 2009, the NMPRC issued a f’mal order conditionally approving the stipulatedrates in NMPRC Case No. 09-00171-UT. The stipulated rates went into effect with January 2010 bills. The stipulated rates provide foran Efficient Use of Energy Factor Rate Rider to recover energy efficiency expenditures which requires an annual filing and approval ofthe related incentives and adjustment to the recovery factors.

Fuel and Purchased Power Costs. Fuel and purchased power costs are recovered through base rates and a Fuel and PurchasedPower Cost Adjustment Clause (the "FPPCAC") that corrects for changes in the costs of fuel included in base rates. On January 8,2014, the NMPRC approved the continuation of the FPPCAC without modification in NMPRC Case No. 13-00380-UT. Fuel andpurchased power costs are reconciled to actual costs on a monthly basis and recovered or refunded to customers the second succeeding

[FERC FORM NO. 1 (ED. 12-88) Page 123.8

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

YeadPeriod of Report

2014/Q4

month. The Company recovers its investment in Palo Verde Unit 3 in New Mexico through the FPPCAC as purchased power using aproxy market price approved in the 2009 New Mexico rate stipulation.

Montana Power Station Approvals. The Company has received a CCN from the NMPRC to construct all four units of the MPSand associated transmission lines. The Company also obtained all necessary air permits from the TCEQ and EPA and has begunconstruction. A f’mal order in NMPRC Case No. 13-00297-UT approving the CCN for MPS Units 3 and 4 was issued on June 11,2014.

Other Required Approvals. The Company has obtained other required approvals for other tariffs, securities transactions,long-term resource plans, recovery of energy efficiency costs through a base rate rider and other approvals as required by the NMPRC.

Federal Regulatory Matters

PNMTransmission Rate Case. On December 31, 2012, PNM filed with FERC to change its method of transmission rate recoveryfor its transmission delivery services from stated rates to formula rates. The Company takes transmission service from PNM and isamong the PNM transmission customers affected by PNM’s shift to formula rates. On March 1, 2013, the FERC issued an orderrejecting in part PNM’s filing, and establishing settlement judge and hearing procedures. The parties to the case, including theCompany, have been participating in settlement negotiations. The Company cannot predict the outcome of the case at this time.

Other Required Approvals. The Company has obtained required approvals for rates and tariffs, securities transactions and otherapprovals as required by the FERC.

Department of Energy ("DOE"). The DOE regulates the Company’s exports of power to the Comisi6n Federal de Electricidad inMexico pursuant to a license granted by the DOE and two presidential permits.

The DOE is authorized to assess operators of nuclear generating facilities a share of the costs of decommissioning the DOE’suranium enrichment facilities and for the ultimate costs of disposal of spent nuclear fuel. See Note E for discussion of spent fuelstorage and disposal costs.

Sales for Resale

The Company provides firm capacity and associated energy to the Rio Grande Electric Cooperative ("RGEC") pursuant to anongoing contract with a two-year notice to terminate provision. The Company also provides network integrated transmission service tothe RGEC pursuant to the Company’s Open Access Transmission Tariff ("OATT"). The contract includes a formula-based rate that isupdated annually to recover non-fuel generation costs and a fuel adjustment clause designed to recover all eligible fuel and purchasedpower costs allocable to the RGEC.

D. Regulatory Assets and Liabilities

The Company’s operations are regulated by the PUCT, the NMPRC and the FERC. Regulatory assets represent probable futurerecovery of previously incurred costs, which will be collected from customers through the ratemaking process. Regulatory liabilitiesrepresent probable future reductions in revenues associated with amounts that are to be credited to customers through the ratemaking

[FERC FORM NO. 1 (ED. 12-88) Page 123.9

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

process. Regulatory assets and liabilities reflected inthousands):

Regulatory assetsRegulatory tax assets (a)Final coal reclamation (c)Nuclear fuel postload daily f’mancing chargeTexas energy efficiencyTexas 2012 rate case costsTexas 2015 rate case costsTexas military base discount and recovery factorNew Mexico procurement plan costsNew Mexico renewable energy creditsNew Mexico 2010 FPPCAC auditNew Mexico Palo Verde deferred depreciationNew Mexico 2015 rate case costsUndercollection of fuel revenues

Total regulatory assets

Regulatory liabilitiesRegulatory tax liabilities (a)New Mexico energy efficiencyTexas energy efficiencyTexas military base discount and recovery factorOvercollection of fuel revenues

Total regulatory liabilities

the Company’s regulatory-basis balance sheets are presented below (in

Amortization December 31, December 31,Period Ends 2014 2013

(b) $ 114,262 $ 110,030(d)(c) 4,451 4,488(e) 1,817

April 2014 581(f) 169(g) 759

(0(f) 5,456 4,833(f): 434(b) 4,720 4,871(f) 42(c) 10,253 7,248

(b)(e)(e)(g)(h)

3,904 3,646

609 --

54,334 $ 55,544

(a) No specific return on investment is required since related assets and liabilities offset.(b) The amortization period for this asset is based upon the life of the associated assets or liabilities.(c) This item is recovered through fuel recovery mechanisms.(d) This item and the related final coal reclamation liability have been included or will be requested in rate base.(e) This item is recovered or credited through a recovery factor that is set annually.(f) Amortization period is anticipated to be established in next general rate case.(g) This item represents the net asset/net liability related to the military discount which is recovered from non-military customers

through a recovery factor.(h) This item is refunded through fuel adjustment mechanisms in each jurisdiction.

Utility Plant, Palo Verde and Other Jointly-Owned Utility Plant

The table below presents the balance of each major class of depreciable assets at December 31, 2014 (in thousands):

GrossPage 123.10

Accumulated NetIFERC FORM NO. 1 (ED. 12-88)

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

NOTES TO FINANCIAL STATEMENTS (Continued)

Date of Report(Mo, Da, Yr)

ii

Year/Period of Report

2014/Q4

Nuclear productionSteam and other

Total productionTransmissionDistributionGeneralIntangible

Total 4,095,848 $ (2,125,211) $ 1,970,637

Amortization of intangible plant (sottware) is provided on a straight-line basis over the estimated useful life of the asset (rangingfrom 5 to 10 years). The table below presents the actual and estimated amortization expense for intangible plant for 2013 and 2014and for the next five years (in thousands):

2013 7,6832014 8,051

2016 (estimated) 7,0306,388

2018 (estimated) 4,762

The Company owns a 15.8% interest in each of the three nuclear generating units and common facilities at Palo Verde, inWintersburg, Arizona. The Palo Verde Participants include the Company and six other utilities: Arizona Public Service Company("APS"), Southern California Edison Company ("SCE"), Public Service Company of New Mexico ("PNM"), Southern CaliforniaPublic Power Authority, Salt River Project Agricultural Improvement and Power District ("SRP") and the Los Angeles Department ofWater and Power.

Other jointly-owned utility plant includes a 7% interest in Units 4 and 5 at Four Comers Generating Station ("Four Comers") andcertain other transmission facilities. A summary of the Company’s investment in jointly-owned utility plant, excluding fuel inventories,at December 3 l, 2014 and 2013 is as follows (in thousands):

Electric plant in serviceAccumulated depreciationConstruction work in progress

Total

December 31, 2014 December 31, 2013

Palo Verde Other Palo Verde Other

(1,197,992) (135,472) (1,189,614) (131,989)

$ 660,094 $ 48,353 $ 636,809 $ 45,102

Palo Verde

IFERC FORM NO. 1 (ED. 12-88) Page 123.11

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

NOTES TO FINANCIAL STATEMENTS (Continued)

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

The operation of Palo Verde and the relationship among the Palo Verde Participants is governed by the Arizona Nuclear PowerProject Participation Agreement (the "ANPP Participation Agreement"). APS serves as operating agent for Palo Verde, and under theANPP Participation Agreement, the Company has limited ability to influence operations and costs at Palo Verde. Pursuant to theANPP Participation Agreement, the Palo Verde Participants share costs and generating entitlements in the same proportion as theirpercentage interests in the generating units, and each participant is required to fund its share of fuel, other operations, maintenance andcapital costs. The Company’s share of direct expenses in Palo Verde and other jointly-owned utility plants is reflected in fuel expense,other operations expense, maintenance expense, miscellaneous other deductions, and taxes other than income taxes in the Company’sregulatory-basis statements of operations. The ANPP Participation Agreement provides that if a participant fails to meet its paymentobligations, each non-defaulting participant shall pay its proportionate share of the payments owed by the defaulting participant.Because it is impracticable to predict defaulting participants, the Company cannot estimate the maximum potential amount of futurepayment, if any, which could be required under this provision.

Nuclear Regulatory Commission ("NRC"). The NRC regulates the operation of all commercial nuclear power reactors in theUnited States, including Palo Verde. The NRC periodically conducts inspections of nuclear facilities and monitors performanceindicators to enable the agency to arrive at objective conclusions about a licensee’s safety performance.

Palo Verde Operating Licenses. Operation of each of the three Palo Verde Units requires an operating license from the NRC.The NP, C issued full power operating licenses for Unit 1 in June 1985, Unit 2 in April 1986 and Unit 3 in November 1987, and issuedrenewed operating licenses for each of the three units in April 2011, which extended the licenses for Units 1, 2 and 3 to June 2045,April 2046 and November 2047, respectively.

Decommissioning. Pursuant to the ANPP Participation Agreement and federal law, the Company must fund its share of theestimated costs to decommission Palo Verde Units 1, 2 and 3, including the Common Facilities, through the term of their respectiveoperating licenses and is required to maintain a minimum accumulation and funding level in its decommissioning account at the end ofeach annual reporting period during the life of the plant. The Company has established external trusts with an independent trustee,which enables the Company to record a current deduction for federal income tax purposes for most of the amounts funded. AtDecember 31, 2014, the Company’s decommissioning trust fund had a balance of $234.3 million, which is above its minimum fundinglevel. The Company monitors the status of its decommissioning funds and adjusts its deposits, if necessary.

Decommissioning costs are estimated every three years based upon engineering cost studies performed by outside engineersretained by APS. In December 2013, the Palo Verde Participants approved the 2013 Palo Verde decommissioning study (the "2013Study"). The 2013 Study estimated that the Company must fund approximately $380.7 million (stated in 2013 dollars) to cover itsshare of decommissioning costs which was an increase in decommissioning costs of $23.3 million (stated in 2013 dollars) from the2010 Palo Verde decommissioning study. However, because the cash flows from the 2013 Study were less than the inflated amountsfrom the 2010 Study, the effect of this change lowered the asset retirement obligation by $1.9 million which lowered annual expensesstarting in January 2014. Although the 2013 Study was based on the latest available information, there can be no assurance thatdecommissioning cost estimates will not increase in the future or that regulatory requirements will not change. In addition, until a newlow-level radioactive waste repository opens and operates for a number of years, estimates of the cost to dispose of low-levelradioactive waste are subject to significant uncertainty.

Spent Nuclear Fuel and Waste Disposal. Pursuant to the Nuclear Waste Policy Act of 1982, as amended in 1987 (the "NWPA"),the DOE is legally obligated to accept and dispose of all spent nuclear fuel and other high-level radioactive waste generated by alldomestic power reactors by 1998. The DOE’s obligations are reflected in a contract for Disposal of Spent Nuclear Fuel and/orHigh-Level Radioactive Waste (the "Standard Contract") with each nuclear power plant. The DOE failed to begin accepting spentnuclear fuel by 1998. On December 19, 2012, APS, acting on behalf of itself and the participant owners of Palo Verde, filed a secondbreach of contract lawsuit against the DOE. This lawsuit sought to recover damages incurred due to the DOE’s failure to accept PaloVerde’s spent nuclear fuel for the period beginning January 1, 2007 through June 30, 2011. On August 18, 2014, APS and the DOEentered into a settlement agreement, stipulating to a dismissal of the lawsuit and payment of $57.4 million by the DOE to the PaloVerde owners for certain spec.ifled costs incurred by Palo Verde during the period January 1, 2007 through June 30, 2011. OnOctober 8, 2014, the Company received approximately $9.1 million, representing its share of the award. The majority of the awardwas refunded to customers through the applicable fuel adjustment clauses. On October 31, 2014, APS acting on behalf of itself and theparticipant owners of Palo Verde, submitted to the government an additional request for reimbursement of spent nuclear fuel storagecosts for the period July 1,2011 through June 30, 2014. The total submitted claim amount was $42.5 million, of which the Company’s

IFERC FORM NO. 1 (ED. 12-88) Page 123.12

Name of Respondent

El Paso Electric Company

This Report is: Date of Report Year/Period of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / / 2014/Q4

NOTES TO FINANCIAL STATEMENTS (Continued)

portion is $6.7 million. The reimbursement is anticipated to be received in the first half of 2015, and the majority will be refunded tocustomers through the applicable fuel adjustment clauses.

DOE’s Construction Authorization Application for Yucca Mountain. The DOE had planned to meet its disposal obligations bydesigning, licensing, constructing, and operating a permanent geologic repository at Yucca Mountain, Nevada. In March 2010, theDOE filed a motion to dismiss with prejudice its Yucca Mountain construction authorization application that was pending before theNRC. Several interested parties have intervened in the NRC proceeding, and the proceeding has not been conclusively decided by theNRC or the courts. Additionally, a number of interested parties have filed a variety of lawsuits in different jurisdictions around thecountry challenging the DOE’s authority to withdraw the Yucca Mountain construction authorization application and NRC’s cessationof its review of the Yucca Mountain construction authorization application. The cases have been consolidated into one matter at theU.S. Court of Appeals for the District of Columbia Circuit (the "D.C. Circuit"). In August 2013, the D.C. Circuit ordered the NRC toresume its review of the application with available appropriated funds.

On October 16, 2014, the NRC issued Volume 3 of the safety evaluation report developed as part of the Yucca Mountainconstruction authorization application. This volume addresses repository safety after permanent closure, and its issuance is a keymilestone in the Yucca Mountain licensing process. Volume 3 contains the NRC staffs finding that the DOE, s repository design meetsthe requirements that apply after the repository is permanently closed, including but not limited to the post-closure performanceobjectives in NRC’s regulations.

On December 18, 2014, the NRC issued Volume 4 of the safety evaluation report developed as part of the Yucca Mountainconstruction authorization application. This volume covers administrative and programmatic requirements for the repository. Itdocuments the NRC staffs evaluation of whether the DOE’s research and development and performance confirmation programs, aswell as other administrative controls and systems, meet applicable NRC requirements. Volume 4 contains the NRC staffs finding thatmost administrative and programmatic requirements in NRC regulations are met, except for certain requirements relating to ownershipof land and water rights.

Publication of Volumes 3 and 4 does not signal whether or when the NRC might authorize construction of the repository. TheCompany cannot predict when spent fuel shipments to the DOE will commence.

Waste Confidence. On June 8, 2012, the D.C. Circuit issued its decision on a challenge by several states and environmentalgroups of the NRC’s rulemaking regarding temporary storage and permanent disposal of high level nuclear waste and spent nuclearfuel. The petitioners had challenged the NRC’s 2010 update to the agency’s Waste Confidence Decision and temporary storage rule("Waste Confidence Decision").

The D.C. Circuit found that the agency’s 2010 Waste Confidence Decision update constituted a major federal action, which,consistent with the National Environmental Policy Act ("NEPA"), requires either an environmental impact statement or a finding of nosignificant impact from the agency’s actions. The D.C. Circuit found that the NRC’s evaluation of the environmental risks from spentnuclear fuel was deficient, and therefore remanded the 2010 Waste Confidence Decision update for further action consistent withNEPA.

On September 6, 2012, the NRC Commissioners issued a directive to the NRC staff to proceed directly with development of ageneric environmental impact statement to support an updated Waste Confidence Decision. The NRC Commissioners also directed theNRC staffto establish a schedule to publish a final rule and environmental impact study within 24 months of September 6, 2012.

In September 2013, the NRC issued its draft Generic Environmental Impact Statement ("GEIS") to support an updated WasteConfidence Decision. On August 26, 2014, the NRC approved a final rule on the environmental effects of continued storage of spentnuclear fuel. The continued storage rule adopted the findings of the GElS regarding the environmental impacts of storing spent fuel at

IFERC FORM NO. 1 (ED. 12-88) Page 123.13

Name of Respondent ~This Report is: Date of Report Year/Period of ReportI(1) X An Original (Mo, Da, Yr)

El Paso Electdc Company (2) __ A Resubmission / / 2014/Q4

NOTES TO FINANCIAL STATEMENTS (Continued)

any reactor site after the reactor’s licensed period of operations. As a result, those generic impacts do not need to be re-analyzed in theenvironmental reviews for individual licenses. Although Palo Verde had not been involved in any licensing actions affected by theD.C. Circuit’s June 8, 2012, decision, the NRC lifted its suspension on final licensing actions on all nuclear power plant licenses andrenewals that went into effect when the D.C. Circuit issued its June 2012 decision. The August 24 final rule has been subject tocontinuing legal challenges before the NRC and the Court of Appeals.

Palo Verde has sufficient capacity at its on-site independent spent fuel storage installation ("ISFSI") to store all of the nuclearfuel that will be irradiated during the initial operating license period, which ends in December 2027. Additionally, Palo Verde hassufficient capacity at its on-site ISFSI to store a portion of the fuel that will be irradiated during the period of extended operation,which ends in November 2047. If uncertainties regarding the United States government’s obligation to accept and store spent fuel arenot favorably resolved, APS will evaluate alternative storage solutions that may obviate the need to expand the ISFSI to accommodateall of the fuel that will be irradiated during the period of extended operation.

The One-Mill Fee. In 2011, the National Association of Regulatory Utility Commissioners and the Nuclear Energy Institutechallenged DOE’s 2010 determination of the adequacy of the one tenth of a cent per kWh fee (the "one-mill fee") paid by the nation’scommercial nuclear power plant owners pursuant to their individual obligations under the Standard Contract. This fee was recoveredby the Company through applicable fuel adjustment clauses. In June 2012, the D.C. Circuit held that DOE failed to conduct asufficient fee analysis in making the 2010 determination. The D.C. Circuit remanded the 2010 determination to the Secretary of theDOE ("Secretary") with instructions to conduct a new fee adequacy determination within six months. In February 2013, uponcompletion of DOE’s revised one-mill fee adequacy determination, the court reopened the proceedings. On November 19, 2013, theD.C. Circuit ordered the Secretary to notify Congress of his intent to suspend collecting annual fees for nuclear waste disposal fromnuclear power plant operators, as he is required to do pursuant to the NWPA and the court’s order. On January 3, 2014, the Secretarynotified Congress of his intention to suspend collection of the one-mill fee, subject to Congress’ disapproval and on May 12, 2014,APS was notified by the DOE that, effective May 16, 2014, the one-mill fee would be suspended. Electricity generated and sold priorto May 16, 2014 remained subject to the one-mill fee.

NRC Oversight of the Nuclear Energy Industry in the FFake of the Earthquake and Tsunami in Japan. The NRC regulates theoperation of all commercial nuclear power reactors in the United States, including Palo Verde. The NRC periodically conductsinspections of nuclear facilities and monitors performance indicators to enable the agency to arrive at objective conclusions about alicensee’s safety performance. Following the March 11,2011 earthquake and tsunami in Japan, the NRC established a task force toconduct a systematic and methodical review of NRC processes and regulations to determine whether the agency should makeadditional improvements to its regulatory system. On March 12, 2012, the NRC issued the first regulatory requirements based on therecommendations of the NRC’s Near Term Task Force. With respect to Palo Verde, the NRC issued two orders requiring safetyenhancements regarding: (1) mitigation strategies to respond to extreme natural events resulting in the loss of power at plants; and(2) enhancement of spent fuel pool instrumentation.

The NRC has issued a series of interim staff guidance documents regarding implementation of these requirements. Due to thedeveloping nature of these requirements, the Company cannot predict the ultimate financial or operational impacts on Palo Verde orthe Company; however, the NRC has directed nuclear power plants to implement the first tier recommendations of the NRC’s NearTerm Task Force. In response to these recommendations, Palo Verde expects to spend approximately $40 million for capitalenhancements to the plant over the next two years (the Company’s share is $6.3 million) in addition to the approximate $80 million (theCompany’s share is $12.6 million) that has already been spent on capital enhancements as of December 31, 2014.

Liability and Insurance Matters. The Palo Verde Participants have insurance for public liability resulting from nuclear energyhazards to the full limit of liability under federal law, which is currently at $13.6 billion. This potential liability is covered by primaryliability insurance provided by commercial insurance carriers in the amount of $375 million, and the balance is covered by an

IFERC FORM NO. 1 (ED. 12-88) Page 123.14

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

NOTES to FINANCIAL STATEMENTS (Continued)

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

industry-wide retrospective assessment program. If a loss at a nuclear power plant covered by the programs exceeds the accumulatedfunds in the primary level of protection, the Company could be assessed retrospective premium adjustments on a per incident basis.Under federal law, the maximum assessment per reactor under the program for each nuclear incident is approximately $127.3 million,subject to an annual limit of $19.0 million. Based upon the Company’s 15.8% interest in the three Palo Verde units, the Company’smaximum potential assessment per incident for all three units is approximately $60.4 million, with an annual payment limitation ofapproximately $9.0 million.

The Palo Verde Participants maintain $2.8 billion of "all risk" nuclear property insurance. The insurance provides coverage forproperty damage and decontamination at Palo Verde. For covered incidents involving property damage not accompanied by a releaseof radioactive material, the policy’s coverage limit is $2.3 billion. The Company has also secured insurance against portions of anyincreased cost of generation or purchased power and business interruption resulting from a sudden and unforeseen outage of any of thethree units. The insurance coverage discussed in this and the previous paragraph is subject to certain policy conditions and exclusions.A mutual insurance company whose members are utilities with nuclear facilities issues these policies. If losses at any nuclear facilitycovered by this mutual insurance company were to exceed the accumulated funds for these insurance programs, the Company could beassessed retrospective premium adjustments of up to $10.9 million for the current policy period.

Four Corners

The Company owns a 7% interest in Units 4 and 5 at Four Comers and shares power entitlements and allocated costs with APS,the operating agent, and the other Four Corners participants. The Company notified the other participants in 2013 that it would notcontinue in Four Comers after the termination of the 50-year contractual term of the participation agreement but that it would offer tosell its interest to them in order to facilitate their decision to extend the life of the plant. On February 17, 2015, the Company and APSentered into an asset purchase agreement (the "Agreement"), providing for the purchase by APS of the Company’s interests in FourComers. The cash purchase price is equal to the net book value of the Company’s interest in Four Comers at the date of closing, whichis expected to occur not later than July 2016, subject to the receipt of regulatory approvals. The purchase price will be adjusteddownward to reflect APS’s assumption in the Agreement of the Company’s obligation to pay for future plant decommissioning andmine reclamation expenses. At the closing, APS will also reimburse the Company for the undepreciated value of certain capitalexpenditures made prior thereto. APS will assume responsibility for all capital expenditures made after July 2016 and, with certainexceptions, any pre-2016 capital expenditures to be put into service following the closing. In addition, APS will indemnify theCompany against liabilities and costs related to the future operation of Four Comers. Included in the Company’s regulatory-basisbalance sheet at December 31, 2014 are obligations of $6.1 million and $19.3 million for plant decommissioning and mine reclamationcosts, respectively, which the Company expects to pay at closing in accordance with the Agreement.

F. Accounting for Asset Retirement Obligations

The Company complies with FERC Order No. 631 guidance for asset retirement obligations ("ARO"). FERC Order No. 631affects the accounting for the decommissioning of the Company’s Palo Verde and Four Comers Stations and the method used to reportthe decommissioning obligation. The Company also complies with FASB guidance for conditional asset retirement obligations whichprimarily affects the accounting for the disposal obligations of the Company’s fuel oil storage tanks, water wells, evaporative pondsand asbestos found at the Company’s gas-fired generating plants. The Company’s AROs are subject to various assumptions anddeterminations such as: (i) whether a legal obligation exists to remove assets; (ii) estimation of the fair value of the costs of removal;(iii) when final removal will occur; (iv) future changes in decommissioning cost escalation rates; and (v) the credit-adjusted interestrates to be utilized in discounting future liabilities. Changes that may .arise over time with regard to these assumptions anddeterminations will change amounts recorded in the future as an expense for AROs. The Company records the increase in the AROdue to the passage of time as an operating expense (accretion expense). If the Company incurs or assumes any liability in retiring anyasset at the end of its useful life without a legal obligation to do so, it will record such retirement costs as incurred.

The ARO liability for Palo Verde is based upon the estimated cost of decommissioning the plant from the 2013 Palo Verdedecommissioning study. See Note E. The ARO liability is calculated by adjusting the estimated decommissioning costs for spent fuelstorage and a profit margin and market-risk premium factor. The resulting costs are escalated over the remaining life of the plant and

[FERC FORM NO. 1 (ED. 12-88) Page 123.15 I

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

NOTES TO FINANCIAL STATEMENTS (Continued)

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

finally discounted using a credit-risk adjusted discount rate. As Palo Verde approaches the end of its estimated useful life, thedifference between the ARO liability and future current cost estimates will narrow over time due to the accretion of the ARO liability.Because the DOE is obligated to assume responsibility for the permanent disposal of spent fuel, spent fuel costs have not been includedin the ARO calculation. The Company maintains six external trust funds with an independent trustee that are legally restricted tosettling its ARO at Palo Verde. The fair value of the funds at December 31, 2014 is $234.3 million.

FERC Order No. 631 requires the Company to revise its previously recorded ARO for any changes in estimated cash flowsincluding changes in estimated probabilities related to timing of settlements. Any changes that result in an upward revision toestimated cash flows shall be treated as a new liability. Any downward revisions to the estimated cash flows result in a reduction to thepreviously recorded ARO. In December 2013, the Company implemented the 2013 Palo Verde decommissioning study, and as aresult, revised its ARO related to Palo Verde to decrease its estimated cash flows from the 2010 Study to the 2013 Study (see Note E).The assumptions used to calculate the Palo Verde ARO liability are as follows:

Original ARO liabilityIncremental ARO liability

Credit RiskEscalation Adjusted

Rate Discount Rate

3.60% 9.50%3.60% 6.20%

A roll forward of the Company’s total ARO liability from January 1. 2013 through December 31, 2014, including the effects ofeach year’s estimate revisions, is presented below. In 2014, the estimate revision includes an adjustment to Four Comers due to theearly recognition of the obligation resulting from the purchase agreement with APS. In 2013, the estimate revision includes a changeto the probability of extending Four Comers’ operating term and decreases in the estimated cash flows related to Palo Verde’sdecommissioning due to implementing the 2013 Palo Verde decommissioning study.

ARO liability at beLiabilities incurredLiabilities settledRevisions to estimateAccretion expense

ARO liability at end of year

2014 2013

(36)3,561 (3,401)

74,577 $ 65,214

The Company has transmission and distribution lines which are operated under various property easement agreements. If theeasements were to be released, the Company may have a legal obligation to remove the lines; however, the Company has assessed thelikelihood of this occurring as remote. The majority of these easements include renewal options which the Company routinelyexercises.

G. Common Stock

Overview

[FERC FORM NO. 1 (ED. 12-88) Page 123.16 [

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) ~ A Resubmission

NOTES TO FINANCIAL STATEMENTS (Continued)

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

The Company’s common stock has a stated value of $1 per share, with no cumulative voting rights or preemptive rights. Holdersof the common stock have the right to elect the Company’s directors and to vote on other matters.

Long-Term Incentive Plan

On May 29, 2014, the Company’s shareholders approved an amended and restated stock-based long-term incentive plan (the"Amended and Restated 2007 LTIP") and authorized the issuance of up to 1.7 million shares of common stock for the benefit ofdirectors and employees. Under the Amended and Restated 2007 LTIP, common stock may be issued through the award or grant ofnon-statutory stock options, incentive stock options, stock appreciation rights, restricted stock, bonus stock, performance stock,cash-based awards and other stock-based awards. The Company may issue new shares, purchase shares on the open market, or issueshares from shares the Company has repurchased to meet the share requirements of the Amended and Restated 2007 LT[P. Asdiscussed in Note A, the Company accounts for its stock-based long-term incentive plan under FASB guidance for stock-basedcompensation.

Stock Options. Stock options have been granted at exercise prices equal to or greater than the market value of the underlyingshares at the date of grant. The fair value for these options was estimated at the grant date using the Black-Scholes option pricingmodel. The options expired ten years from the date of grant unless terminated earlier by the Board of Directors (the "Board"). Stockoptions have not been granted since 2003.

The 15,000 options outstanding at December 31, 2012 were exercised during 2013 with a weighted average exercise price of$12.78. The Company received $0.2 million in cash and realized a current tax benefit of $0.1 million. The Company had no stockoptions outstanding as of December 31, 2013 and December 31 2014.

The intrinsic value of stock options exercised in 2013 was $0.3 million. No options were forfeited, vested or expired during 2014and 2013. No compensation cost was recognized in 2014 or 2013 for stock options.

Restricted Stock and Other Stock-Based Awards. The Company has awarded restricted stock and other stock-based awards underits long-term incentive plan. Restrictions from resale on restricted stock awards generally lapse and awards vest over periods of one tothree years. The market value of the unvested restricted stock at the date of grant is amortized to expense over the restriction periodnet of anticipated forfeitures.

Other stock-based awards are fully vested and are expensed at fair value on the date of grant. Previously directors could elect toreceive retainers and meeting fees in cash, restricted stock, or a combination of cash and stock. On May 29, 2014, the Board ofDirectors voted to revise the terms of the restricted stock awards granted to directors in lieu of cash for retainers and meeting fees.Stock elections by directors in lieu of cash for retainer and meeting fees are now fully vested and are expensed at fair value on the dateof grant. The modification to 13,863 outstanding restricted stock awards granted to directors resulted in forfeiture of those awards andthe granting of new awards which were fully vested and expensed at $37.81 per share, the fair value on the date of grant.

The expense, deferred tax benefit, and current tax expense recognized related to restricted stock awards and other stock-basedawards in 2014 and 2013 is presented below (in thousands):

2014 2013

Expense (a) $ 3,471 $ 2;458Deferred tax benefit 1,215 860

39 109

(a) Any capitalized costs related to these expenses is less than $0.1 million for all years.

The aggregate intrinsic value and fair value at grant date of restricted stock and other stock-based awards which vested in 2014and 2013 is presented below (in thousands):

2014 2013

IFERC FORM NO. 1 (ED. 12-88) Page 123.17 I

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1)X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

Fair value at grant date 3,330 1,765

The unvested restricted stock and other stock-based award transactions for 2014 are presented below:

Restricted shares outstanding at December 31, 2013Stock awardsVestedForfeitures

Restricted shares outstanding at December 31, 2014

Weighted

Average

Total Grant Date

Shares Fair Value

120,534 $ 35.19113,776 36.95(90,851) 36.66(19,162) 34.72124,29"7 35.81

Unrecognized

Compensation Aggregate

Expense(}a Intrinsic Value

(In thousands) (In thousands)

$ 1,662 $ 4.979

(a) The unrecognized compensation expense is expected to be recognized over the weighted average remaining contractual term ofthe outstanding restricted stock of approximately one year.

The weighted average fair value per share at grant date for restricted stock and other stock-base awards granted during 2014 and2013 were:

2014 2013

The holder of a restricted stock award has rights as a shareholder of the Company, including the right to vote and receive cashdividends on restricted stock.

Performance Shares. The Company has granted performance share awards to certain officers under the Company’s Amended andRestated 2007 LTIP, which provides for issuance of Company stock based on the achievement of certain performance criteria over athree-year period. The payout varies between 0% to 200% of performance share awards.

Detail of performance shares vested follows:

PeriodPerformance Compensation Aggregated

Payout Shares Compensation Costs IntrinsicDate Vested Ratio Awarded Costs Expensed Expensed Value

February 18, 2014January 29~ 2013

0% 0 954 2011-2013 --150’0°/o .... 64i275 849

In 2015, 2016 and 2017, subject to meeting certain performance criteria, additional performance shares could be awarded. Inaccordance with FASB guidance related to stock-based compensation, the Company recognizes the related compensation expense byratably amortizing the grant date fair value of awards over the requisite service period and the compensation expense is only adjustedfor forfeitures. The actual number of shares to be issued can range from zero to 145,496 shares.

The fair value at the date of each separate grant of performance shares was based upon a Monte Carlo simulation. The MonteCarlo simulation reflected the structure of the performance plan which calculates the share payout on performance of the Companyrelative to a defined peer group over a three-year performance period based upon total return to shareholders. The fair value wasdetermined as the average payout of one million simulation paths discounted to the grant date using a risk-free interest rate based uponthe constant maturity treasury rate yield curve at the grant date. The expected volatility of total return to shareholders is calculated in

IFERC FORM NO. 1 (ED. 12-88) Page 123.18

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) _X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

accordance with the plan’s term structure and includes the volatilities of all members of the defined peer group.

The outstanding performance share awards at the 100% performance level are summarized below:

WeightedAverage Unrecognized

Number Grant Date CompensationOutstanding Fair Value

Aggregate

Performance shares outstanding at December 31, 2013Performance share awardsPerformance shares lapsedPerformance shares forfeitedPerformance shares outstanding at December 31,2014

(34,050) 28.03(7,027) 32.24

121,481 30.71 975 $ 4,867

(a) The unrecognized compensation expense is expected to be recognized over the weighted average remaining contractual term ofthe awards of approximately one year.

A summary of information related to performance shares for 2014 and 2013 is presented below:

2014 2013

Weighted average per share grant date fair value per share ofperforrnance $Fair value of performance shares vested (in thousands) -- 849Intrinsic value of performance shares vested (in thousands) (a) --Compensation expense (in thousands) (b) 1,181 1,188Deferred tax benefit related to compensation expense (in thousands) 413 416

(a) Based on a 100% performance level.(b) Includes adjustments for forfeiture of performance share awards by certain executives.

Repurchase Program

No shares of common stock were repurchased during the twelve months ended December 31, 2014. Detail regarding theCompany’s stock repurchase program is presented below:

Since 1999 Authorized(a) Shares

Cost, including commission (in thousands) $ 423,647Total remaining shares available for repurchase Decembe~ 31i 20i4

(a) Represents repurchased shares and cost since inception of the stock repurchase program in 1999.(b) Shares repurchased does not include 86,735 treasury shares related to employee compensation arrangements outside of the

Company’s repurchase programs.

The Company may in the future make purchases of its common stock pursuant to its authorized program in open markettransactions at prevailing prices and may engage in private transactions where appropriate. The repurchased shares will be available forissuance under employee benefit and stock incentive plans, or may be retired.

Dividend Policy

[FERC FORM NO. 1 (ED. 12-88) Page 123.19

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

NOTES TO FINANCIAL STATEMENTS (Continued)

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

On December 30, 2014, the Company paid $11.3 million in quarterly cash dividends to shareholders. The Company paid a totalof $44.6 million and $42.0 million in cash dividends during the twelve months ended December 31, 2014 and 2013, respectively. OnJanuary29, 2015, the Board of Directors declared a quarterly cash dividend of $0.28 per share payable on March31, 2015 toshareholders of record on March 16, 2015.

H. Long-Term Debt, Financing Obligations and Capital Lease Obligations

Outstanding long-term debt, financing obligations and capital lease obligations are as follows:

Bonds (Account 221):Pollution Control Bonds (1):

7.25% 2009 Series A refunding bonds, due 2040 (7.46% effective interest rate)$4.50% 2012 Series A refunding bonds, due 2042 (4.63% effective interest rate)7.25% 2009 Series B refunding bonds, due 2040 (7.49% effective interest rate)1.875% 2012 Series A refunding bonds, due 2032 (2.35% effective interest rate)

Total Account 221Other Long-Term Debt (Accounts 224 and 226):Senior Notes (2):

6.00% Senior Notes, net of discount, due 2035 (7.12% effective interest rate)7.50% Senior Notes, net of discount, due 2038 (7.67% effective interest rate)3.30% Senior Notes, net of discount, due 2022 (3.43% effective interest rate)5.00% Senior Notes, net of discount, due 2044 (5.10% effective interest rate)

Total Account 224Unamortized discount on long-term debt Account 226Total long-term debt

Obligations Under Capital Lease - Noncurrent (Account 227):RGRT Senior Notes (3):

3.67% Senior Notes, Series A, due 2015 (3.87% effective interest rate) $4.47% Senior Notes, Series B, due 2017 (4.62% effective interest rate)5.04% Senior Notes, Series C, due 2020 (5.16% effective interest rate)

Total Capital Lease Obligations Noncurrent $Obligations Under Capital Lease -Current (Account 243):

RGRT Senior Notes (3):3.67% Senior Notes, Series A, due 2015 (3.87% effective interest rate) $Revolving Credit Facility

Total Capital Lease Obligations Current

December 31,2014 2013

(In thousands)

59,235 59,235

33,300 33,300

400,000 400,000

150,000 150,000

850,000 700,000

$ 1,039,179 $ 889,620

50,000 50,00045,000 45,00095,000 $ 110,000

16,441 16,262

(1) Pollution Control Bonds ("PCBs")

The Company has four series of tax exempt unsecured PCBs in aggregate principal amount of $193.1 million. The 1.875% 2012Series A (El Paso Electric Company Four Comers Project) Pollution Control Refunding Revenue Bonds with an aggregateprincipal amount of $33.3 million are subject to mandatory tender for purchase in September 2017.

(2) Senior Notes

The Senior Notes are unsecured obligations of the Company. They were issued pursuant to bond covenants that providelimitations on the Company’s ability to enter into certain transactions. The 6.00% Senior Notes have an aggregate principalamount of $400.0 million and were issued in May 2005. The proceeds, net of a $2.3 million discount, were used to fund the

[FERC FORM NO. 1 (ED. 12-88) Page 123.20

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

NOTES TO FINANCIAL STATEMENTS (Continued)

Date of Repor~ YeadPeriod of Report(Mo, Da, Yr)

/ / 2014/Q4

retirement of the Company’s first mortgage bonds. The Company amortizes the loss associated with a cash flow hedge recordedin accumulated other comprehensive income to earnings as interest expense over the life of the 6.00% Senior Notes. See Note N,"Financial Instruments and Investments - Treasury Rate Locks". This amortization is included in the effective interest rate of the6.00% Senior Notes.

The 7.50% Senior Notes have an aggregate principal amount of $150.0 million and were issued in June 2008. The proceeds, netof a $1.3 million discount, were used to repay short-term borrowings of $44.0 million, fund capital expenditures and for othergeneral corporate purposes.

The 3.30% Senior Notes have an aggregate principal amount of $150.0 million and were issued in December 2012. Theproceeds, net of a $0.3 million discount, were used to fund construction expenditures and for working capital and generalcorporate purposes.

The 5.00% Senior Notes have an aggregate principal amount of $150.0 million and were issued in December 2014. Theproceeds, net of a $0.5 million discount, were used to fund construction expenditures and for working capital and generalcorporate purposes.

(3) RGRT Senior Notes

In 2010, the Company and RGRT, a Texas grantor trust through which the Company finances its portion of fuel for Palo Verde,entered into a note purchase agreement with various institutional purchasers. Under the terms of the agreement, RGRT sold tothe purchasers $110 million aggregate principal amount of Senior Notes (the "Notes") of which $15.0 million will mature inAugust 2015. The Company will either repay or refinance this $15.0 million of Notes upon maturity. The Company guaranteesthe payment of principal and interest on the Notes. In the Company’s regulatory-basis financial statements, the obligations to theRGRT are reported as obligations under capital leases of nuclear fuel.

RGRT pays interest on the Notes on February 15, and August 15 of each year until maturity. RGRT may redeem the Notes, inwhole or in part, at any time at a redemption price equal to 100% of the principal amount to be redeemed together with theinterest on such principal amount accrued to the date of redemption, plus a make-whole amount based on the prevailing marketinterest rates. The agreement requires compliance with certain covenants, including a total debt to capitalization ratio. TheCompany was in compliance with these requirements throughout 2014.

The sale of the Notes was made by RGRT in reliance on a private placement exemption from registration under the SecuritiesAct of 1933, as amended. The proceeds of $109.4 million, net of issuance costs, from the sale of the Notes was used by RGRTto repay amounts borrowed under the revolving credit facility and will enable future nuclear fuel financing requirements ofRGRT to be met with a combination of the Notes and amounts borrowed from the RCF.

(4) Revolving Credit Facility

On January 14, 2014, the Company and RGRT entered into a second amended and restated credit agreement related to the RCFwith JP Morgan Chase Bank, N.A., as administrative agent and issuing bank, and Union Bank, N.A., as syndication agent, andvarious lending banks party thereto. Under the terms of the agreement, the Company has available $300 million and the ability toincrease the RCF by up to $100 million (up to a total of $400 million) upon the satisfaction of certain conditions, more fully setforth in the agreement, including obtaining commitments from lenders or third party financial institutions. The RCF has a termending January 2019. The Company may extend the maturity date up to two times, in each case for an additional one year periodupon the satisfaction of certain conditions.

The RCF provides that amounts borrowed by the Company may be used for, among other things, working capital and generalcorporate purposes. Any amounts borrowed by RGRT may be used, among other things, to finance the acquisition andprocessing of nuclear fuel. Amounts borrowed by RGRT are guaranteed by the Company and the balance borrowed under theRCF is recorded as a capital lease of nuclear fuel on the regulatory-basis balance sheet. Quarterly lease payments are made basedupon units of heat production used by the plant. The RCF is unsecured. The RCF requires compliance with certain covenants,

IFERC FORM NO. 1 (ED. 12-88) Page 123.21

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

NOTES TO FINANCIAL STATEMENTS (Continued)

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

including a total debt to capitalization ratio. The Company was in compliance with these requirements throughout 2014. As ofDecember 31, 2014, the total amount borrowed by RGRT was $16.4 million for nuclear fuel under the RCF. As of December 31,2014, no borrowings were outstanding under this facility for working capital and general corporate purposes. The weightedaverage interest rate on the RCF was 1.3% as of December 31, 2014.

As of December 31, 2014, the scheduled maturities for the next five years of long-term debt are as follows (in thousands):

2015 $ /15,00020162017 83,30020182019

The $16.4 million outstanding on the RCF for nuclear fuel financing purposes is anticipated to be paid in 2015.

Income Taxes

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities atDecember 31, 2014 and 2013 are presented below (in thousands):

Deferred tax assets:Plant, principally due to capitalized costsBenefits of federal tax loss carryforwardsPensions and benefitsAlternative minimum tax credit carryforwardRegulatory liabilities related to income taxesAsset retirement obligationDeferred fuelDebt related itemsOther

Total gross deferred tax assets

Deferred tax liabilities:Plant, principally due to depreciation and basis differencesRegulatory assets related to income taxesDecommissioningDeferred fuelOther

Total gross deferred tax liabilities

Net accumulated deferred income taxes

December 31,2014 2013

72,639 $ 63,256357 1

60,277 50,39817,701 26,733 7,119

26,573

6,91712,097 12,316

(112,174) (108,362)

(3,262) (1,990)

(661,244) (626,943)

Based on the average annual book income before taxes for the prior three years, excluding the effects of unusual or infrequentitems, the Company believes that the deferred tax assets will be fully realized at current levels of book and taxable income.

The Company recognized income tax expense for 2014 and 2013 as follows (in thousands):

Income tax expense:

IFERC FORM NO, I (ED. 12-88)

Years Ended December 31~2014 2013

Page 123.22

Name of Respondent

El Paso Electdc Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

Federal:

Deferred 35,878 40,813

Total federal income tax $ 37,829 $ 42,098State:

Current $ 116 $ 54Deferred

Total state income tax $ 757 $ (360)

As of December 31, 2014, the Company had $17.7 million of AMT credit carryforwards that have an unlimited life. As ofDecember 31, 2014, the Company has utilized all of the federal and state tax loss carryfowards.

Federal income tax provisions differ from amounts computed by applying the statutory federal income tax rate of 35% to bookincome before federal income tax as follows (in thousands):

2014 2013

Difference due to:

Investment Tax Credit amortization (net of deferred taxes) (753) (705)Allowance for equi~ ~ds ~a~Stion )Amortization of excess deferred taxes (717) (717)

Total federal income tax expense $ 37,829 $ 42,098

The Company files income tax returns in the United States ("U.S.") federal jurisdiction and in the states of Texas, New Mexicoand Arizona. The Company is no longer subject to tax examination by the taxing authorities in the federal and New Mexicojurisdictions for years prior to 2010. The Company is currently under audit in Texas for tax years 2007 through 2011 and in Arizonafor tax years 2009 through 2012. The Company reached a settlement agreement with the Arizona Department of Revenue ("ADOR")in March 2014 in their audit of income tax returns for the years 1998 through 2007 which did not have a material effect on income taxexpense. Additionally, the Company reached a settlement with ADOR in September of 2014 in their audit of the income tax return for2008 which did not have a material effect on income tax expense.

On December 19, 2014, the President signed the Tax Increase Prevention Act of 2014. This act included the extension of bonusdepreciation which impacted the Company. The Company recorded the impact of the law change in December 2014, which resulted inan $0.8 million increase in income tax expense due to a decrease in the domestic production activities deduction which is limited bytaxable income.

FASB guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition andmeasurement of a tax position taken or expected to be taken in a tax return. In January 2010, the Company filed for a change ofaccounting method with the IRS related to the way in which units of property are determined for purposes of determining capitalizedtax assets. The change was included in the 2009 federal income tax return, with additional amounts included in the 2010 to 20t3federal income tax returns. In August of 2012, the Company filed a change of accounting method with the IRS, effectively adoptingthe safe harbor provisions of Rev. Proc 2011-43 related to units of property for capitalized tax assets. The change was included in the2011 federal income tax return.

IFERC FORM NO. 1 (ED. 12-88) Page 123.23 [

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2 014/Q4

The Company recognizes in interest and penalties expense accounts interest and penalties related to tax benefits that areuncertain. During the years ended December 31, 2014 and 2013, the Company recognized expense of approximately $0.1 million anda benefit of $0.2 million, respectively, in interest. The Company had approximately $0.5 million and $0.4 million for the payment ofinterest and penalties accrued at December 31, 2014 and December 31, 2013, respectively.

J. Commitments, Contingencies and Uncertainties

Power Purchase and Sale Contracts

To supplement its own generation and operating reserves and to meet required renewable portfolio standards, the Companyengages in power purchase arrangements which may vary in duration and amount based on evaluation of the Company’s resourceneeds, the economics of the transactions, and specific renewable portfolio requirements. The Company has entered into the followingsignificant agreements with various counterparties for forward purchases and sales of electricity:

Type of ContractPower Purchase and Sale Agreement

Counterparty Quantity Term

CommercialOperation

Date

Power Purchase and Sale AgreementPower Purchase Agreement

Power Purchase AgreementPower Purchase AgreementPower Purchase AgreementPower Purchase Agreement

Power Purchase Agreement

Freeport 100 MWHatch Solar Energy 5 MW

Center I, LLCNRG 20 MW

Sun Edison 1 10 MWSun Edison 2 12 MW

Macho Springs Solar, 50 MWLLC

PSEG E1 Paso Solar 10 MWEnergy Center

June 2006 through December 2021 N/AJuly 2011 through June 2036 July ~011

August 2011 through August 2031 August 201June2012throu June 2012May 2012 through May 2037 Mav 2012May 2014

December 2014 through November2044

December 2014

The Company has a firm Power Purchase and Sale Agreement with Freeport-McMoran Copper and Gold Energy Services LLC("Freeport") which provides for Freeport to deliver energy to the Company from its ownership interest in the Luna Energy Facility (anatural gas-fired combined cycle generation facility located in Luna County, New Mexico) and for the Company to deliver a likeamount of energy at Greenlee, Arizona. The Company may purchase the quantities noted in the table above at a specified price at timeswhen energy is not exchanged under the Power Purchase and Sale Agreement. Upon mutual agreement, the contract allows the partiesto increase the amount of energy that is purchased and sold under the Power Purchase and Sale Agreement. The parties have agreed toincrease the amount up to 125 MW through December 2015. The contract was approved by the FERC and continues throughDecember 31, 2021. On December 30, 2014, the FERC issued an order authorizing the disposition, i.e. sale, of Freeport’s interest inthe Luna facility to Samchully Power & Utilities 1, LLC. Freeport will retain the ability to purchase up to the full amount of itsprevious ownership share of the Luna facility of approximately 190 MW, thereby continuing to fulfill its obligations pursuant to thePower Purchase and Sale Agreement.

The Company has a 25-year purchase power agreement with Hatch Solar Energy Center I, LLC to purchase all of the output froma solar photovoltaic plant located in southern New Mexico which began commercial operation in July 2011. The Company entered intoa 20-year contract with NRG Solar Roadrunner LLC ("NRG") to purchase all of the output of a solar photovoltaic plant built insouthern New Mexico which began commercial operation in August 2011. The Company has 25-year purchase power agreements topurchase all of the output of two additional solar photovoltaic plants located in southern New Mexico, SunEdison 1 and SunEdison 2which began commercial operation on June 25, 2012 and May 2, 2012, respectively. The Company entered into these contracts to help

]FERC FORM NO. 1 (ED. 12-88) Page 123.24 [

Name of Respondent This Report is: Date of Report Year/Period of Report(1) X An Original (Mo, Da, Yr)

El Paso Electric Company (2) __ A Resubmission / / 2014/Q4

NOTES TO FINANCIAL STATEMENTS (Continued)

meet its renewable portfolio requirements. The Company has a 20-year purchase power agreement with Macho Springs Solar, LLC topurchase the entire generation output delivered from the 50 MW Macho Springs solar photovoltaic plant located in Luna County, NewMexico which began commercial operation on May 23, 2014. The Company has a 30-year purchase power agreement with PSEG ElPaso Solar Energy Center ("PSEG") to purchase the total output of approximately 10 MW from a solar photovoltaic plant that PSEGowns and operates on land subleased from the Company in proximity to its Newman Power Station. This solar photovoltaic plantbegan commercial operation on December 30, 2014.

The Company entered into an agreement in 2009 to purchase capacity and unit contingent energy during 2010 from Shell EnergyNorth America ("Shell"). Under the agreement, the Company provided natural gas to Pyramid Unit No. 4 where Shell had the right toconvert natural gas to electric energy. The Company entered into a contract with Shell on May 17, 2010 to extend the term of thecapacity and unit contingent energy purchase from January 1, 2011 through September 30, 2014.

Environmental Matters

General. The Company is subject to extensive laws, regulations and permit requirements with respect to air and greenhouse gasemissions, water discharges, soil and water quality, waste management and disposal, natural resources and other environmental mattersby federal, state, regional, tribal and local authorities. Failure to comply with such laws, regulations and requirements can result inactions by authorities or other third parties that might seek to impose on the Company administrative, civil and/or criminal penalties orother sanctions. In addition, releases of pollutants or contaminants into the environment can result in costly cleanup liabilities. Theselaws, regulations and requirements are subject to change through modification or reinterpretation, or the introduction of new laws andregulations and, as a result, the Company may face additional capital and operating costs to comply. Certain key environmental issues,laws and regulations facing the Company are described further below.

Air Emissions. The U.S. Clean Air Act ("CAA"), associated regulations and comparable state and local laws and regulationsrelating to air emissions impose, among other obligations, limitations on pollutants generated during the operations of the Company’sfacilities and assets, including sulfur dioxide ("SO2"), particulate matter ("PM"), nitrogen oxides ("NOx") and mercury.

Clean Air Interstate Rule/Cross State Air Pollution Rule. The EPA promulgated the Cross-State Air Pollution Rule ("CSAPR")in August 2011, which rule involves requirements to limit emissions of NOx and SO2 from certain of the Company’s power plants inTexas and/or purchase allowances representing other parties’ emissions reductions. CSAPR was intended to replace the EPA’s 2005Clean Air Interstate Rule ("CAIR"). While the U.S. Court of Appeals for the District of Columbia Circuit ("D.C. Circuit") vacatedCSAPR in August 2012 and allowed CAIR to stand until the EPA issued a proper replacement, on April 29, 2014, the U.S. SupremeCourt reversed and upheld CSAPR, remanding certain portions of CSAPR to the D.C. Circuit for further consideration. On June 26,2014, the EPA filed a motion asking the D.C. Circuit to lift its stay on CSAPR. On October 23, 2014, the D.C. Circuit lifted its stay ofCSAPR, and while we are unable to determine the full impact of the reinstatement of CSAPR until the D.C. Circuit and the EPA takefurther action, the Company believes it is currently positioned to comply with CSAPR.

National Ambient Air Quality Standards. Under the CAA, the EPA sets National Ambient Air Quality Standards ("NAAQS")for six criteria pollutants considered harmful to public health and the environment, including PM, NOx, carbon monoxide ("CO"),ozone and SO2. NAAQS must be reviewed by the EPA at five-year intervals. In 2010, the EPA tightened the NAAQS for both NOxand SO2. The EPA is considering a 1-hour secondary NAAQS for NOx and SO2. In January 2013, the EPA tightened the NAAQS forfine PM. On November 26, 2014, the EPA announced a proposal to tighten the 2008 primary and secondary ground-level ozoneNAAQS. Ozone is the main component of smog. While not directly emitted into the air, it forms from precursors, including NOx andvolatile organic compounds, in combination with sunlight. EPA proposes to tighten the current 8-hour primary (health-based) standardof 75 parts per billion ("ppb") to a level within its preferred range of 65 to 70 ppb, while also taking comment on a potential standardas low as 60 ppb and on retaining the current standard. The EPA intends to issue a final rule by October 2015. The Companycontinues to evaluate what impact these final and proposed NAAQS could have on its operations. If the Company is required to installadditional equipment to control emissions at its facilities, the revised NAAQS could have a material impact on its operations andfinancial results.

Utility MACT. The operation of coal-fired power plants, such as Four Comers, results in emissions of mercury and other airtoxics. In December 2011, the EPA finalized Mercury and Air Toxics Standards (known as the "Utility MACT") for oil-and coal-firedpower plants, which requires significant reductions in emissions of mercury and other air toxics. Several judicial and other challenges

[FERC FORM NO. 1 (ED. 12-88) Page 123.25 [

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

have been made to this rule, with a U.S. Supreme Court decision expected this year. These challenges notwithstanding, companiesimpacted by the new standards will generally have up to three years to comply. Information from the Four Corners plant operator,APS, indicates that APS currently believes Units 4 and 5 will require no additional modifications to achieve compliance with theUtility MACT standards.

Other Laws and Regulations and Risks. As stated above, the Company has entered into an agreement to sell its interest in FourCorners to APS at the expiration of the 50-year participation agreement in July 2016. The Company believes that it has bettereconomic and cleaner alternatives for serving the energy needs of its customers than coal-fired generation, which is subject toextensive regulation and litigation. By ceasing its participation in Four Corners, the Company will avoid the significant cost required toinstall expensive pollution control equipment in order to continue operation of the plant as well as the risks of water availability thatmight adversely affect the amount of power available, or the price thereof, from Four Corners in the future. The closing of thetransaction is subject to the receipt of regulatory approvals.

Climate Change. The U.S. federal government has either considered, proposed and/or finalized legislation or regulations limitingGHG emissions, including carbon dioxide. In particular, the U.S. Congress has considered legislation to restrict or regulate GHGemissions. In the past few years, the EPA began using the CAA to regulate carbon dioxide and other GHG emissions, such as the 2009GHG Reporting Rule and the EPA’s sulfur hexafluoride ("SF6") reporting rule, both of which apply to the Company, as well as theEPA’s 2010 actions to impose permitting requirements on new and modified sources of GHG emissions. After announcing his plan toaddress climate change in 2013, the President directed the EPA to issue proposals for GHG rulemaking addressing power plants. InJanuary 2014, the EPA published a proposal to establish new source performance standards limiting carbon dioxide emissions fromnew electric generating units, and in June 2014, a proposal to create carbon dioxide standards for existing and modified/reconstructedpower plants. The Company participated in the associated proposed rulemaking comment periods. On January 7, 2015, EPAannounced it plans to issue final rules for new, existing and modified/reconstructed power plants by this summer. Given the verysignificant remaining uncertainties regarding these EPA rules, the Company believes it is impossible to meaningfully quantify the costsof these potential requirements at present.

In addition, almost half the U.S. states, either individually and/or through multi-state regional initiatives, have begun to considerhow to address GHG emissions and have developed, or are actively considering the development of emission inventories or regionalGHG cap and trade programs. While a significant portion of the Company’s generation assets are nuclear or gas-fired, and as a result,the Company believes that its greenhouse gas emissions are low relative to electric power companies who rely more on coal-firedgeneration, current and future legislation and regulation of GHGs or any future related litigation could impose significant costs and/oroperating restrictions on the Company, reduced demand for the power the Company generates and/or require the Company to purchaserights to emit GHGs, any of which could be material to the Company’s business, financial condition, reputation or results of operations.

Climate change also has potential physical effects that could be relevant to the Company’s business. In particular, some studiessuggest that climate change could affect the Company’s service area by causing higher temperatures, less winter precipitation and lessspring runoff, as well as by causing more extreme weather events. Such developments could change the demand for power in theregion and could also impact the price or ready availability of water supplies or affect maintenance needs and the reliability ofCompany equipment. The Company believes that material effects on the Company’s business or results of operations may result fromthe physical consequences of climate change, the regulatory approach to climate change ultimately selected and implemented bygovernmental authorities, or both. Given the very significant remaining uncertainties regarding whether and how these issues will beregulated, as well as the timing and severity of any physical effects of climate change, the Company believes it is impossible tomeaningfully quantify the costs of these potential impacts at present.

Environmental Litigation and Investigations. Since 2009, the EPA and certain environmental organizations have beenscrutinizing, and in some cases, have filed lawsuits, relating to certain air emissions and air permitting matters related to Four Corners.In particular, since July 2011, the U.S. Department of Justice (the "DOJ"), on behalf of the EPA, and APS have been engaged insubstantive settlement negotiations in an effort to resolve certain of the pending matters. The allegations being addressed throughsettlement negotiations are that APS failed to obtain the necessary permits and install the controls necessary under the CAA to reduceSO2, NOx, and PM, and that defendants failed to obtain an operating permit under Title V of the CAA that reflects applicablerequirements imposed by law. In November 2014, the DOJ provided APS with a draft consent decree to settle the EPA matter, whichdecree contains specific provisions for the reduction and control of NOx, SO2, and PM, as well as provisions for a civil penalty, andexpenditures on environmental mitigation projects with an emphasis on projects that address alleged harm to the Navajo Nation.

IFERC FORM NO. 1 (ED. 12-88) Page 123.26

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

Settlement discussions are on-going and the Company is unable to predict with certainty the final outcome of these settlementnegotiations. The Company has accrued a total of $0.6 million as its estimated share of the loss contingency related to this matter.

Earthjustice filed a lawsuit in the United States District Court for New Mexico on October 4, 2011 for alleged violations of thePrevention of Significant Deterioration ("PSD") provisions of the CAA related to Four Comers. On January 6, 2012, Earthjustice fileda First Amended Complaint adding claims for violations of the CANs New Source Performance Standards ("NSPS") program. Amongother things, the plaintiffs seek to have the court enjoin operations at Four Comers until APS applies for and obtains any required PSDpermits and complies with the referenced NSPS program. The plaintiffs further request the court to order the payment of civilpenalties, including a beneficial mitigation project. On April 2, 2012, APS and the other Four Corners participants filed motions todismiss with the court. The case is being held in abeyance while the parties seek to negotiate a settlement. On March 30, 2013, uponjoint motion of the parties, the court issued an order deeming the motions to dismiss withdrawn without prejudice during pendency ofthe stay. At such time as the stay is lifted, APS, the Company and the other Four Comers participants may reinstate the motions todismiss. Settlement discussions are ongoing. The Company is unable to predict the outcome of this litigation.

New Mexico Tax Matter Related to Coal Supplied to Four Corners

On May 23, 2013, the New Mexico Taxation and Revenue Department issued a notice of assessment for coal severance surtax,penalty, and interest totaling approximately $30 million related to coal supplied under the coal supply agreement for Four Comers (the"Assessment"). The Company’s share of the assessment is approximately $1.5 million. On behalf of the Four Comers participants, thecoal supplier made a partial payment of the Assessment and immediately filed a refund claim with respect to that partial payment inAugust 2013. The New Mexico Taxation and Revenue Department denied the refund claim. On December 19, 2013, the coal supplierand APS, on its own behalf and as operating agent for Four Comers, filed complaints with the New Mexico District Court contestingboth the validity of the Assessment and the refund claim denial. APS believes the Assessment and the refund claim denial are withoutmerit. The Company cannot predict the timing, results, or potential impacts of the outcome of this litigation.

Lease Agreements

The Company leases land in El Paso adjacent to the Newman Power Station under a lease which expires in June 2033 with arenewal option of 25 years. In addition, the Company leases certain warehouse facilities in El Paso under a lease which expires inDecember 2015. The Company also has several other leases for office, parking facilities and equipment which expire within the nextthree years. The Company has transmission and distribution lines which are operated under various property easement agreements.The majority of these easements include renewal options which the Company routinely exercises. These lease agreements do notimpose any restrictions relating to issuance of additional debt, payment of dividends or entering into other lease arrangements.

Nuclear Fuel Capital Lease Obligation. The Company’s capital lease obligation for the financing of nuclear fuel is accomplishedthrough RGRT. RGRT has $110 million aggregate principal amount borrowed in the form of senior notes, of which $15 million willmature in August 2015. The Company will either repay or refinance the $15 million of senior notes upon maturity. The Companyguarantees the payment of principal and interest on the senior notes. The nuclear fuel financing requirements of RGRT are met with acombination of the senior notes and short-term borrowings under the RCF. In addition to the $15 million mentioned above, theCompany expects to pay $16.4 million in 2015 for borrowings under the RCF.

The Company’s total annual rental expense related to operating leases was $1.8 million and $1.2 million for 2014and 2013,respectively. As of December 31, 2014, the Company’s minimum future rental payments for the next five years are as follows (inthousands):

2016 8382017 6232018 512

516

]FERC FORM NO. 1 (ED. 12-88) Page 123.27

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

K. Litigation

The Company is a party to various legal actions. In many of these matters, the Company has excess casualty liability insurancethat covers the various claims, actions and complaints. Based upon a review of these claims and applicable insurance coverage, theCompany believes that none of these claims will have a material adverse effect on the financial position, results of operations or cashflows of the Company. The Company expenses legal costs, including expenses related to loss contingencies, as they are incurred.

See Note C and Note J for discussion of the effects of government legislation and regulation on the Company as well as certainpending legal proceedings.

L. Employee Benefits

Retirement Plans

The Company’s Retirement Income Plan (the "Retirement Plan") is a qualified noncontributory defined benefit plan. Uponretirement or death of a vested plan participant, assets of the Retirement Plan are used to pay benefit obligations under the RetirementPlan. Contributions from the Company are at least the minimum funding amounts required by the IRS, as actuarially calculated. Theassets of the Retirement Plan are primarily invested in common collective trusts which hold equity securities, debt securities and cashequivalents and are managed by a professional investment manager appointed by the Company.

The Company has two non-qualified retirement plans that are non-funded defined benefit plans. The Company’s SupplementalRetirement Plan covers certain former employees and directors of the Company. The Excess Benefit Plan, was adopted in 2004 andcovers certain active and former employees of the Company. The benefit cost for the non-qualified retirement plans are based onsubstantially the same actuarial methods and economic assumptions as those used for the Retirement Plan.

During the quarter ended March 31, 2014, the Company implemented certain amendments to the Retirement Plan and ExcessBenefit Plan. In the first quarter of 2014, the Company offered a cash balance pension plan as an alternative to its current final averagepay pension plan for employees hired prior to January 1, 2014. The cash balance pension plan also included an enhanced employermatching contribution to the employee’s respective 401 (k) Defined Contribution Plan (discussed below). For employees that electedthe new cash balance feature of the plans, the pension benefit earned trader the existing final average pay feature of the plans wasfrozen as of March 31, 2014. Employees hired after January 1, 2014 are automatically enrolled in the cash balance pension plan. Theamendments to the plans were effective April 1, 2014. As a result of these actions, the Company remeasured the assets and liabilities ofthe plans, based on actuarially determined estimates, using the close of the alternative choice election period of February 28, 2014, asthe remeasurement date.

Prior to December 31, 2013, employees who completed one year of service with the Company and worked at least a minimumnumber of hours each year were covered by the final average pay formula of the plan. For participants that continue to be covered bythe final average pay formula, retirement benefits are based on the employee’s final average pay and years of service. The cash balancepension plan covers employees beginning on their employment commencement date or re-employment commencement date in anyplan year in which the employee completes at least a minimum number of hours of service. Retirement benefits under the cash balancepension plan are based on the employee’s cash balance account, consisting of pay credits and interest credits.

The Company complies with FASB guidance on disclosure for pension and other post-retirement plans that requires disclosure ofinvestment policies and strategies, categories of investment and fair value measurements of plan assets, and significant concentrationsof risk.

The obligations and funded status of the plans are presented below (in thousands):

December 31,

2014 2013Non- Non-

IFERC FORM NO. 1 (ED. 12-88) Page 123.28 I

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

Retirement Qualified Retirement QualifiedIncome Retirement Income RetirementPlan Plans Plan Plans

Change in projected benefit obligation:Benefit obligation at end of prior year $ 317.815Service cost 8,284Interest cost 14,001Amendments (a) (33,700)Actuarial (gain) loss 50,741Benefits paid

Benefit obligation at end of year 341,133Change in plan assets:

Fair value of plan assets at end of prior year 257,831Actual return on plan assets 22,116Employer contribution 9,000Benefits paid

Fair value of plan assets at end of yearFunded status at end of year

25,898 $ 320,846 $ 27,241303 9,137 190

1,041 12,742 872(500)

3,508 (15,373) (533)

28,397 317,815 25,898

220,568

1,853 15,000 1,872

272,939 257,831

(a) Amendments relate to the modification of the Company’s Retirement Plan and Excess Benefit Plan discussed above.

Amounts recognized in the Company’s regulatory-basis balance sheets consist of the following (in thousands):

Current liabilitiesNoncurrent liabilities

Total

December 31,2014 2013

Non- Non-Retirement Qualified Retirement Qualified

Income Retirement Income RetirementPlan Plans Plan Plans

$ ~ $ (2,319)$ ~ $ (I;870)(68,194) (26,078) (59,984) (24,028)

The accumulated benefit obligation in excess of plan assets is as follows (in thousands):

December 31,2014 2013

Non- Non-Retirement Qualified Retirement Qualified

Income Retirement Income RetirementPlan Plans :Plan Plans

Accumulated benefit obligation (312,762) (27,603) (275,555) (25,077)Fair value of plan assets " " ....

IFERC FORM NO. 1 (ED. 12-88) Page 123.29

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2 014/Q4

Amounts recognized in accumulated other comprehensive income consist of the following (in thousands):

Net lossPrior service cost (benefit)

Total

Years Ended December 31,2014 2013

Non- Non-Retirement Qualified Retirement Qualified

Income Retirement Income RetirementPlan Plans Plan Plans

(30,811) (264) 219

The following are the weighted-average actuarial assumptions used to determine the benefit obligations:

Discount rateRate of compensation increase

RetirementIncome

Plan

December 31,2014 2013

Non-Qualified Non-QualifiedSupplemental Excess Retirement Supplemental ExcessRetirement Benefit Income Retirement Benefit

Plan Plan Plan Plan Plan4.0% 3.4% 4.1% 4.9% 3.9% 4.9%4.5% N/A 4.5% 4.75% N/A 4.75%

The Company reassesses various actuarial assumptions at least on an annual basis. The discount rate is reviewed at eachmeasurement date. The discount rate used to measure obligations is based on a spot rate yield curve that matches projected futurepayments with the appropriate interest rate applicable to the timing of the projected future benefit payments. A 1% increase in thediscount rate would decrease the December 31, 2014 retirement plans’ projected benefit obligation by 11.7%. A 1% decrease in thediscount rate would increase the December 31, 2014 retirement plans’ projected benefit obligation by 14.6%.

The components of net periodic benefit cost are presented below (in thousands):

Service costInterest costExpected return on plan assetsAmortization of:

IFERC FORM NO. 1 (ED. 12-88)

Years Ended December 31,2014 2013

Non- Non-Retirement Qualified Retirement Qualified

Income Retirement Income RetirementPlan Plans Plan Plans

14,001(18,699)

Page 123.30

1,041 12,742 872-- (17,108) ---

Name of Respondent

El Paso Electdc Company

This Report is: Date of Report Year/Period of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / / 2014/Q4

NOTES TO FINANCIAL STATEMENTS (Continued)

Net loss 8,178Prior service cost (benefit) (2,889)

Net periodic benefit cost(17) 3 94

The changes in benefit obligations recognized in other comprehensive income are presented below (in thousands):

Net (gain) lossPrior service benefitAmortization of:

Net lossPrior service cost (benefit)

Total recognized in other comprehensive income

Years Ended December 31,2014 2013

Non- Non-Retirement Qualified Retirement Qualified

Income Retirement Income RetirementPlan Plans Plan Plans

$ 47,324 $ 3,508 $ (30,065)$ (533)(33,700) (500)

(8,178) (675) (10,437) (661)

$ 8,335 $ 2,350 $ (40,505) $ (1,288)

The total amount recognized in net periodic benefit costs and other comprehensive income are presented below (in thousands):

Years Ended December 31,2014 2013

Non- Non-Retirement Qualified Retirement Qualified

Income Retirement Income RetirementPlan Plans Plan Plans

Total recognized in net periodic benefit cost and othercomprehensive income

The following are amounts in accumulated other comprehensive income that are expected to be recognized as components of netperiodic benefit cost during 2015 (in thousands):

Non-

Retirement QualifiedIncome RetirementPlan Plans

Net loss $Prior service benefit (3,470) (40)

The following are the weighted-average actuarial assumptions used to determine the net periodic benefit cost for the twelvemonths ended December 31:

J FERC FORM NO. 1 (ED. 12-88) Page 123.31 I

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission ! /

NOTES TO FINANCIAL STATEMENTS (Continued)

YeadPeriod of Report

2014/Q4

Discount rateExpected long-term return on plan assetsRate of compensation increase

2013 2012Non-Qualified Non-Qualified

Retirement Supplemental Excess Retirement Supplemental ExcessIncome Retirement Benefit Income Retirement Benefit

Plan Plan Plan Plan Plan Plan4.9 % 3,9 % 4 9% ........ 4 0~ .............. 3,! ........ o .... o ~ ................. ~’ .............

7.5% N/A N/A 7.5% N/A N/A4:75%

(a) The Retirement Plan and the Excess Benefit Plan were remeasured on February 28, 2014 due to the above mentioned planamendment. The discount rate used to remeasure the benefit obligation was 4.6% for the Retirement Plan and 4.5% for the ExcessBenefit Plan, compared to 4.9% for both plans as of January 1, 2014. All other assumptions remained consistent with assumptionsused at January 1, 2014.

The Company’s overall expected long-term rate of return on assets is 7.5% effective January 1, 2014, which is both a pre-tax andafter-tax rate as pension funds are generally not subject to income tax. The expected long-term rate of return is based on the weightedaverage of the expected returns on investments based upon the target asset allocation of the pension fund. The Company’s targetallocations for the plan’s assets are presented below:

December 31, 2014

Fixed income 40%Alternative in~es~ents .... ....

Total 100%

The Retirement Plan invests the majority of its plan assets in common collective trusts which includes a diversified portfolio ofdomestic and international equity securities and fixed income securities. The Retirement Plan fund also invests in a real estate limitedpartnership. The expected rate of returns for the funds are assessed annually and are based on long-term relationships among majorasset classes and the level of incremental returns that Can be earned by the successful implementation of different active investmentmanagement strategies. Equity returns are based on estimates of long-term inflation rate, real rate of return, 10-year Treasury bondpremium over cash and equity risk premium. Fixed income returns are based on maturity, long-term inflation, real rate of return andcredit spreads.

FASB guidance on disclosure for pension plans requires disclosure of fair value measurements of plan assets. To increaseconsistency and comparability in fair value measurements, FASB guidance on fair value measurements established a fair valuehierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

[] Level 1 - Observable inputs that reflect quoted market prices for identical assets and liabilities in active markets. Prices orsecurities held in the mutual funds and underlying portfolios of the Retirement Plan are primarily obtained from independentpricing services. These prices are based on observable market data.

Level 2 - Inputs other than quoted market prices included in Level 1 that are observable for the asset or liability eitherdirectly or indirectly. The fair value of the Guaranteed Investment Contract was based on market interest rates of investmentswith similar terms and risk characteristics. The Common Collective Trusts are valued using the net asset value ("NAV")provided by the administrator of the fund. The NAV price is quoted on a restrictive market although the underlyinginvestments are traded on active markets.

iFERC FORM NO. 1 (ED. 12-88) Page 123.32 I

iName of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

[] Level 3 - Unobservable inputs using data that is not corroborated by market data. The fair value of the real estate limitedpartnership is reported at the NAV of the investment.

The fair value of the Company’s Retirement Plan assets at December 31, 2014 and 2013, and the level within the three levels ofthe fair value hierarchy defined by FASB guidance on fair value measurements are presented in the table below (in thousands):

Description of SecuritiesCash and Cash EquivalentsCommon Collective Trusts (a)

Equity fundsFixed income funds

Total Common Collective TrustsLimited Partnership Interest in Real Estate (b)

Total Plan Investments

Quoted Prices SignificantFair Value in Active Other Significant

as of Markets for Observable UnobservableDecember 31, Identical Assets Inputs Inputs

149,839113,115 113,115262,954

8.748 8,748

Description of SecuritiesCash and Cash EquivalentsGuaranteed Investment ContractCommon Collective Trusts (a)

Equity fundsFixed income funds

Total Common Collective TrustsLimited Partnership Interest in Real Estate (b)

Total Plan Investments

Quoted Prices SignificantFair Value in Active Other Significant

as of Markets for Observable UnobservableDecember 31, Identical Assets Inputs Inputs

2013 (Level 1) (Level 2) (Level 3)$ 940 $ 940 $ ~ $

1,126 -- 1,126 --

142,960103,948246,908

8,857$ 257,831

142,960103,948

8,857$ 940 $ 248,034 $ 8,857

(a)

(b)

The Common Collective Trusts are invested in equity or fixed income securities, or a combination thereof. The investmentobjective of each trust is to produce returns in excess of. or commensurate with, its predefined index.This investment is a commercial real estate partnership that purchases land, develops limited infrastructure, and sells it forcommercial development. The Company is restricted from selling its partnership interest during the life of the partnership whichis generally 5-7 years. Return on investment is realized as land is sold. The fair value of the limited partnership interest in realestate is based on the NAV of the partnership which reflects the appraised value of the land.

The table below reflects the changes in the fair value of investments in real estate during the period (in thousands):

Fair Value ofInvestments in

Real EstateBalancesat December 3 L

Unrealized gain in fair value 298Balances at December 3L 8,857

[FERC FORM NO. 1 (ED. 12-88) Page 123.33 I

Name of Respondent

El Paso Electric Company

IThis Report is: Date of Report(1) X An Original (Mo, Da, Yr)

!(2) _ A Resubmission / /NOTES TO FINANCIAL STATEMENTS (Continued)

YeadPeriod of Report

2014/Q4

Sale of land (357)

Balances at December 31, 2014 8,748

There were no transfers in or out of Level 1 and Level 2 fair value measurements categories due to changes in observable inputsduring the twelve month periods ending December 31, 2014 and 2013. Except as noted in the above table, there were no purchases,issuances, and settlements related to the assets in the Level 3 fair value measurement category during the twelve month periods endingDecember 31, 2014 and 2013.

The Company adheres to the traditional capital market pricing theory which maintains that over the long term, the risk of owningequities should be rewarded with a greater return than available from fixed income investments. The Company seeks to minimize therisk of owning equity securities by investing in funds that pursue risk minimization strategies and by diversifying its investments tolimit its risks during falling markets. The investment manager has full discretionary authority to direct the investment of plan assetsheld in trust within the guidelines prescribed by the Company through the plan’s investment policy statement including the ability tohold cash equivalents. The investment guidelines of the investment policy statement are in accordance with the Employee RetirementIncome Security Act of 1974 ("ERISA") and Department of Labor ("DOL") regulations.

The Company contributes at least the minimum funding amounts required by the IRS for the Retirement Plan, as actuariallycalculated. The Company expects to contribute $11.3 million to its retirement plans in 2015.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):

Non-

Retirement QualifiedIncome Retirement

Plan Plans

$ 15,77652016 17,153 2,248

2,1712018 20,019 2,196

2,1352020-2024 103,703 10,720

401(k) Defined Contribution Plans

The Company sponsors 401(k) defined contribution plans covering substantially all employees. Annual matching contributionsmade to the savings plans for the years 2014 and 2013 were $3.0 million and $1.9 million, respectively. Historically, the Company hadprovided a 50 percent matching contribution up to 6 percent of the employee’s compensation subject to certain other limits andexclusions. Effective April 1, 2014, for employees who enrolled in the cash balance pension plan (discussed above), the Companyprovided a 100 percent matching contribution up to 6 percent of the employee’s compensation subject to certain other limits andexclusions.

Other Post-retirement Benefits

The Company provides certain health care benefits for retired employees and their eligible dependents and life insurance benefitsfor retired employees only. Substantially all of the Company’s employees may become eligible for those benefits if they retire while

[FERC FORM NO. 1 (ED. 12-88) Page 123.34

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

NOTES TO FINANCIAL STATEMENTS (Continued)

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

working for the Company. Contributions from the Company are generally no more than the IRS tax deductible limit, as actuariallycalculated. The assets of the plan are primarily invested in common collective trusts which hold equity securities, debt securities, andcash equivalents and are managed by a professional investment manager appointed by the Company.

The following table contains a reconciliation of the change in the benefit obligation, the fair value of plan assets, and the fundedstatus of the plan (in thousands):

Change in benefit obligation:Benefit obligation at end of prior yearService costInterest cost

Amendment (a)

Retiree contributionsBenefit obligation at end of year

Change in plan assets:Fairvalue of plan assets at end of prior yearActual return on plan assets

" Employer contributionBenefits paidRetiree contributions

Fair value of plan assets at end of yearFunded status at end of year

December 31,2014 2013

92,847 $ 135,680

4,463 5,156

(97)(4,031)1,111 1,056

2,086 5.539

(4,031) (4,013)

41,358 42,192

(c) Amendment relates to modification of the Company’s Other Post-retirement Benefit Plan which limits the Company’s premiumcontribution. The amendment became effective October 3, 2013 and resulted in a remeasurement of the plan.

Amounts recognized in the Company’s regulatory-basis balance sheets consist of the following (in thousands):

December 31,

2014 2013

Noncurrent liabilities (59,342) (50,655)

Amounts recognized in accumulated other comprehensive income consist of the following (in thousands):

December 31,2014 2013

IFERC FORM NO. 1 (ED. 12-88) Page 123.35 I

Name of Respondent

El Paso Electdc Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

Prior service benefit (14,457) (19,210)Total

The following are the weighted-average actuarial assumptions used to determine the accrued post-retirement benefit obligations:

December 31,2014 2013

Health care cost trend rates:

Ultimate 4.50% 4.50%

The discount rate is reviewed at each measurement date. The discount rate used to measure obligations is based on a spot rateyield curve that matches projected future payments with the appropriate interest rate applicable to the timing of the projected futurebenefit payments. A 1% increase in the discount rate would decrease the December 31, 2014 accumulated post-retirement benefitobligation by 13.5%. A 1% decrease in the discount rate would increase the December 31, 2014 accumulated post-retirement benefitobligation by 17.2%.

Net periodic benefit cost is made up of the components listed below (in thousands):

Years Ended December 31,

2014 2013Service costInterest cost 4,463 5,156Expected return on plan assetsAmortization of:

Prior service benefitNet (gain) loss (2,671) (626)

Net periodic benefit cost

The changes in benefit obligations recognized in other comprehensive income are presented below (in thousands):

Net (gain) lossPrior service benefitAmortization of:

Prior service benefitNet gain (loss)

Total recognized in other comprehensive income

Years Ended December 31,2014

4,753

10,920

2013

(97)

5,657

$ (46,180)

The total amount recognized in net periodic benefit cost and other comprehensive income are presented below (in thousands):

Years Ended December 31,

[FERC FORM NO. 1 (ED. 12-88) Page 123.36

Name of Respondent

El Paso Electdc Company

This Report is:(1) X An Original(2) _ A Resubmission

NOTES TO FINANCIAL STATEMENTS (Continued)

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

20141Q4

2014 2013Total recognized in net periodic benefit cost and 6~r comprehensive inc6~ $

The amount in accumulated other comprehensive income that is expected to be recognized as a component of net periodic benefitcost during 2015 is a prior service benefit of $3.1 million and a net gain of $2.0 million.

The following are the weighted-average actuarial assumptions used to determine the net periodic benefit cost for the twelvemonths ended December 31:

2014 2013 (a)

Expected long-term return on plan assets

Initial

5.2% 5.2%

7.5% 7,75%

Year ultimate reached 2026 2026

(a) The Other Post-retirement Benefits Plan was remeasured at October 3, 2013 due to a plan amendment.The discount rate increased from 4.1% as of January 1, 2013 to 4.9% at the remeasurement date. Allother assumptions remained consistent with assumptions used at January 1, 2013.

For measurement purposes, a 7.5% annual rate of increase in the per capita cost of covered health care benefits was assumed for2014. The rate was assumed to decrease gradually to 4.5% for 2026 and remain at that level thereafter. Assumed health care costtrend rates have a significant effect on the amounts reported for the health care plan. The effect of a 1% change in these assumedhealth care cost trend rates would increase or decrease the December 31, 2014 benefit obligation by $16.1 million or $12.9 million,respectively. In addition, a 1% change in said rate would increase or decrease the aggregate 2014 service and interest cost componentsof the net periodic benefit cost by $1.4 million or $1.1 million, respectively.

The Company’s overall expected long-term rate of return on assets, on an after-tax basis, is 5.2% effective January 1, 2014. Theexpected long-term rate of return is based on the after-tax weighted average of the expected returns on investments based upon thetarget asset allocation. The Company’s target allocations for the plan’s assets are presented below:

December 31, 2014

Fixed income 30%

Total 10 0 %

The Other Post-retirement Benefit Plan invests the majority of its plan assets in common collective trusts which includes adiversified portfolio of domestic and international equity securities and fixed income securities. The asset portfolio also includes cashequivalents and a real estate limited parmership. The expected rates of return for the funds are assessed annually and are based onlong-term relationships among major asset classes and the level of incremental retums that can be earned by the successful

[FERC FORM NO. 1 (ED. 12-88) Page 123.37 I

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

implementation of different active investment management strategies. Equity returns are based on estimates of long-term inflation rate,real rate of return, 10-year Treasury bond premium over cash and equity risk premium. Fixed income returns are based on maturity,long-term inflation, real rate of return and credit spreads.

FASB guidance on disclosure for other post-retirement benefit plans requires disclosure of fair value measurements of planassets. To increase consistency and comparability in fair value measurements, FASB guidance on fair value measurements establisheda fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

[] Level 1 - Observable inputs that reflect quoted market prices for identical assets and liabilities in active markets. Prices orsecurities held in the mutual funds and underlying portfolios of the Other Post-retirement Benefits Plan are primarily obtainedfrom independent pricing services. These prices are based on observable market data.

[] Level 2 - Inputs other than quoted market prices included in Level 1 that are observable for the asset or liability eitherdirectly or indirectly. The fair value of municipal securities-tax-exempt are reported at fair value based on evaluated pricesthat reflect observable market information, such as actual trade information of similar securities, adjusted for observabledifferences. The Common Collective Trusts are valued using the NAV provided by the administrator of the fund. The NAVprice is quoted on a restrictive market although the underlying investments are traded on active markets.

[] Level 3 - Unobservable inputs using data that is not corroborated by market data. The fair value of the real estate limitedpartnership is reported at the NAV of the investment.

The fair value of the Company’s Other Post-retirement Benefits Plan assets at December 31, 2014 and 2013, and the level withinthe three levels of the fair value hierarchy defined by FASB guidance on fair value measurements are presented in the table below (inthousands):

Description of SecuritiesCash and Cash EquivalentsCommon Collective Trusts (a)

Equity fundsFixed income funds

Total Common Collective TrustsLimited Partnership Interest in Real Estate (b)

Total Plan Investments

Quoted Prices SignificantFair Value in Active Other Significant

as of Markets for Observable UnobservableDecember 31, Identical Assets Inputs Inputs

2014 (Level 1) $ (Level 2) $ (Level 3)$ 1,100 $ 1,100 ’ ~ ’;

26,399 -- --12,219 -- 12,219 --38,6181,640 -- 1,640

$ 41,358 $ 1,100 $ 38,618 $ 1,640

Description of SecuritiesCash and Cash EquivalentsCommon Collective Trusts (a)

Equity fundsFixed income funds

Total Common Collective TrustsLimited Partnership Interest in Real Estate (b)

Total Plan Investments

Quoted Prices SignificantFair Value in Active Other Significant

as of Markets for Observable UnobservableDecember 31, Identical Assets Inputs Inputs

2013 (Level 1) (Level 2) (Level 3)$ 33 $ 33 $ $

28,077 -- 28,077 --12,421 -- 12,421 --40,498 ""- ...... 40;498

1,661 1,661

$ 42,192 $ 33 $ 40,498 $ 1,661

(a) The Common Collective Trusts are invested in equity or fixed income securities, or a combination thereof. The .investment

IFERC FORM NO. 1 (ED. 12-88) Page 123.38 [

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Me, Da, Yr)(2) -- A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

(b)objective of each trust is to produce returns in excess of, or commensurate with, its predefined index.This investment is a commercial real estate partnership that purchases land, develops limited infrastructure, and sells it forcommercial development. The Company is restricted from selling its partnership interest during the life of the parmership whichis generally 5-7 years. Return of investment is realized as land is sold. The fair value of the limited partnership interest in realestate is based on the NAV of the parmership which reflects the appraised value of the land.

The table below reflects the changes in the fair value of the investments in real estate during the period (in thousands):

Fair Value ofInvestments in

Real Estate

Unrealized gain in fair value

Sale of landUnrealized gain in fair value

56

(67)46

There were no transfers in or out of Level 1 and Level 2 fair value measurements categories due to changes in observable inputsduring the twelve month periods ending December 31, 2014 and 2013. Except as noted in the above table, there were no purchases,issuances, and settlements related to the assets in the Level 3 fair value measurement category during the twelve month periods endingDecember 31, 2014 and 2013.

The Company adheres to the traditional capital market pricing theory which maintains that over the long term, the risk of owningequities should be rewarded with a greater return than available from fixed income investments. The Company seeks to minimize therisk of owning equity securities by investing in funds that pursue risk minimization strategies and by diversifying its investments tolimit its risks during falling markets. The investment manager has full discretionary authority to direct the investment of plan assetsheld in trust within the guidelines prescribed by the Company through the plan’s investment policy statement including the ability tohold cash equivalents. The investment guidelines of the investment policy statement are in accordance with the ERISA and DOLregulations.

The Company does not expect to contribute to its other post-retirement benefits plan in 2015. The following benefit payments,which reflect expected future service, as appropriate, are expected to be paid (in thousands):

$2016 3,5282017 3,9062018 4,3032019 4,5702020-2024 27,362

Annual Short-Term Incentive Plan

The Annual Short-Term Incentive Plan (the "Incentive Plan") provides for the payment of cash awards to eligible Companyemployees, including each of its named executive officers. Payment of awards is based on the achievement of performance measuresreviewed and approved by the Company’s Board of Directors’ Compensation Committee. Generally, these performance measures are

[FERC FORM NO. 1 (ED. 12-88) Page 123.39 I

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

NOTES TO FINANCIAL STATEMENTS (Continued)

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

based on meeting certain financial, operational and individual performance criteria. The financial performance goals are based onearnings per share and the operational performance goals are based on safety, compliance, customer satisfaction, and reliability. If aspecified level of earnings per share is not attained, no amounts will be paid under the Incentive Plan. In 2014, the Company reachedthe required levels of earnings per share, safety, compliance, and customer satisfaction goals for an incentive payment of $7.4 million.In 2013, the Company reached the required levels of earnings per share, safety, regulatory compliance, and customer satisfaction goalsfor an incentive payment of $4.0 million. The Company has renewed the Incentive Plan in 2015 with similar goals.

M. Franchises and Significant Customers

E! Paso and Las Cruces Franchises

The Company has a franchise agreement with E1 Paso, the largest city it serves. The franchise agreement allows the Company toutilize public rights-of-way necessary to serve its retail customers within El Paso. The Company is also providing electric distributionservice to Las Cruces under an implied franchise by satisfying all obligations under the franchise agreement that expired on April 30,2009.

The franchise arrangements held between the Company and the cities of E1 Paso and Las Cruces are detailed below:

City Period Franchise Fee (a)

Las Cruces February 1, 2000 - Present 2.00%

(a) Based on a percentage of revenue.(b) 0.75% of the El Paso franchise fee is to be placed in a restricted fund to be used solely for economic development

and renewable energy purposes.

Military Installations

The Company serves Holloman Air Force Base ("Holloman"), White Sands Missile Range ("White Sands") and Fort Bliss. Themilitary installations represent approximately 5% of the Company’s annual retail revenues. In July 2014, the Company signed anagreement with Fort Bliss for an initial three-year term under which Fort Bliss takes retail electric service from the Company under theapplicable Texas tariffs. The Company is serving White Sands under the applicable New Mexico tariffs. In March 2006, theCompany signed a contract with Holloman that provides for the Company to provide retail electric service and limited wheelingservices to Holloman for a ten-year term which expires in January 2016.

N. Financial Instruments and Investments

FASB guidance requires the Company to disclose estimated fair values for its f’mancial instruments. The Company hasdetermined that cash and temporary investments, investment in debt securities, accounts receivable, decommissioning trust funds,long-term debt, financing and capital lease obligations, accounts payable and customer deposits meet the definition of financialinstnmaents. The carrying amounts of cash and temporary investments, accounts receivable, accounts payable and customer depositsapproximate fair value because of the short maturity of these items. Investments in debt securities and decommissioning trust funds arecarried at fair value.

Long-Term Debt, Financing Obligations and Capital Lease Obligations. The fair values of the Company’s long-term debtfinancing obligations and capital lease obligations including the current portion thereof, are based on estimated market prices forsimilar issues and are presented below (in thousands):

Carrying

Page 123.40

December 31,2014 2013

Estimated Carrying Estimated

IFERC FORM NO. 1 (ED. 12-88) I

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

Pollution Control Bonds

Senior Notes

RGRT Senior Notes (1)

RCF (1)Total

Amount Fair Value Amount Fair Value

$ 193,135 $ 213.083$ 193,135 $ 193,990846,044 968,728 696,485 734,515110,000 117,215 110,000 115,85016,441 16,441 16,262 16,262

(1) Nuclear fuel capital lease obligations as of December 31, 2014 and December 31, 2013 is funded through the $110 millionRGRT Senior Notes and $16.4 million and $16.3 million, respectively under the RCF. As of December 31, 2014 and 2013, noamount was outstanding under the RCF for working capital or general corporate purposes. The interest rate on the Company’sborrowings under the RCF is reset throughout the period reflecting current market rates. Consequently, the carrying valueapproximates fair value.

Treasury Rate Locks. The Company entered into treasury rate lock agreements in 2005 to hedge against potential movements inthe treasury reference interest rate pending the issuance of the 6% Senior Notes. The treasury rate lock agreements met the criteria forhedge accounting and were designated as a cash flow hedge. In accordance with cash flow hedge accounting, the Company recordedthe loss associated with the fair value of the cash flow hedge, net of tax~ as a component of accumulated other comprehensive loss andamortizes the accumulated comprehensive loss to earnings as interest expense over the life of the 6% Senior Notes. In 2015,approximately $0.5 million of this accumulated other comprehensive loss item will be reclassified to interest expense.

Contracts and Derivative Accounting. The Company uses commodity contracts to manage its exposure to price and availabilityrisks for fuel purchases and power sales and purchases and these contracts generally have the characteristics of derivatives. TheCompany does not trade or use these insmmaents with the objective of earning financial gains on the commodity price fluctuations.The Company has determined that all such contracts outstanding at December 31, 2014, except for certain natural gas commoditycontracts with optionality features, that had the characteristics of derivatives met the "normal purchases and normal sales" exceptionprovided in FASB guidance for accounting for derivative instruments and hedging activities, and, as such, were not required to beaccounted for as derivatives.

The Company determined that certain of its natural gas commodity contracts with optionality features are not eligible for thenormal purchases exception and, therefore, are required to be accounted for as derivative instruments pursuant to FASB guidance foraccounting for derivative instruments and hedging activities. However, as of December 31, 2014, the variable, market-based pricingprovisions of existing gas contracts are such that these derivative instruments have no significant fair value.

Marketable Securities. The Company’s marketable securities, included in decommissioning trust funds in the regulatory-basisbalance sheets, are reported at fair value which was $234.3 million and $214.1 million at December 31, 2014 and 2013, respectively.These securities are classified as available for sale under FASB guidance for certain investments in debt and equity securities and arevalued using prices and other relevant information generated by market transactions involving identical or comparable securities. Thereported fair values include gross unrealized losses on marketable securities whose impairment the Company has deemed to betemporary. The tables below present the gross unrealized losses and the fair value of these securities, aggregated by investmentcategory and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

December 31, 2014Less than 12 Months 12 Months or Longer Total

Fair Unrealized Fair Unrealized Fair Unrealized

Value Losses Value Losses Value Losses

Description of ~urities (1): .....Federal Agency Mortgage Backed Securities $ -- $ -- $ 2,383 $ (57) $ 2,383 $ (57)U:S~ Government Bonds ......Municipal Obligations 6,433 (65) 8,570 (410) 15,003 (475)Corporate Obligations

Total Debt Securities 10,440 (91) 33,474 (1,151) 43,914 (1,242)

IFERC FORM NO. 1 (ED. 12-88) Page 123:41 I

Name of Respondent

El Paso Electdc Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

Common StockCommon Collective Trust-Equity Funds

Total Temporarily Impaired Securities

1,475 (229) 1,475 (229)22,736 (821) 22,736 (821)

(1) Includes approximately 106 securities.

Description of Securities (2):Federal Agency Mortgage Backed SecuritiesU.S. Government BondsMunicipal Obligations

December 31, 2013

Less than 12 Months 12 Months or LongerFair Unrealized Fair Unrealized Fair

Value Losses Value Losses Value

TotalUnrealized

Losses

6,444 $ (169) $ 1,421$ (119) $ 7.865 $ (288)8,114 (245) 10,866 (840) 18,980

12,286 (335) 7,782 (479) 20,068 (814)

Total Debt SecuritiesCommon Stock

Total Temporarily Impaired Securities

30,128 (845) 20.970 (1,492) 51,098 (2,337)

(2) Includes approximately 122 securities.

The Company monitors the length of time the security trades below its cost basis along with the amount and percentage of theunrealized loss in determining if a decline in fair value of marketable securities below recorded cost is considered to be other thantemporary. In addition, the Company will research the future prospects of individual securities as necessary. As a result of thesefactors, as well as the Company’s intent and ability to hold these securities until their market price recovers, these securities areconsidered temporarily impaired. The Company does not anticipate expending monies held in trust before 2044 or a later period whenthe Company begins to decommission Palo Verde.

The reported fair values also include gross unrealized gains on marketable securities which have not been recognized in theCompany’s net income. The table below presents the unrecognized gross unrealized gains and the fair value of these securities,aggregated by investment category (in thousands):

December 31, 2014 December 31, 2013

Fair Unrealized Fair UnrealizedValue Gains Value Gains

Description of Securities:Federal Agency Mortgage Backed Securities $ 15,388 $ 665 $ 9,929 $ 433U.S. Government BondsMunicipal ObligationsCorporate Obligations

Total Debt SecuritiesCommon StockEquity Mutual FundsCash and Cash Equivalents

Total

11,642 595 8,783 450

60,808 2,677 34,158 1,51599160

-- -- 16,802 3,081

$ 166,161 $ 50,930 $ 160,692 $ 47,741

The Company’s marketable securities include investments in municipal, corporate and federal debt obligations. Substantially all

[FERC FORM NO. 1 (ED. 12-88) Page 123.42 I

Name of Respondent

El Paso Electric Company

This Report is:(1) XAn Original(2) _ A Resubmission

NOTES TO FINANCIAL STATEMENTS (Continued)

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

of the Company’s mortgage-backed securities, based on contractual maturity, are due in ten years or more. The mortgage-backedsecurities have an estimated weighted average maturity which generally range from two years to six years and reflects anticipatedfuture prepayments. The contractual year for maturity for these available-for-sale securities as of December 31, 2014 is as follows (inthousands):

2016 2020 2025through through and

Total 2015 2019 2024 Beyond

Municipal Debt Obligations .... 2616~5 101iCorporate Debt Obligations 18,678 720 5,163 6,517 6,278

U~S. Government Bonds

The Company recognizes impairment losses on certain of its securities deemed to be other than temporary. In accordance withFASB guidance, these impairment losses are recognized in net income, and a lower cost basis is established for these securities. Forthe twelve months ended December 31, 2014 and 2013, the Company did not recognized any other than temporary impairment losseson its available-for-sale securities.

The Company’s marketable securities in its decommissioning trust funds are sold from time to time and the Company uses thespecific identification basis to determine the amount to reclassify out of accumulated other comprehensive income and into net income.The proceeds from the sale of these securities during the twelve months ended December 31, 2014 and 2013, and the related effectson pre-tax income are as follows (in thousands):

2014 2013

Proceeds from sales or maturities of available-for-sale securitiesGross realized gains included in pre-tax income $ 7.858 $ 986Gross realized losses included in pre-tax income (508)Gross unrealized losses included in pre-tax income

Net gains (losses) in pre-tax incomeNet unrealized holding gains included in accumulated other comprehensive income$ 10.827 $ 17,699Net (gains) losses reclassified out of accumulated other comprehensive income (7,350) (553)

Net gains in other comprehensive income $ 3,477 $ 17,146

Fair Value Measurements. FASB guidance requires the Company to provide expanded quantitative disclosures for financialassets and liabilities recorded on the regulatory-basis balance sheet at fair value. Financial assets carried at fair value include theCompany’s decommissioning trust investments and investments in debt securities which are included in Other Special Funds and OtherInvestments, respectively, in the regulatory-basis balance sheets. The Company has no liabilities that are measured at fair value on arecurring basis. The FASB guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used tomeasure fair value into three levels as follows:

[] Level 1 - Observable inputs that reflect quoted market prices for identical assets and liabilities in active markets. Financialassets utilizing Level 1 inputs include the nuclear decommissioning trust investments in active exchange-traded equitysecurities, mutual funds and U.S. Treasury securities that are in a highly liquid and active market.

[] Level 2 - Inputs other than quoted market prices included in Level 1 that are observable for the asset or liability eitherdirectly or indirectly. Financial assets utilizing Level 2 inputs include the nuclear decommissioning trust investments infixed income securities. The fair value of these financial instruments is based on evaluated prices that reflect observablemarket information, such as actual trade information of similar securities, adjusted for observable differences. The CommonCollective Trusts are valued using the net asset value ("NAV") provided by the administrator of the fund. The NAV price isquoted on a restrictive market although the underlying investments are traded on active markets.

[] Level 3 - Unobservable inputs using data that is not corroborated by market data and primarily based on internal Companyanalysis using models and various other analysis. Financial assets utilizing Level 3 inputs include the Company’sinvestments in debt securities.

The securities in the Company’s decommissioning trust funds are valued using prices and other relevant information generated by

IFERC FORM NO. 1 (ED. 12-88) Page 123.43 I

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

market transactions involving identical or comparable securities. FASB guidance identifies this valuation technique as the "marketapproach" with observable inputs. The Company analyzes available-for-sale securities to determine if losses are other than temporary.

During the first quarter of 2014, the Company sold its nuclear decommissioning trust investments in equity mutual funds,classified as Level 1, and invested those assets in common collective trusts which are classified as Level 2. The fair value of theCompany’s decommissioning trust funds and investments in debt securities, at December 31, 2014 and 2013, and the level within thethree levels of the fair value hierarchy defined by FASB guidance are presented in the table below (in thousands):

Description of Securities

Trading Securities:Investments in Debt Securities $

Available for sale:U.S. Government BondsFederal Agency Mortgage Backed SecuritiesMunicipal ObligationsCorporate Obligations

Subtotal, Debt SecuritiesCommon StockCommon Collective Trust-Equity FundsCash and Cash Equivalents

Total available for sale $

Quoted Prices SignificantFair Value in Active Other Significant

as of Markets for Observable Unobservable

December 31, Identical Assets Inputs Inputs2014 (Level 1) (Level 2) (Level 3)

1,653 $ -- $ -- $ 1,653

$ 41,628 $ 41,628 $17,771 --- 17,77I26,645 -- 26,64518,678 ~ 18,678

104,722 41,628 63,094

22,736 -- 22,7366,193 6,193 ~

234.286 $ 148,456 $ 85,830 $

Descriotion of Securities

Trading Securities:Investments in Debt Securities

Available for sale:U.S. Government BondsFederal Agency Mortgage Backed SecuritiesMunicipal ObligationsCorporate Obligations

Subtotal, Debt SecuritiesCommon StockEquity Mutual FundsCash and Cash Equivalents

Total available for sale

Quoted Prices SignificantFair Value in Active Other Significant

as of Markets for Observable UnobservableDecember 31. Identical Assets Inputs Inputs

2013 (Level 1) (Level 2) (Level 3)

1,555 $ -- $ $ 1,555

$ 25,238 $ 25,238 $ $17,794 ---/ 17,79428,851 -- 28,85113,373 ~ 13,373 --85,256 25,238 60,018

106,113 106,113 ~16,802 16,8025,924 5,924 --

$ 214,095 $ 154,077 $ 60,018 $

Below is a reconciliation of the beginning and ending balance of the fair value of the investment in debt securities (in thousands):

IFERC FORM NO. 1 (ED. 12-88) Page 123.44 I

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / /

NOTES TO FINANCIAL STATEMENTS (Continued)

Year/Period of Report

2014/Q4

Balance at January 1Net unrealized gains in fair value recognized in income (a)

Balance at December 31

2014 2013$ $

98 260

(a) These amounts are reflected in the Company’s regulatory-basis statement of income as other income.

There were no transfers in or om of Level 1 and Level 2 fair value measurements categories due to changes in observable inputsduring the twelve month periods ending December 31. 2014 and 2013. There were no purchases, sales, issuances, and settlementsrelated to the assets in the Level 3 fair value measurement category during the twelve month periods ending December 31, 2014 and2013.

O. Supplemental Statements of Cash Flows Disclosures

Years Ended December 3112014 2013

(In thousands)

Interest on long-term debt and borrowing under the revolving credit facilityIncome taxes, net of refund

Non-cash financing activities:Grants of restricted shares of common stockIssuance of performance shares

54,792 $ 53,7526,876

849

IFERC FORM NO. 1 (ED. 12-88) Page 123.45

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) [] A Resubmission / /

/STATEMENTS OF ACCUMULATEI~ COMPREHENSIVE INCOME, COMFtREHENSIVE INCOME, AND HEDGING ACTIVITIES

1. Report in columns (b),(c),(d) and (e) the amounts of accumulated other comprehensive income items, on a net-of-tax basis, where appropriate.2. Report in columns (f) and (g) the amounts of other categories of other cash flow hedges.3. For each category of hedges that have been accounted for as "fair value hedges", report the accounts affected and the related amounts in a footnote.4.Report data on a year-to-date basis.

LineNo.

Item

(a)1 Balance of Account 219 at Beginning of

Preceding Year2 Preceding Qtr/Yr to Date Reclassifications

from Acct 219 to Net Income3 Preceding Quarter/Year to Date Changes in

Fair Value4 Total (lines 2 and 3)5 Balance of Account 219 at End of

Preceding Quarter/Year6 Balance of Account 219 at Beginning of

Current Year7 Current Qtr/yr to Date Reclassifications

from Acct 219 to Net Income8 Current Quarter/year to Date Changes in

Fair Value9 Total (lines 7 and 8)

10 Balance of Account 219 at End of CurrentQuarter/year

Unrealized Gains andLosses on Available-for-Sale Securities

(b)

Minimum PensionLiability adjustment

(net amount)(c)

Foreign CurrencyHedges

(d)

OtherAdjustments

(e)

( 435,665) 3,037,622

14,481,526 51,369,55514,045,861 54,407,177

36,237,869 (21,327,999)

36,237,869 (21,327,999)

( 5,977,629) ( 927,246)

8,696,294 ( 12,628,256)2,718,665 ( 13,555,502)

38,956,534 (34,883,501)

FERC FORM NO. 1 (NEW 06-02) Page 122a

Name of RespondentEl Paso Electric Company

STATEMENTS OF ACCUMULATED

This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yi’) End of 2014/Q4(2) [] A Resubmission / /COMPREHENSIVE INCOME, COMPREHENSIVE INCOME, AND HEDGING ACTIVITIES

Other Cash FlowLine HedgesNo. Interest Rate Swaps

456789

10

Other Cash FlowHedges[Specify]

242,697

242,697( 12,298,137)( 12,298,137)

223,709

223,709( 12,074,428)

Totals for eachcategory of items

recorded inAccount 219

(h)(66,084,002)

2,844,65465,851,08168,695,735

2,611,7332,611,733

( 6,681,166)( 3,931,962)

( 10,613,128)( 8,001,395)

Net Income (CarriedForward from

Page 117, Line 78)

92,779,951

95,247,056

TotalComprehensive

Income

161,475,686

84,633,928

FERC FORM NO. 1 (NEW 06-02) Page 122b

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original!2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

~chedule Page: 122(a)(b) LMe No.: 1 Co~mn: bThe Company’s decommissioning trust funds include marketable securities which are reportedat fair value. These securities are classified as available for sale under FASB guidancefor certain investments in debt and equity securites and are valued using prices and otherrelevant information generated by market transactions involving identical or comparablesecurities.~chedule Page: 122(a)(b) Line No.: 1 Column: eIn accordance with the FERC Guidance Letter related to FASB guidance for employers’accounting for defined benefit pension and other postretirement plans, this amountincludes reclassification adjustments of accumulated other comprehensive income as aresult of gains or losses, prior service costs or credits and transition assets orobligations related to postretirement benefit plans being recognized as a component of netperiodic benefit cost of the period.~chedule Page: 122(a)(b) Line No.: 1 Column: gDuring the first quarter of 2005, the Company entered into treasury rate lock agreementsto hedge against potential movements in the treasury reference interest rate pending theissuance of 6% Senior Notes. These treasury rate locks were terminated on May ii, 2005.The treasury rate lock agreements met the criteria for hedge accounting and weredesignated as a cash flow hedge. In accordance with cash flow hedge accounting, theCompany recorded the loss associated with the fair value of the cash flow hedge ofapproximately $14.5 million, net of tax, as a component of accumulated other comprehensiveincome. In May 2005, the Company began to recognize in earnings (as additional interestexpense) the accumulated other comprehensive income associated with the cash flow hedge.During the next twelve month period, approximately $0.5 million pre-tax of thisaccumulated other comprehensive income item will be reclassified to interest expense.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name ot RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [~]An Original (Mo, Da, Yr)(2) [~]A Resubmission / /

SUMMARY OF UTILITY PLANT AND ACCUMOLATED PROVISIONSFOR DEPRECIATION. AMORTIZATION AND DEPLETION

Year/Period of ReportEnd of 2014/Q4

Report in Column (c) the amount for electdc function, in column (d) the amount for gas function, in column (e), (f), and (g) report other (specify) and incolumn (h) common function.

Line ClassificationNo.

(a)1 Utility Plant

2 In Service

3 Plant in Service (Classified)4 Property Under Capital Leases

5 Plant Purchased or Sold6 Completed Construction not Classified7 Experimental Plant Unclassified

8 Total (3 thru 7)9 Leased to Others

10 Held for Future Use11 Construction Work in Progress12 Acquisition Adjustments

13 Total Utility Plant (8 thru 12)14 Accum Prov for Depr, Amort, & Depl15 Net Utility Plant (13 less 14)

16 Detail of Accum Prov for Depr, Amort & Depl17 In Service:18 Depreciation19 Amort & Depl of Producing Nat Gas Land/Land Right

20 Amort of Underground Storage Land/Land Rights21 Amort of Other Utility Plant

22 Total In Service (18 thru 21)23 Leased to Others24 Depreciation

25 Amortization and Depletion

26 Total Leased to Others (24 & 25)27 Held for Future Use28 Depreciation

29 Amortization30 Total Held for Future Use (28 & 29)31 Abandonment of Leases (Natural Gas)32 Amort of Plant Acquisition Adj33 Total Accum Prov (equals 14) (22,26,30,31,32)

Total Company for theCurrent Year/Quarter Ended

(b)

3,920,326,425

175,521,889

4,095,848,314

414,284,207

4,510,132,5212,125,210,546

2,384,921,975

2,080,171,921

45,038,6252,125,210,546

2,125,210,546

Electric(c)

3,920,326,425

175,521,889

4,095,848,314

414,284,207

4,510,132,5212,125,210,5462,384,921,975

2,080,171,921

45,038,6252,125,210,546

2,125,210,546

FERC FORM NO. 1 (ED. 12-89) Page 200

Name of RespondentEl Paso Electric Company

Gas

(d)

This Report Is: Date of Report(1) [~An Original (Mo, Da, Yr)(2) [--]A Resubmission / /

SUMMARY OF UTILITY PLANT AND ACCUMULATED PROVISIONSFOR DEPRECIATION. AMORTIZATION AND DEPLETION

Year/Period of ReportEnd of 2014/Q4

Other (Specify) Other (Specify) Other (Specify) Common

(e) (f) (g) (h)

LineNo.

123

456

789

10111213

14151617

1819

20212223

24252627

2829

30313233

FERC FORM NO. 1 (ED. 12-89) Page 201

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) [~A Resubmission / /NUCLEAR F’UEL MATERIALS (Account 120.1 through 120.6 and 157)

1. Report below the costs incurred for nuclear fuel materials in process of fabrication, on hand, in reactor, and in cooling; owned by therespondent.2. If the nuclear fuel stock is obtained under leasing arrangements, attach a statement showing the amount of nuclear fuel leased, thequantity used and quantity on hand, and the costs incurred under such leasing arrangements.

Line Description of itemNo.

(a)1 Nuclear Fuel in process of Refinement, Conv, Enrichment & Fab (120.1)2 Fabrication3 Nuclear Materials4 Allowance for Funds Used during Construction5 (Other Overhead Construction Costs, provide details in footnote)6 SUBTOTAL (Total 2 thru 5)7 Nuclear Fuel Materials and Assemblies8 In Stock (120.2)9 In Reactor (120.3)

10 SUBTOTAL (Total 8 & 9)11 Spent Nuclear Fuel (120.4)12 Nuclear Fuel Under Capital Leases (120.6)13 (Less) Accum Prov for Amortization of Nuclear Fuel Assem (120.5)14 TOTAL Nuclear Fuel Stock (Total 6, 10, 11, 12, less 13)15 Estimated net Salvage Value of Nuclear Materials in line 916 Estimated net Salvage Value of Nuclear Materials in line 1117 Est Net Salvage Value of Nuclear Materials in Chemical Processing18 Nuclear Materials held for Sale (157)19 Uranium20 Plutonium21 Other (provide details in footnote):22 TOTAL Nuclear Materials held for Sale (Total 19, 20, and 21)

Balance Changes during YearBeginning of Year Additions

(b) (c)

189,389,905 39,967,38374,610,066

114,779,839 ~

FERC FORM NO. 1 (ED. 12-89) Page 202

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [~]An Original (Mo, Da, Yr)(2) r-]A Resubmission / /

NUCLEAR FUEL MATERIALS (Account 120.1 through 120.6 and 157)

Year/Period of ReportEnd of 2014/Q4

Changes during Year BalanceAmo~t(jl,~ation Other Reductions ~eE)xplain in a footnote) End ~)f~ Year

186,416,447-45,028,860 72,863,120

Line

123456789

10111213141516171819202122

FERC FORM NO. 1 (ED. 12-89) Page 203

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

~chedule Pag~ 202 L~e No.: 12 Column: eRetirement of fully amortized nuclear fuel in connection with the 2014 reloads in Units 1and 2.~¢hedule Pag~ 202 L~e No.: 13 Column: cDry cask storage costs allocated to Units I, 2 and 3.~chedule Page: 202 L~e No.: 13 Co~mn: eRetirement of fully amortized nuclear fuel in connection with the 2014 reloads in Units 1and 2.~chedu~ Page: 202 L~e No.: 14 Column: fAll of the Company’s nuclear fuel financing is accomplished through a trust that has $ii0million aggregate principal amount borrowed through senior notes and borrowings under arevolving credit facility. The assets and liabilities of the trust are reported on theCompany’s regulatory basis balance sheets.

The total amount borrowed for nuclear fuel by the trust at December 31, 2014 was $126.4million of which $16.4 million had been borrowed under the revolving credit facility, and$ii0 million was borrowed through the senior notes, of which $15 million will mature inAugust 2015. During 2014, the Company capitalized approximately $5.3 million of costs,including interest on trust borrowings, issuance costs and accrued interest on the seniornotes, trustee fees and miscellaneous legal expenses, in connection with the financing ofnuclear fuel through the trust. Information on quantities of nuclear fuel materials is notavailable.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) ~]A Resubmission / /

ELECTRIC PLANT IN SERVICE (Account 101, ~02, 103 and 106)1. Report below the original cost of electdc plant in service according to the prescribed accounts.2. In addition to Account 101, Electric Plant in Service (Classified), this page and the next include Account 102, Electric Plant Purchased or Sold;Account 103, Experimental Electric Plant Unclassified; and Account 106, Completed Construction Not Classified-Electric.3. Include in column (c) or (d), as appropriate, corrections of additions and retirements for the current or preceding year.4. For revisions to the amount of initial asset retirement costs capitalized, included by primary plant account, increases in column (c) additions andreductions in column (e) adjustments.5. Enclose in parentheses credit adjustments of plant accounts to indicate the negative effect of such accounts.6. Classify Account 106 according to prescribed accounts, on an estimated basis if necessary, and include the entries in column (c). Also to be includedin column (c) are entries for reversals of tentative distributions of prior year reported in column (b). Likewise, if the respondent has a significant amountof plant retirements which have not been classified to primary accounts at the end of the year, include in column (d) a tentative distribution of suchretirements, on an estimated basis, with appropriate contra entry to the account for accumulated depreciation provision. Include also in column (d)Line Account Balance Additions

Beginning of YearNo.(a) (b)

1 1. INTANGIBLE PLANT2 (301) Organization3 (302) Franchises and Consents4 (303) Miscellaneous Intangible Plant 117,108,5405 TOTAL Intang.ible Plant (Enter Total of lines 2, 3, and 4) 117,108,5406 2. PRODUCTION PLANT

~~7 A. Steam Production Plant8 (310) Land and Land Rights9 (311) Structures and Improvements

10 (312) Boiler Plant Equipment11 (313) Engines and Engine-Driven Generators12 (314) Turbogenerator Units13 (315) Accessory Electric Equipment14 (316) Misc. Power Plant Equipment15 (317) Asset Retirement Costs for Steam Production16 TOTAL Steam Production Plant (Enter Total of lines 8 thru 15)17 B. Nuclear Production Plant18 (320) Land and Land Rights19 (321) Structures and Improvements20 (322) Reactor Plant Equipment21 (323) Turbogenerator Units22 (324) Accessory Electric Equipment23 (325) Misc. Power Plant Equipment24 (326) Asset Retirement Costs for Nuclear Production25 TOTAL Nuclear Production Plant (Enter Total of lines 18 thru 24)26 C. Hydraulic Production Plant27 (330) Land and Land Rights28 (331) Structures and Improvements29 (332) Reservoirs, Dams, and Waterways30 (333) Water Wheels, Turbines, and Generators31 (334) Accessory Electric Equipment32 (335) Misc. Power PLant Equipment33 (336) Roads, Railroads, and Bridges34 (337) Asset Retirement Costs for Hydraulic Production35 TOTAL Hydraulic Production Plant (Enter Total of lines 27 thru 34)36 D. Other Production Plant37 (340) Land and Land Rights38 (341) Structures and Improvements39 (342) Fuel Holders, Products, and Accessories40 (343) Prime Movers41 (344) Generators42 (345) Accessory Electric Equipment43 (346) Misc. Power Plant Equipment44 (347) Asset Retirement Costs for Other Production45 TOTAL Other Prod. Plant (Enter Total of lines 37 thru 44)46 TOTAL Prod. Plant (Enter Total of lines 16, 25, 35, and 45)

291,46954,125,502

216,891,98258,372,377

132,495,94936,174,78258,580,988

211,702557,144,751

2,347,703483,327,506746,553,533231,513,400171,710,36688,753,280-42,229,190

1,681,976,598

10,000833,782

4,616,10580,327,28712,352,76310,369,7554,479,566

15,479113,004,737i

2,352,126,086~

(c)

6,470,59~ ~6,470,59~

674,12c~3,082,93~1,426,85~6,144,70~

136,48~1,560,68~2,612,507

15,638,313

8,527,20338,262,78c~

5,267,72C1,414,38~4,465,30~

57,937,40~

78,437124,133

160,83C13,09~

376,49~73,952,218

FERC FORM NO. 1 (REV. 12-05) Page 204

Name of RespondentEl Paso Electdc Company

LineNo.

This Repod Is: Date of Report(1) [~]An Odginal (Mo, Da, Yi’)(2) [~A Resubmission / /

ELECTRIC PLANT IN SERVICE (Account 101,102, 1 )3 and 106) (Continued)Account Balance

Beginning of Year(a) (b)

47 3. TRANSMISSION PLANT48 (350) Land and Land Rights49 (352) Structures and Improvements50 (353) Station Equipment51 (354) Towers and Fixtures52 (355) Poles and Fixtures53 (356) Overhead Conductors and Devices54 (357) Underground Conduit55 (358) Underground Conductors and Devices56 (359) Roads and Trails57 1 (359.1) Asset Retirement Costs for Transmission Plant58 TOTAL Transmission Plant (Enter Total of lines 48 thru 57)59 4. DISTRIBUTION PLANT60 (360) Land and Land Rights61 (361) Structures and Improvements62 (362) Station Equipment63 (363) Storage Battery Equipment64 (364) Poles, Towers, and Fixtures65 (365) Overhead Conductors and Devices

667(366) Underground Conduit(367) Underground Conductors and Devices68 !(368) Line Transformers69 (369) Services70 (370) Meters71 (371) Installations on Customer Premises72 (372) Leased Property on Customer Premises73 (373) Street Lighting and Signal Systems74 (374) Asset Retirement Costs for Distribution Plant75 TOTAL Distribution Plant (Enter Total of lines 60 thru 74)76 5. REGIONAL TRANSMISSION AND MARKET OPERATION PLANT77 (380) Land and Land Rights78 (381) Structures and Improvements79 (382) Computer Hardware80 (383) Computer Software81 (384) Communication Equipment82 (385) Miscellaneous Regional Transmission and Market Operation Plant83 (386) Asset Retirement Costs for Regional Transmission and Market Oper

8~55 TOTAL Transmission and Market Operation Plant (Total lines 77 thru 83)6. GENERAL PLANT86 (389) Land and Land Rights87 (390) Structures and Improvements88 (391) Office Furniture and Equipment89 (392) Transportation Equipment90 (393) Stores Equipment91 (394) Tools, Shop and Garage Equipment92 (395) Laboratory Equipment93 (396) Power Operated Equipment94 (397) Communication Equipment95 (398) Miscellaneous Equipment96 SUBTOTAL (Enter Total of lines 86 thru 95)97 (399) Other Tangible Property-98 (399.1) Asset Retirement Costs for General Plant99 TOTAL General Plant (Enter Total of lines 96, 97 and 98)

100 TOTAL (Accounts 101 and 106)101 (102) Electric Plant Purchased (See Instr. 8)102 (Less) (102) Electric Plant Sold (See Instr. 8)103 (103) Experimental Plant Unclassified104 TOTAL Electric Plant in Service (Enter Total of lines 100 thru 103)

13,941,8278,242,998

150,966,07027,246,287

113,076,70478,194,936

1,095,500

392,764,322

3,878,9247,727,450

167,631,452

138,809,15979,849,751

107,653,245117,606,597206,875,44841,732,56343,556,78811,838,700

10,105,318

937,265,395

899,21145,853,54821,820,53330,563,423

181,3852,793,2482,170,6575,969,553

25,627,6422,703,354

138,582,554

138,582,554

Year/Period of ReportEnd of 2014/Q4

Additions

3,937,846,897

60,631~401,39(

3,673,48(-152,17E-489,423

5,585,05(

9,078,95~

2,816,58�539,56~

21,569,17~

6,999,7744,420,0145,876,95E

10,976,84c.12,632,30E

58,94C2,721,95."

605,09~

162,225

69,379,441

5,512,98‘=2,189,321

15,160,64(

526,111~515,93(46,98(

2,082,37;535,19c.

26,569,54~

26,569,54~185,450,76~

3,937,846,897 185,450,76.=

FERC FORM NO. 1 (REV. 12-05) Page 206

Name of Respondent This Report Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [~]An Original (Mo, Da, Yr) End of 2014/Q4

(2) [~A Resubmission / /ELECTRIC PLANT IN SERVICE (Account 101,102, 103 and 106) (Continued)

distributions of these tentative classifications in columns (c) and (d), including the reversals of the prior years tentative account distributions of theseamounts. Careful observance of the above instructions and the texts of Accounts 101 and 106 will avoid serious omissions of the reported amount ofrespondent’s plant actually in service at end of year.7. Show in column (f) reclassifications or transfers within utility plant accounts. Include also in column (f)the additions or reductions of primary accountclassifications arising from distribution of amounts initially recorded in Account 102, include in column (e) the amounts with respect to accumulated~rovision for depreciation, acquisition adjustments, etc., and show in column (f) only the offset to the debits or credits distributed in column (f) to primaryaccount classifications.8. For Account 399, state the nature and use of plant included in this account and if substantial in amount submit a supplementary statement showingsubaccount classification of such plant conforming to the requirement of these pages.9. For each amount comprising the reported balance and changes in Account 102, state the property pumhased or sold, name of vendor or purchase,and date of transaction. If proposed journal entries have been filed with the Commission as required by the Uniform System of Accounts, give also date

Retirements Adjustments Transfers Balance at Line(d) (e) (f)

End ~)~)T ear No.

123

123,536,669 4123,536,669 5

291,469 854,799,631 9

219,915,522 1059,799,235 11

138,640,657 1236,309,091 i 1360,141,673 142,824,209! 15

572,721,487i 16I1 .... 17

2,347,703! 18491,077,211 19781,504,703 20234,340,386 21170,735,648 2293,141,083 23-42,229,190 24

1,730,917,444 25

27282930313233

3536

10,000 3721,942,014 22,854,233 38-1,140,805 3,599,433 39

-24,522,082 55,805,205 40242,832 8,443,279 21,038,874 41

-4,609,843 5,920,742 42-112,563 4,380,099 43

15,479 44242,832 113,624,065 45242,832 2,417,262,996 46

42,47042,470

59,398

2,179

61,577

777,4983,311,6192,440,7342,389,207

77,505

8,996,563

9,058,140

FERC FORM NO. 1 (REV. 12-05) Page 205

Name of RespondentEl Paso Electdc Company

Retirements

(d)

8,775

148,154

1,080,041

1,236,970

87,0534,170,487

752,982548,140

29,970524,789

1,411,18459,995

73,919

22,783

7,681,302

493,5163,713,3592,791,646

74,30741,163

6211,962,178

138,5039,215,293

9,215,29327,234,175

27,234,175

This Report Is: Date of Report(1) [~An Original (Mo, Da, Yr) End of(2) r--~A Resubmission / /

ELECTRIC PLANT IN SERVICE (Account 101,102, 103 and 106) (Continued)Adjustments Transfers Balance at

End ~)gf)Year(e) (f)

Year/Period of Report2014/Q4

13,993,6908,644,388

154,491,39627,094,111

111,507,24083,779,986

1,095,500

400,606,311

-456,942 -1,063 6,237,5058,179,962i

185,030,141

145,055,95183,721,625

113,500,231128,058,657218,096,57041,731,50846,278,74112,369,880

1 O, 244,758

-456,942 -1,063 998,505,529

899,21150,873,01720,296,49542,932,417

181,3853,245,0572,845,4246,015,912

25,747,8413,100,050

155,936,809

155,936,809-214,110 -1,063 4,095,848,314

-214,110 -1,063 4,095,848,314

LineNo.

47484950515253

55

57585960616263

65666768697071727374757677787980818283

8586878889

919293

95

979899100101102103104

FERC FORM NO. 1 (REV. 12-05) Page 207

Name of RespondentEl Paso Electric Company

This Report Is:(1) [~]An Original(2) ~]A Resubmission

ELECTRIC PLANT LEASED TO OTHERS

Date of Report(Mo, Da, Yr)II

Account 104)

Year/Period of ReportEnd of 2014/Q4

Line Name of Lessee(Design..a.te a,sso.c.iated, c.o .mpanies

No. w=tn a aouo=e asterisK)(a)

12345678

~0~

~2

~4~5

~6

~920

2~22

2a

2526

272829~0

~2

~5

a7

~9404~424~

45

TOTAL

pDescription of.roperb~.easea

CommissionAuthorization

(c)EI~)Pa

irationte of Balance at

End of Year(e)

FERC FORM NO. 1 (ED. 12-95) Page 213

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr)

El Paso Electric Company (2) [~A Resubmission / / End of 2014/Q4

ELECTRIC PLANT HELD FOR FUTURE ’USE (Account 105)1. Report separately each property held for future use at end of the year having an original cost of $250,000 or more. Group other items of property heldfor future use.2. For property having an original cost of $250,000 or more previously used in utility operations, now held for future use, give in column (a), in addition toother required information, the date that utility use of such property was discontinued, and the date the original cost was transferred to Account 105.

LineNo.

1 Land and Rights:23456789

101112131415161718192021 Other Property:222324252627282930313233

3536373839

424a

45

Description and LocationOf P[~rly

Date Originally Include~in This Account

(b)Date Expected to be used

in Ut!li.ty Service(c)

Balance atEnd of Year

(d)

47 Total

FERC FORM NO. 1 (ED. 12-96) Page 214

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electdc Company (2) [~A Resubmission ! /CONSTRU(~TION WORK IN PROGRESS - - ELE(~TRIC (Account 107)

1. Report below descriptions and balances at end of year of projects in process of construction (107)2. Show items relating to "research, development, and demonstration" projects last, under a caption Research, Develo ~ment, and Demonstrating (seeAccount 107 of the Uniform System of Accounts)3. Minor projects (5% of the Balance End of the Year for Account 107 or $1,000,000, whichever is less) may be grouped.

Line Description of Project Construction work in progress -Electric (Account 107)No.

(a) (b)1 MONTANA POWER STATION 220,575,526

2 PAI~O VERDE CAPITAL IMPROVEMENTS 55,631,208

3 1 EASTSIDE DISTRIBUTION OPERATIONS CENTER 35,832,719

4 i MONTANA POWER TRANSMISSION SUBSTATION 14,346,875

~’ARROYO PHASE SHIFTER 11,867,034DISTRIBUTION COMMERCIAL CONSTRUCTION - TX 4,036,717

7 DISTRIBUTION RESIDENTIAL CONSTRUCTION - TX 3,508,784

8 AMRAD EDDY LINE RESTORATION 3,272,150

9 INFORMATION TECHNOLOGY HARDWARE & SOFTWARE PROJECTS 2,874,211

10 DISTRIBUTION SUBSTATION TRANSFORMERS REPLACEMENTS - TX 2,850,746

11 MILAGRO TO LEO TRANSMISSION LINE REBUILD 2,742,211

12 NEWMAN STATION STEAM & WATER SAMPLE SYSTEMS 2,724,431

13 LANE TO COPPER TRANSMISSION LINE REBUILD 2,381,124

14 SUNSET TRANSFORMER REPLACEMENT 2,323,t19

15 1DISTRIBUTION BE’rTERMENT - TX 1,990,686

16 i FOUR CORNERS CAPITAL IMPROVEMENT 1,885,262

17 I AlP ACCESS & CLEARING 1,785,788

18 LEO SUBSTATION UPGRADE 1,722,198

19 TX OVERHEAD SERVICE 1,594,554

20 UTEP FEEDER IMPROVEMENTS 1,578,538

21 AFTON TO AIRPORT TRANSMISSION LINE 1,372,087

22 RIO GRANDE TO SUNSET TRANSMISSION LINE REBUILD 1,253,953

23 COPPER WAREHOUSE RENOVATION 1,253,762

24 ANTHONY SUB AND FEEDER UPGRADE 1,213,648

25 NEWMAN LOW PRESSURE SECTION 1,109,731

26 SUNSET UNDERGROUND BREAKER UPGRADES 1,101,524

27 TX DISTRUBITION DAMAGE 1,087,241

28 MINOR PROJECTS 30,368,380

29

30

31

32

33

35

37

38

39

40

4142

43 TOTAL 414,284,207

FERC FORM NO. 1 (ED. 12-87) Page 216

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yi’) End of 2014/Q4

El Paso Electdc Company (2) [] A Resubmission / /ACCUMULATED PROVISION FOR DEPRECIATION OF ELE(~TRIC UTILITY PLANT (Account 108)

1. Explain in a footnote any important adjustments during year.!2. Explain in a footnote any difference between the amount for book cost of plant retired, Line 11, column (c), and that reported for!electric plant in service, pages 204-207 column 9d), excluding retirements of non-depreciable property.

’3. The provisions of Account 108 in the Uniform System of accounts require that retirements of depreciable plant be recorded whensuch plant is removed from service. If the respondent has a significant amount of plant retired at year end which has not been recordedand/or classified to the various reserve functional classifications, make preliminary closing entries to tentatively functionalize the bookcost of the plant retired. In addition, include all costs included in retirement work in progress at year end in the appropriate functionalclassifications.4. Show separately interest credits under a sinking fund or similar method of depreciation accounting.

Line ItemNo. (a)

1 Balance Beginning of Year2 Depreciation Provisions for Year, Charged to3 (403) Depreciation Expense

~1(403.1) Depreciation Expense for AssetRetirement Costs

(413) Exp. of Elec. Pit. Leas. to OthersTransportation Expenses-Clearing

Other Clearing Accounts

Other Accounts (Specify, details in footnote):

Section A. Balances and Changes During Year

5

7

1(~TOTAL Deprec. Prov for Year (Enter Total oflines 3 thru 9)

11 Net Charges for Plant Retired:12 Book Cost of Plant Retired

13 Cost of Removal14 Salvage (Credit)

1~ TOTAL Net Chrgs. for Plant Ret. (Enter Totalof lines 12 thru 14)

16 Other Debit or Cr. Items (Describe, details infootnote):

17

18 Book Cost or Asset Retirement Costs Retired

Balance End of Year (Enter Totals of lines 1,10, 15, 16, and 18)

( TQtal,C+d+e)

(b)2,032,293,724

74,462,928

-1,067,836

73,395,092

27,100,571

3,309,312

4,892,988

25,516,895

2,080,171,921

Pleq~nc I:’lant ~n~ervlce

(c)2,032,293,72~1

74,462,92~

-1,067,83~

73,395,09;

27,100,571

3,309,31;

4,892,98~

25,516,89~

2,080,171,921

~-~ectnc P’~antfor Future Use

(d)

Section B. Balances at End of Year According to Functional Classification

276,735,61~

1,197,992,281

15,744,52;

208,129,26~

319,487,89~

62,082,334

2,080,171,921

2(] Steam Production

21 Nuclear Production

221 Hydraulic Production-Conventional

23 Hydraulic Production-Pumped Storage

24 Other Production25 Transmission

26 Distribution

27 Regional Transmission and Market Operation

28 General29 TOTAL (Enter Total of lines 20 thru 28)

276,735,619

1,197,992,281

15,744,527

208,129,266

319,487,894

62,082,334

2,080,171,921

Plectrlc I-’JantLeasedto Others

(e)

FERC FORM NO. 1 (REV. 12-05) Page 219

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr)

El Paso Electdc Company (2) [~]A Resubmission / / End of 2014/Q4

INVESTMI=NTS IN SUBSIDIARY COMPANIES/Account 123.1)1. Report below investments in Accounts 123.1, investments in Subsidiary Companies.2. Provide a subheading for each company and List there under the information called for below. Sub - TOTAL by company and give a TOTAL incolumns (e),(f),(g) and (h)(a) Investment in Securities - List and describe each security owned. For bonds give also principal amount, date of issue, maturity and interest rate.(b) Investment Advances - Report separately the amounts of loans or investment advances which are subject to repayment, but which are not subject tocurrent settlement. With respect to each advance show whether the advance is a note or open account. List each note giving date of issuance, maturitydate, and specifying whether note is a renewal.3. Report separately the equity in undistributed subsidiary earnings since acquisition. The TOTAL in column (e) should equal the amount entered forAccount 418.1.

LineNo.

123456789

101112131415161718192021222324252627282930313233

35363738394041

42 Total Cost of Account 123.1 $

FERC FORM NO. 1 (ED. 12-89)

Description of Investment

(a)

OlPage 224

Date Acquired(b)

Date OfMalc ty

TOTAL

Amount of Investment atBegin.ni..ng of Year

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr)El Paso Electric Company (2) [~A Resubmission / / End of 2014/Q4

INVESTMENTS IN SUBSIDIARY COMPANIES (Account 123.1) (Continued)4. For any securities, notes, or accounts that were pledged designate such securities, notes, or accounts in a footnote, and state the name of pledgeeand purpose of the pledge.5. If Commission approval was required for any advance made or secudty acquired, designate such fact in a footnote and give name of Commission,date of authorization, and case or docket number.6. Report column (f) interest and dividend revenues form investments, including such revenues form securities disposed of during the year.7. In column (h) report for each investment disposed of during the year, the gain or loss represented by the difference between cost of the investment (orthe other amount at which carried in the books of account if difference from cost) and the selling price thereof, not including interest adjustment includiblein column (f).8. Report on Line 42, column (a) the TOTAL cost of Account 123.1

Revenues for Year

(f)Amount of Investment at

End ~gf)YearGain or Loss from Investment

Disp~ed ofEquity in Subsidian]

Earnin~)of YearLineNo.

123456789

1011121314151617181920212223242526272829303132333435363738394041

42

FERC FORM NO. 1 (ED. 12-89) Page 225

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr)

El Paso Electric Company (2) [] A Resubmission / / End of 2014/Q4

MATERIALS AND SUPPLIES1. For Account 154, report the amount of plant materials and operating supplies under the primary functional classifications as indicated in column (a);estimates of amounts by function are acceptable. In column (d), designate the department or departments which use the class of material.2. Give an explanation of important inventory adjustments during the year (in a footnote) showing general classes of material and supplies and thevarious accounts (operating expenses, clearing accounts, plant, etc.) affected debited or credited. Show separately debit or credits to stores expenseclearing, if applicable.Line AccountNo.

11

1213

14

15

BalanceBeginning of Year

(b)1,297,394

(a)1 Fuel Stock (Account 151)2 Fuel Stock Expenses Undistributed (Account 152)

3 Residuals and Extracted Products (Account 153)4 Plant Materials and Operating Supplies (Account 154)

5 Assigned to - Construction (Estimated)6 Assigned to - Operations and Maintenance7 Production Plant (Estimated)8 Transmission Plant (Estimated)9 Distribution Plant (Estimated)

10 Regional Transmission and Market Operation Plant(Estimated)Assigned to - Other (provide details in footnote)

TOTAL Account 1 54 (Enter Total of lines 5 thru 11)Merchandise (Account 155)Other Materials and Supplies (Account 156)

Nuclear Materials Held for Sale (Account 157) (Notapplic to Gas Util)Stores Expense Undistributed (Account 163)

29,820,107

5,453,505

7,093,845

BalanceEnd of Year

(c)1,397,719

31,328,550

5,179,2135,482,951

44,688,673 44,514,605

16 -8,972 -1,08617

18

19

20 TOTAL M=erials and Supplies(Per Balance She~) 45,977,095 45,911,238

Department orDepartments which

Use Material(d)

Production

ProductionTransmissionDistribution

Various

FERC FORM NO. 1 (REV. 12-05) Page 227

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2 014/Q4

~chedu~ Pag~ 227 L~e No.: 11 Column: bConsists primarily of items used in the field and includes conduit,goods, lighting and safety supplies and tools.~chedu~ Page: 227 L~e No.: 11 Column: cConsists primarily of items used in the field and includes conduit,goods, lighting and safety supplies and tools.

underground rubber

underground rubber

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of RespondentEl Paso Electdc Company

This Report Is: Date of Report(1) [~An Original (Mo, Da, Yr)(2) [~A Resubmission / /

Allowances (Accounts 158.1 and 158.2)

Year/Period of Report

End of 2014/Q4

1. Report below the particulars (details) called for concerning allowances.2. Report all acquisitions of allowances at cost.3. Report allowances in accordance with a weighted average cost allocation method and other accounting as prescribed by GeneralInstruction No. 21 in the Uniform System of Accounts.4. Report the allowances transactions by the period they are first eligible for use: the current year’s allowances in columns (b)-(c),allowances for the three succeeding years in columns (d)-(i), starting with the following year, and allowances for the remainingsucceeding years in columns (j)-(k).5. Report on line 4 the Environmental Protection Agency (EPA) issued allowances. Report withheld portions Lines 36-40.

Line SO2 Allowances InventoryNo. (Account 158.1)

(a)1 Balance-Beginning of Year23 Acquired During Year:4 Issued (Less Withheld Allow)5 Returned by EPA6

Purchases/Transfers:

Current YearNo. Amt.(b) (c)

13,292.00

359.00

2015NO. Amt.(d) (e)

101112131415 Total

2021222324252627282930313233

35

3637383940414243

45

Relinquished During Year:Charges to Account 509Other:Emissions DeductionCost of Sales/Transfers:

26.00

TotalBalance-End of Year 13,625.00 359.0(;

Sales:Net Sales Proceeds(Assoc. Co.)Net Sales Proceeds (Other)GainsLossesAllowances Withheld (Acct 158.2)Balance-Beginning of YearAdd: Withheld by EPADeduct: Returned by EPACost of SalesBalance-End of Year

Sales:Net Sales Proceeds (Assoc. Co.)Net Sales Proceeds (Other)Gains

46 Losses

FERC FORM NO. 1 (ED. 12-95) Page 228a

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) ~]An Original (Mo, Da, Yr)

El Paso Electric Company (2) DA Resubmission / / End of 2014/Q4

Allowances (Accounts 158.1 and 158.2) (Continued)6. Report on Lines 5 allowances returned by the EPA. Report on Line 39 the EPA’s sales of the withheld allowances. Report on Lines43-46 the net sales proceeds and gains/losses resulting from the EPA’s sale or auction of the withheld allowances.7. Report on Lines 8-14 the names of vendors/transferors of allowances acquire and identify associated companies (See "associatedcompany" under "Definitions" in the Uniform System of Accounts).8. Report on Lines 22 - 27 the name of purchasers/transferees of allowances disposed of an identify associated companies.9. Report the net costs and benefits of hedging transactions on a separate line under purchases/transfers and sales/transfers.10. Report on Lines 32-35 and 43-46 the net sales proceeds and gains or losses from allowance sales.

2016 2017 Future Years Totals LineNo. Amt. No. Amt. No. Amt. No.(f) (g) (h) (i) (I) (m)

359.00

26.00

359.0~ 359.0(~ 9,693.00 24,395.00

12345

89

101112131415

181920212223242528272829~0

32

~5

3637383940414243444546

FERC FORM NO. 1 (ED. 12-95) Page 229a

Name of Respondent

El Paso Electdc Company

This Report is: Date of Report Year/Period of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / / 2014/Q4

FOOTNOTE DATA

~chedule Page: 228 Line No.: 1 Column: dRepresents allowances allocated to the Company by the Environmental Protection Agency("EPA") based on our current electric generation and the current regulatory framework.

~chedule Page: 228 Line No.: 1 Column: fRepresents allowances allocated to the Company by the EPA based on our current electricgeneration and the current regulatory framework.~chedule Page: 228 Line No.: 1 Column: hRepresents allowances allocated to the Company by the EPA based on our current electricgeneration and the current regulatory framework.~chedule Page: 228 LMe No.: 1 Column: jRepresents allowances allocated to the Company by the EPA based on our current electricgeneration and the current regulatory framework. Proposed allowances for future yearsinclude allowances for each year beginning in 2018 and beyond.~chedule Page: 228 Line No.: 1 Column: IRepresents allowances banked by the Company through December 31, 2013.~chedule Page: 228 Line No.: 1 Column: mThe Company has not purchased any allowances; however,were trading at $0.50 per ton (allowance).

at December 30, 2014 SO2 allowances

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of RespondentEl Paso Electdc Company

This Report Is: Date of Report(1) [ElAn Original (Mo, Da, Yr)(2) [--IA Resubmission / /

Allowances (Accounts 158.1 and 158.2)

Year/Period of Report

End of 2014/Q4

1. Report below the particulars (details) called for concerning allowances.2. Report all acquisitions of allowances at cost.3. Report allowances in accordance with a weighted average cost allocation method and other accounting as prescribed by GeneralInstruction No. 21 in the Uniform System of Accounts.4. Report the allowances transactions by the period they are first eligible for use: the current year’s allowances in columns (b)-(c),allowances for the three succeeding years in columns (d)-(i), starting with the following year, and allowances for the remainingsucceeding years in columns (j)-(k).5. Report on line 4 the Environmental Protection Agency (EPA) issued allowances. Report withheld portions Lines 36-40.

Line NOx Allowances InventoryNo. (Account 158.1)

(a)1 Balance-Beginning of Year

Acquired During Year:Issued (Less Withheld Allow)

Returned by EPA

Currant YearNo. Amt.(b) (c)

-744.00 -34,975

988.00

2015NO. Amt.(d) (e)

1,839~0(~

6789

101112131415161718192O21

22i23~

Purchases/Transfers:Evolution Markets 510.00

Adjustments for prioryears’ grants 207.00Adjustments for prioryears’ emissions 108.00Total 825.00

Relinquished During Year:Charges to Account 509Other:

Cost of Sales/Transfers:

22,44(~

22,440

1,748.00 7,905

24252627

28 Total29

32333435

3637383940414243

45

Balance-End of Year -679.00

Sales:Net Sales Proceeds(Assoc. Co.)Net Sales Proceeds (Other)GainsLossesAllowances Withheld (Acct 158.2)Balance-Beginning of YearAdd: Withheld by EPADeduct: Returned by EPACost of SalesBalance-End of Year

Sales:Net Sales Proceeds (Assoc. Co.)Net Sales Proceeds (Other)Gains

-22,280 1,839.0(~

46 Losses

FERC FORM NO. 1 (ED. 12-95) Page 228b

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [~An Original (Mo, Da, Yr)(2) []A Resubmission / /

Allowances (Accounts 158.1 and 158.2) (Continued)

Year/Period of Report

End of 2014/Q4

6. Report on Lines 5 allowances returned by the EPA. Report on Line 39 the EPA’s sales of the withheld allowances. Report on Lines43-46 the net sales proceeds and gains/losses resulting from the EPA’s sale or auction of the withheld allowances.7. Report on Lines 8-14 the names of vendors/transferors of allowances acquire and identify associated companies (See "associatedcompany" under "Definitions" in the Uniform System of Accounts).8. Report on Lines 22 - 27 the name of purchasers/transferees of allowances disposed of an identify associated companies.9. Report the net costs and benefits of hedging transactions on a separate line under purchases/transfers and sales/transfers.10. Report on Lines 32-35 and 43-46 the net sales proceeds and gains or losses from allowance sales.

2016 2017 Future Years Totals LineNo. Amt. No. Amt. No. Amt. No. Amt. No.(f) (9) (h) (i) (~) (k) (I) (m)

-744.00 -34,97~ 1

1,839.00 4567

4,666.00

8510.00 22,44(~ 9

1011

207.00 1213

108.00 14825.00 22,441~ 15

~ 1617

1,748.00 7,90~ 18

1,84C 20

1,839.00 2,999.00 -22,28(~

2223242526272829303132333435

3637383940414243444546

FERC FORM NO. 1 (ED. 12-95) Page 229b

Name of Respondent

El Paso Electdc Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

~chedule Page: 229 Line No.: 4 Column: dRepresents 1,221 NOx allowances eligible for annual emission use and 618 NOx allowanceseligible for ozone-season emission.~chedule Page: 229 Line No.: 4 Column: fRepresents 1,221 Nox allowances eligible for annual emission use and 618 Nox allowanceseligible for ozone-season emission.~chedule Page: 229 Line No.: 18 Column: bIncludes the NOx allowances expected to be purchased for the 2014 compliance year.~chedule Page: 229 Line No.: 18 Column: cIncludes the accrual related to the NOx allowances expected to be purchased for the 2014compliance year.~chedule Page: 229 Line No.: 20 Column: cRepresents the NOx allowance cost adjustment to true-up to the 2013 actual shortage.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of RespondentEl Paso Electric Company

Line ..D~.sc.rip.tiq.n of.Extrao.rdinary L.o.ss oNo. ^ unc=uoe in.the oesc.ripti.on the ~.ate or

L;ofnmi.ssion,/~uthQriz~ion,to use .~cc 182.1ano peno~ o~ amomzatlon ~mo, yr lO mo, yr).]

(a)123456789

10’1112!

16171819

20 TOTAL

This Report Is: Date of Report(1) [~]An Original (Mo, Da, Yr)(2) [] A Resubmission / !

EXTRAORDINARY PROPERTY LOSSES (Account 182.1)

Year/Period of ReportEnd of 2014/Q4

"FotalAmountof Loss

(b)

LossesReco~nisedDurin.~ Year

(c)

WRITTENAccountCharged

(d)

OFF DURING YEAR

Amount(e)

Balance atEnd of Year

(f)

FERC FORM NO. 1 (ED. 12-88) Page 230a

Name of RespondentEl Paso Electric Company

LineNo.

This Report Is: Date of Report(1) [~]An Original (Mo, Da, Yr)(2) [~A Resubmission / /

UNRECOVERED PLANT AND REGULATORY STUDY COSTS (182.2)

Description of Unrecovered Plant "Fotal Costsand Regulatory Study Costs [Include Amount ~Rec.ogn.isedin the description of costs the date of of Charges uunng YearComm ss on Author zat on to use Acc 182.2and period of amortization (too, yr to too, yr)]

(a) (b) (c)212223;24i

272829aO

~2

a5

~7~8~94041424~

45484748

49 TOTAL

Year/Period of ReportEnd of 2014/Q4

WRITTEN OFF DURING YEAR

Account AmountCharged

(d) (e)

Balance atEnd of Year

(f)

FERC FORM NO. 1 (ED. 12-88) Page 230b

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [] An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) [] A Resubmission / /

Transmission Service and Generation Intemonnection Study Costs1. Report the particulars (details) called for concerning the costs incurred and the reimbursements received for performing transmission service andgenerator interconnection studies.2. List each study separately.3. In column (a) provide the name of the study.4. In column (b) report the cost incurred to perform the study at the end of period.5. In column (c) report the account charged with the cost of the study.6. In column (d) report the amounts received for reimbursement of the study costs at end of period.7. In column (e) report the account credited with the reimbursement received for performing the study.Line

1234

6i7I

10

NO. Description(a)

Transmission Studies

111213

141161

17

181920

22 Otero 70MW Solar PV Project SIS

24’

23 Santa Teresa 90MW Solar PV’81s ~

2526272829

3132,33

353637383940

Costs Incurred DuringPeriod

(b)Account Charged

(c)

ReimbursementsReceived During

the Period(d)

17,883 186-000 ( 17,883) 186-00011,504 186-000 ( 11,504) 186-000

Account CreditedWith Reimbursement

(e)

FERC FORM NO. 111-FI3-Q (NEW. 03-07) Page 231

Name of Respondent

El Paso Electric Company

This Report is: Date of Report Year/Period of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / / 2014/Q4

FOOTNOTE DATA

~chedule Page: 231 Line No.: 22 Column: aThe study was one of the projects of theStudy.~chedule Page: 231 Line No.: 23 Column: aThe study was one of the projects of theStudy.

System Impact Study Final Report 115 kV Cluster

System Impact Study Final Report - 115 kV Cluster

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) [~A Resubmission / !OTHER REGULATORY ASSETS (Account 182.3)

1. Report below the particulars (details) called for conce.rning other regulatory assets, including rate order docket number, if applicable.2. Minor items (5% of the Balance in Account 182.3 at end of period, or amounts less than $100,000 which ever is less), may begrouped by classes.3. For Regulatory Assets being amortized, show period of amortization.

12

Description and Purpose ofOther Regulatory Assets

(a)Taxes - Regulatory Assets

LineNo.

3 Rio Grande Resources Trust’.4 Nuclear Fuel Postload Daily Finance Charge567

9 Texas10 FERC1112 Texas:

13

Balance at DebitsBeginning of

CurrentQuarter/Year

(b) (c)110.030,301 28,437,48~

4,488,311 3,270,344

4,289,693 7,593,851

7,204,850

42,764

580,904

14 2015 Rate Case Costs1516

1718 Texas Energy Effidency19

20 New Mexico Renewable Energy Cost:

21 Renewable Procurement Plan

22 Renewable Energy Credits23

24 New Mexico:

26 2015 New Mexico Rate Case Costs27

28293O

313233

35

3738

394O41

43

44 TOTAL

758,668

139,510

4,832,993

4,~1,963

3,043,371

169,303

6,200,23(~

623,241

1,737

41,45~

49,381,024

CREDITSWntten oll Uunngthe Quarter/YearAccount Charged

(d)various

518

501/431

440’S

928

253.4

142

182.3

407.3

Written ott L)unngthe Period

Amount(e)

24,206,200

3,307,660

1,181,262

38,278

580,904

758,668

4,382,916

263

152,184

Balance at end ofCurrent Quarter/Year

(f)

10,702,282

10,248,2214,486

434,259

4,719,769

137,672,469 34,608,335 152,445,158

FERC FORM NO. 113-Q (REV. 02-04) Page 232

Name of Respondent

El Paso Electdc Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

~chedu~ Page: 232 LMe No.: 1 Column: fAmortization period ranges from 5 to 40 years.~chedu~ Pag~ 232 L~e No.: 4 Column: fAmortization is based on a pro rata relationship with nuclear fuel amortization.~chedu~ Pag~ 232 L~e No.: 6 Column: aRepresents total Company final coal mine reclamation liability related to the Company’s 7%interest in Units 4 and 5 at Four Corners. Final coal mine reclamation represents the costto reclaim the land disturbed during the coal mining that was not previously reclaimedwhile the mine was in operation. Current ongoing reclamation of land is passed through asreconcilable fuel costs. In the Company’s New Mexico jurisdiction, the recovery of finalcoal reclamation costs was approved as a base fuel component in Case No. 06-00258-UT andwill be amortized through July 2016, the termination date of the 50-year participationagreement among the owners of the Four Corners generating facility. In the Company’s Texasjurisdiction, the recovery of final reclamation costs was approved as a component ofreconcilable fuel in the Final Order of PUCT Docket No. 38361 issued January 27, 2011 tobe amortized over a 113 month period beginning March 2007 through July 2016. The FinalOrder of PUCT Docket No. 41852 issued July ii, 2014 provided for the final coalreclamation costs to continue in the amount of approximately $70 thousand per month. Inthe Company’s FERC jurisdiction final coal reclamation costs will not be recovered untilactual final reclamation is paid. On February 17, 2015, the Company and APS entered intoan asset purchase agreement, providing for the purchase by APS of the Company’s interestsin Four Corners. The purchase price will be adjusted downward to reflect APS’s assumptionof the Company’s obligation to pay for future mine reclamation expenses. The Companyrecorded an adjustment of $7.6 million at December 31, 2014 for mine reclamation costs,which the Company expects to pay at closing, based on a 2014 Golder Associate Study. SeeNote E of the Notes to the Regulatory-Basis Financial Statements.~chedule Pag~ 232 LMe No.: 8 Column: eAt December 31, 2014, the Company had a net undercollection of fuel revenues.~chedule Page: 232 L~e No.: 13 Column: aBalance of rate case costs related to PUCT Docket No. 40094 which were amortized over atwo year period beginning May 2012.~chedule Page: 232 L~e No.: 14 Column: fThe Company will request recovery of these costs in the Company’s next rate case filing.~chedu~ Page: 232 L~e No.: 16 Column: aPURA Section 36.354 requires that each electric utility provide Military Base Ratediscounts to military bases in areas where customer choice is not available. Inaccordance with the Final Order in Docket No. 37690, the Military Base Discount RecoveryFactor allows the Company to recover the total base rate discount provided to militarybase facilities from non-military customers through a recovery factor. At December 31,2014, the Company had over-collected Military Base Discount and Recovery program costs.The over-collection is presented as a regulatory liability in account 254.3.~chedu~ Pag~ 232 L~e No.: 18 Column: fIn accordance with the Final Order in Docket No. 37690, the Company began recoveringEnergy Efficiency Program costs effective July 2010, through a tariff rider approved bythe PUCT via Texas Rate 97. The rate is updated annually.~chedule Page: 232 L~e No.: 21 Column: fThe Company will request these costs as a component of base rates in the Company’s nextrate case filing.~chedu~ Page: 232 LMe No.: 22 Column: fThe Company will request these Costs as a component of base rates in the Company’s nextrate case filing.~chedule Pag~ 232 L~e No.: 25 Column: aRepresents costs incurred for a Fuel and Purchased Power Cost Adjustment Clause (FPPCAC)audit. As ordered by the NMPRC in Case No. 09-00171-UT, the Company can defer these costsas a regulatory asset and request recovery in a future rate proceeding after the costs areincurred.~chedu~ Pag~ 232 L~e No.: 26 Column: f

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

The Company will request recovery of these costs in the Company’s next rate case filing.~chedule Page: 232 LMe No.: 28 Column: aIn NMPRC Case No. 09-00171-UT, the NMPRC extended the depreciable life of Palo Verde anadditional 20 years for New Mexico ratemaking purposes, reducing the depreciation expensecollected from New Mexico customers in rates, effective January 2010. In April 2011, theNRC renewed the operating license for all three units at Palo Verde for an additional 20years; therefore, the incremental difference in Palo Verde depreciation for the New Mexicojurisdiction will be amortized to account 407.3 over the remaining life of Palo Verde.

IFERC FORM NO. 1 (ED. 12-87) Page 450.2

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) [~]A Resubmission / /MISCELLANEOUS DEFFERED DEBITS (Account 186)

1. Report below the particulars (details) called for conc.erning miscellaneous deferred debits.2. For any deferred debit being amortized, show period of amortization in column (a)3. Minor item (1% of the Balance at End of Year for Account 186 or amounts less than $100,000, whichever is less) may be grouped byclasses.

LineNo.

123456789

1011121314151617181920212223242526272829

313233

35

37i

3940414243

45

Description of Miscellaneous Balance atDeferred Debits Beginning of Year

(a) (b)Facility & Impact Study 68,230

Miscellaneous 39,389

Reimbursable Transmission &Distribution Projects 789,363

El Paso Water Utilities LandLease 1,656,118

Palo Verde Water4,294,458

Debits

6,65~

1,760,73(;

P~CCOUntCharged

(d)

various

131

507

CREDITS

373

1,928,959

445,741

119,321

Balance atEnd of Year

(c)

519

Amount(e) (f)

68,230

45,670

621,134

1,560,944

4,175,137

Misc. Work in Progress -13,413

Expenses (See pages 350 - 351)TOTAL 6,834,145

2,156

6,473,271

FERC FORM NO. 1 (ED. 12-94) Page 233

Name of Respondent

El Paso Electric Company

This Report is: Date of Report Year/Period of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / / 2014/Q4

FOOTNOTE DATA

~chedule Page: 233 L~e No.: 9 Column: cAnnual cash payment for land leased adjacent to our Newman Power Plant.~chedule Page: 233 LMe No.: 12 Column: aIn May 2010, Palo Verde entered into a 40 year Municipal Effluent Purchase and SaleAgreement with the Sub-regional Operating Group (City of Phoenix, City of Mesa, City ofScottsdale and the City of Glendale).~chedule Page: 233 LMe No.: 47 Column: aRepresents CWIP charges pending completion of project, at which time amounts will then betransferred to the proper account.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report(1) []An Original (Mo, Da, Yr)

El Paso Electric Company (2) I~]A Resubmission / /ACCUMULATED DEFERRED INCOME TAXES (Account 190)

1. Report the information called for below concerning the respondent’s accounting for deferred income taxes.2. At Other (Specify), include deferrals relating to other income and deductions.

Year/Period of ReportEnd of 2014/Q4

LineNo.

123456789

101112131415161718

Electric

Description and Location

(a)

Balance of Beginingof Year

(b)

202,347,808

Balance at Endof Year

(c)

202,158,539

Other

TOTAL Electric (Enter Total of lines 2 thru 7) 202,347,808Gas

OtherTOTAL Gas (Enter Total of lines 10 thru 15Other (Specify) 1,918,883 1,135,687TOTAL (Acct 190) (Total of lines 8, 16 and 17) 204,266,691 203,294,226

Notes

FERC FORM NO. 1 (ED. 12-88) Page 234

Name of Respondent

El Paso Electdc Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

~chedule Page: 234 Line No.: 8 Column: c

El Paso Electric CompanyAccount 190 - FERC ONLYFor the Year Ended December 31, 2014

< Page 234 Line 2 Column (a) >

ELECTRICDeferred tax assets:

Plant, principally due to capitalized costsBenefit of tax loss carryforwardsPensions and benefitsAlternative minimum tax credit carryforwardRegulatory liabilities related to income taxesAsset retirement obligationDeferred fuelDebtOther

Net deferred tax assets

(WP 2, pg2)Balance atBeginningof Year

49,089,53217,906,61951,500,83721,637,72810,411,49525,323,931

06,949,498

19,528,168202,347,808

(WP la)Balance at

End ofYear

58,953,908356,992

61,348,16217,700,8898,906,949

27,342,2350

6,796,15620,753,248

202,158,539

< Page 234 Line 17 Column (a) >

OTHER (Specify)Deferred tax assets:

Other capitalized costsDecommissioning costs

Net deferred tax assets

Balance atEnd ofYear

01,918,8831,918,883

204,266,691

Balance atEnd ofYear

01,135,6871,135,687

203,294,226Total Account 190

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company(2) [~]A Resubmission / /

CAPITAL STOCKS (Account 201 and 2 )4)1. Report below the particulars (details) called for concerning common and preferred stock at end of year, distinguishing separateseries of any general class. Show separate totals for common and preferred stock. If information to meet the stock exchange reportingrequirement outlined in column (a) is available from the SEC 10-K Report Form filing, a specific reference to report form (i.e., year andcompany title) may be reported in column (a) provided the fiscal years for both the 10-K report and this report are compatible.2. Entries in column (b) should represent the number of shares authorized by the articles of incorporation as amended to end of year.

LineNo.

1 2012 Common Stock (1)

Class and Series of Stock andName of Stock Series

(a)

Number of sharesAuthorized by Charter

(b)

Par or StatedValue per share

(c)

Call Price atEnd of Year

(d)

3i New York Stock Exchange (NYSE)4i Total Common Stock (2)56 2047 Preferred Stock8 Total Preferred Stock9

1011 (1) As of December 31, 2014, 1,549,01412 unissued shares of Common Stock of the13 Company were reserved for future14i allocations under the 2007 Amended15 and Restated Long-Term Incentive Plan.16

192021222~

262728 Note: For additional information see the29i El Paso Electric Company 2014 Form 10-K30 filed with the SEC February 27, 2015.313233

3536373839404142

100,000,000100,000,000

2,000,0002,000,000

1.00

FERC FORM NO. 1 (ED. 12-91) Page 250

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) r"]A Resubmission / /CAPITAL STOCKS (Account 201 and 204) (Continued)

3. Give particulars (details) concerning shares of any class and series of stock authorized to be issued by a regulatory commissionwhich have not yet been issued.4. The identification of each class of preferred stock should show the dividend rate and whether the dividends are cumulative ornon-cumulative.5. State in a footnote if any capital stock which has been nominally issued is nominally outstanding at end of year.Give particulars (details) in column (a) of any nominally issued capital stock, reacquired stock, or stock in sinking and other funds whichis pledged, stating name of pledgee and purposes of pledge.

OUTSTANDING PER BALANCE SHEET(Total amount outstanding without reduction

for amounts held by respondent)

65,849,54365,849,543

Amount(f)

65,784,97765,784,977

HELD BY RESPONDENTAS REACQUIRED STOCK (Account 217)

Shares(g)

25,492,91925,492,919

Cost(h)

424,646,957424,646,957

IN SINKING AND OTHER FUND~’Shares Amount

(i) (j)Shares

(e)

LineNo.

123456789

101112131415161718192021222324252627282930313233

3536373839404142

FERC FORM NO. 1 (ED. 12-88) Page 251

Name of Respondent This Report Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [~]An Original (Mo, Da, Yr) End of 2014/Q4

(2) [] A Resubmission / /OT~ER PAID-IN CAPITAL (Accounts 208-211, inc.)

Report below the balance at the end of the year and the information specified below for the respective other paid-in capital accounts. Provide asubheading for each account and show a total for the account, as well as total of all accounts for reconciliation with balance sheet, Page 112. Add morecolumns for any account if deemed necessary. Explain changes made in any account during the year and give the accounting entries effecting suchchange.(a) Donations Received from Stockholders (Account 208)-State amount and give brief explanation of the origin and purpose of each donation.(b) Reduction in Par or Stated value of Capital Stock (Account 209): State amount and give brief explanation of the capital change which gave rise toamounts reported under this caption including identification with the class and series of stock to which related.(c) Gain on Resale or Cancellation of Reacquired Capital Stock (Account 210): Report balance at beginning of year, credits, debits, and balance at endof year with a designation of the nature of each credit and debit identified by the class and series of stock to which related.(d) Miscellaneous Paid-in Capital (Account 211)-Classify amounts included in this account according to captions which, together with bdef explanations,disclose the general nature of the transactions which gave rise to the reported amounts.

12,3456789

10i1112131415161718192021222324252627282930313233

3536373839

211. Other Paid-in CapitalDeferred Compensation:

Performance Awards

40 TOTAL

Arr~bo)unt

2,432,300

FERC FORM NO. 1 (ED. 12-87) Page 253

Name of Respondent

El Paso Electric Company

This Report is: Date of Report(1)X An Original (Mo, Da, Yr)(2) --A Resubmission ! !

FOOTNOTE DATA

Year/Period of Report

2014/Q4

~chedule Pag~ 253 LMe No.: 3 Column: bRepresents deferred compensation related to grants of performance share awards to certainofficers in 2012, 2013, and 2014 under the Company’s existing long-term incentive plans,which provide for the issuance of Company stock based on the achievement of certainperformance criteria over a three-year period.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company(2) [] A Resubmission / /

i3APITAL STOCK EXPENSE (Account 214)1. Report the balance at end of the year of discount on capital stock for each class and series of capital stock.2. If any change occurred during the year in the balance in respect to any class or series of stock, attach a statement giving particulars(details) of the change. State the reason for any charge-off of capital stock expense and specify the account charged.

LineNo.

123456789

101112131415161718192021

214. Capital Stock Expense

Class and Series of Stock(a)

Balance at End of Year(b)

340,939

22 TOTAL 340,939

FERC FORM NO. 1 (ED. 12-87) Page 254b

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electdc Company (2) [~A Resubmission ! /LONG-TERM DEBT (Account 221,222, 223 and 224)

1. Report by balance sheet account the particulars (details) concerning long-term debt included in Accounts 221, Bonds, 222,Reacquired Bonds, 223, Advances from Associated Companies, and 224, Other long-Term Debt.2. In column (a), for new issues, give Commission authorization numbers and dates.3. For bonds assumed by the respondent, include in column (a) the name of the issuing company as well as a description of the bonds.4. For advances from Associated Companies, report separately advances on notes and advances on open accounts. Designatedemand notes as such. Include in column (a) names of associated companies from which advances were received.5. For receivers, certificates, show in column (a) the name of the court -and date of court order under which such certificates wereissued.6. In column (b) show the principal amount of bonds or other long-term debt originally issued.7. In column (c) show the expense, premium or discount with respect to the amount of bonds or other long-term debt originally issued.8. For column (c) the total expenses should be listed first for each issuance, then the amount of premium (in parentheses) or discount.Indicate the premium or discount with a notation, such as (P) or (D). The expenses, premium or discount should not be netted.9. Furnish in a footnote particulars (details) regarding the treatment of unamortized debt expense, premium or discount associated with~ssues redeemed during the year. Also, give in a footnote the date of the Commission’s authorization of treatment other than asspecified by the Uniform System of Accounts.

Line Class and Series of Obligation, Coupon Rate Principal Amount Total expense,No. (For new issue, give commission Authorization numbers and dates) Of Debt issued Premium or Discount

(a) (b) (c)

1 Account 22123 2009 Series A Palo Verde Pollution Control Bonds 63,500,000 1,168,9504 2009 Series B Palo Verde Pollution Control Bonds 37,100,000 811,1065 2012 Series A Palo Verde Pollution Control Bonds 59,235,000 896,8546 2012 Series A Four Comers Pollution Control Bonds 33,300,000 912,54578 Subtotal 193,135,000 3,789,4559

10! Account 2221112 Subtotal1314 Account 2241516 2005 Senior Notes 400,000,000 5,239,886171 2,312,000 D18 2008 Senior Notes 150,000,000 1,714,03519 1,281,000 D20 2012 Senior Notes 150,000,000 1,338,65721 318,000 D22 150,000,000 1,772,46323 532,500 D24i Treasury Rate Lock Agreements25 Subtotal 850,000,000 14,508,541262728 $110 million RGRT Senior Notes29 Revolving Credit Facility3O3132

33 TOTAL 1,043,135,00(; 18,297,996

FERC FORM NO. 1 (ED. 12-96) Page 256

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, ¥r) End of 2014/Q4

El Paso Electric Company (2) [~]A Resubmission / /LONG-TERM DEBT (Account 221,222, 22~ and 224) (Continued)

10. Identify separate undisposed amounts applicable to issues which were redeemed in prior years.11. Explain any debits and credits other than debited to Account 428, Amortization and Expense, or credited to Account 429, Premiumon Debt- Credit.12. In a footnote, give explanatory (details) for Accounts 223 and 224 of net changes during the year. With respect to long-termadvances, show for each company: (a) principal advanced during year, (b) interest added to principal amount, and (c) principle repaidduring year. Give Commission authorization numbers and dates.13. If the respondent has pledged any of its long-term debt securities give particulars (details) in a footnote including name of pledgeeand purpose of the pledge.14. If the respondent has any long-term debt securities which have been nominally issued and are nominally outstanding at end ofyear, describe such securities in a footnote.15. If interest expense was incurred during the year on any obligations retired or reacquired before end of year, include such interestexpense in column (i). Explain in a footnote any difference between the total of column (i) and the total of Account 427, interest onLong-Term Debt and Account 430, Interest on Debt to Associated Companies.16. Give particulars (details) concerning any long-term debt authorized by a regulatory commission but not yet issued.

Nominal Dateof Issue

(d)

Date ofAMORTIZATION PERIOD

02/01/400410114008/01/4206/01/32

L)utstandln~(Total amou.nt outstanSing without

reduction mr amounts held by

03/26/0903/26/0908/28/1208/28/12

05/17/05

06103108

12/06/12

12/01/14

Maturity(e)

02/01/4004/01/4008/01/4206/01/32

05/15/35

03/15/38

Date From(f!

03/26/0903/26/0908/28/1208/28/12

05/17/05

06/03/08

Date To(g)

05/15/35

03/15/38

12/15/22

12/01/44

resP~hn)dent)

63,500,00037,100,00059,235,00033,300,000

193,135,000

400,000,000

150,000,000

150,000,000

150,000,000

850,000,000

LineInterest for Year No.Amount

(~)12

4,603,750 32,689,7502,665,575 5

624,375 67

10,583,450~9

101112131415

24,000,000 1617

11,250,000 18

4,950,000 2021

625,000 2223

438,119! 2441,263,119i 25

2627

5,053,500 28222,524

3G3132

12/15/22

12/01/44

12/06/12

12/01/14

1,043,135,000 57,122,593

FERC FORM NO. 1 (ED. 12-96) Page 257

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

~chedule Page: 256 Line No.: 22 Column: aThe 2014 Senior Notes were authorized in FERC Docket No. ES13-59-000 dated November 15,2013.~chedule Page: 256 Line No.: 27 Column: aRio Grande Resources Trust is a trust through which the Company finances its portion ofnuclear fuel for Palo Verde.~chedule Page: 256 Line No.: 28 Column: bObliqations under capital lease-noncurrent are recorded in FERC account 227.~chedule Page: 256 Line No.: 29 Column: bObligations under capital lease-current are recorded in FERC account 243.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1 I

Name of Respondent This Report Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [ElAn Original (Mo, Da, Y~) End of 2014/Q4

. (2) I~1A Resubmission/ /

RECONCILIATION OF REPORTED NET INCOME WITH TAXABL~ INCOME FOR FEDERAL’INCOME TAXES1. Report the reconciliation of reported net income for the year with taxable income used in computing Federal income tax accruals and showcomputation of such tax accruals. Include in the reconciliation, as far as practicable, the same detail as furnished on Schedule M-1 of the tax return forthe year. Submit a reconciliation even though there is no taxable income for the year. Indicate clearly the nature of each reconciling amount.2. If the utility is a member of a group which files a consolidated Federal tax return, reconcile reported net income with taxable net income as if aseparate return were to be field, indicating, however, intercompany amounts to be eliminated in such a consolidated return. State names of groupmember, tax assigned to each group member, and basis of allocation, assignment, or sharing of the consolidated tax among the group members.3. A substitute page, designed to meet a particular need of a company, may be used as Long as the data is consistent and meets the requirements ofthe above instructions. For electronic reporting purposes complete Line 27 and provide the substitute Page in the context of a footnote.

Line Particulars (Details)No. (a)

1 Net Income for the Year (Page 117)234 Taxable Income Not Reported on Books5 (see page 261 footnote)6789 Deductions Recorded on Books Not Deducted for Return

10 (see page 261 footnote)11121314 Income Recorded on Books Not Included in Return15 (see page 261 footnote)1617 Federal Income Taxes (detail below)1819 Deductions on Return Not Charged Against Book Income20 (see page 261 footnote)21222324252627 Federal Tax Net Income28 Show Computation of Tax:29

31 Tax computed at statutory rate32 ITC Amortization Net of Deferred Taxes33 Amortization of Excess Deferred Taxes34 Permanent differences35 i State Income Taxes (Federal effect)36 i ~,mortization of Regulatory Assets37 Allowance for Equity Funds Used During Construction38 Other394041421 Total federal income tax expense (benefit)43

Amount(b)

95,247,056

72,023,990

-752,904-717,127

-2,886,396-265,203-405,410

-3,704,333-281,781

37,828,489

l-~l~C FORM NO. 1 (ED. 12-96) Page 261

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

i Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

~chedule Page: 261 Line No.: ’3 Column: bTaxable Income Not Reported on Books< Page 261, Line 5, Column b >

Contributions in aid of constructionUnbilled RevenueCapitalized Construction Interest and Capitalized CostsTaxable Income Not Reported on Books

7,603,518771,195

22,542,56130,917,274

~chedule Page: 261 Line No.: 10 Column: bDeductions Recorded on Books not Deducted for Return< Page 261, Line 10, Column b >

Meals and EntertainmentLobbyingDebt Issuance CostsCoal ReclamationSFAS 143 Asset Retirement ObligationEmployee BenefitsLegal Expense AccrualTaxes Other Than FederalOtherDeductions Recorded on Books Not Deducted for Return

115,969671,686988,516

1,181,2625,802,4745,026,459

493,7901,538,773

627,48016,446,409

~chedule Page: 261 Line No.: 15 Column: bIncome Recorded on Books Not Deducted for Return< Page 261, Line 15, Column b >

Decommissioning Trust Interest Net of FeesAFUDCDeferred FuelIncome Reported on Books Not Included in Return

(7,195,980)(23,030,003)(3,120,890)

(33,346,873)

~chedule Page: 261 Line No.: 20 Column: bDeductions on Return Not Charged Against Book Income< Page 261, Line 20, Column b >

Depreciation and Amortization DifferencesDomestic Production Activities DeductionSection 174 R&DDecommissioning CostsRepair AllowanceResearch and Development CreditState Income TaxesDeductions on Return not Charged Against Book Income

(48,986,466)(1,700,000)(5,000,000)(8,815,000)(8,000,000)(1,ooo,ooo)(1,566,899)

(75,068,365)

~chedule Page: 261 Line No.: 31Tax Computed at Statutory Rate< Page 261, Line 31, Column b >Net Income

Column: b I

95,247,056

[FERC FORM NO. 1 (ED. 12-87) Page 450.1 ]

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

Federal and State Income Tax ExpensePre-Tax IncomeTax RateTax Computed at Statutory Rate

38~586,210133,833,266

35%46,841,643

[FERC FORM NO. 1 (ED. 12-87) Page 450.2

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) [] A Resubmission / /TA~ ~ES ACCRUED, PREPAID AND CHARGED DURING YEAR

1. Give particulars (details) of the combined prepaid and accrued tax accounts and show the total taxes charged to operations and other accounts duringthe year. Do not include gasoline and other sales taxes which have been charged to the accounts to which the taxed material was charged. If theactual, or estimated amounts of such taxes are know, show the amounts in a footnote and designate whether estimated or actual amounts.2. Include on this page, taxes paid during the year and charged direct to final accounts, (not charged to prepaid or accrued taxes.)Enter the amounts in both columns (d) and (e). The balancing of this page is not affected by the inclusion of these taxes.3. Include in column (d) taxes charged during the year, taxes charged to operations and other accounts through (a) accruals credited to taxes accrued,(b)amounts credited to proportions of prepaid taxes chargeable to currant year, and (c) taxes paid and charged direct to operations or accounts otherthan accrued and prepaid tax accounts.4. List the aggregate of each kind of tax in such manner that the total tax for each State and subdivision can readily be ascertained.

LineNo.

123456789

lO11121314151617181920212223242526272829

Kind of Tax(See instruction 5)

(a)FEDERALCurrent FIT PayablePdor YearsFUTAInsurance ContributionsSubtotal

State County & Local - "IXAd ValoremGross ReceiptsUnemploymentFranchise Tax/Margin TaxUse TaxRegulatory CommissionFranchise Fees (OSR)Subtotal

State County & Local - NMAd ValoremIncomeUnemploymentCompensatingRegulatory CommissionFranchise Fees (OSR)L.C. Fran., Pumping FacilityPayroll TaxesWorker’s Comp Fee

30 Other Taxes31 Subtotal323334 State County & Local - AZ35 Ad Valorem36 Income37 Palo Verde Payroll Taxes38 Sales & Use Taxes

BALANCE AT BEGINNING OF YEARTaxes Accrued P.repai~ Taxes(Account 236) (Inc uae n Account

(b) (c)

563,807401,241

965,048

7,651,1811,527,592

584,837505,239456,940

3,765,79314,491,582

1,859,06516,430

-280,121959,523138,302

11,78711,787

1,8165,500

74,947

I axesC~arged~er~g

(d)

3,608,767-282,337

46,3536,161,4199,534,202

8,825,61910,409,235

69,075-531,101

5,544,713997,290

20,328,08945,642,920

4,567,590407,216

35,301795,276

1,013,4433,626,759

I~eria~g(e)

4,909,000-785,381

46,3536,161,419

10,331,391

7,604,5019,622,105

69,0751,657,3565,432,156

978,64219,983,88145,347,916

4,143,661960,600

35,301742,617987,963

3,528,639

Adjus~ments

(f!

563,807-563,807

2,693,199

3,564,512-1,433,167

82,263

1,502,044

194,143

10,639,730

194,143

-264,24610,328,678

9,614,173240,111

2,809,869

8,980,194.-48,917

2,809,869

39 Subtotal40

41 TOTAL

2,131,345

20,281,174

1,502,044

1,596,094

12,664,153

78,481,00~

11,741,146

77,749,131

FERC FORM NO. 1 (ED. 12-96) Page 262

Name of Respondent This Report Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [~]An Original (Mo, Da, ¥r) End of 2014/Q4

(2) [~A Resubmission / /TAXES ACCF UED, PREPAID AND CHARGED DUllING YEAR (Continued)

5. If any tax (exclude Federal and State income taxes)- covers more then one year, show the required information separately for each tax year,identifying the year in column (a).6. Enter all adjustments of the accrued and prepaid tax accounts in column (f) and explain each adjustment in a foot- note. Designate debit adjustmentsby parentheses.7. Do not include on this page entries with respect to deferred income taxes or taxes collected through payroll deductions or otherwise pendingtransmittal of such taxes to the taxing authority.8. Report in columns (i) through (I) how the taxes were distributed. Report in column (I) only the amounts charged to Accounts 408.1 and 409.1pertaining to electric operations. Report in column (I) the amounts charged to Accounts 408.1 and 109.1 pertaining to other utility departments andamounts charged to Accounts 408.2 and 409.2. Also shown in column (I) the taxes charged to utility plant or other balance sheet accounts.9. For any tax apportioned to more than one utility department or account, state in a footnote the basis (necessity) of apportioning such tax.

BALANCE AT END OF YEAR(Taxes accruedAccot~;t 236)

-114,1152,817,280

2,703,165

8,872,3002,314,722

-608,448617,795475,387

4,109,61215,781,368

2,282,994-1,993

-227,461985,004220,594

264,2453,523,383

4,198,491-1,555,757

2,642,734

24,650,650

Prepaid Taxes(Incl. in Account 165)

(h)

3,884,494-1,349,188

2,535,306

-1

995,17211

11,3961,006,569

1,816640,461

1-1

59,117

1601,395

1,090,426

1,090,426

5,233,696

DISTRIBUTION OF TAXES CHARGED LineElectric Adjustments to Ret.

(Account 408.1,409.1) Earnings (Account 439) Other No.(i) (k) (I)

930,828-3,621,094

39,7645,285,5522,635,050

7,299,09410,409,235

59,256-531,101

5,202997,290

20,328,08938,567,065

4,567,590359,34130,28314,976

1,013,44391,276

194,143

-9,3726,261,680

9,614,173133,783

2,809,869

12,557,825

60,021,620

Extraordinary Items(Account 409.3)

0)1

2,677,939 23,338,757 3

6,589 4875,867 5

6,899,152 678

1,526,525 9lO

9,819 1112

5,539,511 131415

7,075,855 16171819

47,875 205,o18 21

780,302 2223

3,535,483 242526272829

9,372 304,378,050 31

3233

35lO6,328 36

3738

lO6,328 3940

18,459,385 41

FERC FORM NO. 1 (ED. 12-96) Page 263

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) E~]A Resubmission / /ACCUMULA~ ’ED DEFERRED INVESTMENT TAX CREDITS (Account 255)

Report below information applicable to Account 255. Where appropriate, segregate :he balances and transactions by utility andnonutility operations. Explain by footnote any correction adjustments to the account balance shown in column (g).lnclude in column (ithe average period over which the tax credits are amortized.LineNo.

2345678

1011121314151617181£20212223242526272830313233

353637383940414243

45464748

Account

Electric Utility3%4%7%10%3O%

TOTAL

Balance at Beginningof Year

(b)

23,009,240631 555

23,640,795

Deferred for YearAccount NO. Amount

(c) (d)

AllOCations tOCurrent Year’s Income

Account NO. Amount(e) (f)

1,141,82416,491~

1,158,314

411.4411.4/420.0

411.4

Adjustments(g)

1,;

1,280Other (List separately ~-- -and show 3%, 4%, 7%,10% and TOTAL)

411.4 411.4420.0

1,192,314-34 OOC

FERC FORM NO. 1 (ED. 12-89) Page 266

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [~An Original (Mo, Da, Yr)(2) r"]A Resubmission / /

ACCUMULATED D --FERRED INVESTMENT TAX CREDi "IS (Account 255) (continued)

Year/Period of ReportEnd of 2014/Q4

Balance at End Avera~le Periodof Year of AI]’ocation

to Income(h) (i)

21,867,416 25 years616,345 25 years

ADJUSTMENT EXPLANATION

22,483,761

LineNo.

123456789

-1,191,03434,000

10111213141516171819202122232425262728

3(~313233

35363738394(~414243

45

4748

FERC FORM NO. 1 (ED. 12-89) Page 267

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company(2) [] A Resubmission / /

OTHER DEFFERED CREDITS (Account 253)1. Report below the particulars (details) called for concerning other deferred credits.2. For any deferred credit being amortized, show the period of amortization.3. Minor items (5% of the Balance End of Year for Account 253 or amounts less than $100,000, whichever is greater) may be grouped by classes.

Line Description and Other Balance at DEBITS Balance atNo. Deferred Credits Beginning of Year End of Year

123456789

101112131415161718192021222324

(a)

Transmission AccessTucson Electric Power

Environmental Accrual

Texas Docket 23530 Settlement

Contribution in Aid of Construct.

Facility & Impact Study

Other

25262728293031323334353637383940414243444546

47 TOTAL

(b)11,700,000

133, 48(;

550,000

1,433,675

933,921

ContraAccount

(c)

131 137,095

483,485

1,224,958

68,352

Credits

(e)7,593,851

3,615

131

416

131

Amount

(d)

365,000

1,952

726,485

410,000

(f)19,293,851

915,000

952,142

435,448

341,648

413,0261

15,164,102

131 273,388

2,187,278

332,100

9,433,003

471,738

22,409,827

FERC FORM NO. 1 (ED. 12-94) Page 269

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

~chedule Page: 269 LMe No.: 1 Column: aOn February 17, 2015, the Company and APS entered into an asset purchase agreement,providing for the purchase by APS of the Company’s interests in Four Corners. Thepurchase price will be adjusted downward to reflect APS’s assumption of the Company’sobligation to pay for future mine reclamation expenses. The Company recorded anadjustment of $7.6 million at December 31, 2014 for mine reclamation costs, which theCompany expects to pay at closing, based on a 2014 Golder Associate Study.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) [~A Resubmission / /

ACCUMULATED DEFERREr ~ INCOME TAXES - ACCELERATED ,~MORTIZATION PROPERTY (Account 281)1. Report the information called for below concermng the respondent’s accounting for deferred income taxes rating to amortizableproperty.2. For other (Specify),include deferrals relating to other income and deductions.

CHANGES DURING YEARLine AccountNo.

456789

1011121314151617181920

21

(a)

Accelerated Amortization (Account 281)Electric

Defense FacilitiesPollution Control FacilitiesOther (provide details in footnote):

TOTAL Electric (Enter Total of lines 3 thru 7)

Gas

Defense Facilities

Pollution Control FacilitiesOther (provide details in footnote):

TOTAL Gas (Enter Total of lines 10 thru 14)

TOTAL (Acct 281) (Total of 8, 15 and 16)Classification of TOTALFederal Income TaxState Income TaxLocal Income Tax

Balance atBeginning of Year Amounts Debited Amounts Credited

to Account 410.1 to Account 411.1(b) (c) (d)

NOTES

FERC FORM NO. 1 (ED. 12-96) Page 272

~ame of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4--I Paso Electric Company (2) [~A Resubmission / /

ACCUMULATED DEFERRED INCOME TAXES _ ACCELERATED AMORTIZATION PROPERTY (Account 281) (Continued);. Use footnotes as required.

CHANGES DURING YEAR ADJUSTMENTSAmounts Debited Amounts Credited Debits Creditsto Account 410.2 to Account 411.2 Account Amount Account

Credited Debited(e) (f) (g) (h) (i)

Amount~)

Balance atEnd of Year

(k)

LineNo.

123456789

101112131415161718192021

NOTES (Continued)

FERC FORM NO. 1 (ED. 12-96) Page 273

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) [~A Resubmission / /ACCUMULATE ~) DEFFERED INCOME TAXES - OTHER PROPERTY (Account ~)82)

1. Report the information called for below concerning the respondent’s accounting for deferred income taxes rating to property notsubject to accelerated amortization2. For other (Specify),include deferrals relating to other income and deductions.

CHANGES DURING YEARLine AccountNo.

(a)

23456789

10111213

Account 282ElectricGas

548,208,981

Amounts Debitedto Account 410.1

(c)

Balance atBeginning of Year

(b)

61,456,339

Amounts Creditedto Account 411.1

(d)

30,260,222

TOTAL (Enter Total of lines 2 thru 4) 548,208,981 61,456,339 30,260,222

TOTAL Account 282 (Enter Total of lines 5 thru 548,208,981 61,456,339Classification of TOTALFederal Income TaxState Income TaxLocal Income Tax

61,456,339548,208,981

30,260,222

30,260,222

NOTES

ERC FORM NO. 1 (ED. 12-96) Page 274

Name of Respondent "[ This Report Is: ] Date of Report/ (1) [~]An Original I (Mo, Da, Yr)

El Paso Electric Company / (2) [] A Resubmission I / /ACCUMULATED DEFERRED INCOME TAXES - OTHER PROPERTY (Account 282) (Continued)

3. Use footnotes as required.

Year/Period of ReportEnd of 2014/Q4

CHANGES DURING YEARAmounts Debited Amounts Creditedto Account 410.2 to Account 411.2

(e) (f)

ADJUSTMENTSDebits Credits

Account Amount Account AmountCredited Debited

(g) (h) (i) (J)

various 3,704,332

Balance atEnd of Year

(k)

LineNo.

3,704,33.’ 583,109,431 56

3,704,33~ 583,109,431 9

3,704,33~ 583,109,431 1112

13

NOTES (Continued)

FERC FORM NO. 1 (ED. 12-96) Page 275

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

~chedule Page: 274 Line No.: 2 Column: kEl Paso Electric CompanyAccount 282 - FERC ONLYFor the Year Ended December 31, 2014

Electric:Plant, principally due to depreciation and basisdifferencesRegulatory assets related to income taxes

Balance atBeginningof Year

$ 481,753,151 $

37,720,727

Balance atEnd

of Year

508,938,703

41,425,060Decommissioning

Deferred Fuel

Total - Electric Other

26,744,833

1,990,270

548,208,981

29,483,427

3,262,241

583,109,431

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electdc Company (2) [] A Resubmission / /ACCUMULATED DEFFERED INCOME TAXES - OTHER (Account 283)

1. Report the information called for below concerning the respondent’s accounting for deferred income taxes relating to amountsrecorded in Account 283.2. For other (Specify),include deferrals relating to other income and deductions.

CHANGES DURING YEARLine AccountNo. (a)

1 Account 283

2 Electric

3 Deferred Tax

4

5 Deferred State Tax

6

7 FIT on SIT

8 Other- Debt

9 TOTAL Electric (Total of lines 3 thru 8)

10 Gas

11

12

13

14

15

16

17 TOTAL Gas (Total of lines 11 thru 16)

18

19 TOTAL (Acct 283) (Enter Total of lines 9, 17 and 18)

20 Classification of TOTAL

21 Federal Income Tax

22 State Income Tax

23 Local Income Tax

Balance at Amounts Debited Amounts CreditedBeginning of Year to Account 410.1 to Acco.u.nt 411.1

26,368,961 2,396,349 3,103,829

37,880,799

14,484,393

25

78,734,178 2,396,349 3,103,829

78,734,178

40,853,379

37,880,799

2,396,349

2,396,349

3,103,829

3,103,829

NOTES

FERC FORM NO. 1 (EDo 12-96) Page 276

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) [~A Resubmission / /ACCUMULATED DEFERRED INCOME TAXES - OTHER (Account 283) (Continued

3. Provide in the space below explanations for Page 276 and 277. Include amounts relating to insignificant items listed under Other.4. Use footnotes as required.

CHANGES DURING YEAR ADJUSTMENTSAmounts Debited Amounts Credited Debits Credits Balance atto Account 410.2 to Account 411.2 Account Amount ACCOUnt Amount End of Year

(e) (f) Cr~,:l~g ted De~iJed (J) (k)

254.3 4,149,169 182.3 4,849,628 26,361,940

254.3 11,016,856 182.3 9,627,130 36,491,073

254.3 2,152,634 182.3 2,949,971 15,281,730

254.3 5 182.3 20

17,318,664 17,426,729 78,134,763

17,318,664 17,426,729 78,134,763

LineNo.

123456789

10111213141516171819

6,301,808 7,799,599 41,643,690 21

11,016,856 9,627,130 36,491,073 22

23

NOTES (Continued)

FERC FORM NO. 1 (ED. 12.96) Page 277

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [~JAn Odginal (Mo, Da, Yr)(2) [~ Resubmission / /

HER REGULATORY LIABILITIES (Account 254)

YeadPeriod of ReportEnd of 2014/Q4

1. Report below the particulars (details) called for concerning other regulatory liabilities, including rate order docket number, if applicable.2. Minor items (5% of the Balance in Account 254 at end of period, or amounts less than $100,000 which ever is less), may be groupedby classes.3. For Regulatory Liabilities being amortized, show ~eriod of amortization.

LineNo.

Description and Purpose ofOther Regulatory Liabilities

(a)1 Regulatory Tax Liabilities

2

4 New Mexico5

78 Texas Energy Efficiency Program9

10111213

1415

161718

1920

21222324

252627

2829

303132

33343536

3738

394O

41 TOTAL

Balance at Beginingof Current

Quarter/Year(b)

50,488,861

1,047,825

3,6~,4~

362,103

AccountCredited

(c)vadous

440s

131

182.3

DEBITS

Amount

(d)5,403,910

115,797

4,497,964

362,103

Credits

(e)3,804,47~

4,755,953

Balance at Endof Current

Quarter/Year

(f)

932,028

3,903,463

142

55,544,263

4,505,540

14,885,31z

5,114,582

13,675,014

609,042

54,333,963

FERC FORM NO. 113-Q (REV 02-04) Page 278

Name of Respondent

El Paso Electdc Company

This Report is: Date of Report Year/Period of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / / 2014/Q4

FOOTNOTE DATA

~chedule Page: 278 L~e No.: 1 Column: fAmortization period ranges from 5 to 40 years.~chedule Page: 278 LMe No.: 3 Column: aAt December 31, 2014, the Company had a net undercollection of fuel revenues.~chedule Page: 278 LMe No.: 6 Column: aIn accordance with the Final Order in Docket No. 06-0065-UT, the Company startedcollecting Energy Efficiency costs, effective May 2009, through a tariff riderapproved by the NMPRC via New Mexico Rate 17. The rate is updated annually.~chedule Page: 278 L~e No.: 10 Column: aPURA Section 36.354 requires that each electric utility provide Military Base Ratediscounts to military bases in areas where customer choice is not available. In accordancewith the Final Order in Docket No. 37690, the Military Base Dsicount Recovery Factorallows the Company to recover the total base rate discount provided to military basefacilities from non-military base customers through a recovery factor.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) [~A Resubmission / /ELECTRIC OPERATING REVENUES (,~,ccount 400)

1. The following instructions generally apply to the annual version of these pages. Do not report quarterly data in columns (c), (e), (t), and (g). Unbilled revenues and MWHrelated to unbilled revenues need not be reported separately as required in the annual version of these pages.2. Report below operating revenues for each prescribed account, and manufactured gas revenues in total.3. Report number of customers, columns (f) and (g), on the basis of meters, in addition to the number of fiat rate accounts; except that where separate meter readings are addedfor billing purposes, one customer should be counted for each group of meters added. The -average number of customers means the average of twelve figures at the close ofeach month.4. If increases or decreases from previous pedod (columns (c),(e), and (g)), are not dedved from previously reported figures, explain any inconsistencies in a footnote.5. Disclose amounts of $250,000 or greater in a footnote for accounts 451,456, and 457.2.

Title of AccountLineNO.

~ (a)1 Sales of Electricity

2 (440) Residential Sales

3 (442) Commercial and Industrial Sales

4 Small (or Comm.) (See Instr. 4)

5 Large (or Ind.) (See Instr. 4)

6 (444) Public Street and Highway Lighting

7 (445) Other Sales to Public Authorities

8 (446) Sales to Railroads and Railways9 (448) Interdepartmental Sales

10 TOTAL Sales to Ultimate Consumers

11 (447) Sales for Resale

12 TOTAL Sales of Electricity

13 (Less) (449.1) Provision for Rate Refunds

14 TOTAL Revenues Net of Prov. for Refunds

15 Other Operating Revenues

16 (450) Forfeited Discounts

17 (451) Miscellaneous Service Revenues

18 (453) Sales of Water and Water Power

19 (454) Rent from Electdc Property20 (455) Interdepartmental Rents

21 (456) Other Electric Revenues

22 (456.1) Revenues from Transmission of Electricity of Others

23 (457.1) Regional Control Service Revenues

24 (457.2) Miscellaneous Revenues

2526

27

Operating Revenues Yearto Date Quarlerly/Annual

(b)

317,143,525

258,462,491

Operating RevenuesPrevious year (no Quarterly)

(c)

313,138,900

250,838,821

68,944,130 67,858,998

4,754,511 5,803,061

135,756,173 134,921,940

785,060,830 772,561,720

101,455,268 86,539,995

886,516,098 859,101,715

-581,753

887,097,851

1,358,313J~,~ ~ .....

3,600,624

19,298,065

859,101,715

1,401,678

2,824,325

22,549,607

TOTAL Other Operating Revenues 30,427,577 31,259,995TOTAL Electric Operating Revenues 917,525,428 890,361,710

FERC FORM NO. 113-Q (REV. 12-05) Page 300

Name of Respondent This Report Is: Date of Report Year/Period of Report

El Paso Electric Company (1) r~An Original (Mo, Da, Yr)End of 2014/Q4

(2) [--~A Resubmission / /

ELECTRIC OPERATING REVENUES (,~ccount 400)6. Commercial and industrial Sales, Account 442, may be classified according to the basis of classification (Small or Commercial, and Large or Industrial) regularly used by therespondent if such basis of classification is not generally greater than 1000 Kw of demand. (See Account 442 of the Uniform System of Accounts. Explain basis of classificationin a footnote.)7. See pages 108-109, Important Changes During Pedod, for important new territory added and important rate increase or decreases.8. For Lines 2,4,5,and 6, see Page 304 for amounts relating to unbilled revenue by accounts.9. Include unmetered sales. Provide details of such Sales in a footnote.

MEGAWAI-r HOURS SOLDYear to Date Quarterly/Annual Amount Previous year (no Quarledy) Current Year (no Quarterly)

(d) (e) (f)

2,640,535 2,679,262 352,277

2,357,846 2,349,148 39,600

1,064,475 1,095,379 49

36,248 43,802 181

1,526,536 1,578,805 4,907

AVG.NO. CUSTOMERS PER MONTH

Previous Year (no Quarterly)(g)

347,891

38,83E

5(

17(~

4,827

391,77,~

391,801

391,801

7,625,640 7,746,396 397,014

25

397,039

397,039

LineNo.

1

2

3

4

5

67

8

9

10

1112

13

14

Line 12, column (b) includes $

Line 12, column (d) includes

1,417,000 of unbilled revenues.16,682 MWH relating to unbilled revenues

FERC FORM NO. 113-Q (REV. 12-05) Page 301

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

Schedule Page: 300 Line No.: 11 Column: dIncludes 712 284 MWhs related to the Company’s Power Purchase and Sales Agreement withFreeport-McMoRan dated December 16, 2005Schedule Page: 300 Line No.: 11 Column: eIncludes 603 991 MWhs related to the Company’s Power Purchase and Sales Agreement withFreeport-McMoRan dated December 16, 2005Schedule Page: 300 Line No.: 12 Column: dIncludes 712 284 MWhs related to the Company’s Power Purchase and Sales Agreement withFreeport-McMoRan dated December 16, 2005Schedule Page: 300 Line No.: 12 Column: eIncludes 603 991 MWhs related to the Company’s Power Purchase and Sales Agreement withFreeport-McMoRan dated December 16, 2005Schedule Page: 300 Line No.: 14 Column: dIncludes 712,284 MWhs related to the Company’s Power Purchase and Sales Agreement withFreeport-McMoRan dated December 16, 2005Schedule Page: 300 Line No.: 14 Column: eIncludes 603,991 MWhs related to the Company’s Power Purchase and Sales Agreement withFreeport-McMoRan dated December 16, 2005~chedule Page: 300 Line No.: 17 Column: bBelow is the detail of Miscellaneous Service Revenues recorded in account 451:

Non Pay Reconnect ChargesName Change/Cut in ChargeNew Service ChargesOverhead/Underground Connection ChargesTexas Energy Efficiency BonusMisc Other

Total~chedule Page: 300 LMe No.: 17 Column: c

December 20141,851,8021,094,115

299,952206,129

2,035,783272,400

5,760,181

Below is the detail of Miscellaneous Service Revenues recorded in account 451:

Non Pay Reconnect ChargesName Change/Cut in ChargeNew Service ChargesOverhead/Underground Connection ChargesTexas Energy Efficiency BonusMisc Other

Total~chedule Page: 300 LMe No.: 21 Column: b

December 20131,843,8371,059,004

319,582199,815465,275338,470

4,225,983

Includes $407,845 related to the Company’s 15.8% share of Palo Verde other electricrevenues from APS.~chedule Page: 300 LMe No.: 21 Column: cIncludes $257,209 related to the Company’s 15.8% share of Palo Verde other electricrevenues from APS.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of RespondentEl Paso Electric Company

This Report Is:

[

Date of Report(1) [~]An Original (Mo, Da, Yr)(2)

[] A Resubmission/ /

Year/Period of ReportEnd of 2014/Q4

REGIONAL TRANSMISSION SERVICE REVENUES (Account 457.1)

1. The respondent shall report below the revenue collected for each service (i.e., control area administration, market administration,etc.) performed pursuant to a Commission approved tariff. All amounts separately billed must be detailed below.

LineNo.

12

3456

789

10

1112

13141516

17181920

212223

24252627

28293O

313233

35363738

394O4142

43

45

Description of Service

(a)

46 TOTAL

FERCFORM NO. 113-Q (NEW. 12-05)

Balance at End ofQuarter 1

(b)

Balance at End ofQuarter 2

(c)

Balance at End ofQuarter 3

(d)

Balance at End ofYear(e)

Page 302

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [~An Original (Mo, Da, Yr)(2) [~A Resubmission / /

SALES OF ELECTRICITY BY RATE S(~HEDULES

Year/Period of ReportEnd of 2014/Q4

1. Report below for each rate schedule in effect during the year the MWH of electricity sold, revenue, average number of customer, average Kwh percustomer, and average revenue per Kwh, excluding date for Sales for Resale which is reported on Pages 310-311.2. Provide a subheading and total for each prescribed operating revenue account in the sequence followed in "Electric Operating Revenues," Page300-301. If the sales under any rate schedule are classified in more than one revenue account, List the rate schedule and sales data under eachapplicable revenue account subheading.3. Where the same customers are served under more than one rate schedule in the same revenue account classification (such as a general residentialschedule and an off peak water heating schedule), the entries in column (d) for the special schedule should denote the duplication in number of reportedcustomers.4. The average number of customers should be the number of bills rendered during the year divided by the number of billing periods during the year (12if all billings are made monthly).5. For any rate schedule having a fuel adjustment clause state in a footnote the estimated additional revenue billed pursuant thereto.6. Report amount of unbilled revenue as of end of year for each applicable revenue account subheading.Line Number and I=tle Ol" I~ate scneouleNo. (a)

1 (440)2 RESIDENTIAL SALES-’rx3 01 Residential Service4 28 Private Area Lighting Service.= "I’XVRE-R Voluntary Renewable~ Deferred Fuel7 Unbilled Revenue~ Renewable Energy Credit9 Power Factor Adjustment

1(11 RESIDENTIAL SALES-NM12 01 Residential Service13 12 Private Area Lighting Service14 Deferred Fuel1.= Unbilled Revenuele Renewable Energy Credit17le Total (440)192(;21 (442)22 C & I SALES SMALL-’rx23 02 Small Commemial Service24 07 Outdoor Recreational Lighting2.= 22 Irrigation Service2~ 24 General Service27 25 Large Power Service28 28 Private Area Lighting Service29 34 Cotton Gin Service31~ TXVRE-C Voluntary Renewable31 Deferred Fuel32 Unbilled Revenue33’ Renewable Energy Credit34 Power Factor Adjustment353e C & I SALES SMALL-NM37 03 Small Commercial Service38 04 General Service39 05 Irrigation Service40 08 Municipal Water Pumping

41 TOTAL Billed42 Total Unbilled Rev.(See Instr. 6)43 TOTAL

FERC FORM NO. 1 (ED. 12-95)

Mwrl ~010

(b)

5,721

649,0632,451

690

I~evenue(c)

230,876,823298,59829,293

594,279523,000-29,294743,014

83,439,013587,807

10,67077,000-6,678

2,640,53.= 317,143,525

236,680355

3,725!1,350,6451

223,55;14,95(

1,00~

7,90~

153,601280,27;

49,81~2,08~

33,923,74839,548

455,497137,101,587

19,486,2561,881,846

93,930848

1,020,433444,000

-85279,767

22,820,42531,273,1185,988,370

216,417

783,643,8301,417,000

785,060,830

Page 304

Average Numberof C~lt)omers

352,27;

23,022159~

6,23~5~

43;1

i~wrl o1" ;salesPer ~eU)Stomer

7,3668,047

7,8377,781

7,496

10,28123,66737,626

216,6583,854,345

34,6061,005,000

18,495502,280

67,87383,360

0.116~0.1599

0.0914

0.128~0.239~

0.111~

0.1201

0.0562

0.148e0.111~0.120;O.lO3~

0.103[0.084(.0.103(

7,608,95~16,68~

7,625,64(

397,01z

397,01z

19,165

19,207

0.143~0.111~0.122~0.101.=0.08720.125~

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [~An Original (Mo, Da, Yr)(2) [~A Resubmission / /

SALES OF ELECTRICITY BY RATE S(~HEDULES

Year/Period of ReportEnd of 2014/Q4

1. Report below for each rate schedule in effect during the year the MWH of electricity sold, revenue, average number of customer, average Kwh percustomer, and average revenue per Kwh, excluding date for Sales for Resale which is reported on Pages 310-311.2. Provide a subheading and total for each prescribed operating revenue account in the sequence followed in "Electric Operating Revenues," Page300-301. If the sales under any rate schedule are classified in more than one revenue account, List the rate schedule and sales data under eachapplicable revenue account subheading.3. Where the same customers are served under more than one rate schedule in the same revenue account classification (such as a general residentialschedule and an off peak water heating schedule), the entries in column (d) for the special schedule should denote the duplication in number of reportedcustomers.4. The average number of customers should be the number of bills rendered during the year divided by the number of billing periods during the year (12if all billings are made monthly).5. For any rate schedule having a fuel adjustment clause state in a footnote the estimated additional revenue billed pursuant thereto.6. Report amount of unbilled revenue as of end of year for each applicable revenue account subheading.Line Number and I itle ol" Hate scheduleNo. (a)

1 09 Large Power Service2 12 Private Area Lighting Service3 19 Seasonal Agr. Processing Svc.4 25 Outdoor Recreational Lighting5 29 Interrupt. Svc. for Lg Power6 Deferred Fuel7 Unbilled Revenue8 Renewable Energy Credit9

10 C & I SALES LARGE-TX11 15 Electrolytic Refining12 25 Large Power Service13 26 Petroleum Refinery Service14 28 Private Area Lighting Service15 30 Electric Furnace16 38 Interrupt. Svc. for Lg Power17 Deferred Fuel18 Unbilled Revenue19 Power Factor Adjustment2021 C & I SALES LARGE-NM22 09 Large Power Service23 29 Interrupt. Svc. for Lg Power24 Deferred Fuel25 Unbilled Revenue2627 Total (442)2829 (444)30 PUBLIC ST. & HIGHWAY LIGHT-TX31 08 Gov’t Street Lights and Signal32 Deferred Fuel33 Unbilled Revenue34 Power Factor Adjustment3536 PUBLIC ST. & HIGHWAY LIGHT-NM37 11 Municipal St. Lighting and Sig

Mwn ~ola(b)

22,8382,0754,333

1072,096

1,804

54,10(~302,221318,713

26122,635

286,589

393

57,10721,692

763

I.~evenue(C)

2,225,673.482,717599,081

15,70~129,3~67,243.

126,00C-8,22C

3,753,803.26,366,19220,411,477

31,2671,866,14~

10,181,681698,69;

83,00(;-1,116,93(;

5,374,57e1,271,08(;

1,14122,00(;

3,422,321 327,406,621

32,993

25

4,161,38~7,64~=

4,00(;14,11~

573,96~

Average Numberof C~tomers

27

134

1

15

43

39,649

162

~wn ~ ~alesPer~e~Stomer

5,709,50(;27,303.

160,48111,889

2,096,00C

64,100,00(;8,888,853.

318,713,00(;

86,31E

203,66C

3,227 19 169,84;38 Deferred Fuel39 Unbilled Revenue40

41 TOTAL Billed42 Total Unbilled Rev.(See Instr. 6)43 TOTAL

7,608,95~16,68;

7,625,64(;

3971,00(~

783,643,83~1,417,00~

785,060,83C

397,014C

397,014

19,16~(

19,20~

I~t~ ~eo~er(f)

0.097,=

0.23260.13830.14680.0617

0.0698

0.06940.08720.064(0.11980.08240.0355

0.2112

0.09410.0586

0.0288

0.0957

0.1261

-0.1600

0.1779

0.3333

0.103C0.084~c

0.103C

FERC FORM NO. 1 (ED. 12-95) Page 304.1

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [~]An Original (Mo, Da, Yr)(2) r--1A Resubmission / /

ALES OF ELECTRICITY BY RATE S(~HEDULES

Year/Period of ReportEnd of 2014/Q4

1. Report below for each rate schedule in effect during the year the MWH of electricity sold, revenue, average number of customer, average Kwh percustomer, and average revenue per Kwh, excluding date for Sales for Resale which is reported on Pages 310-311.2. Provide a subheading and total for each prescribed operating revenue account in the sequence followed in "Electric Operating Revenues," Page300-301. If the sales under any rate schedule are classified in more than one revenue account, List the rate schedule and sales data under eachapplicable revenue account subheading.3. Where the same customers are served under more than one rate schedule in the same revenue account classification (such as a general residentialschedule and an off peak water heating schedule), the entries in column (d) for the special schedule should denote the duplication in number of reportedcustomers.4. The average number of customers should be the number of bills rendered during the year divided by the number of billing periods during the year (12if all billings are made monthly).5. For any rate schedule having a fuel adjustment clause state in a footnote the estimated additional revenue billed pursuant thereto.6. Report amount of unbilled revenue as of end of year for each applicable revenue account subheading.Line Numl~er and ~t~e ot Hate scneouleNo. (a)

1 Total (444)23 (445)4 OTHER SALES PUB AUTH-TX5 01 Residential Service

Small Commemial ServiceOutdoor Recreational LightingMunicipal Pumping ServiceIrrigationGeneral ServiceLarge Power ServicePrivate Area LightingMilitary Reservation Service

6 027 078119 22

102411 2512 2813 3114 38 Interruptible Service Large Po15 41 City and County Service16 43 University Service17 45 Supplemental Power18 Deferred Fuel19 Unbilled Revenue20 University Discount21 Power Factor Adjustment2223 OTHER SALES PUB AUTH-NM24 01 Residential Service25 03 Small Commemial Service26 04 General Service27 05 Irrigation Service28 07 City and County Service29 08 Municipal Pumping Service30 09 Large Power Service31! 10 Military Research & Dev. Power3; 12 Private Area Lighting3,~ 25 Outdoor Recreational Lighting3~ 26 State University Service3~= Deferred Fuel36 Unbilled Revenue37 Renewable Energy Credit3~3~ Total (445)4(~

41 TOTAL Billed42 Total Unbilled Rev.(See Instr. 6)43 TOTAL

FERC FORM NO. 1 (ED. 12-95)

Mwn ;5OI0

(b)36,248

3039,0954,608

172,2341,693

140,27076,7629,693

300,42743,763

295,19358,05224,831

947

1247,407

26,568162

73,23431,09048,214

159,26036955O

43,256

~evenue(c)

4,754,511

40,4081,313,888

508,95(]13,826,971

194,81114,408,6156,702,4011,151,687

21,909,0631,589,332

30,500,6333,953,1411,858,75~

711,681136,00(;

-345,253280,034

17,6941,153,9572,917,258

20,2138,981,2253,099,2184,605,036

12,502,07482,79875,03(]

3,531,27436,34~

9,00(;-16,068

Average Numberof C~lt/om ers

181

1181,133

18042717

45313

13211

1,05221

36306

579~126

52

2919

1

I~WI10t ~salesPer ~stomer

200,265

2,5688,027

25,60(;403,358

99,588309,647

5,904,76~c

73,432300,427,00(;43,763,00(;

280,60229,026,00(;24,831,00(;

3,44424,206

531,36C32,40C91,772

246,7469,642,80(;

79,630,00(;12,72428,947

43,256,00(;

1,526,536

7,608,95816,682

7,625,64(;

135,756,173

783,643,8301,417,000

785,060,830

Page 304.2

4,907

397,014

397,014

311,094

19,16~(

19,20;

0.1312

0.13340~14450.11040~08030.11510.10270.08730.11880.07290.03630.10330.06810.0749

0.1436

0.14270.15580.10980.12480.12260.09970.09550.07850.22440.13640:0816

-0.0057

0.0889

0.103(;0.064c~0.103(;

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

~chedule Page: 304 Line No.: 1 Column: cEstimated Fuel Clause Revenues by Rate Schedule

(440) RESIDENTIAL SALES

TEXAS

01 Residential Service28 Private Area Lighting Service

Power Factor AdjustmentDeferred Fuel

Total - Texas

$ 52,613,47249,269

743,014594,279

54°000°034

NEW MEXICO

01 Residential Service12 Private Area Lighting Service

Deferred FuelTotal - New Mexico

121,150(1,680)i0.670

130.140

Total (440) $ 54,130.174~chedule Page: 304 L~e No.: 1 Column: dThere were less than 1,167 duplicate customers for all rates schedules combined in 2014.~chedule Page: 304 L~e No.: 21 Column: cEstimated Fuel Clause Revenues by Rate Schedule

(442) COMMERCIAL AND INDUSTRIAL SALES

SMALL - TEXAS

02 Small Commercial Service07 Outdoor Recreational Lighting22 Irrigation Service24 General Service25 Large Power Service28 Private Area Lighting Service34 Cotton Gin Service

Power Factor AdjustmentDeferred Fuel

Total - Texas

$ 6,278,5819,367

98,89335,803,855

5,930,349395,042

26,720683,521

1,020,43350,246,761

SMALL - NEW MEXICO

03 Small Commercial Service04 General Service05 Irrigation Service08 Municipal Water Pumping09 Large Power Service12 Private Area Lighting Service19 Seasonal Agr. Processing Svc.25 Outdoor Recreational Lighting29 Interrup. Svc for Lg Power

Deferred FuelTotal - New Mexico

(11,731)(26,792)118,858

3,237173

(1,396)(23,420)

891,907

67.243128,168

LARGE - TEXAS

15 Electrolytic refining25 Large Power Service26 Petroleum Refinery Service28 Private Area Lighting Service

IFERC FORM NO. 1 (ED. 12-87)

1,367,8857,960,6598,079,044

6,890Page 450.1 I

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

30 Electric Furnace38 Interruptible Svc for Large Power

Power Factor AdjustmentDeferred Fuel

Total - Texas

574,0767,280,287

355,100698,692

26,322,633

LARGE - NEW MEXICO

09 Large Power Service29 Interruptible Service Large Power

Deferred FuelTotal - New Mexico

(27,770)(13,790)

1,141(40,419)

Total (442) $ 76,657,143~chedu~ P~qe: 304.1 i~e No.: 29 Column: cEstimated Fuel Clause Revenues by Rate Schedule

(444) PUBLIC STREET AND HIGHWAY LIGHTING

TEXAS

08 Municipal St. Lights & SignalsPower Factor AdjustmentDeferred Fuel

Total - Texas

$ 830,20814,115

7,645851,968

NEW MEXICO

ii Municipal St. Lights & SignalsDeferred Fuel

Total - New Mexico

(476)397(79)

Total (444)~chedu~ Page: 304.2 L~e No.: 3 Column: cEstimated Fuel Clause Revenues by Rate Schedule

851,889

(445) OTHER SALES TO PUBLIC AUTHORITIES

TEXAS

01 Residential Service02 Small Commercial Service07 Outdoor Rec. Lighting Serviceii Municipal Pumping Service22 Irrigation24 General Service25 Large Power Service28 Private Area Lighting31 Military Reservation Service38 Interruptible Service for Large41 City and County Service43 University Service45 Supplemental Power

Power Factor AdjustmentDeferred Fuel

Total - Texas

$ 8 020240 759121 869

4,538,42645 009

3,719 0032,021,640

256 0657,614 9431,141 5797,804,5041,513,398

645,533410,627711,681

300793,056

NEW MEXICO

01 Residential Service03 Small Commercial Service04 General Service

31(174)

1,034

IFERC FORM NO. 1 (ED. 12-87) Page 450.2 I

Name of Respondent

El Paso Electdc Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

05 Irrigation Service07 City and County Service08 Municipal Pumping09 Large Power Servicei0 Military Research & Dev. Power12 Private Area Lighting25 Outdoor Rec. Lighting Service26 State University Service

Deferred FuelTotal - New Mexico

Total (445)

444(46,982)

(35)(15,117)(21,979)

(253)223

(2,845)36°346

(49.307)

S 30.743,749

IFERC FORM NO. 1 (ED. 12-87) Page 450.3

Name of Respondent This Re_~_port Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) I~An Original (Mo, Da, Yr) End of 2014/Q4

(2) [~A Resubmission / /I

SALES FOR RESALE (Account 447)1. Report all sales for resale (i.e., sales to purchasers other than ultimate consumers) transacted on a settlement basis other thanpower exchanges during the year. Do not report exchanges of electricity ( i.e., transactions involving a balancing of debits and creditsfor energy, capacity, etc.) and any settlements for imbalanced exchanges on this schedule. Power exchanges must be reported on thePurchased Power schedule (Page 326-327).2. Enter the name of the purchaser in column (a). Do note abbreviate or truncate the name or use acronyms. Explain in a footnote anyownership interest or affiliation the respondent has with the purchaser.3. In column (b), enter a Statistical Classification Code based on the original contractual terms and conditions of the service as follows:RQ - for requirements service. Requirements service is service which the supplier plans to provide on an ongoing basis (i.e., thesupplier includes projected load for this service in its system resource planning). In addition, the reliability of requirements service mustbe the same as, or second only to, the supplier’s service to its own ultimate consumers.LF - for tong-term service. "Long-term" means five years or Longer and "firm" means that service cannot be interrupted for economicreasons and is intended to remain reliable even under adverse conditions (e.g., the supplier must attempt to buy emergency energyfrom third parties to maintain deliveries of LF service). This category should not be used for Long-term firm service which meets thedefinition of RQ service. For all transactions identified as LF, provide in a footnote the termination date of the contract defined as theearliest date that either buyer or setter can unilaterally get out of the contract.IF - for intermediate-term firm service. The same as LF service except that "intermediate-term" means longer than one year but Less

than five years.SF - for short-term firm service. Use this category for all firm services where the duration of each period of commitment for service isone year or less.LU - for Long-term service from a designated generating unit. "Long-term" means five years or Longer. The availability and reliability ofservice, aside from transmission constraints, must match the availability and reliability of designated unit.IU - for intermediate-term service from a designated generating unit. The same as LU service except that "intermediate-term" meansLonger than one year but Less than five years.

Line Name of Company or Public Authority StatisticalNo. (Footnote Affiliations) Classifi-

cation(a) (b)

1 Rio Grande Electric Cooperative, Inc. RQ2 Adzona Electric Power Cooperative SF 13 Arizona Public Service Company SF4 Black Hills Power Inc SF 15 Cargill Power Markets, LLC SF 16 Citigmup Energy Inc. SF 17 City of Burbank California SF 18 EDF Trading North America, LLC SF 19 Exelon Generation Company SF 1

10 Freeport-McMoran Copper & Gold Energy LU 211 Gila River Power LLC 112 Gila River Power LLC SF 113 Iberdrola Renewables, LLC SF 114 Imperial Irrigation Distdct SF 1

Subtotal RQ

Subtotal non-RQ

~otal

FERC Rate AverageSchedule or Monthly Billing

Tariff Number Demand (MVV)(d)

8.8

o

o

o

Actual Demand (MW)Average Averaqe

Monthly NCP Deman, Monthly CP"Demand(e) (f)

10.~ 8.8

0 0

0 0

0 0

FERC FORM NO. 1 (ED. 12-90) Page 310

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electdc Company (2) [] A Resubmission / /

SALES FOR RESALE (Account 447)1. Report all sales for resale (i.e., sales to purchasers other than ultimate consumers) transacted on a settlement basis other than3ower exchanges during the year. Do not report exchanges of electricity ( i.e., transactions involving a balancing of debits and creditsfor energy, capacity, etc.) and any settlements for imbalanced exchanges on this schedule. Power exchanges must be reported on thePurchased Power schedule (Page 326-327).2. Enter the name of the purchaser in column (a). Do note abbreviate or truncate the name or use acronyms. Explain in a footnote anyownership interest or affiliation the respondent has with the purchaser.3. In column (b), enter a Statistical Classification Code based on the original contractual terms and conditions of the service as follows:RQ - for requirements service. Requirements service is service which the supplier plans to provide on an ongoing basis (i.e., thesupplier includes projected load for this service in its system resource planning). In addition, the reliability of requirements service mustbe the same as, or second only to, the supplier’s service to its own ultimate consumers.LF - for tong-term service. "Long-term" means five years or Longer and "firm" means that service cannot be interrupted for economicreasons and is intended to remain reliable even under adverse conditions (e.g., the supplier must attempt to buy emergency energyfrom third parties to maintain deliveries of LF service). This category should not be used for Long-term firm service which meets thedefinition of RQ service. For all transactions identified as LF, provide in a footnote the termination date of the contract defined as theearliest date that either buyer or setter can unilaterally get out of the contract.IF - for intermediate-term firm service. The same as LF service except that "intermediate-term" means longer than one year but Less

than five years.SF - for short-term firm service. Use this category for all firm services where the duration of each period of commitment for service isone year or less.LU - for Long-term service from a designated generating unit. "Long-term" means five years or Longer. The availability and reliability ofservice, aside from transmission constraints, must match the availability and reliability of designated unit.IU - for intermediate-term service from a designated generating unit. The same as LU service except that "intermediate-term" meansLonger than one year but Less than five years.

Line Name of Company or Public Authority StatisticalNo. (Footnote Affiliations) Classifi-

cation(a) (b) (c)

1 Los Alamos County ~ 12 LOS Alamos County [SF / 13 Los Alamos County 14 J. Aron & Company SF 15 J.P. Morgan Ventures Energy Corporation SF 16 Los Angeles Department of Water and Pow SF 17 Macquade Energy LLC SF 18 Morgan Stanley Capital Group, Inc. SF 19 PacifiCorp SF 1

10 Powerex Corp. SF 111 Public Service Company of Colorado SF 112 Public Service Company of New Mexico 113 Public Service Company of New Mexico SF 114 Salt River Project Agricultural Improv SF 1

Subtotal RQ

Subtotal non-RQ

~otal

AverageMonthly BillingDemand (MVV)

o

o

0

Actual Demand (MVV)Average Average

Monthly NCP Deman~ Monthly CP-Demand(e) (f)

0 0

0 0

0 0

FERC RateSchedule or

Tadff Number(d)

FERC FORM NO. 1 (ED. 12-90) Page 310.1

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) [] A Resubmission / /

SALES FOR RESALE (Account 447)1. Report all sales for resale (i.e., sales to purchasers other than ultimate consumers) transacted on a settlement basis other thanpower exchanges during the year. Do not report exchanges of electricity ( i.e., transactions involving a balancing of debits and creditsfor energy, capacity, etc.) and any settlements for imbalanced exchanges on this schedule. Power exchanges must be reported on thePurchased Power schedule (Page 326-327).2. Enter the name of the purchaser in column (a). Do note abbreviate or truncate the name or use acronyms. Explain in a footnote anyownership interest or affiliation the respondent has with the purchaser.3. In column (b), enter a Statistical Classification Code based on the original contractual terms and conditions of the service as follows:RQ - for requirements service. Requirements service is service which the supplier plans to provide on an ongoing basis (i.e., thesupplier includes projected load for this service in its system resource planning). In addition, the reliability of requirements service mustbe the same as, or second only to, the supplier’s service to its own ultimate consumers.LF - for tong-term service. "Long-term" means five years or Longer and "firm" means that service cannot be interrupted for economicreasons and is intended to remain reliable even under adverse conditions (e.g., the supplier must attempt to buy emergency energyfrom third parties to maintain deliveries of LF service). This category should not be used for Long-term firm service which meets thedefinition of RQ service. For all transactions identified as LF, provide in a footnote the termination date of the contract defined as theearliest date that either buyer or setter can unilaterally get out of the contract.IF - for intermediate-term firm service. The same as LF service except that "intermediate-term" means longer than one year but Less

than five years.SF - for short-term firm service. Use this category for all firm services where the duration of each period of commitment for service isone year or less.LU - for Long-term service from a designated generating unit. "Long-term" means five years or Longer. The availability and reliability ofservice, aside from transmission constraints, must match the availability and reliability of designated unit.IU - for intermediate-term service from a designated generating unit. The same as LU service except that "intermediate-term" meansLonger than one year but Less than five years.

Line Name of Company or Public Authority StatisticalNo. (Footnote Affiliations) Classifi-

cation(a) (b) (c)

1 Sempra Generation 12 Sempra Generation SF 13 Shell Energy North America (US), LP. SF 24 Southern California Edison Co SF 15 Tenaska Power Services Co SF 16 TransAIta Energy Marketing (U.S.), Inc. SF 17 Tri-State G & T Association, Inc. 18 Tri-State G & T Association, Inc. SF ~ 19 Tucson Electric Power Marketing 1

10 Tucson Electric Power Marketing SF 111 UNS Electdc Inc SF 112 WAPA - Desert SouthWest SF 113 Westar Energy, Inc. SF 114 Arizona Electric Power Cooperative, Inc SF 104

AverageMonthly BillingDemand (MVV)

Actual Demand (MW)Average Average

Monthly NCP Deman~ Monthly CP’Demand(e) (f)

N/,~ N/A

0 0

0 0

0 0

Subtotal RQ

Subtotal non-RQ

~’otal

0

0

FERC RateSchedule or

Tariff Number(d)

FERC FORM NO. 1 (ED. 12-90) Page 310.2

Name of Respondent This Re_~ort Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [~An Original (Mo, Da, Yr) End of 2014/Q4

(2) [~A Resubmission / /SALES FOR RESALE (Account 447)

1. Report all sales for resale (i.e., sales to purchasers other than ultimate consumers) transacted on a settlement basis other thanpower exchanges during the year. Do not report exchanges of electricity ( i.e., transactions involving a balancing of debits and creditsfor energy, capacity, etc.) and any settlements for imbalanced exchanges on this schedule. Power exchanges must be reported on thePurchased Power schedule (Page 326-327).2. Enter the name of the purchaser in column (a). Do note abbreviate or truncate the name or use acronyms. Explain in a footnote anyownership interest or affiliation the respondent has with the purchaser.3. In column (b), enter a Statistical Classification Code based on the original contractual terms and conditions of the service as follows:RQ - for requirements service. Requirements service is service which the supplier plans to provide on an ongoing basis (i.e., thesupplier includes projected load for this service in its system resource planning). In addition, the reliability of requirements service mustbe the same as, or second only to, the supplier’s service to its own ultimate consumers.LF - for tong-term service. "Long-term" means five years or Longer and "firm" means that service cannot be interrupted for economicreasons and is intended to remain reliable even under adverse conditions (e.g., the supplier must attempt to buy emergency energyfrom third parties to maintain deliveries of LF service). This category should not be used for Long-term firm service which meets thedefinition of RQ service. For all transactions identified as LF, provide in a footnote the termination date of the contract defined as theearliest date that either buyer or setter can unilaterally get out of the contract.IF - for intermediate-term firm service. The same as LF service except that "intermediate-term" means longer than one year but Less

than five years.SF - for short-term firm service. Use this category for all firm services where the duration of each period of commitment for service isone year or less.LU - for Long-term service from a designated generating unit. "Long-term" means five years or Longer. The availability and reliability ofservice, aside from transmission constraints, must match the availability and reliability of designated unit.IU - for intermediate-term service from a designated generating unit. The same as LU service except that "intermediate-term" meansLonger than one year but Less than five years.

Line Name of Company or Public Authority Statistical FERC RateNo. (Footnote Affiliations) Classifi- Schedule or

cation Tariff Number(a) (b) (c)

1 Arizona Public Service Company SF 1042 HGMA SF 1043 Los Alamos SF 1044 Panda Gila River SF 1045 Public Service Company of New Mexico SF 1046 SEMPRA SF 1047 Salt River Pro~ect SF 1048 STAR SF 1049 Tucson Electric Power Company SF 104

10 TRI-STATE SF 10411 Enron Power Marketing, Inc. AD121314

Subtotal RQ

Subtotal non-RQ

~otal

AverageMonthly BillingDemand (MVV)

(d)N/AN/AN/AN/A

N/AN/AN/A

N/AN/AN/A

Actual Demand (MVV)Average Average

Monthly NCP Deman~ Monthly CP’~)eman¢(e) (f)

N/A N/P

N/A NIPN/A NIPN/A NIP

N/A NIPN/A NIPN/A NIP

N/,~ NIP

N/A NIPN/A N/P

0 0

0 0

0 0

0

0

0

FERC FORM NO. 1 (ED. 12-90) Page 310.3

Name of Respondent This Re_~port Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electdc Company (2) [~A Resubmission / /

SALES FOR RESALE (Account 447) (Continued)OS - for other service, use this category only for those services which cannot be placed in the above-defined categories, such as allnon-firm service regardless of the Length of the contract and service from designated units of Less than one year. Describe the natureof the service in a footnote.AD - for Out-of-period adjustment. Use this code for any accounting adjustments or "true-ups" for service provided in prior reportingyears. Provide an explanation in a footnote for each adjustment.4. Group requirements RQ sales together and report them starting at line number one. After listing all RQ sales, enter "Subtotal - RQ"in column (a). The remaining sales may then be listed in any order. Enter"SubtotaI-Non-RQ" in column (a) after this Listing. Enter"Total" in column (a) as the Last Line of the schedule. Report subtotals and total for columns (9) through (k)5. In Column (c), identify the FERC Rate Schedule or Tariff Number. On separate Lines, List all FERC rate schedules or tariffs underwhich service, as identified in column (b), is provided.6. For requirements RQ sales and any type of-service involving demand charges imposed on a monthly (or Longer) basis, enter theaverage monthly billing demand in column (d), the average monthly non-coincident peak (NCP) demand in column (e), and the averagemonthly coincident peak (CP)demand in column (f). For all other types of service, enter NA in columns (d), (e) and (f). Monthly NCP demand is the maximummetered hourly (60-minute integration) demand in a month. Monthly CP demand is the metered demand during the hour (60-minuteintegration) in which the supplier’s system reaches its monthly peak. Demand reported in columns (e) and (f) must be in megawatts.Footnote any demand not stated on a megawatt basis and explain.7. Report in column (g) the megawatt hours shown on bills rendered to the purchaser.8. Report demand charges in column (h), energy charges in column (i), and the total of any other types of charges, includingout-of-period adjustments, in column (j). Explain in a footnote all components of the amount shown in column (j). Report in column (k)the total charge shown on bills rendered to the purchaser.9. The data in column (g) through (k) must be subtotaled based on the RQ/Non-RQ grouping (see instruction 4), and then totaled onthe Last -line of the schedule. The "Subtotal - RQ" amount in column (g) must be reported as Requirements Sales For Resale on Page401, line 23. The "Subtotal - Non-RQ" amount in column (g) must be reported as Non-Requirements Sales For Resale on Page401 ,iine 24.10. Footnote entries as required and provide explanations following all required data.

MegaWatt HoursSold(g)

61,729

20,4017,029

45,199

24,6002,896

95,033

6,616712,284

33,757

4,00013,141

61,729

3,322,053

3,383,782

Demand Charges($)(h)

2,002,054

2,002,054

0

2,002,054

REVENUEEnergy Charges

($)(~)

2,092,766598,889230,017

105179,072

869,250105,788

3,626,563283,627

1,435,000

1,528,013

137,986476,962

2,092,766

97,176,397

99,269,163

Other Charges($)~)

-38,278

222,329

184,051

Total ($) Line(h+i+j) No.

(k)4,056,542 1

600,85~ 2230,69.= 3

10~= 4179,072 5869,25(~ 6105,78~ 7

3,627,00,~ 8283,627 9

1,435,00(~ 105,44L" 11

1,528,013 12137,98~ 13476,96; 14

4,056,542

97,398,726

101,455,268

FERC FORM NO. 1 (ED. 12-90) Page 311

Name of Respondent This Re~ort Is: Date of Report Year/Period of ReportEl Paso Electdc Company (1) [~An Original (Mo, Da, Yr) End of 2014/Q4

(2) [] A Resubmission / /S,~LES FOR RESALE (Account 447) (Continued)

OS - for other service, use this category only for those services which cannot be placed in the above-defined categories, such as allnon-firm service regardless of the Length of the contract and service from designated units of Less than one year. Describe the natureof the service in a footnote.AD - for Out-of-period adjustment. Use this code for any accounting adjustments or "true-ups" for service provided in prior reportingyears. Provide an explanation in a footnote for each adjustment.4. Group requirements RQ sales together and report them starting at line number one. After listing all RQ sales, enter "Subtotal - RQ"in column (a). The remaining sales may then be listed in any order. Enter "SubtotaI-Non-RQ" in column (a) after this Listing. Enter"Total" in column (a) as the Last Line of the schedule. Report subtotals and total for columns (9) through (k)5. In Column (c), identify the FERC Rate Schedule or Tariff Number. On separate Lines, List all FERC rate schedules or tariffs underwhich service, as identified in column (b), is provided.6. For requirements RQ sales and any type of-service involving demand charges imposed on a monthly (or Longer) basis, enter theaverage monthly billing demand in column (d), the average monthly non-coincident peak (NCP) demand in column (e), and the averagemonthly coincident peak (CP)demand in column (f). For all other types of service, enter NA in columns (d), (e) and (f). Monthly NCP demand is the maximummetered hourly (60-minute integration) demand in a month. Monthly CP demand is the metered demand during the hour (60-minuteintegration) in which the supplier’s system reaches its monthly peak. Demand reported in columns (e) and (f) must be in megawatts.Footnote any demand not stated on a megawatt basis and explain.7. Report in column (g) the megawatt hours shown on bills rendered to the purchaser.8. Report demand charges in column (h), energy charges in column (i), and the total of any other types of charges, includingout-of-period adjustments, in column (j). Explain in a footnote all components of the amount shown in column (j). Report in column (k)the total charge shown on bills rendered to the purchaser.9. The data in column (g) through (k) must be subtotaled based on the RQ/Non-RQ grouping (see instruction 4), and then totaled on

~the Last -line of the schedule. The "Subtotal - RQ" amount in column (g) must be reported as Requirements Sales For Resale on Page401, line 23. The "Subtotal - Non-RQ" amount in column (g) must be reported as Non-Requirements Sales For Resale on Page401 ,iine 24.10. Footnote entries as required and provide explanations following all required data.

MegaWatt HoursSold(g)

2,117

15,80050800

212,625479,905

6,6109,7147,236

32,315145,043

61,729

3,322,053

3,383,782

Demand Charges($)(h)

2,002,054

0

2,002,054

REVENUEEnergy Charges Other Charges

($) ($)(i) (j)

78,503

586,350

18,25035,746

7,945,09815,844,215

250,955

302,005264,124

1,257,7206,230,948

2,092,766

97,176,397

99,269,163

-38,278

222,329

184,051

Total(S) Line(h+i~) No.

(k)387,22~ 178,503 2

1,44C 3

586,35C 418,25~ 538,20£ 6

7,945,09~ 715,858,84~ 8

250,95~ 9302,00~ 10

264,124 1112~ 12

1,257,72~ 136,234,523 14

4,056,542

97,398,726

101,455,268

FERC FORM NO. 1 (ED. 12-90) Page 311.1

Name of Respondent This Re_~port Is: Date of Report Year/Period of ReportEl Paso Electdc Company (1) [~An Original (Mo, Da, Yr) End of 2014/Q4

(2) [’-]A Resubmission / /SALES FOR RESALE (Account 447) (Continued)

OS - for other service, use this category only for those services which cannot be placed in the above-defined categories, such as allnon-firm service regardless of the Length of the contract and service from designated units of Less than one year. Describe the natureof the service in a footnote.AD - for Out-of-period adjustment. Use this code for any accounting adjustments or "true-ups" for service provided in prior reportingyears. Provide an explanation in a footnote for each adjustment.4. Group requirements RQ sales together and report them starting at line number one. After listing all RQ sales, enter "Subtotal - RQ"in column (a). The remaining sales may then be listed in any order. Enter "SubtotaI-Non-RQ" in column (a) after this Listing. Enter"Total" in column (a) as the Last Line of the schedule. Report subtotals and total for columns (9) through (k)5. In Column (c), identify the FERC Rate Schedule or Tariff Number. On separate Lines, List all FERC rate schedules or tariffs underwhich service, as identified in column (b), is provided.6. For requirements RQ sales and any type of-service involving demand charges imposed on a monthly (or Longer) basis, enter theaverage monthly billing demand in column (d), the average monthly non-coincident peak (NCP) demand in column (e), and the averagemonthly coincident peak (CP)demand in column (f). For all other types of service, enter NA in columns (d), (e) and (f). Monthly NCP demand is the maximummetered hourly (60-minute integration) demand in a month. Monthly CP demand is the metered demand during the hour (60-minuteintegration) in which the supplier’s system reaches its monthly peak. Demand reported in columns (e) and (f) must be in megawatts.Footnote any demand not stated on a megawatt basis and explain.7. Report in column (g) the megawatt hours shown on bills rendered to the purchaser.8. Report demand charges in column (h), energy charges in column (i), and the total of any other types of charges, includingout-of-period adjustments, in column (j). Explain in a footnote all components of the amount shown in column (j). Report in column (k)the total charge shown on bills rendered to the purchaser.9. The data in column (g) through (k) must be subtotaled based on the RQ/Non-RQ grouping (see instruction 4), and then totaled onthe Last -line of the schedule. The "Subtotal - RQ" amount in column (g) must be reported as Requirements Sales For Resale on Page401, line 23. The "Subtotal - Non-RQ" amount in column (g) must be reported as Non-Requirements Sales For Resale on Page401 ,iine 24.10. Footnote entries as required and provide explanations following all required data.

MegaWatt HoursSold(g)

92,294725,958

3,200519,822

26,214

21,412

82,9009,218

25650241

Demand Charges($)(h)

REVENUEEnergy Charges Other Charges

($) ($)Ci) (j)

3,057,94728,374,861

92,054

18,807,736810,171

734,304

2,498,232364,118

1,320

18,02510,152

Total(S) Line(h+i~) No.

(k)510 1

3,058,875 228,376,759 3

92,800 418,808,873 5

810,171 6181,515 7734,304 8

1,382 92,498,606 10

364,118 111,320 12

18,025 1310,152 14

61,729 2,002,054 2,092,766 -38,278 4,056,542

3,322,053 0 97,176,397 222,329 97,398,726

3,383,782 2,002,054 99,269,163 184,051 101,455,268

FERC FORM NO. 1 (ED. 12-90) Page 311.2

Name of Respondent This Re~ort Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electdc Company (2) F"~A Resubmission / /SALES FOR RESALE (Account 447) (Continued)

OS - for other service, use this category only for those services which cannot be placed in the above-defined categories, such as allnon-firm service regardless of the Length of the contract and service from designated units of Less than one year. Describe the natureof the service in a footnote.AD - for Out-of-period adjustment. Use this code for any accounting adjustments or "true-ups" for service provided in prior reportingyears. Provide an explanation in a footnote for each adjustment.4. Group requirements RQ sales together and report them starting at line number one. After listing all RQ sales, enter "Subtotal - RQ"in column (a). The remaining sales may then be listed in any order. Enter "SubtotaI-Non-RQ" in column (a) after this Listing. Enter"Total" in column (a) as the Last Line of the schedule. Report subtotals and total for columns (9) through (k)5. In Column (c), identify the FERC Rate Schedule or Tariff Number. On separate Lines, List all FERC rate schedules or tariffs underwhich service, as identified in column (b), is provided.6. For requirements RQ sales and any type of-service involving demand charges imposed on a monthly (or Longer) basis, enter theaverage monthly billing demand in column (d), the average monthly non-coincident peak (NCP) demand in column (e), and the averagemonthly coincident peak (CP)demand in column (f). For all other types of service, enter NA in columns (d), (e) and (f). Monthly NCP demand is the maximummetered hourly (60-minute integration) demand in a month. Monthly CP demand is the metered demand during the hour (60-minuteintegration) in which the supplier’s system reaches its monthly peak. Demand reported in columns (e) and (f) must be in megawatts.Footnote any demand not stated on a megawatt basis and explain.7. Report in column (g) the megawatt hours shown on bills rendered to the purchaser.8. Report demand charges in column (h), energy charges in column (i), and the total of any other types of charges, includingout-of-period adjustments, in column (j). Explain in a footnote all components of the amount shown in column (j). Report in column (k)the total charge shown on bills rendered to the purchaser.9. The data in column (g) through (k) must be subtotaled based on the RQ/Non-RQ grouping (see instruction 4), and then totaled onthe Last -line of the schedule. The "Subtotal- RQ" amount in column (g) must be reported as Requirements Sales For Resale on Page401, line 23. The "Subtotal - Non-RQ" amount in column (g) must be reported as Non-Requirements Sales For Resale on Page401,iine 24.10. Footnote entries as required and provide explanations following all required data.

MegaWatt HoursSold(g)

30263

61,729

3,322,053

3,383,782

466787

45822185

396

166

Demand Charges($)(h)

2,002,054

0

2,002,054

REVENUEEnergy Charges Other Charges

($) ($)(i) (j)

11,8742,203

Total ($) Line(h+i+j) No.

19,742

32,80719,019

9,5913,233

17,0256,797

-38,278

222,329

184,051

11,874 1

2,203 2

755 3

20,592 4

32,807 5

20,394 6

9,591 7

3,233 8

17,025 9

6,797 10

-387,119 111213

14

(k)

2,092,766

97,176,397

99,269,t63

4,056,542

97,398,726

!01,455,268

FERC FORM NO. 1 (ED. 12-90) Page 311.3

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

~chedule Page: 310 Line No.: 1 Column: cContract effective April I, 2008.~chedule Page: 310 Line No.: 1 Column: iRepresents Rio Grande Electric Cooperative ("RGEC")recover all eligible fuel costs allocable to RGEC.~chedule Page: 310 Line No.: 2 Column: jTransmission services.~chedule Page: 310 Line No.: 3 Column: cI=WSPP Agreement- Rate Schedule FERC No. 6.~chedule Page: 310 Line No.: 3 Column: jTransmission services.~chedule Page: 310 Line No.: 8Transmission services.~chedule Page: 310 Line No.: 11Spznning reserves.~chedule Page: 310 Line No.: 11Spinning reserves.~chedule Page: 310.1Spznning reserves.~chedule Page: 310.1Splnning reserves.~chedule Page: 310.1 Line No.: 3Prior year adjustment.~chedule Page: 310.1 Line No.: 3Prior year adjustment.~chedule Page: 310.1 Line No.: 6Transmission services.~chedule Page: 310.1 Line No.: 8Transmission services.~chedule Page: 310.1 Line No.: 12Spinning reserves.~chedule Page: 310.1 Line No.: 12Spinning reserves.~¢hedule Page: 310.1 Line No.: 14Transmission services.~chedule Page: 310.2 Line No.: 1Spinning reserves.~chedule Page: 310.2 Line No.: 1Spinning reserves.~chedule Page: 310.2 Line No.: 2Transmission services.~chedule Page: 310.2 Line No.: 3Transmission services.~chedule Page: 310.2 Line No.: 4Transmission services.~chedule Page: 310.2 Line No.: 5Transmission services.~chedule Page: 310.2 Line No.: 7Spinning reserves.~chedule Page: 310.2 Line No.: 7Spinning reserves.~chedule Page: 310.2 Line No.: 9Spinning reserves.~chedule Page: 310.2 Line No.: 9IFERC FORM NO. 1 (ED. 12-87)

Column: j

Column: b

Column: j

Line No.: 1 Column: b

Line No.: 1 Column: j

Page 450.1

fuel adj us tment clause designed to

Column: b

Column: j

Column: j

Column: j

Column: b

Column: j

Column:j

Column: b

Column: j

Column: j

Column: j

Column:j

Column: j

Column: b

Column: j

Column: b

Column: j

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

Spinning reserves.~chedule Page: 310.2 Line No.: 10 Column: jTransmission services.~chedule Page: 310.3 Line No.: 3 Column: jOther Charges are for Southwest Reserve Sharing Group~chedule Page: 310.3 Line No.: 4 Column: jOther Charges are for SRSG charge received.~chedule Page: 310.3 Line No.: 6 Column: jOther Charges are for SRSG charge received.~chedule Page: 310.3 Line No.: 11 Column: jPrior year adjustment.

("SRSG") charge received.

IFERC FORM NO. t (ED. 12-87) Page 450.2

Name of Respondent This Report Is: Date of Report(1) [~]An Original (Mo, Da, Yr)

El Paso Electric Company (2) [] A Resubmission / /ELE(~TRIC OPERATION AND MAINTENANCE EXPENSES

If the amount for previous year is not derived from previously reported figures, explain in footnote.Line AccountNo. (a)

1 1. POWER PRODUCTION EXPENSES2 A. Steam Power Generation3 Operation4 (500) Operation Supervision and Engineering5 (501) Fuel6 (502) Steam Expenses7 (503) Steam from Other Sources8 (Less) (504) Steam Transferred-Cr.9 (505) Electric Expenses

10 (506) Miscellaneous Steam Power Expenses11 (507) Rents12 (509) Allowances13 TOTAL Operation (Enter Total of Lines 4 thru 12)14 Maintenance15 (510) Maintenance Supervision and Engineering16 (511) Maintenance of Structures17 (512) Maintenance of Boiler Plant18 (513) Maintenance of Electric Plant19 (514) Maintenance of Miscellaneous Steam Plant20 TOTAL Maintenance (Enter Total of Lines 15 thru 19)21 TOTAL Power Production Expenses-Steam Power (Entr Tot lines 13 & 20)22 B. Nuclear Power Generation23 Operation24 (517) Operation Supervision and Engineering25 i(518) Fuel26 (519) Coolants and Water27 (520) Steam Expenses28 (521) Steam from Other Sources29 (Less) (522) Steam Transferred-Cr.30 (523) Electric Expenses31 (524) Miscellaneous Nuclear Power Expenses32 (525) Rents33 TOTAL Operation (Enter Total of lines 24 thru 32)34 Maintenance35 (528) Maintenance Supervision and Engineering36 (529) Maintenance of Structures37 (530) Maintenance of Reactor Plant Equipment38 (531) Maintenance of Electric Plant39 (532) Maintenance of Miscellaneous Nuclear Plant40 TOTAL Maintenance (Enter Total of lines 35 thru 39)41 TOTAL Power Production Expenses-Nuc. Power (Entr tot lines 33 & 40)42 C. Hydraulic Power Generation43 Operation44 (535) Operation Supervision and Engineering45 (536) Water for Power46 i(537) Hydraulic Expenses47 (538) Electric Expenses48 (539) Miscellaneous Hydraulic Power Generation Expenses49 (540) Rents50 TOTAL Operation (Enter Total of Lines 44 thru 49)51 C. Hydraulic Power Generation (Continued)52 Mai~tei~ance53 (541) Mainentance Supervision and Engineering54 (542) Maintenance of Structures55 (543) Maintenance of Reservoirs, Dams, and Waterways56 (544) Maintenance of Electric Plant57 (545) Maintenance of Miscellaneous Hydraulic Plant58 TOTAL Maintenance (Enter Total of lines 53 thru 57)59 TOTAL Power Production Expenses-Hydraulic Power (tot of lines 50 & 58)

Year/Period of ReportEnd of 2014/Q4

cAumOUt~t .for _Amount.forrrem ~’ear ~revlous ~’ear

(b) (c)

2,908,212i197,844,410I

3,979,942

3,028,8514,794,7011,436,129

9,745214,001,990

2,177,293934,131

9,437,8218,597,7203,551,268

24,698,233238,700,223

6,692,6135,280,881

4,672,95718,218,820

90,477,162

1,967,278171,009,451

3,691,798

3,056,90~5,489,4511,299,85~

35,94Zl186,550,68~

1,711,0781,249,95~9,519,42~8,812,8882,453,827

23,747,177210,297,86~

12,557,86~49,180,711~

6,314,47~5,135,53C

5,042,37217,674,123

-24~95,904,831

3,932,7531,000,29C7,653,6827,253,62~2,149,571

21,989,91~117,894,747

4,393,6701,290,8806,789,6538,592,8691,967,286

23,034,358113,511,520

FERC FORM NO. 1 (ED. 12-93) Page 320

Name of Respondent I This Report Is: Date of ReportI (1) [~An Original (ao, Da, Yr)

El Paso Electdc Company I (2) [] A Resubmission / /

ELECTRIC OPERATION AND MAINTENANCE E~PENSES (Continued)If the amount for previous year is not derived from previously reported figures, explain in footnote.LineNo.60616263

65666768697071727374757677787980818283

858687888990919293

95

9899100101102103

105106107108109110

112

Year/Period of ReportEnd of 2014/Q4

Account(a)

D. Other Power GenerationOperation(546) Operation Supervision and Engineering(547) Fuel(548) Generation Expenses(549) Miscellaneous Other Power Generation Expenses(550) RentsTOTAL Operation (Enter Total of lines 62 thru 66)Maintenance(551) Maintenance Supervision and Engineering!(552) Maintenance of Structures~ (553) Maintenance of Generating and Electdc Plant

cAumOUnt fortrent Year

(b)pAm.ount.forrevlous Year

(c)

28,64211,870,668

4,75248,497

11,952,559

21,14828,264

2,802,316(554) Maintenance of Miscellaneous Other Power Generation PlantTOTAL Maintenance (Enter Total of lines 69 thru 72)TOTAL Power Production Expenses-Other Power (Enter Tot of 67 & 73)E. Other Power Supply Expenses(555) Purchased Power(556) System Control and Load Dispatching(557) Other ExpensesTOTAL Other Power Supply Exp (Enter Total of lines 76 thru 78)TOTAL Power Production Expenses (Total of lines 21, 41, 59, 74 & 79)2. TRANSMISSION EXPENSESOperation(560) Operation Supervision and Engineering

(561.1) Load Dispatch-Reliability(561.2) Load Dispatch-Monitor and Operate Transmission System(561.3) Load Dispatch-Transmission Service and Scheduling(561.4) Scheduling, System Control and Dispatch Services(561.5) Reliability, Planning and Standards Development(561.6) Transmission Service Studies!(561.7) Generation Interconnection Studies(561.8) Reliability, Planning and Standards Development Services(562) Station Expenses(563) Overhead Lines Expenses(564) Underground Lines Expenses(565) Transmission of Electricity by Others(566) Miscellaneous Transmission Expenses(567) RentsTOTAL Operation (Enter Total of lines 83 thru 98)Maintenance(568) Maintenance Supervision and Engineering(569) Maintenance of Structures(569.1) Maintenance of Computer Hardware(569.2) Maintenance of Computer Software(569.3) Maintenance of Communication Equipment(569.4) Maintenance of Miscellaneous Regional Transmission Plant

135,6412,987,589

14,940,148

64,804,3891,112,369

481,29066,398,048

433,549,939

1,383,567

92,200633,302494,891963,757911,507

37,15E,6,810,024,

93;,45,1516,36C,

6,899,623

4,98~=

59,733624,337

72,887761,94;

7,661,56~=

(570) Maintenance of Station Equipment(571) Maintenance of Overhead Lines(572) Maintenance of Underground Lines(573) Maintenance of Miscellaneous Transmission PlantTOTAL Maintenance (Total of lines 101 thru 110)TOTAL Transmission Expenses (Total of lines 99 and 111)

62,362,17E1,057,93(~

755,70~64,175,81;

400,029,98~

1,103,02~

88,76~609,361492,18~945,41~794,31;

264,962 268,08£195,630 257,81~

5,540,1055,067,677

279,08015,826,678

5,487,00~4,258,377

389,61~14,693,97~

61,405 10,37;11,860 10,407

565,2271,330,625

59,6222,028,739

17,855,417

70,4512,070,89~=

16,764,874

FERC FORM NO. 1 (ED. 12-93) Page 321

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) [~A Resubmission / /ELECTRIC OPERATION AND MAINTENANCE EXPENSES (Continued)

If the amount for previous year is not derived from previously reported figures, explain in footnote.Line Account _Amount .for _Amount.for

uurrent Y ear ~revlous ~’earNo. (a) (b) (c)113 3. REGIONAL MARKET EXPENSES11.__~4 Operation115 (575.1) Operation Supervision116 (575.2) Day-Ahead and Real-Time Market Facilitation117 (575.3)Transmission Rights Market Facilitation118 (575.4) Capacity Market Facilitation119 (575.5) Ancillan] Services Market Facilitation120 (575.6) Market Monitoring and Compliance121 (575.7) Market Facilitation, Monitoring and Compliance Services122 (575.8) Rents123 Total Operation (Lines 115 thru 122)124 Maintenance125 (576.1) Maintenance of Structures and Improvements126 (576.2) Maintenance of Computer Hardware127 (576.3) Maintenance of Computer Software128 (576.4) Maintenance of Communication Equipment129 (576.5) Maintenance of Miscellaneous Market Operation Plant130 Total Maintenance (Lines 125 thru 129)13"1 TOTAL Regional Transmission and Market Op Expns (Total 123 and 130)132 4. DISTRIBUTION EXPENSES133 Operation134 (580) Operation Supervision and Engineering135 (581) Load Dispatching136 (582) Station Expenses137 (583) Overhead Line Expenses138 (584) Underground Line Expenses139 (585) Street Lighting and Signal System Expenses140 (586) Meter Expenses141 (587) Customer Installations Expenses142 (588) Miscellaneous Expenses143 (589) Rents144 TOTAL Operation (Enter Total of lines 134 thru 143)145 Maintenance146 (590) Maintenance Supervision and Engineering147 (591) Maintenance of Structures148 (592) Maintenance of Station Equipment149 (593) Maintenance of Overhead Lines150 (594) Maintenance of Underground Lines151 (595) Maintenance of Line Transformers152 (596) Maintenance of Street Lightin~ and Signal Systems153 (597) Maintenance of Meters154 (598) Maintenance of Miscellaneous Distribution Plant155 TOTAL Maintenance (Total of lines 146 thru 154)

15~6 TOTAL Distribution Expenses (Total of lines 144 and 155)157 5. CUSTOMER ACCOUNTS EXPENSES158 Operation

706,067

1,461,879543,207217,288391,063

1,938,535541,477

9,132,88466,905

14,999,305

12,5151,400

785,2254,965,560

648,60713,257

363,102202,704329,649

7,322,01922,321,324

639,479

159 (901) Supervision160 (902) Meter Reading Expenses161 (903) Customer Records and Collection Expenses162 (904) Uncollectible Accounts163 (905) Miscellaneous Customer Accounts Expenses164 TOTAL Customer Accounts Expenses (Total of lines 159 thru 163)

6722,631,481

13,860,7942,754,995

489,16019,737,102

1,542,428514,803286,444232,767

1,833,242478,669

8,666,517125,920

14,320,2691]1

53,0421,973

956,3994,884,281

625,18645,314

323,632207,385322,296

7,419,50821,739,777

2,595,71412,602,8382,097,500

306,42817,602,480

FERC FORM NO. 1 (ED. 12-93) Page 322

Name of Respondent This Report Is: Date of Report(1) [~]An Original (Mo, Da, Yr)

El Paso Electric Company (2) [~A Resubmission / /ELECTRIC OPERATION AND MAINTENANCE EXPENSES (Continued)

If the amount for previous year is not derived from previously reported figures, explain in footnote.Line AccountNo. (a)165 6. CUSTOMER SERVICE AND INFORMATIONAL EXPENSES166 Operation167 (907) Supervision168 (908) Customer Assistance Expenses169 (909) Informational and Instructional Expenses170 (910) Miscellaneous Customer Service and Informational Expenses171 TOTAL Customer Service and Information Expenses (Total 167 thru 170)

~umOUnt .forrrentYear

(b)

207,968

207,9681727. SALES EXPENSES173 Operation174 (911) Supervision175 (912) Demonstrating and Selling Expenses176 (913) Advertising Expenses177 (916) Miscellaneous Sales Expenses178 TOTAL Sales Expenses (Enter Total of lines 174 thru 177)1798. ADMINISTRATIVE AND GENERAL EXPENSES180 Operation181 (920) Administrative and General Salades182 (921) Office Supplies and Expenses183 (Less) (922) Administrative Expenses Transferred-Credit184 (923) Outside Services Employed185 (924) Property Insurance186 (925) Injuries and Damages187 (926) Employee Pensions and Benefits188 (927) Franchise Requirements189 (928) Regulatory Commission Expenses190 (929) (Less) Duplicate Charges-Cr.191 (930.1) General Advertising Expenses192 (930.2) Miscellaneous General Expenses193 (931) Rents194 TOTAL Operation (Enter Total of lines 181 thin 193)195 Maintenance196 (935) Maintenance of General Plant197 TOTAL Administrative & General Expenses (Total of lines 194 and 196)198 TOTAL Elec Op and Maint Expns (Total 80,112,131,156,164,171,178,197)

28,488,1264,876,606

17,250,5333,027,9995,359,530

30,806,717

5,653,965

892,32018,443,767

703,588115,503,151

5,558,323121,061,474614,733,224

Year/Period of ReportEnd of 2014/Q4

pAm.ount.f.orrevlous ~’ear(C)

5,84~=’

193,82~=

199,67(~

26,122,4776,033,995

18,874,68~3,073,11;3,577,66~

38,569,84;

6,000,74C

1,122,19~16,246,01~

648,86.~120,269,59c.

5,078,59~125,348,19~581,684,983

FERC FORM NO. 1 (ED. 12-93) Page 323

Name of Respondent

El Paso Electdc Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2 014/Q4

~chedule Page: 320 Line No.: 25 Column: bIncludes a DOE refund of $8,535,927.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) ~]A Resubmission / /

PUI~Ct:IA~;ED POWER (Ac, ouot 5~5)unc~ua=ng power excnan les)1. Report all power purchases made during the year. Also report exchanges of electricity (i.e., transactions involving a balancing ofdebits and credits for energy, capacity, etc.) and any settlements for imbalanced exchanges.2. Enter the name of the seller or other party in an exchange transaction in column (a). Do not abbreviate or truncate the name or useacronyms. Explain in a footnote any ownership interest or affiliation the respondent has with the seller.3. In column (b), enter a Statistical Classification Code based on the original contractual terms and conditions of the service as follows:

RQ - for requirements service. Requirements service is service which the supplier plans to provide on an ongoing basis (i.e., thesupplier includes projects load for this service in its system resource planning). In addition, the reliability of requirement service mustbe the same as, or second only to, the supplier’s service to its own ultimate consumers.

LF - for long-term firm service. "Long-term" means five years or longer and "firm" means that service cannot be interrupted foreconomic reasons and is intended to remain reliable even under adverse conditions (e.g., the supplier must attempt to buy emergencyenergy from third parties to maintain deliveries of LF service). This category should not be used for long-term firm service firm servicewhich meets the definition of RQ service. For all transaction identified as LF, provide in a footnote the termination date of the contractdefined as the earliest date that either buyer or seller can unilaterally get out of the contract.

IF - for intermediate-term firm service. The same as LF service expect that "intermediate-term" means longer than one year but lessthan five years.

SF - for short-term service. Use this category for all firm services, where the duration of each period of commitment for service is oneyear or less.

LU - for long-term service from a designated generating unit. "Long-term" means five years or longer. The availability and reliability ofservice, aside from transmission constraints, must match the availability and reliability of the designated unit.

IU - for intermediate-term service from a designated generating unit. The same as LU service expect that "intermediate-term" meanslonger than one year but less than five years.

EX - For exchanges of electricity. Use this category for transactions involving a balancing of debits and credits for energy, capacity, etc.and any settlements for imbalanced exchanges.

OS - for other service. Use this category only for those services which cannot be placed in the above-defined categories, such as allnon-firm service regardless of the Length of the contract and service from designated units of Less than one year. Describe the natureof the service in a footnote for each adjustment.

Line Name of Company or Public Aulhority Statistical ! FERC Rate Average Actual Demand (MW)No. (Footnote Affiliations)

(a)1 Arizona Electdc Power COOP2 Arizona Public Service Company3 Black Hills Power, Inc.4 Cargill Power Markets, LLC5 Citigroup Energy Inc.6 City of Burbank Water & Power7 Constellation Energy Commodities Group8 EDF Trading North Amedca, LLC9 Enron Power Marketing, Inc.

10 Four Peaks Energy Inc.11 Freeport-McMoran Copper & Gold Energy12 Gila River Power, L.P.13 Gila River Power, L.P.14 Hatch Solar Energy Center LLC

Total

Classifi-cation

(b)SFSFSFSFSFSFSFSF

LUSF

Schedule orTariffNumber

(c)

1111111

Monthly BillingDemand (MVV)

(d)oooooooooooooo

Average AverageMonthly NCP Deman Monthly CP Demand

(e) (f)0 o0 o0 o0 o0 o0 o0 o0 00 o0 o0 o0 ~’ o0 o0 o

FERC FORM NO. 1 (ED. 12-90) Page 326

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) []A Resubmission / /

PUI~CHA~ED POWER (Accouot 555)unc~u<~=ng power exchanges)

1. Report all power purchases made during the year. Also report exchanges of electricity (i.e., transactions involving a balancing ofdebits and credits for energy, capacity, etc.) and any settlements for imbalanced exchanges.2. Enter the name of the seller or other party in an exchange transaction in column (a). Do not abbreviate or truncate the name or useacronyms. Explain in a footnote any ownership interest or affiliation the respondent has with the seller.3. In column (b), enter a Statistical Classification Code based on the original contractual terms and conditions of the service as follows:

RQ - for requirements service. Requirements service is service which the supplier plans to provide on an ongoing basis (i.e., thesupplier includes projects load for this service in its system resource planning). In addition, the reliability of requirement service mustbe the same as, or second only to, the supplier’s service to its own ultimate consumers.

LF - for long-term firm service. "Long-term" means five years or longer and "firm" means that service cannot be interrupted foreconomic reasons and is intended to remain reliable even under adverse conditions (e.g., the supplier must attempt to buy emergencyenergy from third parties to maintain deliveries of LF service). This category should not be used for long-term firm service firm servicewhich meets the definition of RQ service. For all transaction identified as LF, provide in a footnote the termination date of the contractdefined as the earliest date that either buyer or seller can unilaterally get out of the contract.

IF - for intermediate-term firm service. The same as LF service expect that "intermediate-term" means longer than one year but lessthan five years.

SF - for short-term service. Use this category for all firm services, where the duration of each period of commitment for service is oneiyear or ess

LU - for long-term service from a designated generating unit. "Long-term" means five years or longer. The availability and reliability ofservice, aside from transmission constraints, must match the availability and reliability of the designated unit.

IU - for intermediate-term service from a designated generating unit. The same as LU service expect that "intermediate-term" meanslonger than one year but less than five years.

EX - For exchanges of electricity. Use this category for transactions involving a balancing of debits and credits for energy, capacity, etc.and any settlements for imbalanced exchanges.

OS - for other service. Use this category only for those services which cannot be placed in the above-defined categories, such as allnon-firm service regardless of the Length of the contract and service from designated units of Less than one year. Describe the natureof the service in a footnote for each adjustment.

Line Name of Company or Public AuthorityNo. (Footnote Affiliations)

(a)1 Hatch Solar Energy Center LLC2 Iberdrola Renewables, Inc3 Imperial Irrigation District4 Incorporated County Of Los Alamos5 J. Aron & Company6 Los Angeles Dept of Water and Power7 Los Angeles Dept of Water and Power8 Macho Spdngs Solar, LLC9 Macquarie Cook Power Inc.

10 Morgan Stanley Capital Group, Inc.11 Newman Solar LLC12 NRG Solar Roadrunner, LLC13 PacifiCorp14 PowerEx Corp.

Total

StatisticalClassifi-cation

(b)

SF 1SF 1

SF 1SF 1SF 1

SF 1SF 1

FERC RateSchedule or

Tariff Number

AverageMonthly BillingDemand (MW)

(e)00000000000000

Actual Demand (IVlW)Average Average

Monthly NCP Deman Monthly CP Demand(f)

00000000000o00

1SF 1SF 1

(c) (d)00000000000000

FERC FORM NO. 1 (ED. 12-90) Page 326.1

Name of Respondent This Re_~port Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Y~) End of 2014/Q4El Paso Electric Company (2) r-’]A Resubmission / /

PUI~CHA~ED POWER (Accou0t 565)unc~ualng power excnanges,~

1. Report all power purchases made during the year. Also report exchanges of electricity (i.e., transactions involving a balancing ofdebits and credits for energy, capacity, etc.) and any settlements for imbalanced exchanges.2. Enter the name of the seller or other party in an exchange transaction in column (a). Do not abbreviate or truncate the name or useacronyms. Explain in a footnote any ownership interest or affiliation the respondent has with the seller.3. In column (b), enter a Statistical Classification Code based on the original contractual terms and conditions of the service as follows:

RQ - for requirements service. Requirements service is service which the supplier plans to provide on an ongoing basis (i.e., thesupplier includes projects load for this service in its system resource planning). In addition, the reliability of requirement service mustbe the same as, or second only to, the supplier’s service to its own ultimate consumers.

LF - for long-term firm service. "Long-term" means five years or longer and "firm" means that service cannot be interrupted foreconomic reasons and is intended to remain reliable even under adverse conditions (e.g., the supplier must attempt to buy emergencyenergy from third parties to maintain deliveries of LF service). This category should not be used for long-term firm service firm servicewhich meets the definition of RQ service. For all transaction identified as LF, provide in a footnote the termination date of the contractdefined as the earliest date that either buyer or seller can unilaterally get out of the contract.

IF - for intermediate-term firm service. The same as LF service expect that "intermediate-term" means longer than one year but lessthan five years.

SF - for short-term service. Use this category for all firm services, where the duration of each period of commitment for service is oneyear or less.

LU - for long-term service from a designated generating unit. "Long-term" means five years or longer. The availability and reliability ofservice, aside from transmission constraints, must match the availability and reliability of the designated unit.

IU - for intermediate-term service from a designated generating unit. The same as LU service expect that "intermediate-term" meanslonger than one year but less than five years.

EX - For exchanges of electricity. Use this category for transactions involving a balancing of debits and credits for energy, capacity, etc.and any settlements for imbalanced exchanges.

OS - for other service. Use this category only for those services which cannot be placed in the above-defined categories, such as allnon-firm service regardless of the Length of the contract and service from designated units of Less than one year. Describe the natureof the service in a footnote for each adjustment.

Line StatisticalNo. Classifi-

cation(a) (b)

1 Public Service Company of Colorado SF 12 Public Service Company of New Mexico SF 13 Salt River Project Agricultural Impmv SF 14 Salt River Project Agricultural Impmv ~! 15 Sempra Generation SF 16 Shell Energy North America (U.S.), L.P SF 27 Shell Energy North America (U.S.), L.P8 Shell Energy North America (U.S.), L.P 29 Southern California Edison SF 1

10 Southwest Environmental Center ’ ~- 1

FERC RateSchedule or

Tariff Number

AverageMonthly BillingDemand (MVV)

Actual Demand (MW)Average Average

Monthly NCP Deman, Monthly CP Demand(e) (f)

0 0

0 0~ 0

I0 0

0 0

40 40~ 0~ 0

i0 0!0 0

Name of Company or Public Authority(Footnote Affiliations)

(c) (d)000004O0000

11 SunE EPE 1 LLC ~; 1’ :~: 112 SunE EPE 1 LLC _._

13 SunE EPE 2 LLC14 SunE EPE 2 LLC

Total

oooo

oo~0i0

oooo

FERC FORM NO. 1 (ED. 12-90) Page 326.2

Name of Respondent This Re_~port Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electdc Company(2) ["-~A Resubmission / /

PUI~C~A~;ED POWER ~Accouot 555)Uncluolng power excnanges)

1. Report all power purchases made during the year. Also report exchanges of electricity (i.e., transactions involving a balancing ofdebits and credits for energy, capacity, etc.) and any settlements for imbalanced exchanges.2. Enter the name of the seller or other party in an exchange transaction in column (a). Do not abbreviate or truncate the name or useacronyms. Explain in a footnote any ownership interest or affiliation the respondent has with the seller.3. In column (b), enter a Statistical Classification Code based on the original contractual terms and conditions of the service as follows:

RQ - for requirements service. Requirements service is service which the supplier plans to provide on an ongoing basis (i.e., thesupplier includes projects load for this service in its system resource planning). In addition, the reliability of requirement service mustbe the same as, or second only to, the supplier’s service to its own ultimate consumers.

LF - for long-term firm service. "Long-term" means five years or longer and "firm" means that service cannot be interrupted foreconomic reasons and is intended to remain reliable even under adverse conditions (e.g., the supplier must attempt to buy emergencyenergy from third parties to maintain deliveries of LF service). This category should not be used for long-term firm service firm servicewhich meets the definition of RQ service. For all transaction identified as LF, provide in a footnote the termination date of the contractdefined as the earliest date that either buyer or seller can unilaterally get out of the contract.

IF - for intermediate-term firm service. The same as LF service expect that "intermediate-term" means longer than one year but lessthan five years.

SF - for short-term service. Use this category for all firm services, where the duration of each period of commitment for service is oneyear or less.

LU - for long-term service from a designated generating unit. "Long-term" means five years or longer. The availability and reliability ofservice, aside from transmission constraints, must match the availability and reliability of the designated unit.

IU - for intermediate-term service from a designated generating unit. The same as LU service expect that "intermediate-term" meanslonger than one year but less than five years.

EX - For exchanges of electricity. Use this category for transactions involving a balancing of debits and credits for energy, capacity, etc.and any settlements for imbalanced exchanges.

OS - for other service. Use this category only for those services which cannot be placed in the above-defined categories, such as allnon-firm service regardless of the Length of the contract and service from designated units of Less than one year. Describe the natureof the service in a footnote for each adjustment.

Line Name of Company or Public AuthorityNo. (Footnote Affiliations)

(a)1 Tenaska Power Service CO2 Transalta Energy Marketing (U.S.) Inc.3 Td-State G & T Power Association Inc.4 Tucson Electdc Power Marketing5 Tucson Electdc Power Marketing6 UNS Electric, INC.7 Arizona Electric Power Cooperative8 Adzona Public Service Company9 Farmington

10 HGMA11 Los Alamos12 Panda Gila River13 Public Service Company of New Mexico14 SEMPRA

Total

StatisticalClassifi-cation

(b)SFSFSFSF

SFSFSFSF

ISFSFSFSF

SF

FERC RateSchedule or

TariffNumber(c)

1111

1104104104104104104104104

AverageMonthly BillingDemand (MW)

(d)000000N/AN/AN/AN/AN/AN/AN/AN/A

Actual Demand (MVM)Average

Monthly NCP Deman~(e)

000000N/AN/AN/A~/AN/AN/AN/AN/A

AverageMonthly CP Demanc

(f)cccccc

N/h

N/,~N/,~N/,~N/,~N/hN/h

FERC FORM NO. 1 (ED. 12-90) Page 326.3

Name of Respondent This R~ort Is: Date of Report YeadPeriod of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electdc Company(2) [~A Resubmission / /

PUI~Cl-;IA~ED POWER {Accou~t 5~5)unc~umng power exchanges)

1. Report all power purchases made during the year. Also report exchanges of electricity (i.e., transactions involving a balancing ofdebits and credits for energy, capacity, etc.) and any settlements for imbalanced exchanges.2. Enter the name of the seller or other party in an exchange transaction in column (a). Do not abbreviate or truncate the name or useacronyms. Explain in a footnote any ownership interest or affiliation the respondent has with the seller.3. In column (b), enter a Statistical Classification Code based on the original contractual terms and conditions of the service as follows:

RQ - for requirements service. Requirements service is service which the supplier plans to provide on an ongoing basis (i.e., thesupplier includes projects load for this service in its system resource planning). In addition, the reliability of requirement service mustbe the same as, or second only to, the supplier’s service to its own ultimate consumers.

LF - for long-term firm service. "Long-term" means five years or longer and "firm" means that service cannot be interrupted foreconomic reasons and is intended to remain reliable even under adverse conditions (e.g., the supplier must attempt to buy emergencyenergy from third parties to maintain deliveries of LF service). This category should not be used for long-term firm service firm servicewhich meets the definition of RQ service. For all transaction identified as LF, provide in a footnote the termination date of the contractdefined as the earliest date that either buyer or seller can unilaterally get out of the contract.

IF - for intermediate-term firm service. The same as LF service expect that "intermediate-term" means longer than one year but lessthan five years.

SF - for short-term service. Use this category for all firm services, where the duration of each period of commitment for service is oneyear or less.

LU - for long-term service from a designated generating unit. "Long-term" means five years or longer. The availability and reliability ofservice, aside from transmission constraints, must match the availability and reliability of the designated unit.

IU - for intermediate-term service from a designated generating unit. The same as LU service expect that "intermediate-term" meanslonger than one year but less than five years.

EX - For exchanges of electricity. Use this category for transactions involving a balancing of debits and credits for energy, capacity, etc.and any settlements for imbalanced exchanges.

OS - for other service. Use this category only for those services which cannot be placed in the above-defined categories, such as allnon-firm service regardless of the Length of the contract and service from designated units of Less than one year. Describe the natureof the service in a footnote for each adjustment.

Line Name of Company or Public Authority Statistical FERC RateClassifi- Schedule or

No. (Footnote Affiliations) cation Tariff Number(a) (b) (c)

1 Salt River Project SF 1042 Tucson Electric Power Company SF 1043 TRI-STATE SF 1044 Adzona Electdc Power Cooperative EX 15 Coral Power EX 16 Public Service Company of New Mexico EX 17 Salt River Project EX 18 Td-State G&T Association, Inc. EX 19 Tucson Electric Power Company EX 1

10 Westem Area Power Administration EX 111 Inadvertent12 NM Net Mtr PP OS13 NM Net MtrRECs OS14 TX Non-Firm PP OS

Total

AverageMonthly BillingDemand (MVV)

(e)q/AN/AN/A

Actual Demand (MVV)Average Average

Monthly NCP Deman Monthly CP Demand(f)

N/AN/AN/A

(d)N/AN/AN/A

FERC FORM NO. 1 (ED. 12-90) Page 326.4

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electdc Company(2) ~--~A Resubmission / /

PURCHASED. P.OWER(Accoupt ‘= ie5,~)(Continued)(,mClumng power excnan

AD - for out-of-period adjustment. Use this code for any accounting adjustments or "true-ups" for service provided in prior reportingyears. Provide an explanation in a footnote for each adjustment.

4. In column (c), identify the FERC Rate Schedule Number or Tariff, or, for non-FERC jurisdictional sellers, include an appropriatedesignation for the contract. On separate lines, list all FERC rate schedules, tariffs or contract designations under which service, asidentified in column (b), is provided.5. For requirements RQ purchases and any type of service involving demand charges imposed on a monnthly (or longer) basis, enterthe monthly average billing demand in column (d), the average monthly non-coincident peak (NCP) demand in column (e), and theaverage monthly coincident peak (CP) demand in column (f). For all other types of service, enter NA in columns (d), (e) and (f). MonthlyNCP demand is the maximum metered hourly (60-minute integration) demand in a month. Monthly CP demand is the metered demandduring the hour (60-minute integration) in which the suppliefs system reaches its monthly peak. Demand reported in columns (e) and (f)must be in megawatts. Footnote any demand not stated on a megawatt basis and explain.6. Report in column (g) the megawatthours shown on bills rendered to the respondent. Report in columns (h) and (i) the megawatthoursof power exchanges received and delivered, used as the basis for settlement. Do not report net exchange.7. Report demand charges in column (j), energy charges in column (k), and the total of any other types of charges, includingout-of-period adjustments, in column (I). Explain in a footnote all components of the amount shown in column (I). Report in column (m)the total charge shown on bills received as settlement by the respondent. For power exchanges, report in column (m) the settlementamount for the net receipt of energy. If more energy was delivered than received, enter a negative amount. If the settlement amount (I)include credits or charges other than incremental generation expenses, or (2) excludes certain credits or charges covered by theagreement, provide an explanatory footnote.8. The data in column (g) through (m) must be totalled on the last line of the schedule. The total amount in column (g) must bereported as Purchases on Page 401, line 10. The total amount in column (h) must be reported as Exchange Received on Page 401,line 12. The total amount in column (i) must be reported as Exchange Delivered on Page 401, line 13.9. Footnote entries as required and provide explanations following all required data.

MegaWatt HoursPurchased

(g)15,57.=

24,08;43;

57e1,40(4,34Z

12,60(

31,45~

7,99;

2,056,711

POWER EXCHANGESMegaWatt Hours

Received(h)

67,992

MegaWatt HoursDelivered

(i)

21,929

Demand Charges

1,152,000

COST/SETTLEMENT OF POWEREnergy Charges

671,5741,111,715

15,30(;2,745

17,80750,52(;

132,57~628,37~¢

Other Charges

20,46e

1,448,277

951,621

62,472,431 1,179,958

LineTotal O+k+l) No.

of Se~lement ($)(m)

671,574 11,111,715 2

15,30(; 32,74~ 4

17,807 550,52C 6

132,57~ 7628,37~ 8

-1,040,045 933,954 10

111,448,277 12

15(; 13835,35~ 14

64,804,38.¢

FERC FORM NO. 1 (ED. 12-90) Page 327

Name of Respondent This R~ort Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [~An Original (Mo, Da, Yi’) End of 2014/Q4

(2) [--]A Resubmission / /PURCHA~EI~ P.OWER(Accou~t ,= ~e5.~)(COntinued)

Unclumng power excnarAD - for out-of-period adjustment. Use this code for any accounting adjustments or "true-ups" for service provided in prior reportingyears. Provide an explanation in a footnote for each adjustment.

4. In column (c), identify the FERC Rate Schedule Number or Tariff, or, for non-FERC jurisdictional sellers, include an appropriatedesignation for the contract. On separate lines, list all FERC rate schedules, tariffs or contract designations under which service, asidentified in column (b), is provided.5. For requirements RQ purchases and any type of service involving demand charges imposed on a monnthly (or longer) basis, enterthe monthly average billing demand in column (d), the average monthly non-coincident peak (NCP) demand in column (e), and theaverage monthly coincident peak (CP) demand in column (f). For all other types of service, enter NA in columns (d), (e) and (t~. MonthlyNCP demand is the maximum metered hourly (60-minute integration) demand in a month. Monthly CP demand is the metered demandduring the hour (60-minute integration) in which the supplier’s system reaches its monthly peak. Demand reported in columns (e) and (f)must be in megawatts. Footnote any demand not stated on a megawatt basis and explain.6. Report in column (g) the megawatthours shown on bills rendered to the respondent. Report in columns (h) and (i) the megawatthoursof power exchanges received and delivered, used as the basis for settlement. Do not report net exchange.7. Report demand charges in column (j), energy charges in column (k), and the total of any other types of charges, includingout-of-period adjustments, in column (I). Explain in a footnote all components of the amount shown in column (I). Report in column (m)the total charge shown on bills received as settlement by the respondent. For power exchanges, report in column (m) the settlementamount for the net receipt of energy. If more energy was delivered than received, enter a negative amount. If the settlement amount (I)include credits or charges other than incremental generation expenses, or (2) excludes certain credits or charges covered by theagreement, provide an explanatory footnote.8. The data in column (g) through (m) must be totalled on the last line of the schedule. The total amount in column (g) must bereported as Purchases on Page 401, line 10. The total amount in column (h) must be reported as Exchange Received on Page 401,line 12. The total amount in column (i) must be reported as Exchange Delivered on Page 401, line 13.9. Footnote entries as required and provide explanations following all required data.

MegaWatt HoursPurchased

(g)-1(80(26."

27,77~22(

108,70(

3,46E73,31~

71~51,24~

42,6273,76~

2,056,711

POWER EXCHANGESMegaWatt Hours

Received(h)

67,992

MegaWatt HoursDelivered

(~)

21,929

Demand Charges

1,152,00C

COST/SETTLEMENT OF POWEREnemy Cha~es Other Cha~es

32,60C8,87e

148

1,068,63813,300

5,887,09586,301

2,493,10926,897

6,461,6371,596,989

221,145

62,472,431 1,179,958

LineT~al 0+k+l) No.

of Se~lement ($)(m)

-1,190 132,600 2

8,87~ 3148 4

1,068,638 513,300 6

7,780 75,887,095 8

86,301 92,493,109 10

26,897 116,461,637 121,596,989 13

221,145 14

64,804,38~

FERC FORM NO. 1 (ED. 12-90) Page 327.1

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electdc Company (2) [~A Resubmission / /

PUlRCHA~EI~ P, OWER(Accoupt .= $5). (Continued)unc~umng power excnan les)

AD - for out-of-period adjustment. Use this code for any accounting adjustments or "true-ups" for service provided in prior reportingyears. Provide an explanation in a footnote for each adjustment.

4. In column (c), identify the FERC Rate Schedule Number or Tariff, or, for non-FERC jurisdictional sellers, include an appropriatedesignation for the contract. On separate lines, list all FERC rate schedules, tariffs or contract designations under which service, asidentified in column (b), is provided.5. For requirements RQ purchases and any type of service involving demand charges imposed on a monnthly (or longer) basis, enterthe monthly average billing demand in column (d), the average monthly non-coincident peak (NCP) demand in column (e), and theaverage monthly coincident peak (CP) demand in column (f). For all other types of service, enter NA in columns (d), (e) and (f). MonthlyNCP demand is the maximum metered hourly (60-minute integration) demand in a month. Monthly CP demand is the metered demandduring the hour (60-minute integration) in which the supplier’s system reaches its monthly peak. Demand reported in columns (e) and (f)must be in megawatts. Footnote any demand not stated on a megawatt basis and explain.6. Report in column (g) the megawatthours shown on bills rendered to the respondent. Report in columns (h) and (i) the megawatthoursof power exchanges received and delivered, used as the basis for settlement. Do not report net exchange.7. Report demand charges in column (j), energy charges in column (k), and the total of any other types of charges, includingout-of-period adjustments, in column (I). Explain in a footnote all components of the amount shown in column (I). Report in column (m)the total charge shown on bills received as settlement by the respondent. For power exchanges, report in column (m) the settlementamount for the net receipt of energy. If more energy was delivered than received, enter a negative amount. If the settlement amount (I)include credits or charges other than incremental generation expenses, or (2) excludes certain credits or charges covered by theagreement, provide an explanatory footnote.8. The data in column (g) through (m) must be totalled on the last line of the schedule. The total amount in column (g) must bereported as Purchases on Page 401, line 10. The total amount in column (h) must be reported as Exchange Received on Page 401,line 12. The total amount in column (i) must be reported as Exchange Delivered on Page 401, line 13.9. Footnote entries as required and provide explanations following all required data.

MegaWatt HoursPurchased

(g)1,50z

12,26(140,71;

8,59~624,60~10,73(

10;95~.

¢

27,131-1~

32,94;-2(

2,056,711

POWER EXCHANGESMegaWatt Hours

Received(h)

67,992

MegaWatt HoursDelivered

(i)

21,929

Demand Charges

1,152,000

1,152,000

COST/SETFLEMENT OF POWEREnergy Charges

524,5626,448,12e

271,08~23,404,122

45,433

1,17~2,819,69~

3,451,063

62,472,431

Other Charges

1,179,958

LineTotal (j+k+l) No.

of Settlement ($)(m)

5,44(; 1

524,562 26,448,12~ 3

1,75(~ 4271,08~ 5

24,5,56,12; 6638,69~ 7-18,57(; 845,433, 9

1,17~= 102,819,69~c 11

1,653 123,451,063 13

2,107 14

64,804,38~.

FERC FORM NO. 1 (ED. 12-90) Page 327.2

Name of Respondent This R~ort Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [~]An Original (Mo, Da, Yr) End of 2014/Q4

(2) [] A Resubmission / /PURCHA~EI~ P.O NER(Accoupt 555). (Cbntinued)

unc~ualn ] power excnanges)AD - for out-of-period adjustment. Use this code for any accounting adjustments or "true-ups" for service provided in prior reportingyears. Provide an explanation in a footnote for each adjustment.

4. In column (c), identify the FERC Rate Schedule Number or Tariff, or, for non-FERC jurisdictional sellers, include an appropriatedesignation for the contract. On separate lines, list all FERC rate schedules, tariffs or contract designations under which service, asidentified in column (b), is provided.5. For requirements RQ purchases and any type of service involving demand charges imposed on a monnthly (or longer) basis, enterthe monthly average billing demand in column (d), the average monthly non-coincident peak (NCP) demand in column (e), and theaverage monthly coincident peak (CP) demand in column (f). For all other types of service, enter NA in columns (d), (e) and (f). MonthlyNCP demand is the maximum metered hourly (60-minute integration) demand in a month. Monthly CP demand is the metered demandduring the hour (60-minute integration) in which the supplier’s system reaches its monthly peak. Demand reported in columns (e) and (f)must be in megawatts. Footnote any demand not stated on a megawatt basis and explain.6. Report in column (g) the megawatthours shown on bills rendered to the respondent. Report in columns (h) and (i) the megawatthoursof power exchanges received and delivered, used as the basis for settlement. Do not report net exchange.7. Report demand charges in column (j), energy charges in column (k), and the total of any other types of charges, includingout-of-period adjustments, in column (I). Explain in a footnote all components of the amount shown in column (I). Report in column (m)the total charge shown on bills received as settlement by the respondent. For power exchanges, report in column (m) the settlementamount for the net receipt of energy. If more energy was delivered than received, enter a negative amount. If the settlement amount (I)include credits or charges other than incremental generation expenses, or (2) excludes certain credits or charges covered by theagreement, provide an explanatory footnote.8. The data in column (g) through (m) must be totalled on the last line of the schedule. The total amount in column (g) must bereported as Purchases on Page 401, line 10. The total amount in column (h) must be reported as Exchange Received on Page 401,line 12. The total amount in column (i) must be reported as Exchange Delivered on Page 401, line 13.9. Footnote entries as required and provide explanations following all required data.

MegaWatt HoursPurchased

(g)24,84,’13,92~12,84;14,834

2,59(9~

214

32;

1;

2,056,711

POWER EXCHANGESMegaWatt Hours

Received(h)

67,992

MegaWatt HoursDelivered

(i)

21,929

Demand Charges

1,152,000

COST/SETTLEMENT OF POWEREnergy Charges Other Charges

798,721~597,85;

491,61(503,59"/

98,64C4,02(7,49E

3,17;29~56~

1,95~16,12~=

76(

62,472,431 1,179,958

LineTotal (j+k+l) No.

of Settlement ($)(m)

798,72~ 1597,85; 2

491,61( 3

503,597 4375 5

98,6401 6

4,02( 77,491~ 8

3,17; 9

29~ 1056~. 11

1,959; 1216,125! 13

76( 14

64,804,38~

FERC FORM NO. 1 (ED. 12-90) Page 327.3

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) [~A Resubmission / /

PU~RCHA~EI~ p.(~l VER(Accoupt 555). (COntinued)uncluam = power excnanges)

AD - for out-of-period adjustment. Use this code for any accounting adjustments or "true-ups" for service provided in prior reportingyears. Provide an explanation in a footnote for each adjustment.

4. In column (c), identify the FERC Rate Schedule Number or Tariff, or, for non-FERC jurisdictional sellers, include an appropriatedesignation for the contract. On separate lines, list all FERC rate schedules, tariffs or contract designations under which service, asidentified in column (b), is provided.5. For requirements RQ purchases and any type of service involving demand charges imposed on a monnthly (or longer) basis, enterthe monthly average billing demand in column (d), the average monthly non-coincident peak (NCP) demand in column (e), and theaverage monthly coincident peak (CP) demand in column (f). For all other types of service, enter NA in columns (d), (e) and (f). MonthlyNCP demand is the maximum metered hourly (60-minute integration) demand in a month. Monthly CP demand is the metered demandduring the hour (60-minute integration) in which the supplier’s system reaches its monthly peak. Demand reported in columns (e) and (f)must be in megawatts. Footnote any demand not stated on a megawatt basis and explain.6. Report in column (g) the megawatthours shown on bills rendered to the respondent. Report in columns (h) and (i) the megawatthoursof power exchanges received and delivered, used as the basis for settlement. Do not report net exchange.7. Report demand charges in column (j), energy charges in column (k), and the total of any other types of charges, includingout-of-period adjustments, in column (I). Explain in a footnote all components of the amount shown in column (I). Report in column (m)the total charge shown on bills received as settlement by the respondent. For power exchanges, report in column (m) the settlementamount for the net receipt of energy. If more energy was delivered than received, enter a negative amount. If the settlement amount (I)include credits or charges other than incremental generation expenses, or (2) excludes certain credits or charges covered by theagreement, provide an explanatory footnote.8. The data in column (g) through (m) must be totalled on the last line of the schedule. The total amount in column (g) must bereported as Purchases on Page 401, line 10. The total amount in column (h) must be reported as Exchange Received on Page 401,line 12. The total amount in column (i) must be reported as Exchange Delivered on Page 401, line 13.9. Footnote entries as required and provide explanations following all required data.

MegaWatt HoursPurchased

(g)22719C15~

2,179

497

2,056,711

POWER EXCHANGESMegaWatt Hours

Received(h)

701690

26,361

16,73(~

22,88,~27~=

35;

67,992

MegaWatt HoursDelivered(i)

15,848

6,081

21,929

Demand Charges

1,152,00C

COST/SETTLEMENT OF POWEREnergy Charges

10,5727,917

10,690

Other Charges

62,472,431 1,179,95~

Total (j+k+l)of Settlement ($)

(m)10,572

7,91710,690

90,2811,586,086

13,657

64,804,38~

LineNo.

123

4567

89

10

11121314

FERC FORM NO. 1 (ED. 12-90) Page 327.4

Name of Respondent

El Paso Electdc Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2 014/Q4

~chedule Page: 326 Line No.: 1 Column: cI=WSPP Agreement- Rate Schedule FERC No. 6.~chedule Page: 326 Line No.: 9 Column: bPrior Year Adjustment.~chedule Page: 326 Line No.: 9 Column: IPrior Year Adjustment.~chedule Page: 326 Line No.: 10 Column: bInterconnection Agreement and Contract for Power Service between E1 Paso Electric Companyand Four Peaks Energy, Inc. Contract is an evergreen contract.~¢hedule Page: 326 L~e No.: 10 Column: IPayment of charges related to New Mexico Public Regulatory Commission (NMPRC) Final OrderNo. 09-00259-UT.~chedule Page: 326 L~e No.: 11 Column: gThe 712,284 MWhs relate to purchases from Freeport-McMoran Copper & Gold Energy ServicesLLC ("Freeport") related to E1 Paso Electric’s Power Purchase and Sales Agreement withFreeport dated December 16, 2005.~chedule Page: 326 L~e No.: 13 Column: bSpinning reserve purchases.~chedule Page: 326 L~e No.: 13 Column: ISpinning reserve purchases.~chedule Page: 326 L~e No.: 14 Column: bRenewable Purchase Power Agreement between Hatch Solar Energy Center i, LLC and E1 PasoElectric Company effective August 31, 2010, and continues for twenty-five years followingthe date of commercial operation in 2011.~chedu~ Page: 326 L~e No.: 14 Column: ILiquidated damages payment made by Hatch Solar Energy Center i, LLC per Renewable PurchasePower Agreement between Hatch Solar Energy Center i, LLC and E1 Paso Electric Company.~chedule Page: 326.1 L~e No.: 1 Co~mn: bPrior Year Adjustment.~chedule Page: 326.1 L~e No.: 1 Co~mn: IPrior Year Adjustment.~chedule Page: 32&1 L~e No.: 7 Column: bSpinning reserve purchases.~chedu~ Page: 326.1 L~e No.: 7 Commn: ISpinning reserve purchases.~chedule Page: 326.1 L~e No.: 8 Column: bRenewable Purchase Power Agreement between Macho Springs Solar, LLC and E1 Paso ElectricCompany effective October 25, 2012, and continues for twenty years following the date ofcommercial operation in 2014.~chedule Page: 326.1 L~e No.: 11 Column: bRenewable Purchase Power Agreement between PSEG E1 Paso Solar Energy Center and E1 PasoElectric Company effective September 5, 2013, and continues for thirty years following thedate of commercial operation in 2014.~chedule Page: 326.1 L~e No.: 12 Column: bRenewable Purchase Power Agreement between NRG Solar Roadrunner LLC and E1 Paso ElectricCompany dated June 4, 2010, and continues for twenty years following the date ofcommercial operation in 2011.~chedule Pag~ 326.2 Line No.: 4 Column: bSpinning reserve purchases.~chedule Pag~ 326.2 L~e No.: 4 Column: ISpinning reserve purchases.~chedule Page: 32&2 L~e No.: 7 Column: bEnergy conversion services agreement between Shell Energy North America (U.S.), L.P and E1Paso Electric Company dated May 17, 2010. Contract effective January i, 2011 throughSeptember 30, 2014.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

~chedule Page: 326.2 Line No.: 7 Column: IIncludes startup and energy conversion fees related to the energy conversion servicesagreement between Shell Energy North America (U.S.), L.P. and E1 Paso Electric Company.Also includes gas purchased from various vendors by E1 Paso Electric and delivered toPyramid Unit 4 for energy conversion.~chedule Page: 326.2 Line No.: 8 Column: bPrior Year Adjustment.~chedule Page: 326.2 Line No.: 8 Column: IPrior Year Adjustment.~chedule Page: 326.2 Line No.: 10 Column: bRenewable Purchase Power Agreement between Southwest Environmental Center and E1 PasoElectric Company. Contract has a minimum twenty year term beqinning in 2008.~chedule Page: 326.2 Line No.: 11 Column: bRenewable Purchase Power Agreement between SunEdison 1 and E1 Paso Electric Company datedNovember 8, 2010, and continues for twenty-five years following the date of commercialoperation in 2012.~chedule Page: 326.2 Line No.: 12 Column: bPrior Year Adjustment.~chedule Page: 326.2 Line No.: 12 Column: IPrior Year Adjustment.Schedule Page: 326.2 Line No.: 13 Column: bRenewable Purchase Power Agreement between SunEdison 2 and E1 Paso Electric Company datedNovember 8, 2010, and continues for twenty-five years following the date of commercialoperation in 2012.Schedule Page: 326.2 Line No.: 14 Column: bPrior Year Adjustment.Schedule Page: 326.2 Line No.: 14 Column: IPrior Year Adjustment.Schedule Page: 326.3 Line No.: 5 Column: bSpinning reserve purchases.Schedule Page: 326.3 Line No.: 5 Column: ISpinning reserve purchases.Schedule Page: 326.4 Line No.: 12 Column: cNew Mexico Rate No. 16.Schedule Page: 326.4 Line No.: 12 Column: IRepresents amount paid to various New Mexico customers for excess renewable energygenerated by customers and bought by the Company.~chedule Page: 326.4 Line No.: 13 Column: cNew Mexico Rate No. 33.~chedule Page: 326.4 Line No.: 13 Column: IRepresents amount paid for renewable energy certificates related to renewable energygenerated by various New Mexico customers.~chedule Page: 326.4 Line No.: 14 Column: cTexas Rate No. 48.~chedule Page: 326.4 Line No.: 14 Column: IRepresents amount paid to various retail Texas customers for excess distributed renewableenergy generated by customers and bought by the Company.

IFERC FORM NO. 1 (ED. 12-87) Page 450.2

Name of Respondent This Re_~port Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) [~]A Resubmission / /

TRANSMIt. S ON.OF ELECTRIC.ITY FOR OTH.E~.S (.A.ccount 456.1)(Incluain9 iransactions rererred to as ’wnee ing’)

1. Report all transmission of electricity, i.e., wheeling, provided for other electric utilities, cooperatives, other public authorities,qualifying facilities, non-traditional utility suppliers and ultimate customers for the quarter.2. Use a separate line of data for each distinct type of transmission service involving the entities listed in column (a), (b) and (c).3. Report in column (a) the company or public authority that paid for the transmission service. Report in column (b) the company orpublic authority that the energy was received from and in column (c) the company or public authority that the energy was delivered to.Provide the full name of each company or public authority. Do not abbreviate or truncate name or use acronyms. Explain in a footnoteany ownership interest in or affiliation the respondent has with the entities listed in columns (a), (b) or (c)4. In column (d) enter a Statistical Classification code based on the original contractual terms and conditions of the service as follows:FNO - Firm Network Service for Others, FNS - Firm Network Transmission Service for Self, LFP - "Long-Term Firm Point to PointTransmission Service, OLF - Other Long-Term Firm Transmission Service, SFP - Short-Term Firm Point to Point TransmissionReservation, NF - non-firm transmission service, OS - Other Transmission Service and AD - Out-of-Period Adjustments. Use this codefor any accounting adjustments or "true-ups" for service provided in prior reporting periods. Provide an explanation in a footnote foreach adjustment. See General Instruction for definitions of codes.

Line Payment By

No. (Company of Public Authority)(Footnote Affiliation)

(a)123 Et Pa~o Electd~ ~rkefJr, g

4567 Rio Grande Electric Co-Op

8 Arizona Electric Power Cooperativeg Arizona Electric Power Cooperative

10 Arizona Electric Power Cooperative11 Arizona Electric Power Cooperative

12 Arizona Electric Power Cooperative13 Arizona Electric Power Cooperative14 Arizona Electric Power Cooperative

15 Arizona Public Service Company16 Coral Power

17 Coral Power18 Coral Power19 Coral Power20 Eagle Energy Partners21 Eagle Energy Partners

22 Eagle Energy Partners23 Eagle Energy Partners24 Eagle Energy Partners

25 Eagle Energy Partners26 Eagle Energy Partners27 Eagle Energy Partners28 Exelon Generation LLC

29 Exelon Generation LLC30 Impedal Irrigation District31 Imperial Irrigation District32 Imperial Irrigation District

33 JP Morgan Ventures34 Macquarie Cook Power

TOTAL

Energy Received From(Company of Public Authority)

(Footnote Affiliation)(b)

El Paso Electric Marketing

El Paso Electric MarketingEl Paso Electric MarketingEl Paso Electric MarketingArizona Public Service Company

Arizona Public Service CompanyEl Paso Electric MarketingSalt River ProjectSalt River Project

Salt River ProjectSalt River Project

Tucson Electric Power CompanyArizona Public Service CompanyArizona Public Service CompanySalt River Project

Salt River ProjectSalt River ProjectSalt River ProjectSalt River Project

Salt River ProjectSalt River ProjectSalt River Project

Salt River ProjectSalt River ProjectSalt River ProjectSalt River Project

Salt River ProjectSalt River ProjectSalt River ProjectSalt River Project

Salt River ProjectSalt River ProjectSalt River Project

Salt River Project

Energy Delivered To(Company of Public Authority)

(Footnote Affiliation)(c)

Tucson Electric Power Company

Public Service Company of New MexTucson Electric Power CompanyArizona Public Service Company

Salt River ProjectSalt River ProjectEl Paso Electric Marketing

Arizona Public Service CompanyArizona Public Service CompanyArizona Public Service CompanyArizona Public Service Company

Tucson Electric Power CompanySalt River ProjectSalt River Project

Arizona Public Service CompanyArizona Public Service CompanyArizona Public Service CompanyArizona Public Service Company

Arizona Public Service CompanySalt River ProjectSalt River Project

Salt River ProjectSalt River ProjectSalt River Project

Salt River ProjectArizona Public Service CompanyArizona Public Service CompanyArizona Public Service CompanyArizona Public Service Company!Arizona Public Service Company

Arizona Public Service CompanyArizona Public Service Company

Arizona Public Service CompanyArizona Public Service Company

StatisticalClassifi-cation

(d)NFNFNFNF

NFSFP

NFSFP

SFPNFNFSFP

SFP

NF

SFPSFPNF

SFPSFPSFPSFP

SFPNFSFPNF

SFPNFSFPSFPNF

NF

FERC FORM NO. 1 (ED. 12-90) Page 328

Name of Respondent This R~ort Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [~jAn Original (Mo, Da, Yr) End of 2014/Q4

(2) [--~A Resubmission / /TRANSMI~SSION OF ELECTRICITY FOR OTHE~RS i,/~cceunt 456.1)

(Including transactions referred to as ’wheelin1. Report all transmission of electricity, i.e., wheeling, provided for other electric utilities cooperatives, other.public authorities,qualifying facilities, non-traditional utility suppliers and ultimate customers for the quarter.

12. Use a separate line of data for each distinct type of transmission service involving the entities listed in column (a), (b) and (c).3. Report in column (a) the company or public authority that paid for the transmission service. Report in column (b) the company or

public authority that the energy was received from and in column (c) the company or public authority that the energy was delivered to.Provide the full name of each company or public authority. Do not abbreviate or truncate name or use acronyms. Explain in a footnoteany ownership interest in or affiliation the respondent has with the entities listed in columns (a), (b) or (c)

i4. In column (d) enter a Statistical Classification code based on the original contractual terms and conditions of the service as follows:FNO - Firm Network Service for Others, FNS - Firm Network Transmission Service for Self, LFP - "Long-Term Firm Point to Point

i Transmission Service, OLF - Other Long-Term Firm Transmission Service, SFP - Short-Term Firm Point to Point TransmissionReservation, NF - non-firm transmission service, OS - Other Transmission Service and AD - Out-of-Period Adjustments. Use this codefor any accounting adjustments or "true-ups" for service provided in prior reporting periods. Provide an explanation in a footnote foreach adjustment. See General Instruction for definitions of codes.

Line Payment By Energy Received From Energy Delivered To StatisticalNo. (Company of Public Authority) (Company of Public Authority) (Company of Public Authority) Classifi-

(Footnote Affiliation) (Footnote Affiliation) (Footnote Affiliation) cation(a) (b) (c) (d)

1 Macquade Cook Power Salt River Project Arizona Public Service Company SFP2 Macquade Cook Power Arizona Public Service Company Salt River Project NF3 Macquarie Cook Power Arizona Public Service Company Salt River Project SFP4 Morgan Stanley Salt River Project Arizona Public Service Company NF5 Morgan Stanley Salt River Project Arizona Public Service Company SFP6 Morgan Stanley Arizona Public Service Company Salt River Project NF7 Morgan Stanley Arizona Public Service Company Salt River Project ISFP8 Open Access Technology International, Inc. Salt River Project Salt River Project NF9 Open Access Technology International, Inc. Salt River Project Arizona Public Service Company NF

10 Open Access Technology International, Inc. Public Service Company of New Mex Tucson Electdc Power Company NF11 Open Access Technology International, Inc. Salt River Project Arizona Public Service Company NF12 Open Access Technology International, Inc. Tucson Electdc Power Company Tucson Electric Power Company NF13 PacificCorp Power Marketing Salt River Project Arizona Public Service Company NF14 PacificCorp Power Marketing Salt River Project Arizona Public Service Company SFP15 PacificCorp Power Marketing Arizona Public Service Company Salt River Project NF16 PacificCorp Power Marketing Adzona Public Service Company Salt River Project SFP17 Panda Gila River Salt River Project Salt River Project NF18 Panda Gila River Salt River Project Salt River Project SFP19 Panda Gila River Salt River Project Arizona Public Service Company NF20 Panda Gila River Salt River Project Arizona Public Service Company SFP21 Panda Gila River Salt River Project Salt River Project NF22 Panda Gila River Salt River Project Salt River Project SFP23 Panda Gila River Salt River Project Arizona Public Service Company NF24 Panda Gila River Salt River Project Arizona Public Service Company SFP25 Panda Gila River Salt River Project Arizona Public Service Company SFP26 Panda Gila River Arizona Public Service Company Salt River Project NF27 Powerex Salt River Project Arizona Public Service Company NF28 Powerex Salt River Project Arizona Public Service Company SFP29 Powerex Arizona Public Service Company Salt River Project NF30 Powerex Arizona Public Service Company Salt River Project SFP31 PPM Energy, Inc Salt River Project Arizona Public Service Company NF32 Public Service Company of New Mexico Public Service Company of New Mex Public Service Company of New Mex NF33 Public Service Company of New Mexico Public Service Company of New Mex Public Service Company of New Mex NF34 Public Service Company of New Mexico Public Service Company of New Mex Public Service Company of New Mex SFP

TOTAL

FERC FORM NO. 1 (ED. 12-90) Page 328.1

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr)El Paso Electric Company(2) [~A Resubmission / / End of 2014/Q4

TRANSMISSION ’OF ELECTRICITY FOR OTHERS (.A, ccount 456.1)(Including transactions referred to as ’wheeling’)

1. Report all transmission of electricity, i.e., wheeling, provided for other electric utilities, cooperatives, other public authorities,qualifying facilities, non-traditional utility suppliers and ultimate customers for the quarter.2. Use a separate line of data for each distinct type of transmission service involving the entities listed in column (a), (b) and (c).3. Report in column (a) the company or public authority that paid for the transmission service. Report in column (b) the company orpublic authority that the energy was received from and in column (c) the company or public authority that the energy was delivered to.Provide the full name of each company or public authority. Do not abbreviate or truncate name or use acronyms. Explain in a footnoteany ownership interest in or affiliation the respondent has with the entities listed in columns (a), (b) or (c)4. In column (d) enter a Statistical Classification code based on the original contractual terms and conditions of the service as follows:FNO - Firm Network Service for Others, FNS - Firm Network Transmission Service for Self, LFP - "Long-Term Firm Point to PointTransmission Service, OLF - Other Long-Term Firm Transmission Service, SFP - Short-Term Firm Point to Point TransmissionReservation, NF - non-firm transmission service, OS - Other Transmission Service and AD - Out-of-Period Adjustments. Use this codefor any accounting adjustments or "true-ups" for service provided in prior reporting periods. Provide an explanation in a footnote foreach adjustment. See General Instruction for definitions of codes.

LineNo.

1 Public Service2 Public Service3 Public Service4 Public Service5 Public Service6 Public Service7 Public Service8 Public Service9 Public Service

10 Public Service11 Public Service12 Public Service13 Public Service14 Public Service15 Public Service16 Public Service17 Public Service18 Public Service19 Public Service20 Public Service

Payment By(Company of Public Authority)

(Footnote Affiliation)(a)

Company of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New MexicoCompany of New Mexico

Energy Received From(Company of Public Authority)

(Footnote Affiliation)(b)

Public Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexTucson Electric Power CompanyPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexSalt River ProjectPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New Mex

Energy Delivered To(Company of Public Authority)

(Footnote Affiliation)(c)

Tucson Electric Power CompanyTucson Electric Power CompanyPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexTucson Electric Power Company;Tucson Electric Power CompanyTucson Electric Power CompanyTucson Electric Power CompanyArizona Public Service CompanyPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New Mex

StatisticalClassifi-cation

(d)

SFP

NFSFPSFPNF

SFPSFPNF

NF

SFPSFP

NF

NF

SFP

SFP

NF

21 Public Service Company of New Mexico22 Salt River Project23 Salt River Project24 Tenaska Power Services Company25 Tenaska Power Services Company26 Tenaska Power Services Company27 Tenaska Power Services Company28 Transalta29 Tristate Generating and Transmission Coop30 Tristate Generating and Transmission Coop

Arizona Public Service CompanySalt River ProjectTucson Electric Power CompanySalt River ProjectSalt River ProjectTucson Electric Power CompanyArizona Public Service CompanyArizona Public Service CompanyTucson Electric Power CompanyTucson Electdc Power Company

;Salt River ProjectArizona Public Service CompanyTucson Electric Power CompanyArizona Public Service CompanyArizona Public Service CompanyTucson Electric Power CompanySalt River ProjectSalt River ProjectPublic Service Company of New MexPublic Service Company of New Mex

SFPNFNFNFSFPNFSFPNF

SFP31 Tucson Electric Power32 Tucson Electric Power33 Tucson Electric Power34 Tucson Electdc Power

TOTAL

Salt River ProjectSalt River ProjectPublic Service Company of New MexPublic Service Company of New Mex

Salt River ProjectArizona Public Service CompanyTucson Electric Power CompanyTucson Electric Power Company

NFNF

NF

FERC FORM NO. 1 (ED. 12-90) Page 328.2

Name of Respondent This R~ort Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [~An Original (Mo, Da, Yr) End of 2014/Q4

(2) [] A Resubmission / /TRANSMISSION OF ELECTRICITY FOR OTHE’RS ’Account 456.1)

(Including transactions referred to as ’wheelin.),)1. Report all transmission of electricity, i.e., wheeling, provided for other electric utilities cooperatives, other public authorities,qualifying facilities, non-traditional utility suppliers and ultimate customers for the quarter.2. Use a separate line of data for each distinct type of transmission service involving the entities listed in column (a), (b) and (c).3. Report in column (a) the company or public authority that paid for the transmission service. Report in column (b) the company orpublic authority that the energy was received from and in column (c) the company or public authority that the energy was delivered to.Provide the full name of each company or public authority. Do not abbreviate or truncate name or use acronyms. Explain in a footnoteany ownership interest in or affiliation the respondent has with the entities listed in columns (a), (b) or (c)4. In column (d) enter a Statistical Classification code based on the original contractual terms and conditions of the service as follows:FNO - Firm Network Service for Others, FNS - Firm Network Transmission Service for Self, LFP - "Long-Term Firm Point to PointTransmission Service, OLF - Other Long-Term Firm Transmission Service, SFP - Short-Term Firm Point to Point TransmissionReservation, NF - non-firm transmission service, OS - Other Transmission Service and AD - Out-of-Period Adjustments. Use this codefor any accounting adjustments or "true-ups" for service provided in prior reporting periods. Provide an explanation in a footnote foreach adjustment. See General Instruction for definitions of codes.

Line Payment ByNo. (Company of Public Authority)

(Footnote Affiliation)(a)

1 Tucson Electric Power2 Tucson Electric Power3 Tucson Electric Power4 Tucson Electric Power5 Tucson Electric Power6 Tucson Electric Power7 Tucson Electric Power8 Tucson Electdc Power9 Tucson Electric Power

10 Tucson Electric Power11 Tucson Electric Power12 Tucson Electric Power

Energy Received From(Company of Public Authority)

(Footnote Affiliation)(b)

Public Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexPublic Service Company of New MexTucson Electric Power CompanyTucson Electric Power CompanyTucson Electdc Power CompanyTucson Electric Power CompanySalt River ProjectSalt River ProjectTucson Electdc Power CompanyTucson Electric Power Company

Energy Delivered To(Company of Public Authority)

(Footnote Affiliation)(c)

Tucson Electric Power CompanyTucson Electric Power CompanyTucson Electric Power CompanyTucson Electric Power CompanyTucson Electric Power CompanyTucson Electric Power CompanyTucson Electric Power CompanyTucson Electric Power CompanyArizona Public Service CompanyArizona Public Service CompanyTucson Electric Power CompanyTucson Electric Power Company

StatisticalClassifi-cation

(d)SFP

NFSFPNFNFSFPSFPNFSFPNFSFP

13 Tucson Electric Power14 UniSource Energy Services15 UniSource Energy Services16 UniSource Energy Services17 UniSource Energy Services18 Western Area Power Admin19 Westem Area Power Admin20 Western Area Power Admin - DSW21 Western Area Power Admin - DSW22 Western Area Power Admin - DSW232425i

2728

29~0

32

Arizona Public Service CompanySalt River Project

Salt River ProjectSalt River ProjectTucson Electric Power CompanyPublic Service Company of New Mex

Public Service Company of New MexSalt River ProjectSalt River ProjectSalt River Project

Salt River ProjectSalt River ProjectArizona Public Service CompanyArizona Public Service CompanyTucson Electric Power CompanyPublic Service Company of New MexPublic Service Company of New MexArizona Public Service CompanyArizona Public Service CompanyArizona Public Service Company

NFSFP

NFSFPNF

SFPNFNFSFP

TOTAL

FERC FORM NO. 1 (ED. 12-90) Page 328.3

Name of Respondent This Re__pod Is: Date of Report Year/Period of Report(1) [~jAn Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) r’-]A Resubmission ! /

TRANSMISS.I.ON. qF E~ECTRIClTY F..OR OTHERS .(/~c..cou.nt 456)(Continued)unc~uoing transactions renered to as ’wnee~ing’)

5. In column (e), identify the FERC Rate Schedule or Tariff Number, On separate lines, list all FERC rate schedules or contractdesignations under which service, as identified in column (d), is provided.6. Report receipt and delivery locations for all single contract path, "point to point" transmission service. In column (f), report thedesignation for the substation, or other appropriate identification for where energy was received as specified in the contract. In column(g) report the designation for the substation, or other appropriate identification for where energy was delivered as specified in thecontract.7. Report in column (h) the number of megawatts of billing demand that is specified in the firm transmission service contract. Demandreported in column (h) must be in megawatts. Footnote any demand not stated on a megawatts basis and explain.8. Report in column (i) and (j) the total megawatthours received and delivered.

FERC RateSchedule of

Tariff Number(e)

010101010101~)101~)1~)1~)101~)101~)131313131!010101010101010101010101010101

Point of Receipt(Subsatation or Other

Designation)(f)

EPE SystemEPE SystemEPE SystemPalo VerdeWestwingWestwingEPE SystemPalo VerdePalo VerdePalo VerdePalo VerdeSpringervilleWestwingWestwingPalo VerdePalo VerdePalo VerdePalo VerdePalo VerdeJojobaJojobeJojobaJojobaJojobaPalo VerdePalo VerdePalo VerdePalo VerdePalo VerdePalo VerdePalo VerdePalo VerdePalo VerdePalo Verde

Point of Delivery(Substation or Other

Billing TRANSFER OF ENERGY LineDemand MegaWatt Hours MegaWatt Hours No.(MVV) Received Delivered

(h) (i) (j)2~ 2( 1

1 2

5C 5( 37C 7( 4

72( 72( 5

4,68G 4,68( 69 63,111 63,111 7

125 148,28~ 148,28( 8

182 18; 9

227 22; 1029; 11

5 12

385 38.= 137,085 7,08.= 14

71 24(~ 24( 15

125 172,19(~ 172,19( 16

1740z 18

444 44z 19

7,283 . 7,28.’ 2093,335 93,33.= 21

150 202,779 202,77~. 22

450 216,06~ 216,06~ 23

400 320,698 320,694 2410(~ 10( 25

" 3,242 3,24; 26

75 7.= 2720,809 20,80~. 28

1,722 1,72; 2913,282 13,28; 30

9,856 9,85( 31

50 62,180 62,18( 3250 5( 33

3,372 3,37; 34

1,884 5,545,907 5,545,90i

Designation)(g)

GreenleeLunaSpringervilleWestwingPalo VerdePalo VerdeCoyote/FarmerWestwingWestwingWestwingWestwingGreenleePalo VerdePalo VerdeWestwingWestwingWestwingWestwingWestwingPalo VerdePalo VerdePalo VerdePalo VerdePalo VerdeJojobaWestwingWestwingWestwingWestwingWestwingWestwingWestwingWestwingWestwing

FERC FORM NO. 1 (ED. 12-90) Page 329

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yi’) End of 2014/Q4El Paso Electric Company (2) [~A Resubmission / /

TRANSMISSION. O.F E.LECTRICITY FOR OTHERS .(,~c.c.ou,.nt 456)(Continued)(Inc~u(]ing transactions reffered to as ’wneeiing’)

5. In column (e), identify the FERC Rate Schedule or Tariff Number, On separate lines, list all FERC rate schedules or contractdesignations under which service, as identified in column (d), is provided.6. Report receipt and delivery locations for all single contract path, "point to point" transmission service. In column (f), report thedesignation for the substation, or other appropriate identification for where energy was received as specified in the contract. In column(g) report the designation for the substation, or other appropriate identification for where energy was delivered as specified in thecontract.7. Report in column (h) the number of megawatts of billing demand that is specified in the firm transmission service contract. Demandreported in column (h) must be in megawatts. Footnote any demand not stated on a megawatts basis and explain.8. Report in column (i) and (j) the total megawatthours received and delivered.

FERC RateSchedule of

Tariff Number(e)

01010101=010101,010101010101010101010101010101010101010101010101010101

Point of Receipt(Subsatation or Other

Designation)(f)

Palo VerdeWestwingWestwingPalo VerdePalo VerdeWestwingWestwingJojobaJojobaLunaPalo VerdeSpringervillePalo VerdePalo VerdeWestwingWestwingJojobaJojobaJojobaJojobaPalo VerdePalo VerdePalo VerdePalo VerdePalo VerdeWestwingPalo VerdePalo VerdeWestwingWestwingPalo VerdeAltonAltonAlton

Point of Delivery(Substation or Other

Designation)(g)

WestwingPalo VerdePalo VerdeWestwingWestwingPalo VerdePalo VerdePalo VerdeWestwingSpringervilleWestwingGreenleeWestwingVVestwingPalo VerdePalo VerdePalo VerdePalo VerdeWestwingWestwingJojobaJojobaWestwingWestwingWestwingPalo VerdeWestwingWestwingPalo VerdePalo VerdeWestwingAmradLunaLuna

Billing TRANSFER OF ENERGY LineDemand MegaWatt Hours MegaWatt Hours No.(MW) Received Delivered

(h) (i) (j)175 17.= 1

1,994 1,99a 2

33,108 33,10~ 3

855,091 855,091 4

100,857 100,85; 531 31 6

1,168 1,16~ 7

155 15~ 8945 94~ 9

1 1011

564 56~ 1224,356 24,35(~ 13

4,988 4,98e 14

4,783 4,78‘. 15

89,905 89,90~= 16

52,344 52,34z 17

427,233 427,23‘. 18

5,945 5,94.= 19

1,619 1,61(. 2021

1,17(] 1,17( 22

10,823 10,82‘. 23

5,993 5,99.’ 24

10 14,527 14,52; 25

50 5( 2610,042 10,04; 27

4,522 4,52; 28

35 3.= 29

11,129 11,12.~ 30

134 13z 313,457 3,45; 32

19 1(. 33

27,412 27,41; 34

1,884 5,545,907 5,545,90i

FERC FORM NO. 1 (ED. 12-90) Page 329.1

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electdc Company (2) [] A Resubmission / /

TRANSMISSION OF ELECTRICITY FOR OTHERS .(/~c.c.ou,,nt 456)(Continued)(Including transactions reffered to as ’wneedng’)

5. In column (e), identify the FERC Rate Schedule or Tariff Number, On separate lines, list all FERC rate schedules or contractdesignations under which service, as identified in column (d), is provided.6. Report receipt and delivery locations for all single contract path, "point to point" transmission service. In column (f), report thedesignation for the substation, or other appropriate identification for where energy was received as specified in the contract. In column(g) report the designation for the substation, or other appropriate identification for where energy was delivered as specified in thecontract.7. Report in column (h) the number of megawatts of billing demand that is specified in the firm transmission service contract. Demandreported in column (h) must be in megawatts. Footnote any demand not stated on a megawatts basis and explain.8. Report in column (i) and (j) the total megawatthours received and delivered.

FERC RateSchedule of

Tariff Number(e)

OlOlOlOlOlOlOlOlOlOlOlOlOlOlOlolOlOlOlOlOlOlOlOlOlOlOlOl80OlOlOlOlOl

Point of Receipt(Subsatation or Other

Designation)(f)

Point of Deliver/(Substation or Other

Designation)(g)

SpringervilleSpdngervilleWestmesa

Billing TRANSFER OF ENERGY LineDemand MegaWatt Hours MegaWatt Hours No.

(MVV) Received Delivered(h) (i) (j)

94 176,07e 176,076 1

14115,49C

241,44=~15,490

241,445

18,4692,705

89,0771

1,113

9,9445

110,330104

11,719

83,303286

168,08528,4283,779

5,232423201

1,6031,687

10,263

14,5132682

136

391,92116,879

448181

75,4743,782

WestmesaWestmesaWestmesaAmradLuna

1218,4692,705

89,077

11,113

Las CrucesLunaLunaLunaLunaLunaPaloVerdeWestmesaWestmesaWestmesaWestmesaWestmesaWestwingPalo VerdeSpringervillePalo VerdePalo VerdeSpringervilleWestwingWestwingSpringervilleSpringervilleJ~obaJ~obaLunaLuna

AmradAffonSpringerville

Springerville!SpringervilleSpringerville

WestwingAmradAmredAmrad

AmradLas CrucesPalo VerdeWestwingGreenleeWestwingWestwingGreenleePalo VerdePalo VerdeLas Cruces/OrograndeLas Cruces/OrograndePalo VerdeWestwingGreenleeGreenlee

6C

6C

2~

9,9445

110,330i

11,71983,303

286168,08528,428

3,779

423201

1,6031,687

10,26314,513

2682130

391,921

448181

75,4743,782

5C

3C

23456789

101112131415161718192021222324252627282930313233

1,884 5,545,907 5,545,907

FERC FORM NO. 1 (ED. 12-90) Page 329.2

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~JAn Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) ["-~A Resubmission / /

TRANSMISS!,O~. O,F E.LECTR!CITY F..OR OTHERS ,(A’ .c~. u.nt 456)(Continued)uncluoing transactions revered to as ’wnee~ing’)

5. In column (e), identify the FERC Rate Schedule or Tariff Number, On separate lines, list all FERC rate schedules or contractdesignations under which service, as identified in column (d), is provided.6. Report receipt and delivery locations for all single contract path, "point to point" transmission service. In column (f), report thedesignation for the substation, or other appropriate identification for where energy was received as specified in the contract. In column(g) report the designation for the substation, or other appropriate identification for where energy was delivered as specified in thecontract.7. Report in column (h) the number of megawatts of billing demand that is specified in the firm transmission service contract. Demandreported in column (h) must be in megawatts. Footnote any demand not stated on a megawatts basis and explain.8. Report in column (i) and (j) the total megawatthours received and delivered.

FERC RateSchedule of

Tariff Number(e)

OlOlOlOlOl01OlOlOlOlOlOlOlOlOlOlOlOlOlOlOlOl

Point of Receipt(Subsatation or Other

LunaLunaLunaLuna

Designation)(f!

Macho SpringsMacho SpringsMacho SpringsMacho SpringsPalo VerdePalo VerdeSpringervilleSpringervilleWestwingJojobaPalo VerdePalo VerdeSpringervilleWestmesaWestmesaJojobaPalo VerdePalo Verde

Point of Delivery Billing TRANSFER OF ENERGYDemand MegaWatt Hours MegaWatt Hours

(MVV) Received Delivered(h) (i) (j)

1,66e

1,03;6,92,~

2,50~32,26~72,41~=

154,817

5,53712,73e

117411

642,867

66,63~33~

2 7,57~1

2,20~1,301

5,545,907

(Substation or OtherDesignation)

(g)GreenleeSpringervilleSpringervilleSpringervilleGreenleeSpringervilleSpringervilleSpringervilleWestwingWestwingGreenleeGreenleePalo VerdePalo VerdeWestwingWestwingGreenleeHollomanHollomanWestwingWestwingWestwing

1C

1,884

3,19,"

1,6651,0326,92~2,50~

32,26~72,41,=

154,81;5,53;

12,73~

11741’

642,86766,63~

33~7,57~

32"

2,20~1,301!

5,545,90~

LineNo.

1234

5678

91011

121314

15161718

19202122

2324

25262728

293O313233

FERC FORM NO. 1 (ED. 12-90) Page 329.3

Name of Respondent This Re.~port Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) ~]An Original (Mo, Da, Yr) End of 2014/Q4

(2) [~A Resubmission / /TRANSMISSIOR OF ELECTRICITY FOR OTHERS ~AC.C.ount 456) (Continued)

(Including transactions reffered to as ’wnee~ing’)9. In column (k) through (n), report the revenue amounts as shown on bills or vouchers. In column (k), provide revenues from demandcharges related to the billing demand reported in column (h). In column (~), provide revenues from energy charges related to theamount of energy transferred. In column (m), provide the total revenues from all other charges on bills or vouchers rendered, includingout of period adjustments. Explain in a footnote all components of the amount shown in column (m). Report in column (n) the totalcharge shown on bills rendered to the entity Listed in column (a). If no monetary settlement was made, enter zero (11011) in column(n). Provide a footnote explaining the nature of the non-monetary settlement, including the amount and type of energy or servicerendered.10. The total amounts in columns (i) and (j) must be reported as Transmission Received and Transmission Delivered for annual reportpurposes only on Page 401, Lines 16 and 17, respectively.11. Footnote entries and provide explanations following all required data.

Demand Charges($)(k)

198,790608,537

58,220612,876

522,000543,000)752,00(

61,50(

14,274,596

REVENUE FROM TRANSMISSION OF ELECTRICITY FOR OTHERSEnergy Charges (Other Charges) Total Revenues ($) Line

($) ($) (k*l+m) No.(I) (m) (n)

12

3456

68,222 -665,090 7608,537 8

166 166 9

115 115 1011

34 34 12

349 349 13

6,183 6,1831 14

42 58,262i 15

612,876 16

199 199 1718

317 317 19

16,796 16,796 20

220,113 220,1131 21522,000 22

543,000 23

752,000 ’24

329 329 25

2,675 2,675 26

151 151 27

17,547 17,547i 28

1,220 1,220 29

13,403 13,403 30

20,750 20,750 31

61,500 3252 52’ 33

3,813 3,813 34

5,955,571 -932,102 19,298,065

FERC FORM NO. 1 (ED. 12-90) Page 330

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) [-’IA Resubmission I / /

TRANSMISSION. O.F ELECTRICITY FOR OTHERS .(A~.c.ou.n,t 456) (Continued)(Inc~uoin9 transactions reffered to as ’wneedng’)

9. In column (k) through (n), report the revenue amounts as shown on bills or vouchers. In column (k), provide revenues from demandcharges related to the billing demand reported in column (h). In column (I), provide revenues from energy charges related to theamount of energy transferred. In column (m), provide the total revenues from all other charges on bills or vouchers rendered, includingout of period adjustments. Explain in a footnote all components of the amount shown in column (m). Report in column (n) the totalcharge shown on bills rendered to the entity Listed in column (a). If no monetary settlement was made, enter zero (11011) in column(n). Provide a footnote explaining the nature of the non-monetary settlement, including the amount and type of energy or servicerendered.10. The total amounts in columns (i) and (j) must be reported as Transmission Received and Transmission Delivered for annual reportpurposes only on Page 401, Lines 16 and 17, respectively.11. Footnote entries and provide explanations following all required data.

Demand Charges($)(k)

12,300

14,274,596

REVENUE FROM TRANSMISSION OF ELECTRICITY FOR OTHERSEnergy Charges

($)(i)

907

1,98325,770

684,542

77,009

1,045229

2,6843

2,81533,846

5,531

6,97595,613

139,4971,283,385

17,9674,066

236

2,59511,5538,415

319,0794,144

26(~

9,605216

24,731101

155,617

5,955,571

(Other Charges)($)(m)

-932,102

Total Revenues ($) Line(k+l+m) No.

(n)907 1

1,983 2

25,77(} 3684,542 4

77,009 536 6

1,045! 72291 5

2,684 9

2,815 12

33,84(; 13

5,531 1,4

6,975 15

95,613 16

139,497 171,283,386 18

17,967 19

4,060 26

230 212,5981 22

11,553 23

8,415 24

12,306 2531 26

9,079 274,144 28

260 299,608 3(~

210 31

24,731 32

101 33155,617 34

19,298,0651

FERC FORM NO. 1 (ED. 12-90) Page 330.1

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) r-1A Resubmission / /

TRANSMISSION OF ELECTRICITY FOR OTHERS .(Ab..cou.n,t 456) (Continued)(Including transactions reffered to as ’wnee,ing’)

9. In column (k) through (n), report the revenue amounts as shown on bills or vouchers. In column (k), provide revenues from demandcharges related to the billing demand reported in column (h). In column (I), provide revenues from energy charges related to theamount of energy transferred. In column (m), provide the total revenues from all other charges on bills or vouchers rendered, includingout of period adjustments. Explain in a footnote all components of the amount shown in column (m). Report in column (n) the totalcharge shown on bills rendered to the entity Listed in column (a). If no monetary settlement was made, enter zero (11011) in column(n). Provide a footnote explaining the nature of the non-monetary settlement, including the amount and type of energy or servicerendered.10. The total amounts in columns (i) and (j) must be reported as Transmission Received and Transmission Delivered for annual reportpurposes only on Page 401, Lines 16 and 17, respectively.11. Footnote entries and provide explanations following all required data.

Demand Charges($)(k)

2,499,114

2,382,029

29,088

REVENUE FROM TRANSMISSION OF ELECTRICITY FOR OTHERSEnergy Charges

($)(i)

67,315

117,272

444,2733

43,23168,208

1,1551,681,81,~

711212,916

1,034,685 427,924258

701,88~

194,79540,902

(Other Charges)($)(m)

Total Revenues ($)(k+l+m)

(n)2,499,114

67,3152,382,029

117,27229,088

444,2733

43,23168,208

1,1551,681,814

711212,916

1,462,609258

701,889194,79540,902

4,100 4,100111 111

1,607 1,607

15,800 15,80010,004 10,004

12,257 12,257

143 143

83 83

132 o 132

1,386,00(~ 1,386,000

1,306 1,3063,173 3,173

872,732 872,732

27,184 27,184

14,274,596 5,955,571 -932,102 19,298,065

LineNo.

123

456

789

10

11121314

1516

17181920

21222324

25262728

293O3132

33

FERC FORM NO. 1 (ED. 12-90) Page 330.2

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electdc Company (2) E~]A Resubmission / /

TRANSMISSIOR OF ELECTRICITY FOR OTHERS .(Account 456) (Continued)(Including transactions reffered to as ’wheeling’)

9. In column (k) through (n), report the revenue amounts as shown on bills or vouchers. In column (k), provide revenues from demandcharges related to the billing demand reported in column (h). In column (I), provide revenues from energy charges related to theamount of energy transferred. In column (m), provide the total revenues from all other charges on bills or vouchers rendered, includingout of period adjustments. Explain in a footnote all components of the amount shown in column (m). Report in column (n) the totalcharge shown on bills rendered to the entity Listed in column (a). If no monetary settlement was made, enter zero (11011) in column(n). Provide a footnote explaining the nature of the non-monetary settlement, including the amount and type of energy or servicerendered.10. The total amounts in columns (i) and (j) must be reported as Transmission Received and Transmission Delivered for annual reportpurposes only on Page 401, Lines 16 and 17, respectively.11. Footnote entries and provide explanations following all required data.

Demand Charges($)(k)

48,485

211,353

58,184

REVENUE FROM TRANSMISSION OF ELECTRICITY FOR OTHERSEnergy Charges

($)(I)

5,907

4,88762,72122,766

191,215

72,728141,833

4,83889,839

107990

616,48257,925

2,441

181,915

1,105

(Other Charges) Total Revenues ($) Line($) (k+l+m) No.(m) (n)

48,4855,907

4,88762,72122,766

191,215

284,081141,833

4,83889,839

107990

616,48257,925

2,44158,184

18

1,9151,105

14,274,596 5,955,571 -932,102 19,298,065

123456789

101112131415161718192021222324252627282930313233

FERC FORM NO. 1 (ED. 12-90) Page 330.3

Name of Respondent

El Paso Electdc Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

~chedule Page: 328E1 Paso Electric~chedule Page: 328E1 Paso Electric~chedule Page: 328E1 Paso Electric~chedule Page: 328E1 Paso Electric~chedule Page: 328E1 Paso Electric~chedule Page: 328E1 Paso Electric~chedule Page: 328

Line No.: 1MarketingLine No.: 2

MarketingLine No.: 3

MarketingLine No.: 4

MarketingLine No.: 5

MarketingLine No.: 6

MarketingLine No.: 7

Column: aiS the marketing affiliate of E1 Paso Electric Company.

Column: alS the marketing affiliate of E1 Paso Electric Company.

Column: aIS the marketing affiliate of E1 Paso Electric Company.

Column: ais the marketing affiliate of E1 Paso Electric Company.

Column: ais the marketing affiliate of E1 Paso Electric Company.

Column: azs the marketing affiliate of E1 Paso Electric Company.

Column: dNetwork Integration Transmission Service, Evergreen contract, expiration March 31 with twoyear notice.~chedule Page: 328 LMe No,: 7 Column: mPrior year adjustment.~chedule Page: 328 LMe No,: 8 Column: dFirm transmission contracts of 17, 23, 35 and 50MW, expiration January I, 2021. Servicewas partially redirected to hourly services.~chedule Page: 328 LMe No,: 11 Column: iLosses associated with the energy wheeled on transmission purchases that are paid back inkind.~chedule Page: 328 LMe No,: 16 Column: dFirm transmission contracts of 25 and 100 MW, expiration January i, 2021.~chedu~ Page: 328 L~e No,: 18 Column: iLosses associated with the energy wheeled on transmission purchases that are paid back inkind.~chedule Pag~ 328,2 LMe No.: 1 Column: dFirm transmission contract, expiration August I, 2019. Service was partially redirected todaily and hourly services.~chedule Page: 328,2 LMe No.: 3 Column: dFirm transmission contracts of iii and 30 MW, expiration January i, 2019. Service wasprimarily redirected to monthly services.~chedu~ Page: 328,2 iMe No,: 11 Column: dFirm transmission contract, expiration January I, 2020. Service was partially redirectedto daily and hourly services.~chedule Pag~ 32&2 LMe No,: 16 Column: dFirm transmission contract, expiration July i, 2018. Service was partially redirected todaily and hourly services.~chedule Page: 328,2 LMe No,: 19 Column: iLosses associated with the energy wheeled on transmission purchases that are paid back inkind.~chedu~ Page: 328.2Firm transmission~chedule Page: 328,2Losses associatedkind.~chedule Page: 328,2Firm transmission~chedu~ Page: 328,3Losses associatedkind.

LMe No.: 29 Column: dcontract, expiration January i, 2026.

LMe No.: 30 Column: iwith the energy wheeled on transmission purchases that are paid back in

LMe No,: 33 Co~mn: dcontract, expiration November i, 2029.LMe No.: 1 Co~mn: i

with the energy wheeled on transmission purchases that are paid back in

~chedule Page: 328,3 Line No,: 2 Column: dFirm transmission contract, expiration November i,IFERC FORM NO, 1 (ED, 12,,87) Page 450.1

2029. Service was primarily redirected

Name of Respondent

El Paso Electdc Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

to monthly services.~chedule Page: 328.3 L~e No.: 12 Column: iLosses associated with the energy wheeled on transmission purchases that are paid back inkind.~chedule Page: 328.3 LMe No.: 18 Column: dFirm transmission contract, expiration October i, 2024.~chedule Page: 328.3 i~e No.: 19 Column: iLosses associated with the energy wheeled on transmission purchases that are paid back inkind.

IFERC FORM NO. 1 (ED. 12-87) Page 450.2

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yi’) End of 2014/Q4El Paso Electric Company (2) [] A Resubmission / /

TI~,NSMISSION OF ELECTRICITY BY’ ISO/RTOs1. Report in Column (a) the Transmission Owner receiving revenue for the transmission of electricity by the ISO/RTO.2. Use a separate line of data for each distinct type of transmission service involving the entities listed in Column (a).3. In Column (b) enter a Statistical Classification code based on the original contractual terms and conditions of the service as follows: FNO - FirmNetwork Service for Others, FNS - Firm Network Transmission Service for Self, LFP - Long-Term Firm Point-to-Point Transmission Service, OLF - OtherLong-Term Firm Transmission Service, SFP - Short-Term Firm Point-to-Point Transmission Reservation, NF - Non-Firm Transmission Service, OS -Other Transmission Service and AD- Out-of-Period Adjustments. Use this code for any accounting adjustments or "true-ups" for service provided in priorreporting periods. Provide an explanation in a footnote for each adjustment. See General Instruction for definitions of codes.4. In column (c) identify the FERC Rate Schedule or tariff Number, on separate lines, list all FERC rate schedules or contract designations under whichservice, as identified in column (b) was provided.5. In column (d) report the revenue amounts as shown on bills or vouchers.6. Report in column (e) the total revenues distributed to the entity listed in column (a).LineNo.

123456789

101112131415161718192021222324252627282930313233

3536373839

Payment Received by(-rransmission Owner Name)

(a)

StatisticalClassification

(b)

FERC Rate Schedukor Tariff Number

(c)

TOTAL

~Total Revenue by RateSchedule or Tarirff

(d)

Total Revenue

(e)

FERC FORM NO. 113-Q (REV 03-07) Page 331

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) [~A Resubmission / !

TRANSI~ ISSION OF ELECTRICITY BY OTHEI~S (Account 565)(Including transactions referred to as "wheeling")

1. Report all transmission, i.e. wheeling or electricity prbvided by other electric utilities, cooperatives, municipalities, other publicauthorities, qualifying facilities, and others for the quarter.2. In column (a) report each company or public authority that provided transmission service. Provide the full name of the company,abbreviate if necessary, but do not truncate name or use acronyms. Explain in a footnote any ownership interest in or affiliation with thetransmission service provider. Use additional columns as necessary to report all companies or public authorities that providedtransmission service for the quarter reported.3. In column (b) enter a Statistical Classification code based on the original contractual terms and conditions of the service as follows:FNS - Firm Network Transmission Service for Self, LFP - Long-Term Firm Point-to-Point Transmission Reservations. OLF - OtherLong-Term Firm Transmission Service, SFP - Short-Term Firm Point-to- Point Transmission Reservations, NF - Non-Firm TransmissionService, and OS - Other Transmission Service. See General Instructions for definitions of statistical classifications.4. Report in column (c) and (d) the total megawatt hours received and delivered by the provider of the transmission service.5. Report in column (e), (f) and (g) expenses as shown on bills or vouchers rendered to the respondent. In column (e) report thedemand charges and in column (f) energy charges related to the amount of energy transferred. On column (g) report the total of allother charges on bills or vouchers rendered to the respondent, including any out of period adjustments. Explain in a footnote allcomponents of the amount shown in column (g). Report in column (h) the total charge shown on bills rendered to the respondent. If nomonetary settlement was made, enter zero in column (h). Provide a footnote explaining the nature of the non-monetary settlement,including the amount and type of energy or service rendered.6. Enter "TOTAL" in column (a) as the last line.7. Footnote entries and provide explanations following all required data.

Line TRANSFER OF ENERGYNo. Name of Company or Public Statistical Ma.gawatt- MahgoauWmatt-nounsAuthority (Footnote Affiliations) Classification Rece veo Delivered

(a) (b) (c) (d)

EXPENSES FOR TRANSMISSION OF ELECTRICITY BY OTHERuemand uther Total Cost of

Ch~es

~nergy

s~0~!L;n~les Ch~les Tran ssion

(e) (f) (g)1 Arizona Public Sewice

2 Arizona Public Service

3 Public Sew. Co. of NM

4 Public Serv. Co. of NM5 Public Serv. Co. of NM

6 Public Serv. Co. of NM

7 Public Serv. Co. of NM

8 Salt River Project9 Salt River Project

10 Tucson Electric Power

11 Tucson Electric Power

12 Tucson Electric Power13 ! Open Access Technology

14

15

16

TOTAL

SFP

NF

SFP

NF

NF

2,982,427

340,112

223,916

1,697,750

1,116,681 1,116,681 5,244,20~=

2,537

5,336

2,982,427

340,112

223,916

4,999

254,712

1,697,750

91

11,818

16,369

38

295,900 5,540,105

FERC FORM NO. 113-Q (REV. 02-04) Page 332

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report IYear/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

~chedule Page: 332 Line No.: 1 Column: cAmounts shown based on transmission reservations.~chedule Page: 332 Line No.: 1 Column: dAmounts shown based on transmission reservations.~chedule Page: 332 Line No.: 1 Column: fAmounts shown include short term transmission reservations,~chedule Page: 332 Line No.: 2 Column: cAmounts shown based on transmission reservations.~chedule Page: 332 Line No.: 2 Column: dAmounts shown based on transmission reservations.~chedule Page: 332 Line No.: 2 Column: fAmounts shown include short term transmission reservations,~chedule Page: 332 Line No.: 3 Column: bContract terminates June 30, 2017.~chedule Page: 332 Line No.: 3 Column: cAmounts shown based on actual energy flows.~chedule Page: 332 Line No.: 3 Column: dAmounts shown based on actual energy flows.ISchedule Page: 332 Line No.: 4 Column: bContract terminates June i, 2019.~chedule Page: 332 Line No.: 4 Column: cAmounts shown based on actual energy flows.~chedule Page: 332 Line No.: 4 Column: dAmounts shown based on actual energy flows.~chedule Page: 332 Line No.: 5 Column: bContract terminated June i, 2014.~chedule Page: 332 Line No.: 5 Column: cAmounts shown based on actual energy flows.~chedule Page: 332 Line No.: 5 Column: dAmounts shown based on actual energy flows.~chedule Page: 332 Line No.: 6 Column: cAmounts shown based on actual energy flows and~chedule Page: 332 Line No.: 6 Column: dAmounts shown based on actual energy flows and~chedule Page: 332 Line No.: 6 Column: fAmounts shown include short term transmission reservations,~chedule Page: 332 Line No.: 7 Column: cAmounts shown based on transmission reservations.~chedule Page: 332 Line No.: 7 Column: dAmounts shown based on transmission reservations.~chedule Page: 332 Line No.: 7 Column: fAmounts shown include short term transmission reservations, related~chedule Page: 332 Line No.: 8 Column: bContract expires concurrent with the ANPP Participation Agreement.~chedule Page: 332 Line No.: 8 Column: cAmounts shown based on actual energy flows.~chedule Page: 332 Line No.: 8 Column: dAmounts shown based on actual energy flows.~chedule Page: 332 Line No.: 9 Column: cAmounts shown based on transmission reservations.~chedule Page: 332 Line No.: 9 Column: dAmounts shown based on transmission reservations.~chedule Page: 332 Line No.: 9 Column: fAmounts shown include short term transmission reservations, related

Page 450.1IFERC FORM NO. 1 (ED. 12-87)

related ancillary and losses.

related ancillary and losses.

transmission reservations.

transmission reservations.

related ancillary and losses.

ancillary and losses.

ancillary and losses.

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report IYear/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

~chedule Page: 332 Line No.: 10Service Schedule C terminatesPalo Verde Nuclear Generatingthe Company.~chedule Page: 332 Line No.: 10Amounts shown based on actual~chedule Page: 332 Line No.: 10Amounts shown based on actual~chedule Page: 332 Line No.: 10

Column:bon the date of retirement of the last generating unit atStation, subject to twelve-month notice of termination by

Column: cenergy flows.

Column: denergy flows.

Column: eUnder a pre-order 888/889 agreement, the Company was assigned rights as part of the PowerExchange and Transmission Agreement.~chedule Page: 332 LMe No.: 11 Column: cAmounts shown based on transmission reservations.~chedule Page: 332 LMe No.: 11 Column: dAmounts~chedu~Amounts~chedu~Amounts~cheduleAmounts~cheduleAmounts~cheduleAmounts~cheduleAmounts~cheduleAmounts

shown based on transmission reservations.Pag~ 332 LMe No.: 11 Column: fshown include short term transmission reservations, related ancillary and losses.Page: 332 LMe No.: 12 Column: cshown based on transmission reservations.Page: 332 LMe No.: 12 Column: dshown based on transmission reservations.Page: 332 LMe No.: 12 Column: fshown include short term transmission reservations, related ancillary and losses.Page: 332 LMe No.: 13 Column: cshown based on transmission reservations.Page: 332 LMe No.: 13 Co~mn: dshown based on transmission reservations.Pag~ 332 LMe No.: 13 Column: fshown include short term transmission reservations, related ancillary and losses.

IFERC FORM NO. 1 (ED. 12-87) Page 450.2

Name of RespondentEl Paso Electdc Company

This I~ort Is: Date_of R.e.p.ort(1)l~..J An Original (Mo, ua,(2) [] A Resubmission / /

MISCELLANEOUS GENERAL EXPENSES (Account 930.2) (ELECTRIC)

Year/Period of ReportEnd of 2014/Q4

Line AmountNo. (b)

1 363,0212

34 800,3615 19,100

6 12,629,1957 1,356,9638 75,4169 2,846,210

1011 Promotional Materials 40,50112

131415

16171819

20212223

2425

26272829

30313233

353637

38394O41

4243

45

Description(a)

Industry Association DuesNuclear Power Research Expenses

Other Experimental and General Research ExpensesPub & Dist Info to Stkhldrs...expn servicing outstanding SecuritiesOth Expn >=5,000 show purpose, recipient, amount. Group if < $5,000Palo Verde General Expenses

Four Corners General Expenses

Palo Verde Transmission Line CostDirector’s Fees and Expenses

Economic Development

46 TOTAL 18,443,767

FERC FORM NO. 1 (ED. 12-94) Page 335

Name of Respondent

El Paso Electdc Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

~chedulePage:335 LMeNo.:IO Column:bPrimarily consists of contributions to promote economic development to (a) Borderplex BiNational Economic Alliance of $250,000; (b) Mesilla Valley Economic Development Allianceof $43,000; (c) Project Vida of $I0,000; and (d) ACCION New Mexico of $i0,000.

JFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent ] This Report Is: ]" Date of Report 1 Year/Period of ReportI (1) [~]An Original / (Mo, Da, Yr) IEl Paso Electric Company 1(2) [] A Resubmission / II / Endof 2014/Q4

DEPRECIATION AND AMORTIZATION OF ELECTRIC PI .ANT (Account 403, 404, 405)(Except amortization of aquisition adjustments)

1. Report in section A for the year the amounts for : (b) Depreciation Expense (Account 403; (c) Depreciation Expense for AssetRetirement Costs (Account 403.1; (d) Amortization of Limited-Term Electric Plant (Account 404); and (e) Amortization of Other ElectricPlant (Account 405).2. Report in Section 8 the rates used to compute amortization charges for electric plant (Accounts 404 and 405). State the basis used tocompute charges and whether any changes have been made in the basis or rates used from the preceding report year.3. Report all available information called for in Section C every fifth year beginning with report year 1971, reporting annually only changesto columns (c) through (g) from the complete report of the preceding year.Unless composite depreciation accounting for total depreciable plant is followed, list numerically in column (a) each plant subaccount,account or functional classification, as appropriate, to which a rate is applied, identify at the bottom of Section C the type of plantincluded in any sub-account used.In column (b) report all depreciable plant balances to which rates are applied showing subtotals by functional Classifications and showingcomposite total. Indicate at the bottom of section C the manner in which column balances are obtained. If average balances, state themethod of averaging used.For columns (c), (d), and (e) report available information for each plant subaccount account or functional classification Listed in column(a). If plant mortality studies are prepared to assist in estimating average service Lives, show in column (f) the type mortality curveselected as most appropriate for the account and in column (g), if available, the weighted average remaining life of surviving plant. Ifcomposite depreciation accounting is used, report available information called for in columns (b) through (g) on this basis.4. If provisions for depreciation were made during the year in addition to depreciation provided by application of reported rates, state atthe bottom of section C the amounts and nature of the provisions and the plant items to which related.

A. Summary of Depreciation and Amortization Charges

LineNo. Functional Classification

(a)1 Intangible Plant2 Steam Production Plant3 Nuclear Production Plant4 Hydraulic Production Plant-Conventional5 Hydraulic Production Plant-Pumped Storage6 Other Production Plant7 Transmission Plant8 Distribution Plant~ I Regional Transmission and Market Operation

1(; General Plant11 Common Plant-Electric12 TOTAL

DeEPxpreCiationense(Account 403)

(b)

17,404,011

19,736,257

3,054,099

7,197,854

19,859,050

7,211,657

74,462,928

DepreciationExpense for AssetRetirement Costs(Account 403.1)

(c)

279,382

-1,347,634

416

-1,067,836

Amortization ofLimited TermElectric Plant

(Account 404)(d)8,051,001

8,051,001

Amortization ofOther ElectricPlant (Acc 405)

(e)Total

(f)8,051,001

17,683,39318,388,623

3,054,515

7,197,854

19,859,050

7,211,657

81,446,093

Asset Term Basis

Computer Software 5 - 10 years $75,200,691

B. Basis for Amortization Charges

Amort Exp Method

$8,051,001 Straight Line

FERC FORM NO. 1 (REV. 12-03) Page 336

Name of RespondentEl Paso Electric Company

LineNo. Account No.

12131415161718192021222324252627282930313233

353637383940414243

45

47I

48495(~

This Report Is: Date of Report(1) [~An Original (Mo, Da, Yr)(2) [] A Resubmission / /

DEPRECIATION AND AMORTIZATION OF ELECTRIC PLANT (Continued)

C. Factors Used in Estimating Depreciation ChargesL)epreclaDlePlant Base

(In Thousands)(b)

~-stlmatedAvg. Service

Life

NetSalvage(Percent)

(d) .

Appliedl~epper, ratesrcent)

MortalityCurve

Year/Period of ReportEnd of 2014/Q4

AverageRemaining

Life

FERC FORM NO. 1 (REV. 12-03) Page 337

Name of Respondent This Report Is: Date of Report(1) [~An Original (Mo, Da, Yr)El Paso Electdc Company(2) [] A Resubmission / /

REGULATORY COMMISSION EXPEN~;ES

Year/Period of ReportEnd of 2014/Q4

1. Report particulars (details) of regulatory commission expenses incurred during the current year (or incurred in previous years, ifbeing amortized) relating to format cases before a regulatory body, or cases in which such a body was a party.2. Report in columns (b) and (c), only the current year’s expenses that are not deferred and the current year’s amortization of amountsdeferred in previous years.LineNo.

123456789

lO111213141516171819202122232425262728293o313233

35

373839

414243

45;

Description(Fumish name of regulatory commission or body the

docket or case number and a description of the case)(a)

Federal Energy Regulatory CommissionFERC General and OtherFERC Annual Fee

Public Utility Commission of Texas

Texas 2015 Rate Case CostsTexas Energy Efficiency

Texas General and Other

New Mexico Public Regulation Commission

New Mexico Procurement PlanNew Mexico Energy Efficiency FilingsNew Mexico 2015 Rate Case CostsFour Corners ProjectNew Mexico General and Other

Nuclear Regulatory CommissionPVNGS Unit 1 FeesPVNGS Unit 2 FeesPVNGS Unit 3 Fees

Assessed byRegulatoryCommission

(b)

Expensesof

Utility(c)

247,34;673,55(

202,99~16,35~=

99,973i91,716

Total(~uxpen.s.e forrrem Year

(b)(~)(c)

247,342673,550

599,054328,413

202,99416,355

106,22369,510

99,97391,716

Deferredin Account

B 182 3 ateginmS"g of Year(e)

580,904

432,522

Other

46TOTAL

FERC FORM NO. 1(ED. 12-96)

1,081,05~1,038,81;1,031,43."

67,52;

5,653,96~=

1,081,0581,038,8171,031,433

67,527

5,653,965 1,013,426

Page 350

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) [~A Resubmission / /REG~JLATORY COMMISSION EXPENSE~ (Continued)

3. Show in column (k) any expenses incurred in prior years which are being amortized. List in column (a) the period of amortization.4. List in column (f), (g), and (h) expenses incurred during year which were charged currently to income, plant, or other accounts.5. Minor items (less than $25,000) may be grouped.

EXPENSES INCURRED DURING YEARCURRENTLY CHARGED TO

Department AC~o.Um Amount(f) (g) (h)

928000928000

928000928000928000928000928000

928OOO928000928000928000928000

928000928000928000

928000

FERC FORM NO. 1 (ED. 12-96)

247,342673,55C

599,054328,413

202,99416,355

106,22369,51C

99,97391,716

1,081,0581,038,8171,031,433

67,527

5,653,965

Deferred toAccount 182.3

(i)

169,303

1,737

41,458

212,498

Page 351

ContraAccount

0)

182.3

182.3

182.3

182.3

AMORTIZED DURING YEAR

Amount Deferred inAccount 182.3End of Year

(k) (I)

-580,904

-580.

169,30~

434,25~

41,458

645

LineNo.

3

789

101112

34151617

192021222324252627282930

32

353637383940414243

Name of Respondent

El Paso Electdc Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

~chedule Page: 350 LMe No.: 6 Column: aRepresents Texas rate case costs related to Docket No. 40094 which the Company filed withthe PUCT in February 2012. These costs were fully amortized by 2014.~chedule Pag~ 350 LMe No.: 7 Column: aRepresents Texas Fuel Reconciliation costs related to Docket No. 41852 which the Companyfiled with the PUCT in September 2013.~chedule Pag~ 350 LMe No.: 13 Column: aRepresents New Mexico Fuel and Purchased Power Cost Adjustment Clause ("FPPCAC") auditcosts in Case No. 10-00065 UT.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) DA Resubmission / / /RESEARCH, DEVELOPMENT, AND DEMONSTRATION ACTIVITIES

1. Describe and show below costs incurred and accounts charged during the year for technological research, development, and demonstration (R, D &D) project initiated, continued or concluded during the year. Report also support given to others during the year for jointly-sponsored projects.(Identifyrecipient regardless of affiliation.) For any R, D & D work carried with others, show separately the respondent’s cost for the year and cost chargeable toothers (See definition of research, development, and demonstration in Uniform System of Accounts).2. Indicate in column (a) the applicable classification, as shown below:

Classifications:A. Electric R, D & D Performed Internally:

(1) Generationa. hydroelectric

i. Recreation fish and wildlifeii Other hydroelectric

b. Fossil-fuel steamc. Internal combustion or gas turbined. Nucleare. Unconventional generationf. Siting and heat rejection

(2) TransmissionLine ClassificationNo. (a)

1234567!

~o

~2

t4~5~6~7

~g

202~222a242526272829

~2

~5

a7

a. Overheadb. Underground

(3) Distribution(4) Regional Transmission and Market Operation(5) Environment (other than equipment)(6) Other (Classify and include items in excess of $50,000.)(7) Total Cost Incurred

B. Electric, R, D & D Performed Externally:(1) Research Support to the electrical Research Council or the Electric

Power Research Institute

Description(b)

FERC FORM NO. 1 (ED. 12-87) Page 352

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) r~An Original (Mo, Da, Y~) End of 2014/Q4

El Paso Electric Company (2) [~A Resubmission / /RESEARCH, DEVELOPMENT, AND DEMONSTRATI(~N ACTIVITIES (Continuec)

(2) Research Support to Edison Electric Institute(3) Research Support to Nuclear Power Groups(4) Research Support to Others (Classify)(5) Total Cost Incurred

3. Include in column (c) all R, D & D items performed internally and in column (d) those items performed outside the company costing $50,000 or more,briefly describing the specific area of R, D & D (such as safety, corrosion control, pollution, automation, measurement insulation, type of appliance, etc.).Group items under $50,000 by classifications and indicate the number of items grouped. Under Other, (A (6) and B (4)) classify items by type of R, D &D activity.4. Show in column (e) the account number charged with expenses dudng the year or the account to which amounts were capitalized dudng the year,listing Account 107, Construction Work in Progress, first. Show in column (f) the amounts related to the account charged in column (e)i5. Show in column (g) the total unamortized accumu ating of costs of projects. This total must equal the ba ance n Account 188, Research,Development, and Demonstration Expenditures, Outstanding at the end of the year.6. If costs have not been segregated for R, D &D activities or projects, submit estimates for columns (c), (d), and (f) with such amounts identified by"Est."7. Report separately research and related testing facilities operated by the respondent.

Costs Incurred InternallyCurrent Year

Costs Incurred ExtemallyCurrent Year

(d)

AMOUNTS CHARGED IN CURRENT YEARAccount Amount

(e) (f)

Unamortized LineAccumulation No.(g)

123456789

lO111213141516171819202122232425262728293o313233

35363738

FERC FORM NO. 1 (ED~ 12-87) Page 353

Name of RespondentEl Paso Electric Company IThis Report Is:

(1) I~lAn Original(2) I~1A Resubmission

DISTRIBUTION OF SALARIES AND

Date of Report(Mo, Da, Yr)II

/VAGES

Year/Period of ReportEnd of 2014/Q4

Report below the distribution of total salaries and wages, for the year. Segregate amounts originally charged to clearing accounts toUtility Departments, Construction, Plant Removals, and Other Accounts, and enter such amounts in the appropriate lines and columnsprovided. In determining this segregation of salaries and wages originally charged to clearing accounts, a method of approximationgiving substantially correct results may be used.

LineNo.

23456789

10

12131415161718192O21222324252627282930313233

353637383940414243

454647

Classification

(a)Dl~rie.ct.,Pa.Yroll

s~rlDU~lOnAllocation of

P.a.yroll ch.arged for

Clearin~ccoumsElectricOperationProductionTransmissionRegional MarketDistributionCustomer AccountsCustomer Service and InformationalSalesAdministrative and GeneralTOTAL Operation (Enter Total of lines 3 thru 10)MaintenanceProductionTransmissionRegional MarketDistributionAdministrative and GeneralTOTAL Maintenance (Total of lines 13 thru 17)Total Operation and MaintenanceProduction (Enter Total of lines 3 and 13)Transmission (Enter Total of lines 4 and 14)Regional Market (Enter Total of Lines 5 and 15)Distribution (Enter Total of lines 6 and 16)Customer Accounts (Transcribe from line 7)Customer Service and Informational (Transcribe from line 8)Sales (Transcribe from line 9)Administrative and General (Enter Total of lines 10 and 17)TOTAL Oper. and Maint. (Total of lines 20 thru 27)GasOperationProduction-Manufactured GasProduction-Nat. Gas (Including Expl. and Dev.)Other Gas SupplyStorage, LNG Terminaling and ProcessingTransmissionDistributionCustomer AccountsCustomer Service and InformationalSalesAdministrative and GeneralTOTAL Operation (Enter Total of lines 31 thru 40)MaintenanceProduction-Manufactured GasProduction-Natural Gas (Including Exploration and Development)Other Gas SupplyStorage, LNG Terminaling and ProcessingTransmission

13,517,8166,506,548

13,212,7299,135,610

29,981,91072,354,613 698,580

Total

(d)

73,053,193

FERC FORM NO. 1 (ED. 12-88) Page 354

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [~]An Original (Mo, Da, Yr)

| (2) [~]A Resubmission/ /

DISTRIBUTION OF SALARIES AND WAGI~S (Continued)

Year/Period of ReportEnd of 2014/Q4

LineNo.

484950515253545556575859606162636465666768697071727374757677787980818283

858687888990919293

95

Distribution

Classification

(a)

Dl~.e .ct .Pa.yrollis~riDu~lon

(b)

Allocation ofPayroll ch.arged f.or Total

Clearin~c~CC°Unts (d)

Administrative and GeneralTOTAL Maint. (Enter Total of lines 43 thru 49)Total Operation and MaintenanceProduction-Manufactured Gas (Enter Total of lines 31 and 43)Production-Natural Gas (Including Expl. and Dev.) (Total lines 32,Other Gas Supply (Enter Total of lines 33 and 45)Storage, LNG Terminaling and Processing (Total of lines 31 thruTransmission (Lines 35 and 47)Distribution (Lines 36 and 48)Customer Accounts (Line 37)Customer Service and Informational (Line 38)Sales (Line 39)Administrative and General (Lines 40 and 49)TOTAL Operation and Maint. (Total of lines 52 thru 61)Other Utility DepartmentsOperation and MaintenanceTOTAL All Utility Dept. (Total of lines 28, 62, and 64)Utility PlantConstruction (By Utility Departments)

72,364,613 698,580 73,053,19:

Electric PlantGas PlantOther (provide details in footnote):TOTAL Construction (Total of lines 68 thru 70)Plant Removal (By Utility Departments)Electric PlantGas PlantOther (provide details in footnote):TOTAL Plant Removal (Total of lines 73 thru 75)Other Accounts (Specify, provide details in footnote):In-Kind Donations and Exp fo Certain Civic, Political & RelPrepayment and other

TOTAL Other AccountsTOTAL SALARIES AND WAGES

17,425,738

17,425,738

104,484

104,484

141,32283,398

1,380,259

1,380,259

II1,377

1,377

27815

224,72090,109,555

2932,080,509

18,805,99’

18,805,99’

105,86’

105, 86

141,60~83,41:

225,01:92,190,0tY

FERC FORM NO. 1 (ED. 12-88) Page 355

Name of Respondent

El Paso Electric Company

This Report Is:(1) [] An Original(2) [] A Resubmission

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

End of 2014/Q4

COMMON UTILITY PLANT AND EXPENSES1. Describe the property carried in the utility’s accounts as common utility plant and show the book cost of such plant at end of year classified byaccounts as provided by Plant Instruction 13, Common Utility Plant, of the Uniform System of Accounts. Also show the allocation of such plant costs tothe respective departments using the common utility plant and explain the basis of allocation used, giving the allocation factors.2. Fumish the accumulated provisions for depreciation and amortization at end of year, showing the amounts and classifications of such accumulatedprovisions, and amounts allocated to utility departments using the Common utility plant to which such accumulated provisions relate, includingexplanation of basis of allocation and factors used.3. Give for the year the expenses of operation, maintenance, rents, depreciation, and amortization for common utility plant classified by accounts asprovided by the Uniform System of Accounts. Show the allocation of such expenses to the departments using the common utility plant to which suchexpenses are related. Explain the basis of allocation used and give the factors of allocation.4. Give date of approval by the Commission for use of the common utility plant classification and reference to order of the Commission or otherauthorization.

FERC FORM NO. 1 (ED. 12-87) Page 356

Name of RespondentEl Paso Electric Company

This Report Is:(1) [~]An Original(2) [~A Resubmission

Date of Report(Mo, Da, Yr)/I

Year/Period of ReportEnd of 2014/Q4

AMOUNTS INCLUDED IN ISO/RTO SETFLEMENT STATEMENTS

1. The respondent shall report below the details called for concerning amounts it recorded in Account 555, Purchase Power, and Account 447, Sales forResale, for items shown on ISO/RTO Settlement Statements. Transactions should be separately netted for each ISO/RTO administered energy marketfor purposes of determining whether an entity is a net seller or purchaser in a given hour. Net megawatt hours are to be used as the basis for determiningwhether a net pumhase or sale has occurred. In each monthly reporting period, the hourly sale and purchase net amounts are to be aggregated andseparately reported in Account 447, Sales for Resale, or Account 555, Purchased Power, respectively.

Line Description of Item(s)No. (a)

1 Energy2 Net Purchases (Account 555)3 Net Sales (Account 447)4 Transmission R~hts5 Ancillary Services6 Other Items (list separately)789

101112131415161718192021222324252627282930313233

35

37383940414243

45

46 TOTAL

Balance at End ofQuarter 1

(b)

Balance at End ofQuarter 2

(c)

Balance at End ofQuarter 3

(d)

Balance at End ofYear(e)

FERC FORM NO. 113-(2 (NEW. 12-05) Page 397

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electric Company (2) L"]A Resubmission / /PUF~CHASES AND SALES OF ANCILLAR~ SERVICES

Report the amounts for each type of ancillary service shown in column (a) for the year as specified in Order No. 888 and defined in therespondents Open Access Transmission Tariff.

In columns for usage, report usage-related billing determinant and the unit of measure.

(1) On line 1 columns (b), (c), (d), (e), (f) and (g) report the amount of ancillary services purchased and sold during the year.

(2) On line 2 columns (b) (c), (d), (e), (f), and (g) report the amount of reactive supply and voltage control services purchased and soldduring the year.

(3) On line 3 columns (b) (c), (d), (e), (f), and (g) report the amount of regulation and frequency response services purchased and soldduring the year.

(4) On line 4 columns (b), (c), (d), (e), (f), and (g) report the amount of energy imbalance services purchased and sold during the year.

(5) On lines 5 and 6, columns (b), (c), (d), (e), (f), and (g) report the amount of operating reserve spinning and supplement servicespurchased and sold during the period.

(6) On line 7 columns (b), (c), (d), (e), (f), and (g) report the total amount of all other types ancillary services purchased or sold duringthe year. Include in a footnote and specify the amount for each type of other ancillary service provided.

Line Type of Ancillary ServiceNo. (a)

1 Scheduling, System Control and Dispatch

2 Reactive Supply and Voltage

3 Regulation and Frequency Response

4 Energy Imbalance

50peraltng Reserve - Spinning

6 Operating Resen~e - Supplement

7 Other

8 Total (Unes 1 thru 7)

Amount Purchased for the Year

Usage - Related Billing DeterminantUnit of

Number of Units(b)

16,460,542

Measure(c)

MWh

MWh

Dollars(d)

1,283,922

Amount Sold for the Year

Usage - Related Billing Determinant

Number of Units(e)

Unit ofMeasure

(f)MWh

MWh

6,301,868

Dollars(g)

1,332,382

FERC FORM NO. 1 (New 2-04) Page 398

Name of Respondent

El Paso Electric Company

This Report is: Date of Report Year/Period of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / / 2014/Q4

FOOTNOTE DATA

~chedule Page: 398 L~e No.: 1 Column: bAncillary Services Purchased represents serviceCompany self-provides from its own facilities.Paso Electric Company took these services under~chedule Page: 398 L~e No.: 1 Column: dAncillary Services Purchased represents serviceCompany self-provides from its own facilities.Paso Electric Company took these services under~chedule Page: 398 L~e No.: 1 Column: e

to Native Load that E1 Paso ElectricThe dollar values are imputed as though E1its own tariff.

to Native Load that E1 Paso ElectricThe dollar values are imputed as though E1its own tariff.

The Number of Units includes 1,720,355 MWh from hourly services, (of which 4,227 MWh weresold to E1 Paso Electric Marketing, an affiliate of E1 Paso Electric Company); 1,215,435MWh from daily services, (of which 960 MWh were sold to E1 Paso Electric Marketing, anaffiliate of E1 Paso Electric Company); 974,910 MWh from monthly services; and 1,161,186MWh from yearly contracts, (of which 61,726 MWh were sold to Rio Grande Electric Co-Op, anetwork customer of E1 Paso Electric Company).~chedule Page: 398 L~e No.: 1 Column: g$205,495 pertains to hourly services (of which $409 pertains to E1 Paso ElectricMarketing, an affiliate of E1 Paso Electric Company). $140,837 pertains to daily services(of which $127 pertains to E1 Paso Electric Marketing, an affiliate of E1 Paso Electric

Company). $567 pertains to weekly services. $218,170 pertains to monthly services and$517,928 pertains to yearly contracts, (of which $7,421 pertains to Rio Grande ElectricCo-Op, a network customer of E1 Paso Electric Company).~chedule Page: 398 L~e No.: 2 Column: bAncillary Services Purchased represents service to Native Load that E1 Paso ElectricCompany self-provides from its own facilities. The dollar values are imputed as though E1Paso Electric Company took these services under its own tariff.~chedu~ Page: 398 L~e No.: 2 Column: dAncillary Services Purchased represents service to Native Load that E1 Paso ElectricCompany self-provides from its own facilities. The dollar values are imputed as though E1Paso Electric Company took these services under its own tariff.~chedule Page: 398 L~e No.: 2 Column: eThe Number of Units includes 206,540 MWh from hourly services (of which 77 MWh were soldto E1 Paso Electric Marketing, an affiliate of E1 Paso Electric Company); 24,309 MWh fromdaily services; 158,423 MWh from monthly services; and 840,710 MWh from yearly contracts,(of which 61,726 MWh were sold to Rio Grande Electric Co-Op, a network customer of E1 Paso

Electric Company).~chedu~ Page: 398 L~e No.: 2 Column: g$19,581 pertains to hourly services (of which $6 pertains to E1 Paso Electric Marketing,an affiliate of E1 Paso Electric Company). $3,571 pertains to daily services. $34,848pertains to monthly services and $191,384 pertains to yearly contracts, (of which $4,648pertains to Rio Grande Electric Co-Op, a network customer of E1 Paso Electric Company).

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Re_~port Is: Date of Report Year/Period of ReportEl Paso Electdc Company (1) [~An Original (Mo, Da, Yr) End of 2014/Q4

(2) ~]A Resubmission / /M )NTHLY TRANSMISSION SYSTEM F EAK LOAD

(1) Report the monthly peak load on the respondent’s transmission system. If the respondent has two or more power systems which are not physicallyintegrated, furnish the required information for each non-integrated system.(2) Report on Column (b) by month the transmission system’s peak load.(3) Report on Columns (c) and (d) the specified information for each monthly transmission - system peak load reported on Column (b).(4) Report on Columns (e) through (j) by month the system’ monthly maximum megawatt load by statistical classifications. See General Instruction forthe definition of each statistical classification.

NAME OF SYSTEM:

LineNo. Month

(a)1 January2 February

3 March4 Total for Quarter 1

56 May7 June

8 Total for Quarter 29 July

10 August11 September

12 Total for Quarter 313 October14 November

15 December16 Total for Quarter 417 Total Year to

Date/Year

Monthly Peak Day of Hour of Firm NetworkMW - Total Monthly Monthly Sewice for Self

Peak Peak(b) (c) (d) (e)

1,07~ 23 200~1,09; 5 200(1,00( 31 200(3,1~;1,16~1,511

1,76~4,431,71~1,60,"1,63~,

4,951,29;

1,02,"1,06(3,38

15,94~

22 160C28 160C4 160~

2262

81731

150~160(160~

160(2001190(

Firm NetworkService for

Others(f)

6

69

21

81113

32121113

3675

517

Long-Term FirmPoint-to-pointReservations

(g)541

54(54(

1,621

53~50~53;

1,57~

1,61~53;56~474

1,57~

Other Long-Term Firm

Service(h)

5~

5~5~15~

5(5~5(15~

5(5~5~15~

5~5~5~

15(~

Short-Term Rrm

106 6,39( 60C

Point-to-pointReservation

d)7172

7221576

258535869751

601277

1,629

22595

125445

3,158

OtherService

(J)

FERC FORM NO. 113-Q (NEW. 07-04) Page 400

Name of Respondent This Re_~port Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [~]An Original (Mo, Da, Yr) End of 2014/Q4

(2) [~A Resubmission / /MONTHLY ISO/RTO TRANSMISSION SYST --M PEAK LOAD

(1) Report the monthly peak load on the respondent’s transmission system. If the Respondent has two or more power systems which are not physicallyintegrated, furnish the required information for each non-integrated system.

i (2) Report on Column (b) by month the transmission system’s peak load.! (3) Report on Column (c) and (d) the specified information for each monthly transmission - system peak load reported on Column (b).(4) Report on Columns (e) through (i) by month the system’s transmission usage by classification. Amounts reported as Through and Out Service inColumn (g) are to be excluded from those amounts re )orted in Columns (e) and (f).(5) Amounts reported in Column (j) for Total Usage is the sum of Columns (h) and (i).

NAME OF SYSTEM:

LineNo. Month

(a)1 January2 February

3 March4 "i’otal for Quarter 1

6 May7 June8 Total for Quarter 29 July

10 August11 September12 Total for Quarter 3

13 October14 November15 December16 Total for Quarter 4

17 Total Year toDate/Year

Monthly Peak Dayof Hourof Impodsi~oMW- Total Monthly Monthly; ISO/RTO

Peak Peak(b) (c) (d) (e)

Exports fromISO/RTO

Through andOut Sewice

(g)

NetworkService Usage

(h)

Point-to-PointService Usage

(i)

Total Usage

(J)

FERC FORM NO. 113-Q (NEW. 07-04) Page 400a

Name of Respondent This Report Is: Date of Report(1) [~]An Original (Mo, Da, Yr)El Paso Electdc Company (2) [~A Resubmission / /

ELECTRIC ENERGY ACCOUNT

Year/Period of ReportEnd of 2014/Q4

Report below the information called for concerning the disposition of electric energy generated, purchased, exchanged and wheeled during the year.

Line ItemNo.

(a)1 SOURCES OF ENERGY2 Generation (Excluding Station Use):3 Steam4 Nuclear5 Hydro-Conventional6 Hydro-Pumped Storage7 Other

MegaWatt Hours

(b)

4,134,567

5,106,66~ 23

24

235,89~

8 Less Energy for Pumping 25

9 Net Generation (Enter Total of lines 3through 8)

10 Purchases11 Power Exchanges:12 Received13 Delivered14 Net Exchanges (Line 12 minus line 13)15 Transmission For Other (VVheeling)16 Received17 Delivered

18 Net Transmission for Other (Line 16 minusline 17)

19Transmission By Others Losses20TOTAL (Enter Total of lines 9, 10, 14, 18

and 19)

9,477,12~ 26

i|-67,99221,92~46,063.

Line ItemNo.

(a)21 DISPOSITION OF ENERGY22 Sales to Ultimate Consumers (Including

Interdepartmental Sales)Requirements Sales for Resale (Seeinstruction 4, page 311.)Non-Requirements Sales for Resale (Seeinstruction 4, page 311.)Energy Fumished Without ChargeEnergy Used by the Company (ElectricDept Only, Excluding Station Use)

27 Total Energy Losses28 TOTAL (Enter Total of Lines 22 Through

27) (MUST EQUAL LINE 20)

MegaWatt Hours

(b)

7,625,640

61,729

16,916

553,565

FERC FORM NO. 1 (ED. 12-90) Page 401a

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company(2) [] A Resubmission / /

MONTHLY PEAKS AND OUTPL I"1. Report the monthly peak load and energy output. If the respondent has two or more power which are not physically integrated, fumish the requiredinformation for each non- integrated system.2. Report in column (b) by month the system’s output in Megawatt hours for each month.3. Report in column (c) by month the non-requirements sales for resale. Include in the monthly amounts any energy losses associated with the sales.4. Report in column (d) by month the system’s monthly maximum megawatt load (60 minute integration) associated with the system.5. Report in column (e) and (f) the specified information for each monthly peak load reported in column (d).

NAME OF SYSTEM:

Line Monthly Non-RequirmentsSales for Resale &No. Month Total Monthly Energy Associated Losses

(a) (b) (c) (d)2.c January 1,0763(~ February 1,09231 March 1,0003~ April ~ _ i ._..~ 1,163

3~ June 1,7643~= July 1,7143E August " 1,16~,~ 1,60337 September 1,6393E October 1,2973c. November 1,02341~ December 1,060

41 TOTAL 11,579,903 3,322,053

MONTHLY PEAKMegawatts (See Instr. 4) Day of Month

(e)235

3122284

226281731

Hour(~200020002000160016001600150016001600160020001900

FERC FORM NO. 1 (ED. 12-90) Page 401b

Name of Respondent

El Paso Electric Company

This Report is:(1) _X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

~chedule Paqe: 401 L~e No.: 10 Column: bIncludes 712,284 MWhs related to purchases to Freeport-McMoRan related to the Company’sPower Purchase and Sales Agreement with Freeport-McMoRan dated December 16, 2005.~chedule Page: 401 LMe No.: 20 Column: bIncludes 712,284 MWhs related to purchases to Freeport-McMoRan related to the Company’sPower Purchase and Sales Agreement with Freeport-McMoRan dated December 16, 2005.~chedule Page: 401 LMe No.: 24 Column: bIncludes 712,284 MWhs related to purchases to Freeport-McMoRan related to the Company’sPower Purchase and Sales Agreement with Freeport-McMoRan dated December 16, 2005.~chedule Pag~ 401 L~e No.: 28 Column: bIncludes 712,284 MWhs related to purchases to Freeport-McMoRan related to the Company’sPower Purchase and Sales Agreement with Freeport-McMoRan dated December 16, 2005.~chedu~ Pag~ 401 L~e No.: 29 Column: bIncludes 62 930 MWhs related to sales to Freeport related to the Company s Power Purchaseand Sales Agreement with Freeport dated December 16, 2005~chedule Page: 401 LMe No.: 29 Column: cIncludes 62 930 MWhs related to sales to Freeport related to the Company s Power Purchaseand Sales Agreement with Freeport dated December 16 2005~chedule Page: 401 LMe No.: 30 Column: bIncludes 60,404 MWhs related to sales to Freeport related to the Company s Power Purchaseand Sales Agreement with Freeport dated December 16 2005~chedule Page: 401 L~e No.: 30 Column: cIncludes 60,404 MWhs related to sales to Freeport related to the Company s Power Purchaseand Sales Agreement with Freeport dated December 16 2005~chedu~ Page: 401 LMe No.: 31 Column: bIncludes 67,505 MWhs related to sales to Freeport related to the Company s Power Purchaseand Sales Agreement with Freeport dated December 16 2005~chedu~ Page: 401 Line No.: 31 Column: cIncludes 67,505 MWhs related to sales to Freeport related to the Company s Power Purchaseand Sales Agreement with Freeport dated December 16 2005~chedule Page: 401 LMe No.: 32 Column: bIncludes 50,481 MWhs related to sales to Freeport related to the Company s Power Purchaseand Sales Agreement with Freeport dated December 16 2005~chedule Page: 401 LMe No.: 32 Cblumn: cIncludes 50,481 MWhs related to sales to Freeport related to the Company s Power Purchaseand Sales Agreement with Freeport dated December 16 2005~chedule Pag~ 401 L~e No.: 33 Column: bIncludes 69,566 MWhs related to sales to Freeport related to the Company s Power Purchaseand Sales Agreement with Freeport dated December 16 2005~chedule Page: 401 L~e No.: 33 Column: cIncludes 69,566 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16 2005~chedu~ Page: 401 LMe No.: 34 Column: bIncludes 69,582 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16 2005~chedule Page: 401 L~e No.: 34 Column: cIncludes 69,582 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16 2005~chedu~ Page: 401 LMe No.: 35 Column: bIncludes 74,524 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16 2005~chedule Page: 401 L~e No.: 35 Column: cIncludes 74,524 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16 2005.~chedule Page: 401 L~e No.: 36 Column: b

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent

El Paso Electdc Company

iThis Report is:!(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

Includes 76,797 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16, 2005~chedu~ Page: 401 LMe No.: 36 Column: cIncludes 76,797 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16, 2005~chedule Page: 401 L~e No.: 37 Column: bIncludes 73,506 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16, 2005~chedule Page: 401 L~e No.: 37 Column: cIncludes 73,506 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated~December 16, 2005~chedule Pag~ 401 L~e No.: 38 Column: bIncludes 15,479 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16, 2005~chedule Page: 401 L~e No.: 38 Column: cIncludes 15,479 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16, 2005ISchedu~ Page: 401 LMe No.: 39 Column: bIncludes 45,891 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16, 2005~chedule Page: 401 L~e No.: 39 Column: cIncludes 45,891 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16, 2005~chedule Page: 401 L~e No.: 40 Column: bIncludes 45,619 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16, 2005~chedule Pag~ 401 L~e No.: 40 Column: cIncludes 45,619 MWhs related to sales to Freeport related to the Company’s Power Purchaseand Sales Agreement with Freeport dated December 16, 2005

IFERC FORM NO. 1 (ED. 12-87) Page 450.2

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr)

El Paso Electric Company (2) F-1A Resubmission / / End of 2014/Q4

STEAM-ELECTRIC GENERATING PLANT STATISTICS (Large Plants)1. Report data for plant in Service only. 2. Large plants are steam plants with installed capacity (name plate rating) of 25,000 Kw or more. Report inthis page gas-turbine and internal combustion plants of 10,000 Kw or more, and nuclear plants. 3. Indicate by a footnote any plant leased or operatedas a joint facility. 4. If net peak demand for 60 minutes is not available, give data which is available, specifying period. 5. If any employees attendmore than one plant, report on line 11 the approximate average number of employees assignable to each plant. 6. If gas is used and purchased on atherm basis report the Btu content or the gas and the quantity of fuel burned converted to Mct. 7. Quantities of fuel burned (Line 38) and average costper unit of fuel burned (Line 41) must be consistent with charges to expense accounts 501 and 547 (Line 42) as show on Line 20. 8. If more than onefuel is burned in a plant furnish only the composite heat rate for all fuels burned.

Line ItemNo.

(a)

PlantName: Rio Grande

(b)

SteamIndoor and Outdoor

19291972

266.00195

7959233238233

PlantName: Rio Grande Unit 9

(c)

Gas TurbineOutdoor

20132013

132.0088

2855889388

1 Kind of Plant (Internal Comb, Gas Turb, Nuclear2 Type of Constr (Conventional, Outdoor, Boiler, etc)3 Year Originally Constructed4 Year Last Unit was Installed5 Total Installed Cap (Max Gen Name Plate Ratings-MW)6 Net Peak Demand on Plant - MW (60 minutes)7 Plant Hours Connected to Load8 Net Continuous Plant Capability (Megawatts)9 When Not Limited by Condenser Water

10 When Limited by Condenser Water11 Average Number of Employees12 Net Generation, Exclusive of Plant Use - KWh13 Cost of Plant: Land and Land Rights14 Structures and Improvements15 Equipment Costs16 Asset Retirement Costs17 Total Cost18 Cost per KW of Installed Capacity (line 17/5) Including19 Production Expenses: Oper, Supv, & Engr20 Fuel21 Coolants and Water (Nuclear Plants Only)22 Steam Expenses23 Steam From Other Sources24 Steam Transferred (Cr)25 Electric Expenses26 Misc Steam (or Nuclear) Power Expenses27 Rents28 Allowances29 Maintenance Supervision and Engineering30 Maintenance of Structures31 Maintenance of Boiler (or reactor) Plant32 Maintenance of Electric Plant33 Maintenance of Misc Steam (or Nuclear) Plant34 Total Production Expenses35 Expenses per Net KWh36 Fuel: Kind (Coal, Gas, Oil, or Nuclear)37 Unit (Coal-tons/Oil-barrel/Gas-mcf/Nuclear-indicate)38 Quantity (Units) of Fuel Burned39 Avg Heat Cont - Fuel Burned (btu/indicate if nuclear)40 Avg Cost of Fuel/unit, as Delvd f.o.b, during year41 Average Cost of Fuel per Unit Burned42 Average Cost of Fuel Burned per Million BTU43 Average Cost of Fuel Burned per KWh Net Gen44 1 Average BTU per KWh Net Generation

GasMcf886158710240004.2624.2624.1630.04911802.000

OilBBL000.0000.0000.0000.0000.000

52768847000

1009465465997

5298913576983

58633061220.4250

72780737771661

01566076

00

1876011274661

00

745138143538

13925351150510803358

457628850.0595

1955040000

2203476972456912

094491681715.8461

08460049

00000

739900

52565129

255272446659

011077216

0.0567

ooo.oooo.oooo.0ooo.0ooo.ooo

Gas OilMcf BBL1668296 01024000 05.071 0.0005.071 0.0004.952 0.0000.043 0.0008738.000 0.000

ooo.o0oo.0oo0.oooo.oooo.ooo

FERC FORM NO. 1 (REV. 12-03) Page 402

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yi’)

El Paso Electric Company (2) [-’]A Resubmission / / End of 2014/Q4

STEAM-ELECTRIC GENERATING PLANT STATISTICS (Large Plants) (Continued)1. Report data for plant in Service only. 2. Large plants are steam plants with installed capacity (name plate rating) of 25,000 Kw or more. Report inthis page gas-turbine and internal combustion plants of 10,000 Kw or more, and nuclear plants. 3. Indicate by a footnote any plant leased or operatedas a joint facility. 4. If net peak demand for 60 minutes is not available, give data which is available, specifying period. 5. If any employees attendmore than one plant, report on line 11 the approximate average number of employees assignable to each plant. 6. If gas is used and purchased on atherm basis report the Btu content or the gas and the quantity of fuel burned converted to Mct. 7. Quantities of fuel burned (Line 38) and average costper unit of fuel burned (Line 41) must be consistent with charges to expense accounts 501 and 547 (Line 42) as show on Line 20. 8. If more than onefuel is burned in a plant furnish only the composite heat rate for all fuels burned.

Line ItemNo.

(a)

1 Kind of Plant (Internal Comb, Gas Turb, Nuclear2 Type of Constr (Conventional, Outdoor, Boiler, etc)3 Year Originally Constructed4 Year Last Unit was Installed5 Total Installed Cap (Max Gen Name Plate Ratings-MW)6 Net Peak Demand on Plant - MW (60 minutes)7 Plant Hours Connected to Load8 Net Continuous Plant Capability (Megawatts)9 When Not Limited by Condenser Water

10 When Limited by Condenser Water11 Average Number of Employees12 Net Generation, Exclusive of Plant Use - KWh13 Cost of Plant: Land and Land Rights14 Structures and Improvements15 Equipment Costs16 Asset Retirement Costs17 Total Cost18 Cost per KW of Installed Capacity (line 17/5) Including19 Production Expenses: Oper, Supv, & Engr20 Fuel21 Coolants and Water (Nuclear Plants Only)22 Steam Expenses23 Steam From Other Sources24 Steam Transferred (Cr)25 Electric Expenses26 Misc Steam (or Nuclear) Power Expenses27 Rents28 Allowances29 Maintenance Supervision and Engineering30 Maintenance of Structures31 Maintenance of Boiler (or reactor) Plant32 Maintenance of Electdc Plant33 Maintenance of Misc Steam (or Nuclear) Plant34 Total Production Expenses35 Expenses per Net KWh36 Fuel: Kind (Coal, Gas, Oil, or Nuclear)37 Unit (Coal-tonslOil-barrellGas-mcflNuclear-indicate)38 Quantity (Units) of Fuel Burned39 Avg Heat Cont - Fuel Burned (btu/indicate if nuclear)40 Avg Cost of Fuel/unit, as Delvd f.o.b, during year41 Average Cost of Fuel per Unit Burned42 Average Cost of Fuel Bumed per Million BTU43 Average Cost of Fuel Bumed per KWh Net Gen44 Average BTU per KWh Net Generation

PlantName: Pa/o Verde

(b)

0.00000000

51066680002347703

4910772111279721718

-422291901730917442

014056910

66926135280881

00

467295718218820

00

43936701290880678965385928691967286

122047447

PlantName:

0.0000000000000000000000000000000

NuclearMMbtu5261451100.9520.9520.9520.01010303.000

ooo.oooo.oooo.oooo.oooo.ooo

0.0239

oo0.0ooo.0ooo.0oo0.oo0o.0oo

ooo.oooo.oooo.oooo.oooo.ooo

ooo.oooo.oooo.oooo.oooo.ooo

0.0000

ooo.oooo.oooo.oooo.oooo.ooo

FERC FORM NO. 1 (REV. 12-03) Page 402.1

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr)

El Paso Electric Company (2) r--1A Resubmission / / End of 2014/Q4

STEAM-ELECTRIC GENERATING PLANT STATISTICS (Large Plants)(Continued)9. Items under Cost of Plant are based on U. S. of A. Accounts. Production expenses do not include Purchased Power, System Control and LoadDispatching, and Other Expenses Classified as Other Power Supply Expenses. 10. For IC and GT plants, report Operating Expenses, Account Nos.547 and 549 on Line 25 "Electric Expenses," and Maintenance Account Nos. 553 and 554 on Line 32, "Maintenance of Electric Plant." Indicate plantsdesigned for peak load service. Designate automatically operated plants. 11. For a plant equipped with combinations of fossil fuel steam, nuclearsteam, hydro, internal combustion or gas-turbine equipment, report each as a separate plant. However, if a gas-turbine unit functions in a combinedcycle operation with a conventional steam unit, include the gas-turbine with the steam plant. 12. If a nuclear power generating plant, briefly explain byfootnote (a) accounting method for cost of power generated including any excess costs attributed to research and development; (b) types of cost unitsused for the various components of fuel cost; and (c) any other informative data concerning plant type fuel used, fuel enrichment type and quantity for thereport period and other physical and operating characteristics of plant.Plant Plant Plant LineName: Newman Name: Four Comers Name: Copper No:

(d) (e) (f)

GasMcf2567336710200005.7335.7335.6210.0539456.000

OilBBL

~0io! 0.0000.0000.0000.0000.000

Indoor and Outdoor Outdoor1959 19792011 1980

889.00 0.00 79.00546 0 68

8753 0 1021752 0 54758 0 64752 0 54

2769468000 597252000 39856000181900 8623 10000

45789640 3543995 727595372420559 89396484 14958432

-325470 15479418066629 96021798 15711506

470.2662 0 198.87981815035 365370 0

147189924 i~ ~ ~ i~ ~i~i 34106190 0 0

983089 1430777 00 0 00 0 0

2690624 150626 02675475 844565 47047

462412 973717 09745 0 0

1180974 251175 15892606748 183845 22501

4661865 3383425 2495926795755 651455 669771778418 969494 0

170850054 20915378 38126280.0617 0.0350 0.0957

CoalTon

0 3287330 175704300.000 34.8620.000 34.8620.000 1.9840.000 0.0200.000 9734.000

GasMcf2781810100009.0149,0148.9240.0000.000

GasMcf

0 6390680 10190000.000 5.3370.000 5.3370.000 5.2370.000 0.0860.000 16339.000

OilBBL000.0000.0000.0000.0000.000

000.0000.0000.0000.0000.000

123456789

101112131415161718192021222324252627282930313233

35

37383940414243

FERC FORM NO. 1 (REV. 12-03) Page 403

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) ~]An Original (ao, Da, Yr)

El Paso Electric Company (2) ~--lA Resubmission ! / End of 2014/Q4

STEAM-ELECTRIC GENERATING PLANT STATISTICS (Large Plants)(Continued)9. Items under Cost of Plant are based on U. S. of A. Accounts. Production expenses do not include Purchased Power, System Control and LoadDispatching, and Other Expenses Classified as Other Power Supply Expenses. 10. For IC and GT plants, report Operating Expenses, Account Nos.547 and 549 on Line 25 "Electric Expenses," and Maintenance Account Nos. 553 and 554 on Line 32, "Maintenance of Electric Plant." Indicate plantsdesigned for peak load service. Designate automatically operated plants. 11. For a plant equipped with combinations of fossil fuel steam, nuclearsteam, hydro, intemal combustion or gas-turbine equipment, report each as a separate plant. However, if a gas-turbine unit functions in a combinedcycle operation with a conventional steam unit, include the gas-turbine with the steam plant. 12. If a nuclear power generating plant, briefly explain by~footnote (a) accounting method for cost of power generated including any excess costs attributed to research and development; (b) types of cost unitsused for the various components of fuel cost; and (c) any other informative data concerning plant type fuel used, fuel enrichment type and quantity for thereport period and other physical and operating characteristics of plant.Plant PlantName: Name:

(d)

0.0000000000000000000000000000000

0.0000

000.0000.0000.0000.0000.000

000.0000.0000.0000.0000.000

000.0000.0000.0000.0000.000

0 0

0 0

0.000 0.0000.000 0.0000.000 0.000

0.000 0.000

0.000 0o000

(e)

ooo.oo0o.oooo.oooo.oooo.ooo

o.oooooooooooo0oooooooooooooooooo

o.oooo

Plant LineName: No.

000.0000.0000.0000.0000.000

1oio

o.oooo.oooo.oooo.oooo.ooo

1234

o.oo 5o 6o 7o 80 9o lOo 11o 12o 130 14o 15o 16o 17o 18o 19o 20o 21o 22o 23o 24o 25o 26o 27o 28o 29o 30o 31o 32o 33o 34

o.o0o0 35

37o 38o 39o.ooo 40o.ooo 41o.ooo 42o.ooo 43o.ooo 44

FERC FORM NO. 1 (REV. 12-03) Page 403.1

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

~chedule Page: 403 Line No.: 1 Column: eJointly owned plant.~chedule Page: 403 Line No.: 2 Column: eData on lines 2-11 for total plant to be reported by the Operating Agent, Arizona PublicService Company.~chedule Page: 402 Line No.: 11Average number of employees~chedule Page: 403 Line No.: 11Average number of employees~chedule Page: 403 Line No.: 16Includes and adjustment duepurchase agreement with APS~chedule Page: 403 Line No.: 20Excludes $1,171,896 related~chedule Page: 402.1 Line No.: 1Jointly owned plant.~chedule Page: 402.1 Line No.: 2 Column: bData on lines 2-11 for total plant to be reported by the Operating Agent, Arizona PublicService Company.~chedule Page: 402.1 Line No.: 20 Column: bExcludes a DOE refund of $8,535,927.

Column: cincluded in the number for Rio Grande Plant.

Column: fincluded in the number for Newman Plant.

Column: eto early recognition of the ARO obligation resulting from the

Column: eto the amortization of final coal reclamation costs.

Column: b

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr)

El Paso Electdc Company (2) [~]A Resubmission / / End of 2014/Q4

HYDROELECTRIC GENERATING PLANT STATISTICS (Large Plants)

1. Large plants are hydro plants of 10,000 Kw or more of installed capacity (name plate ratings)2. If any plant is leased, operated under a license from the Federal Energy Regulatory Commission, or operated as a joint facility, indicate such facts ina footnote. If licensed project, give project number.3. If net peak demand for 60 minutes is not available, give that which is available specifying period.4. If a group of employees attends more than one generating plant, report on line 11 the approximate average number of employees assignable to each}lant.

Line ItemNo.

(a)

123456789

lO1112131415161718192021222324252627282930313233

35

Kind of Plant (Run-of-River or Storage)Plant Construction type (Conventional or Outdoor)Year Originally ConstructedYear Last Unit was InstalledTotal installed cap (Gen name plate Rating in MVV)Net Peak Demand on Plant-Megawatts (60 minutes)Plant Hours Connect to LoadNet Plant Capability (in megawatts)(a) Under Most Favorable Oper Conditions(b) Under the Most Adverse Oper Conditions

Average Number of EmployeesNet Generation, Exclusive of Plant Use - KwhCost of PlantLand and Land RightsStructures and ImprovementsReservoirs, Dams, and WaterwaysEquipment CostsRoads, Railroads, and BridgesAsset Retirement CostsTOTAL cost (Total of 14 thru 19)Cost per KW of Installed Capacity (line 20 / 5)

FERC Licensed Project No.Plant Name:

(b)

0.0000

000

FERC Licensed Project No.Plant Name:

(c)

0.0000

0000

o oo oo oo oo oo oo o

o.oooo o.oooo

ooooo

oooooo

0.0000 0.0000

Production ExpensesOperation Supervision and EngineeringWater for PowerHydraulic ExpensesElectric ExpensesMisc Hydraulic Power Generation ExpensesRentsMaintenance Supervision and EngineeringMaintenance of StructuresMaintenance of Reservoirs, Dams, and WaterwaysMaintenance of Electric PlantMaintenance of Misc Hydraulic PlantTotal Production Expenses (total 23 thru 33)Expenses per net KVVh

FERC FORM NO. 1 (REV. 12-03) Page 406

Name of Respondent This Report Is: Date of Report YeadPeriod of Report(1) ]~]An Original (Mo, Da, Yr)

El Paso Electric Company (2) [’--~A Resubmission / / End of 2014/Q4

HYDROELECTRIC GENERATING PLANT STATISTICS (Large Plants) (Continued)

5. The items under Cost of Plant represent accounts or combinations of accounts prescribed by the Uniform System of Accounts. Production Expensesdo not include Pumhased Power, System control and Load Dispatching, and Other Expenses classified as "Other Power Supply Expenses."6. Report as a separate plant any plant equipped with combinations of steam, hydro, internal combustion engine, or gas turbine equipment.

FERC Licensed Project No. 0 FERC Licensed Project No. 0 FERC Licensed Project No. 0 LinePlant Name: Plant Name: Plant Name: No.

(d) (e)

0.00 0.000 00 0

0 00 00 00 0

1234

0.00 50 60 7

0 90 ~00 ~

0 ~2

0 ~4

0 ~50 ~6

0 ~7

0 ~80 ~90 20

0.0000 2122

0 230 240 250 260 270 280 290 300 310 320 330 34

0.0000 35

0 00 00 00 00 00 00 0

0.0000 0.0000

0 00 00 00 00 00 00 00 00 00 00 00 0

0.0000 0.0000

FERC FORM NO. 1 (REV. 12-03) Page 407

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr)

El Paso Electric Company (2) F-]A Resubmission / / End of 2014/Q4

PUMPED STORAGE GENERATING PLANT STATISTICS (Large Plants)

1. Large plants and pumped storage plants of 10,000 Kw or more of installed capacity (name plate ratings)2. If any plant is leased, operating under a license from the Federal Energy Regulatory Commission, or operated as a joint facility, indicate such facts ina footnote. Give project number.3. If net peak demand for 60 minutes is not available, give the which is available, specifying period.4. If a group of employees attends more than one generating plant, report on line 8 the approximate average number of employees assignable to each31ant.5. The items under Cost of Plant represent accounts or combinations of accounts prescribed by the Uniform System of Accounts. Production Expensesdo not include Purchased Power System Control and Load Dispatching, and Other Expenses classified as "Other Power Supply Expenses."

Line ItemNo.

(a)

1 Type of Plant Construction (Conventional or Outdoor)2 Year Originally Constructed3 Year Last Unit was Installed4 Total installed cap (Gen name plate Rating in MVV)5 Net Peak Demaind on Plant-Megawatts (60 minutes)6 Plant Hours Connect to Load While Generating

71Net Plant Capability (in megawatts)Average Number of Employees

9 Generation, Exclusive of Plant Use - Kwh10 Energy Used for Pumping11 Net Output for Load (line 9 - line 10) - Kwh12 Cost of Plant13 Land and Land Rights14 Structures and Improvements151 Reservoirs, Dams, and Waterways16 Water Wheels, Turbines, and Generators17 Accessory Electric Equipment18 Miscellaneous Powerplant Equipment19; Roads, Railroads, and Bridges201 Asset Retirement Costs21 Total cost (total 13 thru 20)22 Cost per KW of installed cap (line 21 / 4)23 Production Expenses24 Operation Supervision and Engineering25~ Water for Power26 Pumped Storage Expenses27 Electric Expenses28 Misc Pumped Storage Power generation Expenses29 Rents30 Maintenance Supervision and Engineering31 Maintenance of Structures32 Maintenance of Reservoirs, Dams, and Waterways33 Maintenance of Electdc Plant34 Maintenance of Misc Pumped Storage Plant35 Production Exp Before Pumping Exp (24 thru 34)36 Pumping Expenses37 Total Production Exp (total 35 and 36)38 Expenses per KWh (line 37 / 9)

FERC Licensed Project No.Plant Name:

(b)

FERC FORM NO. 1 (REV. 12-03) Page 408

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr)

El Paso Electric Company (2) r-’]A Resubmission / / End of 2014/Q4

PUMPED STORAGE GENERATING PLANT STATISTICS (Large Plants) (Continued)

6. Pumping energy (Line 10) is that energy measured as input to the plant for pumping purposes.7. Include on Line 36 the cost of energy used in pumping into the storage reservoir. When this item cannot be accurately computed leave Lines 36, 37and 38 blank and describe at the bottom of the schedule the company’s principal soumes of pumping power, the estimated amounts of energy from eachstation or other source that individually provides more than 10 percent of the total energy used for pumping, and production expenses per net MWH asreported herein for each source described. Group together stations and other resources which individually provide less than 10 percent of total pumpingenergy. If contracts are made with others to purchase power for pumping, give the supplier contract number, and date of contract.

~’ERC Licensed Project No. FERC Licensed Project No. FERC Licensed Project No. LinePlant Name: Plant Name: Plant Name: No.

(c) (d) (e)

123456789

101112131415161718192021222324252627282930313233

35363738

FERC FORM NO. 1 (REV. 12-03) Page 409

Name of Respondent This Re~oort Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) I~An Original (Mo, Da, Yr) End of 2014/Q4

(2) [] A Resubmission / /G --NERATING PLANT STATISTICS (Small Plants)

1. Small generating plants are steam plants of, less than 25,000 Kw; internal combustion and gas turbine-plants, conventional hydro plants and pumpedstorage plants of less than 10,000 Kw installed capacity (name plate rating). 2. Designate any plant leased from others, operated under a license fromthe Federal Energy Regulatory Commission, or operated as a joint facility, and give a concise statement of the facts in a footnote. If licensed project,give project number in footnote.

Year Installed CapacibLine Name of Plant ~Orig; Name Plate RatiriNo. ~onst. (In MW)

(a) (b) (c)1 Solar Plants2 Newman PV System 2009 0.063 Rio Grande PV System 2009 0.064 Wrangler CPV System 2011 0.055 Stanton PV System 2012 0.036 El Paso Community College PV System 2012 0.027 Van Horn PV System 2013 0.028 Total Solar 0.249

101112131415161718192021222324252627282930313233

35

37383940414243

45

Net Peak Net GenerationDemand E_.xclu.d.ing~(~n

P’lam use(6 .) (e)

130125i108503237482

Cost of Plant

(f)

418,730273,687

97,02099,675

1,446,492

FERC FORM NO. 1 (REV. 12-03) Page 410

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Y~) End of 2014/Q4

El Paso Electric Company " (2) [-"]A Resubmission / /GENERATING PLANT STATISTICS (Small Plants) (Continued)

3. List plants appropriately under subheadings for steam, hydro, nuclear, internal combustion and gas turbine plants. For nuclear, see instruction 11,Page 403. 4. If net peak demand for 60 minutes is not available, give the which is available, specifying period. 5. If any plant is equipped withcombinations of steam, hydro internal combustion or gas turbine equipment, report each as a separate plant. However, if the exhaust heat from the gasturbine is utilized in a steam turbine regenerative feed water cycle, or for preheated combustion air in a boiler, report as one plant.

Plant Cost (Incl AssetRetire. Costs) Per MW

(g)

8,723,542

8,552,7196,468,000

5,863,2358,267,300

OperationExc’l. Fuel

(h)

Production ExpensesFuel Maintenance(i) (j)

1,732

1,732

Kind of Fuel(k)

Fuel Costs (in cents(per Million Btu)

(i)LineNo.

123456789

10111213141516171819202122232425262728293031323334353637383940414243444546

FERC FORM NO. 1 (REV. 12-03) Page 411

Name of Respondent

El Paso Electdc Company

This Report is: Date of Report Year/Period of Report(1) X An Original (Mo, Da, Yr)(2) _ A Resubmission / / 2014/Q4

FOOTNOTE DATA

~chedule Page: 410Includes creditsProgram.~chedule Page: 410Excludes credits~chedule Page: 410Includes credits~chedule Page: 410Excludes credits

Line No.: 2 Column: f ]of $150,536 recovered through the Volunteer Renewable Energy (VRE)

Line No.: 2 Column: gof $150,536 recovered through the VRE Program.Line No.: 3 Column: f

of $387,124 recovered through the VRE Program.Line No.: 3 Column: g

of $387,124 recovered through the VRE Program.

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [~]An Original (Mo, Da, Yr)(2) [’--IA Resubmission / /

TRANSMISSION LINE STATIST CS

Year/Period of ReportEnd of 2014/Q4

1. Report information concerning transmission lines, cost of lines and expenses for year. List each transmission line having nominal voltage of 132kilovolts or greater. Report transmission lines below these voltages in group totals only for each voltage.2. Transmission lines include all lines covered by the definition of transmission system plant as given in the Uniform System of Accounts. Do not reportsubstation costs and expenses on this page.3. Report data by individual lines for all voltages if so required by a State commission.4. Exclude from this page any transmission lines for which plant costs are included in Account 121, Nonutility Property.5. Indicate whether the type of supporting structure reported in column (e) is: (1) single pole wood or steel; (2) H-frame wood, or steel poles; (3) tower;or (4) underground construction If a transmission line has more than one type of supporting structure, indicate the mileage of each type of constructionby the use of brackets and extra lines. Minor portions of a transmission line of a different type of construction need not be distinguished from theremainder of the line.6. Report in columns (f) and (g) the total pole miles of each transmission line. Show in column (f) the pole miles of line on structures the cost of which isreported for the line designated; conversely, show in column (g) the pole miles of line on structures the cost of which is reported for another line. Reportpole miles of line on leased or partly owned structures in column (g). In a footnote, explain the basis of such occupancy and state whether expenses withrespect to such structures are included in the expenses reported for the line designated.

Line DESIGNATIONNo.

123456789

lO1112131415161718192021222324252627282930313233

35

Palo VerdePalo Verde

NewmanNewmanAftonLunaNewmanDiabloLunaMacho Springs

From(a)

Various 115kV LinesVarious 69kV Lines

To(b)

KyreneWestwing

AffonLuna

LunaMacho SpringsSpringerville

VO.L.TA.GE .(KV)(Inclicate whereother than60 cycle, 3 phase)

Operating(c)

500.0C500.0~

345.0~345.0C345.0C345.0C345.0C345.0(~345.0(~345.01

115.0~69.0(~

Designed(d)

500.00500.00

345.00345.00345.00345.00345.00345.00345.00345.00

115.0069.00

LEI~IG.TH (Pole r0iles)Type of (m me case.or Numberu nae.rg [ou n..a ..n. es,Supporting report c~rcu~z m,es~ Of

un structure un structures Circuitsof Line of ,~r)otherStructure Desi ated une

(e) ~;~f)n (g) (h)(1),(3) 1(3) 2

(2) 232.20(2) 29.88(2) 57.26(2)(2)(2) 85.662),(3)

(2),(3) 201.3B

(1),(2) 441.82(1),(2) 204.65

TOTAL 1,357.64 431.20

11111111

11

13

FERC FORM NO. 1 (ED. 12-87) Page 422

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~An Original (Mo, Da, Yr)El Paso Electric Company (2) [~IA Resubmission / / End of 2014/Q4

TRANSMISSION LINE STATISTICS ((~ontinued)7. Do not report the same transmission line structure twice. Report Lower voltage Lines and higher voltage lines as one line. Designate in a footnote ifyou do not include Lower voltage lines with higher voltage lines. If two or more transmission line structures support lines of the same voltage, report thepole miles of the primary structure in column (f) and the pole miles of the other line(s) in column (g)8. Designate any transmission line or portion thereof for which the respondent is not the sole owner. If such property is leased from another company,give name of lessor, date and terms of Lease, and amount of rent for year. For any transmission line other than a leased line, or portion thereof, forwhich the respondent is not the sole owner but which the respondent operates or shares in the operation of, furnish a succinct statement explaining thearrangement and giving particulars (details) of such matters as percent ownership by respondent in the line, name of co-owner, basis of sharingexpenses of the Line, and how the expenses borne by the respondent are accounted for, and accounts affected. Specify whether lessor, co-owner, orother party is an associated company.9. Designate any transmission line leased to another company and give name of Lessee, date and terms of lease, annual rent for year, and howdetermined. Specify whether lessee is an associated company.10. Base the plant cost figures called for in columns (j) to (I) on the book cost at end of year.

Size ofConductor

and Material(i)

1780 ACSR1780 ACSR

F95 ACSR~95 ACSRF95 ACSR~95 ACSR)54 ACSR/T2)54 ACSR)54 ACSR)54 ACSR

Ca~ousCadous

COST OF LINE (Include in Column (j) Land,Land rights, and clearing right-of-way)

Land Construction and Total Cost

~)1,550,8111,212,906

930,038423,552811,653

86,5132,836,3851,114,625

19,320154,575

4,425,988309,717

13,876,085

Other Costs(k)

7,028,5715,497,12(

11,839,51~5,410,81~

10,368,75(1,417,78;

16,237,31112,217,98~6,853,28~

54,832,47~

217,574,566

8,579,3826,710,026

12,769,5565,834,364

11,180,4031,504,295

19,073,69613,332,6076,872,609

54,987,053

75,730,11614,876,542

231,450,649

EXPENSES, EXCEPT DEPRECIATION AND TAXES

OperationExpenses

(m)

MaintenanceExpenses

(n)

Rents(o)

TotalEXp~pr~Ses

Lin~No.

1234567891011121314151617181920212223242526272829303132333435

FERC FORM NO. 1 (ED. 12-87) Page 423

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report Year/Period of Report(Mo, Da, Yr)

/ / 2014/Q4

~chedule Page: 422 LMe No.: 1 Column: gEPE Ownership - 18.7%~chedule Page: 422 Line No.: 2 Column: gEPE Ownership - 18.7%~chedule Page: 422 Line No.: 4 Column: bIncludes intermediate station - Arroyo.~chedule Page: 422 Line No.: 7 Column: bIncludes intermediate station - Hidalgo.~chedule Page: 422 Line No.: 7 Column: gEPE Ownership - 57.2% Luna-Hidalgo (50.0 mi), 40% Hidalgo-Greenlee (59.8 mi).~chedule Page: 422 Line No.: 8 Column: bIncludes intermediate stations - Caliente Amrad.~chedule Page: 422 Line No.: 8 Column: fEPE Ownership - 100% Newman - Caliente (22.8 mi), 100% Caliente - Amrad (56.0 mi).~chedule Page: 422 Line No.: 8 Column: gEPE Ownership - 66.7% Amrad-Eddy County (125.4 mi).~chedule Page: 422 Line No.: 10 Column: fComposed of (2) H-frame wood or steel poles (146.90 mi) and (3) tower (77.80 mi).~chedule Page: 422 Line No.: 14 Column: gIncludes double circuit and underbuilt segments of line.~chedule Page: 422 Line No.: 15 Column: gIncludes double circuit and underbuilt segments of line.

I FERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of RespondentEl Paso Electric Company

This Report Is: Date of Report(1) [~An Original (Mo, Da, Yr)(2) [] A Resubmission / /

I"RANSMISSION LINES ADDED DURING YEAR

Year/Period of ReportEnd of 2014/Q4

1. Report below the information called for concerning Transmission lines added or altered during the year. It is not necessary to reportminor revisions of lines.2. Provide separate subheadings for overhead and under- ground construction and show each transmission line separately. If actualcosts of competed construction are not readily available for reporting columns (I) to (o), it is permissible to report in these columns the

Line LINE DESIGNATIONNo.

123

4

7

1C

111213

1415

17

192(~21

22232425

27

28

3(;31

3233

35

3738

4~4142

43

From

(a)

44 TOTAL

FERC FORM NO. 1 (REV. 12-03)

To

(b)

LineLe.ngth

inMiles(c)

SUPPORTING STRUCTUREAverage

Type Number perMiles

(d) (e)

CIRCUITS PER STRUCTURIPresent Ultimate

(f) (g)

Page 424

Name of Respondent ~ This Report Is: [ Date of Report T Year/Period of Report/ (1) [~]An Original I (Mo, Da, Yr)

~End of 2014/Q4El Paso Electric Company

I (2) E3A Resubmission~

I I

TRANSMISSION LINES ADDED DURING Y AR (Continued)

costs. Designate, however, if estimated amounts are re.ported. Include costs of Clearing Land and Rights-of-Way, and Roads and

Trails, in column (I) with appropriate footnote, and costs of Underground Conduit in column (m).

3. If design voltage differs from operating voltage, indicate such fact by footnote; also where line is other than 60 cycle, 3 phase,

indicate such other characteristic.

CONDUCTORSSize Specification Configuration

and Spacing(h) (i) (j)

VoltageKV

(Ol~ting)Land andLand Rights

(i)Poles, Towersand Fixtures

(m)

LINE COSTConductorsand Devices

(n)

AssetRetire. Costs

(o)

Total

(p)

LineNo.

123456789

101112131415161718192021222324252627282930313233

35363738394O414243

FERC FORM NO. 1 (REV. 12-03) Page 425

Name of RespondentEl Paso Electric Company

i~ort Is: T Date of Report

/ (Mo, Da, Yr)!!! [~An Original(2) [~A Resubmission / /

SUBSTATIONS

Year/Period of ReportEnd of 2014/Q4

1. Report below the information called for concerning substations of the respondent as of the end of the year.2. Substations which serve only one industrial or street railway customer should not be listed below.3. Substations with capacities of Less than 10 MVa except those serving customers with energy for resale, may be grouped accordingto functional character, but the number of such substations must be shown.4. Indicate in column (b) the functional character of each substation, designating whether transmission or distribution and whetherattended or unattended. At the end of the page, summarize according to function the capacities reported for the individual stations incolumn (f).

LineNo.

123’45678

1516

171

20212223

24~2526

27282930

32

353637

383940

Name and Location of Substation

(a)10,000 kVA and Over

Character of Substation

(b)

Airport New MexicoAlamo Lower ValleyAltura El PasoAmedcas El PasoAmrad Oro Grande, NMAmrad Oro Grande, NMAnthony Anthony, NMApollo New MexicoArroyo Las Cruces, NMArroyo Las Cruces, NMArroyo Las Cruces, NMArroyo Las Cruces, NMAscarate El PasoAscarate El PasoAscarate El PasoAscarate El PasoAustin El PasoAustin El Paso

UADist. UA

Dist. UADist. UADist. UATrans. UA

Dist. UADist. UADist. UATrans. UA

Trans. UADist. UADist. UA

Dist. UADist. UADist. UA

Dist: UADist. UADist. UA

-:~r,- ¯ ~ :’ D~st. UABorder Steel El Paso Dist. UAButterfield El Paso Dist. UACaliente El Paso Trans. UACaliente El Paso Trans. UAChaparral Chaparral, NM Dist. UA

Primary(c)

115.0(;

69.0¢13.8(;

69.0(;345.0(;115.0(;

115.0C69.0(;

345.0C345.0(;

115.0(;115.0C115.0(;

115.0(;69.0(;69.01~

115:0C

69.0(;115.0(;115.0(;

115.0C345.0(;115.0(;

115.0(;

VOLTAGE (In MVa)Secondary

(d)

23.9023,904.16

13.80115.0024.90

24.902.40

345.00115.00

23.9023.9069.00

69.0013.804.16

13.80

4.16

13.80

13.80115.00

13.80

13.80

Tertiary(e)

Clint Lower Valley Dist. UAClint Lower Valley Dist. UACopper El Paso Dist. UACopper El Paso Dist. UACopper El Paso Dist. UACopper El Paso Dist. UACox New Mexico Trans. UACoyote Lower Valley Dist. UACromo El Paso Dist. UADallas El Paso Dist. UADallas El Paso Dist. UADallas El Paso Dist. UADiablo Sunland Park, NM Trans. UA

69.0(;69.0(;13.8(;

115.0(;13.8(;13.8(;

115:0(;

115.0(;115.0(;69.0(;

69.0(;13.8(;

345.0(;

13.804.16

115.00

13.8045.800.48

69.00

13.8013.8013:80

13.804.16

115.00

13.00

13.80

13.80

13.80

13.80

FERC FORM NO. 1 (ED. 12-96) Page 426

Name of Respondent This R~ort Is: Date of Report(1) [~]An Original (Mo, Da, Yr)El Paso Electric Company(2) [~]A Resubmission / /

SUBSTATIONS

Year/Period of ReportEnd of 2014/Q4

1. Report below the information called for concerning substations of the respondent as of the end of the year.2. Substations which serve only one industrial or street railway customer should not be listed below.3. Substations with capacities of Less than 10 MVa except those serving customers with energy for resale, may be grouped accordingto functional character, but the number of such substations must be shown.4. Indicate in column (b) the functional character of each substation, designating whether transmission or distribution and whetherattended or unattended. At the end of the page, summarize according to function the capacities reported for the individual stations incolumn (f).

LineName and Location of Substation

1 Diamond Head T-12 Durazno El Paso3 Dyer El Paso

45678

lOl

12

14151617

20

21222324~

252627

282930

32

35363738

3940

Dyer

EMRLDFarahFelipe

(a)El Paso

Character of Substation

Dist. UADist. UA

Dist. UAEl Paso Dist. UA

New Mexico Dist. UAEl Paso Dist. UA

El Paso Dist. UA

(b)Pdmary

(c)115.0(;115.0(;69.0(;

115.0(;115.0(;69.0(;

69.0(;

VOLTAGE (In MVa)

Secondary(d)

13.8013.8013.8069.0013.8013.8023.90

Fort Bliss El Paso Dist.Global Reach El Paso Dist.Hatch New Mexico Dist.Hatch New Mexico Dist.Lane Lower Valley Dist.Lane Lower Valley Dist.Las Cruces Las Cruces, NM Dist.Las Cruces Las Cruces, NM Dist.Las Cruces Las Cruces, NM Dist.

UAUAUAUAUAUAUAUAUA

115.0(;115.0(;115.0(~

23.9(~115.0(;115.0(;115.0(;23.9(;

115.0(;

13.8013.8024.90

4.16

69.0013.8024.00

4.1623.90

Tertiary(e)

Leo El Paso Dist. UA 69.0(; 13.80Leo El Paso Dist UA 13.8(; 4.16Leo Temp Dist. UA 69.0(; 13.80Mann Lower Valley Dist. UA 69.0(; 13.80Mann Lower Valley Dist. UA 69.01 13.80Mesa El Paso Dist. UA 115.0(; 13.80Milagro El Paso Dist. UA 115.0(; 69.00Milagro El Paso Dist. UA 115.01; 13.80Montoya Upper Valley, NM Dist. UA 115.0(; 23.90Montwood El Paso Dist. UA 115.0(; 23.90Newman T-1 Trans. UA 345.0(; 115.00 13.80Newman T-2 Trans. UA 13.8(; 115.00Newman T-3 Dist. UA 115.0(; 2.40Newman T-4 Dist. UA 13.8(; 2.40Newman T-5 Dist. UA 13.8(; 2.40Newman T-6 Trans. UA 13.8(; 115.00Newman T-7 Dist. UA 13.81~ 2.40Newman T-8 Trans. UA 13.8(; 115.00Newman T-9 Trans. UA 13.8(; 115.00Newman T-10 Dist. UA 13.8(; 4.16Newman T-11 Trans. UA 13.8(; 115.00Newman T-12 Dist. UA 115.0(; 4.16Newman T-13 Trans. UA 13.8(; 115.00Newman T-14 Trans. UA 13.8(; 115.00

FERC FORM NO. 1 (ED. 12-96) Page 426.1

Name of RespondentEl Paso Electric Company

This R~ort Is:(1) rX~An Original(2) I~]A Resubmission

SUBSTATIONS

Date of Report(Mo, Da, Yr)II

Year/Period of ReportEnd of 2014/Q4

1. Report below the information called for concerning substations of the respondent as of the end of the year.2. Substations which serve only one industrial or street railway customer should not be listed below.3. Substations with capacities of Less than 10 MVa except those serving customers with energy for resale, may be grouped accordingto functional character, but the number of such substations must be shown.4. Indicate in column (b) the functional character of each substation, designating whether transmission or distribution and whetherattended or unattended. At the end of the page, summarize according to function the capacities reported for the individual stations incolumn (f).

LineNo.

123456789

101112131415161718192021222324252627282930313233

35

37383940

Name and Location of Substation

Newman T-15Newman T-16Newman T-17

Newman T-18Patriot T-1 El PasoPendale El PasoPhelps Dodge El Paso

Phelps Dodge El PasoPhelps Dodge El PasoPellicano El PasoPicecho New Mexico

Picante

(a)

Character of Substation

(b)Trans. UATrans. UA

Primary(c)

13.80

13.80Dist. UA

Dist. UADist. UADist. UA

Dist. UADist. UADist. UADist. UA

Dist. UA

13.8013.80

115.00

115.0069.0013.80

13.80115.00115.00

VOLTAGE (In MVa)

Secondary(d)

115.00

115.004.164.16

13.80

13.8013.802.3(

4.1623.9023.90

RedeyeRio BosqueRio GrandeRio GrandeRio GrandeRio GrandeRio GrandeRio GrandeRio GrandeRio GrandeRio GrandeRio GrandeRio GrandeRio Grande

T-1New Mexico

Sunland Park, New MexicoSunland Park, New Mexico

Sunland Park, New MexicoSunland Park, New MexicoSunland Park, New MexicoSunland Park, New Mexico

Sunland Park, New MexicoSunland Park, New MexicoSunland Park, New Mexico

Sunland Park, New Mexico

Trans. UADist. UADist. UA

Dist. UA

345.00

115.00115.00

17.20

Dist. UADist. UA

Dist. UATrans. UATrans. UA

Trans. UADist. UATrans. UADist. UA

115.0069.0013.8018.00

13.8014.40

69.0013.8014.40

115.0(13.8013.80

115.00

69.002.4(4.16

4.1(69.004.16

14.4(2.402.40

Sunland Park, New MexicoSunland Park, New Mexico

Ripley El PasoSalopek Las Cruces, NMSanta Fe El PasoSanta Fe El PasoSanta Teresa Santa TeresaSanta Teresa T-2Scotsdale El PasoScotsdale El PasoShearman El Paso

Dist. UADist. UADist. UADist. UA

Dist. UADist. UA

Dist. UATrans. UADist. UADist. UA

Dist. UA

13.80

13.80115.00115.0069.00

13.80115.00115.00115.00

115.00115.00

115.00

4.1613.8024.9013.80

4.1624.9024.9069.00

13.8013.80

i Socorro Lower Valley Dist. UA 69.00 13.80Sol El Paso Dist. UA 115.00 13.80Sparks El Paso i Dist. UA 115.00 13.80Sparks El Paso Dist. UA 115.00 69.00Sunset El Paso Dist. UA 69.00 13.80

Tertiary(e)

FERC FORM NO. 1 (ED. 12-96) Page 426.2

Name of Respondent This Re_~port Is: Date of Report(1) I~An Original (Mo, Da, Yr)El Paso Electric Company(2) [~A Resubmission / /

SUBSTATIONS

Year/Period of ReportEnd of 2014/Q4

1. Report below the information called for concerning substations of the respondent as of the end of the year.2. Substations which serve only one industrial or street railway customer should not be listed below.3. Substations with capacities of Less than 10 MVa except those serving customers with energy for resale, may be grouped accordingto functional character, but the number of such substations must be shown.4. Indicate in column (b) the functional character of each substation, designating whether transmission or distribution and whetherattended or unattended. At the end of the page, summarize according to function the capacities reported for the individual stations incolumn (f).

LineNo.

123

456789lOi111213141516171819

2oi21222324

25262726

2930

32

353637

39

40

Name and Location of Substation

Sunset El PasoSunset North El PasoSunset North El PasoSunset T-4 El PasoTalavera Temp T-1Thorn El PasoTransmountain TempViscount El PasoVista El PasoWhite Sands New MexicoWrangler El Paso

(a)

Las Cruces, NM

5,000 to 10,000 kVA

Clint Lower ValleyClint Lower ValleyDarbyshire El PasoDiana El PasoDurazno El PasoFarmer Van HomFive Points El PasoHodzon HorizonLocust New MexicoMar New MexicoMar New MexicoMcGregor New MexicoProler ProlerS.P. Pipeline El PasoSierra Blanca Sierra BlancaSierra Blanca Sierra BlancaTobin El PasoValley Lower Valley

1,000 to 5,000 kVA

Character of Substation

(b)Dist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UA

Dist. UADist. UA

Dist. UADist. UADist. UADist. UA

Dist. UADist. UADist. UADist. UA

Dist. UADist. UADist. UADist. UA

Dist. UADist. UA

Dist. UADist. UA

VOLTAGE (In MVa)

Primary(c)

69.0(~115.0(;115.0(369.0(;

115.0(;115.0(;115.0(;69.0(;

115.0(;115.0(;115.0(;

69.0(;69.0(;69.0(~

13.8(;69.0(;69.0¢13.8(;

69.0(;23.9(;

115.0(;24.9(;

69.0(;6913.8(;

69.0(;23.9(;13.8(;69.0(;

Secondary(d)

4.1613.8069.0(;13.8(;23.9(;13.8(;24.9(;13.80I

13.8013.8013.80

13.80

4.1613.804.16

13.8023.904.16

13.804.164.164.16

13.802.402.40

24.004.164.16

13.80

Alameda Las Cruces, NM Dist. UA 23.9( 4.16Beaumont El Paso Dist. UA 13.8(; 4.16Cadwallader El Paso Dist. UA 13.8(; 4.16Canutillo Upper Valley Dist. UA 23.9(; 4.16Cielo El Paso Dist. UA 13.8(; 4.16

Tertiary(e)

FERC FORM NO. 1 (ED. 12-96) Page 426.3

Name of RespondentEl Paso Electric Company

This Re~oort Is:(1) [~An Original(2) [] A Resubmission

SUBSTATIONS

Date of Report(Mo, Da, Yr)II

Year/Period of ReportEnd of 2014/Q4

1. Report below the information called for concerning substations of the respondent as of the end of the year.2. Substations which serve only one industrial or street railway customer should not be listed below.3. Substations with capacities of Less than 10 MVa except those serving customers with energy for resale, may be grouped accordingto functional character, but the number of such substations must be shown.4. Indicate in column (b) the functional character of each substation, designating whether transmission or distribution and whetherattended or unattended. At the end of the page, summarize according to function the capacities reported for the individual stations incolumn (f).

LineNo.

123

456

789

10

111213

141516

17181920

21222324

252627

28293031

3233

3536373839

4O

Name and Location of SubstationVOLTAGE (In MVa)

(a)Cinecue El PasoClardy El PasoCoronado El PasoCotton El PasoEast El PasoFabens Lower ValleyFranklin El PasoFresno El PasoFrontera Upper ValleyGrace El PasoGriggs Upper ValleyHacienda El PasoHanes New MexicoHueco El PasoHueco El PasoKemp El PasoLatta El PasoLomaland El PasoMcClure Las Cruces, NM

Character of Substation

(b)Dist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UADist. UA

Primary(c)

13.8013.8013.8013.8013.8069.0013.8013.8013.8013.8023.9013.8023.9(;69.0(;23.9(~13.8013.8(;13.8023.9(~

Secondary Tertiary(d) (e)

4.164.1(4.1(4.164.1(4.1(4.164.164.16i4.164.164.1614.161

23.9010.484.164.16i4.164.16

Melendres Las Cruces, NMMesilla Park Mesilla Park, NMMission El PasoMissouri Las Cruces, NMMomingside El PasoMountain El PasoMulberry Upper ValleyNewell NewellNewtex Upper ValleyOctavia El PasoParkdale El PasoPrison El PasoRailroad El PasoRanchland El PasoRange New MexicoRiver Upper ValleyRosedale El PasoSierra Blanca Sierra BlancaSierra Blanca Sierra BlancaSummit El PasoUTEP El Paso

Dist. UA

Dist. UADist. UADist. UA

Dist. UADist. UADist. UA

Dist. UADist. UADist. UADist. UA

Dist. UADist. UADist. UA

23.9(;

23.9013.8023.9013.8(~

13.8013.8013.8023.90

13.8013.8023.90

13.8013.80

4.164.164.164.164.164.164.1612.404.16i4.164.162.402.404.16

Dist. UA

Dist. UADist. UADist. UADist. UA

Dist. UADist. UA

24.9013.80

13.8069.0023.9013.80

13.80

13.204.16

4.1623.904.1(4.1(

4.1(

FERC FORM NO. 1 (ED. 12-96) Page 426.4

Name of RespondentEl Paso Electric Company I~l~is Re~ort Is:

[~An Original(2) [] A Resubmission

SUBSTATIONS

Date of Report T Year/Period of Report(Mo, Da, Yr)

~ End Of2014/Q4

II

1. Report below the information called for concerning substations of the respondent as of the end of the year.2. Substations which serve only one industrial or street railway customer should not be listed below.3. Substations with capacities of Less than 10 MVa except those serving customers with energy for resale, may be grouped according

to functional character, but the number of such substations must be shown.4. Indicate in column (b) the functional character of each substation, designating whether transmission or distribution and whetherattended or unattended. At the end of the page, summarize according to function the capacities reported for the individual stations incolumn (f).

Line!No. Character of Substation

VOLTAGE (In MVa)Name and Location of Substation

(a)Van Horn Van HornVinton New MexicoWater Trtmnt El PasoWestside Las Cruces, NMWhite Upper ValleyYsleta El Paso

300 to 999 kVA

Chevron Pipeline New MexicoDona Ana New MexicoFort Hancock Hudspeth CountyLa Mesa New MexicoLa Posta New MexicoTornillo Lower ValleyWilson El Paso

300 kVA (Distribution Racks)

Acala Hudspeth County Dist.Allamore Hudspeth County Dist.Camp 90 Hudspeth County Dist.Country Club Anthony, NM Dist.Eagler Flats Hudspeth County (Dees) Dist.Faskin Hudspeth County Dist.GilI-Neely Hudspeth County (Maverick) Dist.Love Hudspeth County Dist.Riverside Hudspeth County Dist.

Pdmary(c)

23.9023.9013.8023.9013.8013.80

(b)1 Dist. UA2 Dist. UA3 Dist. UA4 Dist. UA5 Dist. UA6 Dist. UA789

10 Dist. UA 23.9011 Dist. UA 23.9012 Dist. UA 24.9013 Dist. UA 23.9014 Dist. UA 23.9015 Dist. UA 24.4016 Dist. UA 13.8017181920 UA 23.9021 UA 23.9022 UA 23.9023 UA 13.8024 UA 23.9025 UA 23.9026 UA 23.9027 UA 23.9028 UA 23.902930 PORTABLE SUBSTATIONS31 (All sizes)32 Mobile Substation Dist. UA 13.8033 Mobile Substation Dist. UA 115.0034 Mobile Substation Dist. UA 115.0035 Mobile Substation Dist. UA 69.0036 Mobile Substation No. 2 Dist. UA 24.9037 Mobile Substation No. 3 Dist. UA 13.803839 SPARE TRANSFORMERS N/A40

Secondary Tertiary(d) (e)

4.164.162.404.164.164.16

2.404.164.164.164.164.162.40

2.402.402.402.402.402.402.402.402.40

0.4813.8013.802.402.402.40

FERC FORM NO. 1 (ED. 12-96) Page 426.5

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electdc Company(2) [~A Resubmission / /

SUBSTATIONS (Continued)5. Show in columns (I), (j), and (k) special equipment such as rotary converters, rectifiers, condensers, etc. and auxiliary equipment for~ncreasing capacity.6. Designate substations or major items of equipment leased from others, jointly owned with others, or operated otherwise than byreason of sole ownership by the respondent. For any substation or equipment operated under lease, give name of lessor, date and)eriod of lease, and annual rent. For any substation or equipment operated other than by reason of sole ownership or lease, give nameof co-owner or other party, explain basis of sharing expenses or other accounting between the parties, and state amounts and accountsaffected in respondent’s books of account. Specify in each case whether lessor, co-owner, or other party is an associated company.

Capacity of Substation(In Service) (In MVa)

30301330

2618

60

3030840030

30100100

601080

10

7060

40030608

375

3021

12

13602020

5600

Number of Number ofSpare

Transformers

112

111

211

2111

121

23

2223

213

1111

1121

123

Type of Equipment

(~)

Number of UnitsTransformers

In Service(h)

CONVERSION APPARATUS AND SPECIAL EQUIPMENT LineTotal Capacity No.

(In MVa)(k)

123456789

lO1112131415161718192021222324252627282930313233

353637383940

FERC FORM NO. 1 (ED. 12-96) Page 427

Name of Respondent This R~ort Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [~An Original (Mo, Da, Yr) End of 2014/Q4

(2) [~A Resubmission / /SUBSTATIONS (Continued)

15. Show in columns (I), (j), and (k) special equipment such as rotary converters, rectifiers, condensers, etc. and auxiliary equipment forincreasing capacity.6. Designate substations or major items of equipment leased from others, jointly owned with others, or operated otherwise than byreason of sole ownership by the respondent. For any substation or equipment operated under lease, give name of lessor, date and~eriod of lease, and annual rent. For any substation or equipment operated other than by reason of sole ownership or lease, give nameof co-owner or other party, explain basis of sharing expenses or other accounting between the parties, and state amounts and accounts

affected in respondent’s books of account. Specify in each case whether lessor, co-owner, or other party is an associated company.

Capacity of Substation(In Service) (In MVa)

(f)3030501001330305030302

10030406

120205

1630246O1009013030

230112

65

101121011211;10

20125175

Number ofTransformers

In Service(g)

Number ofSpare

Transformers(h)

1121111211111212121112133111111111111111

CONVERSION APPARATUS AND SPECIAL EQUIPMENTType of Equipment Number of Units Total Capacity

(In MVa)(i) (j) (k)

LineNo.

123456789

10111213141516171819202122232425262728293O313233

35

37383940

FERC FORM NO. 1 (ED. 12-96) Page 427.1

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4El Paso Electric Company (2) [~]A Resubmission / /

SUBSTATIONS (Continued)15 Show in columns (I), (j), and (k) special equipment such as rotary converters, rectifiers, condensers, etc. and auxiliary equipment fori increasing capacity.6. Designate substations or major items of equipment leased from others, jointly owned with others, or operated otherwise than byreason of sole ownership by the respondent. For any substation or equipment operated under lease, give name of lessor, date and)eriod of lease, and annual rent. For any substation or equipment operated other than by reason of sole ownership or lease, give nameof co-owner or other party, explain basis of sharing expenses or other accounting between the parties, and state amounts and accountsaffected in respondent’s books of account. Specify in each case whether lessor, co-owner, or other party is an associated company.

Capacity of Substation(In Service) (In MVa)

(f)1171171717303010105

305022013303482001110145O4

2038

1326

3078251160301005530

6030

130

Number ofTransformers

In Service

(9)

Number ofSpare

Transformers(h)

11111132111111121111111211131321121121

2

CONVERSION APPARATUS AND SPECIAL EQUIPMENTType of Equipment

0)Number of Units Total Capacity

(In MVa)(j) (k)

LineNo.

123456789

lO111213141516171819202122232425262728293o313233

353637383940

FERC FORM NO. 1 (ED. 12-96) Page 427.2

Name of Respondent This R~ort Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [~An Original (Mo, Da, Yr) End of 2014/Q4

(2) [~A Resubmission / /SUBSTATIONS (Continued)

5. Show in columns (I), (j), and (k) special equipment such as rotary converters, rectifiers, condensers, etc. and auxiliary equipment for=ncreasing capacity.6. Designate substations or major items of equipment leased from others, jointly owned with others, or operated otherwise than byreason of sole ownership by the respondent. For any substation or equipment operated under lease, give name of lessor, date and~eriod of lease, and annual rent. For any substation or equipment operated other than by reason of sole ownership or lease, give nameof co-owner or other party, explain basis of sharing expenses or other accounting between the parties, and state amounts and accountsaffected in respondent’s books of account. Specify in each case whether lessor, co-owner, or other party is an associated company.

Capacity of Substation(In Service) (In MVa)

(f)1060703O1360203060

50

816

68

106

306

10

3866

816

8

3332

3

Number ofTransformers

In Service

Number of

Type of Equipment

(i)Number of Units

~)

SpareTransformers

(h)32111211211

113711311111113121

11112

CONVERSION APPARATUS AND SPECIAL EQUIPMENT LineTotal Capacity No.

(In MVa)(k)

123456789

lO1112131415161718192021222324252627282930313233

353637383940

FERC FORM NO. 1 (ED. 12-96) Page 427.3

Name of Respondent This Re_~port Is: Date of Report Year/Period of ReportEl Paso Electric Company (1) [~An Original (Mo, Da, Yr) End of 2014/Q4

(2) [--IA Resubmission / /SUBSTATIONS (Continued)

5. Show in columns (I), (j), and (k) special equipment such as rotary converters, rectifiers, condensers, etc. and auxiliary equipment forincreasing capacity.6. Designate substations or major items of equipment leased from others, jointly owned with others, or operated otherwise than byreason of sole ownership by the respondent. For any substation or equipment operated under lease, give name of lessor, date and~eriod of lease, and annual rent. For any substation or equipment operated other than by reason of sole ownership or lease, give nameof co-owner or other party, explain basis of sharing expenses or other accounting between the parties, and state amounts and accountsaffected in respondent’s books of account. Specify in each case whether lessor, co-owner, or other party is an associated company.

Capacity of Substation(In Service) (In MVa)

3

3333

322

221

553

2242

32

5332

3332

3324

812

18144

Number ofTransformers

In Service

Number ofSpare

Transformers(h)

1212233111111311121311121212121

2

CONVERSION APPARATUS AND SPECIAL EQUIPMENTType of Equipment

(i)Number of Units Total Capacity

(In MVa)(j) (k)

LineNo.

123456789

101112131415161718192021222324252627282930313233

353637383940

FERC FORM NO. 1 (ED. 12-96) Page 427.4

Name of Respondent This R~ort Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Y~) End of 2014/Q4

El Paso Electric Company (2) [~A Resubmission / /SUBSTATIONS (Continued)

5. Show in columns (I), (j), and (k) special equipment such as rotary converters, rectifiers, condensers, etc. and auxiliary equipment forincreasing capacity.6. Designate substations or major items of equipment leased from others, jointly owned with others, or operated otherwise than byreason of sole ownership by the respondent. For any substation or equipment operated under lease, give name of lessor, date andperiod of lease, and annual rent. For any substation or equipment operated other than by reason of sole ownership or lease, give nameof co-owner or other party, explain basis of sharing expenses or other accounting between the parties, and state amounts and accountsaffected in respondent’s books of account. Specify in each case whether lessor, co-owner, or other party is an associated company.

Capacity of Substation(In Service) (In MVa)

(f)3134323

1

1!111

Number ofTransformers

In Service(g)

Number ofSpare

Transformers(h)

411114

1111311

111211111

19

CONVERSION APPARATUS AND SPECIAL EQUIPMENTType of Equipment Number of Units Total Capacity

(In MVa)(i) O) (k)

LineNo.

123456789

101112131415161718192021222324252627282930313233

353637383940

FERC FORM NO. 1 (ED. 12-96) Page 427.5

Name of Respondent

El Paso Electric Company

This Report is:(1) X An Original(2) _ A Resubmission

FOOTNOTE DATA

Date of Report(Mo, Da, Yr)

II

Year/Period of Report

2014/Q4

~chedu~ Paqe: 426 LMe No.: 3 Column: aAfton substation is a switching transmission substation.transformers on site.~chedule Page: 426 L~e No.: 22 Column: aBiggs substation is a switching distribution substation.transformers on site.

The Company does not own the

The Company does not own the

IFERC FORM NO. 1 (ED. 12-87) Page 450.1

Name of Respondent This Report Is: Date of Report Year/Period of Report(1) [~]An Original (Mo, Da, Yr) End of 2014/Q4

El Paso Electdc Company (2) [~]A, Resubmission / /TRANSACTIONS WITH ASSOCIATED (AFFILIATED) COMPANIES

1. Report below the information called for concerning all non-power goods or services received from or provided to associated (affiliated) companies.2. The reporting threshold for reporting purposes is $250,000. The threshold applies to the annual amount billed to the respondent or billed to

an associated/affiliated company for non-power goods and services. The good or service must be specific in nature. Respondents should notattempt to include or aggregate amounts in a nonspecific category such as "general".

3. Where amounts billed to or received from the associated (affiliated) company are based on an allocation process, explain in a footnote.

LineNo.

123456789

10111213141516171819202122232425262728293031

35

~6

a940

4~

42

Description of the Non-Power Good or Service(a)

Non-power Goods or Services Provided by Affiliated

Name ofAssociated/Affiliated

Company(b)

AccountCharged orCredited

(o)

AmountCharged or

Credited

Non-power Goods or Services Provided for Affiliate

FERC FORM NO. 1 (New) Page 429FERC FORM NO. 1-F (New)

INDEX

Schedule Pa,qe No.

Accrued and prepaid taxes ........................................................................ 262-263

Accumulated Deferred Income Taxes .................................................................... 234

272-277Accumulated provisions for depreciation of

common utility plant ............................................................................. 356

utility plant .................................................................................... 219

utility plant (summary) ...................................................................... 200-201

Advances

from associated companies .................................................................... 256-257

Allowances ....................................................................................... 228-229Amortization

miscellaneous .................................................................................... 340of nuclear fuel .............................................................................. 2021203

Appropriations of Retained Earnings .............................................................. 118-119

Associated Companies

advances from ................................................................................ 256-257

corporations controlled by respondent ............................................................ 103

control over respondent .......................................................................... 102

interest on debt to .......................................................................... 256-257

Attestation ............................................................................................ iBalance sheet

comparative .................................................................................. 110-113notes to ..................................................................................... 122-123

Bonds ............................................................................................ 256-257Capital Stock ........................................................................................ 251

expense .......................................................................................... 254premiums ......................................................................................... 252reacquired ....................................................................................... 251subscribed ....................................................................................... 252

Cash flows, statement of ......................................................................... 120-121

Changes

important during year ........................................................................ 108-109

Constructionwork in progress - common utility plant .......................................................... 356work in progress - electric ...................................................................... 216work in progress - other utility departments ................................................. 200-201

Control

corporations controlled by respondent ............................................................ 103over respondent .................................................................................. 102

Corporation

controlled by .................................................................................... 103incorporated ..................................................................................... i01

CPA, background information on ....................................................................... I01CPA Certification, this report form ................................................................. i-ii

FERC FORM NO. 1 (ED. 12-93) Index 1

INDEX (continued)

Schedule Pa~e No.Deferred

credits, other ................................................................................... 269

debits, miscellaneous ............................................................................ 233income taxes accumulated - accelerated

amortization property ........................................................................ 272-273income taxes accumulated - other property .................................................... 274-275income taxes accumulated - other ............................................................. 276-277

income taxes accumulated - pollution control facilities .......................................... 234

Definitions, this report form ........................................................................ iii

Depreciation and amortization

of common utility plant .......................................................................... 356

of electric plant ................................................................................ 219

336-337Directors ............................................................................................ 105Discount - premium on long-term debt ............................................................. 256-257Distribution of salaries and wages ............................................................... 354-355Dividend appropriations .......................................................................... 118-119Earnings, Retained ............................................................................... 118-119Electric energy account .............................................................................. 401Expenses

electric operation and maintenance ........................................................... 320-323electric operation and maintenance, summary ...................................................... 323unamortized debt ................................................................................. 256

Extraordinary property losses ........................................................................ 230

Filing requirements, this report form

General information .................................................................................. 101

Instructions for filing the FERC Form 1 ............................................................. i-ivGenerating plant statistics

hydroelectric (large) ........................................................................ 406-407pumped storage (large) ....................................................................... 408-409small plants ................................................................................. 410-411steam-electric (large) ....................................................................... 402-403

Hydro-electric generating plant statistics ....................................................... 406-407Identification ....................................................................................... I01Important changes during year .................................................................... 108-109Income

statement of, by departments ................................................................. 114-117statement of, for the year (see also revenues) ............................................... 114-117deductions, miscellaneous amortization ........................................................... 340deductions, other income deduction ................................................... ............ 340

deductions, other interest charges ............................................................... 340

Incorporation information ............................................................................ I01

FERC FORM NO. 1 (ED. 12-95) Index 2

INDEX (continued)

Schedule Pa,qe No.

Interest

charges, paid on long-term debt, advances, etc ............................................... 256-257

Investments

nonutility property .............................................................................. 221

subsidiary companies ......................................................................... 224-225

Investment tax credits, accumulated deferred ..................................................... 266-267

Law, excerpts applicable to this report form .......................................................... ivList of schedules, this report form .................................................................. 2-4Long-term debt ................................................................................... 256-257Losses-Extraordinary property ........................................................................ 230

Materials and supplies ............................................................................... 227

Miscellaneous general expenses ....................................................................... 335

Notes

to balance sheet ............................................................................. 122-123

to statement of changes in financial position ................................................ 122-123

to statement of income ....................................................................... 122-123to statement of retained earnings ............................................................ 122-123

Nonutility property .................................................................................. 221Nuclear fuel materials ........................................................................... 202-203

Nuclear generating plant, statistics ............................................................. 402-403

Officers and officers’ salaries ...................................................................... 104

Operating

expenses-electric ............................................................................ 320-323

expenses-electric (summary) ...................................................................... 323Other

paid-in capital .................................................................................. 253donations received from stockholders ............................................................. 253gains on resale or cancellation of reacquired

capital stock .................................................................................... 253miscellaneous paid-in capital .................................................................... 253reduction in par or stated value of capital stock ................................................ 253regulatory assets ................................................................................ 232regulatory liabilities ........................................................................... 278

Peaks, monthly, and output ........................................................................... 401Plant, Common utility

accumulated provision for depreciation ........................................................... 356

acquisition adjustments .......................................................................... 356

allocated to utility departments ................................................................. 356completed construction not classified ............................................................ 356construction work in progress .................................................................... 356expenses ......................................................................................... 356held for future use .............................................................................. 356in service ....................................................................................... 356

leased to others ................................................................................. 356

Plant data ................................................................................... 336-337

401-429

FERC FORM NO. 1 (ED. 12-95) Index 3

INDEX (continued)

Schedule Paqe No.Plant - electric

accumulated provision for depreciation ........................................................... 219construction work in progress .................................................................... 216

held for future use .............................................................................. 214in service ................................................................................... 204-207

leased to others ................................................................................. 213

Plant - utility and accumulated provisions for depreciation

amortization and depletion (summary) ............................................................. 201

Pollution control facilities, accumulated deferred

income taxes ..................................................................................... 234Power Exchanges .................................................................................. 326-327Premium and discount on long-term debt ............................................................... 256Premium on capital stock ............................................................................. 251

Prepaid taxes .................................................................................... 262-263

Property - losses, extraordinary ..................................................................... 230

Pumped storage generating plant statistics ....................................................... 408-409

Purchased power (including power exchanges) ...................................................... 326-327

Reacquired capital stock ............................................................................. 250

Reacquired long-term debt ........................................................................ 256-257

Receivers’ certificates .......................................................................... 256-257Reconciliation of reported net income with taxable income

from Federal income taxes ...................................................................... 261

Regulatory commission expenses deferred .............................................................. 233

Regulatory commission expenses for year .......................................................... 350-351

Research, development and demonstration activities ............................................... 352-353Retained Earnings

amortization reserve Federal ..................................................................... 119appropriated ................................................................................. 118-119statement of, for the year ................................................................... 118-119!unappropriated ............................................................................... 118-119

Revenues - electric operating .................................................................... 300-301

Salaries and wages

directors fees ................................................................................... 105

:distribution of .............................................................................. 354-355officers’ ........................................................................................ 104

Sales of electricity by rate schedules ............................................................... 304Sales - for resale ............................................................................... 310-311

Salvage - nuclear fuel ........................................................................... 202-203

Schedules, this report form .......................................................................... 2-4Securities

exchange registration ........................................................................ 250-251

Statement of Cash Flows .......................................................................... 120-121Statement of income for the year ................................................................. 114-117Statement of retained earnings for the year ................................................... ... 118-119Steam-electric generating plant statistics ....................................................... 402-403

Substations ........................................................... " ............................... 426Supplies - materials and ............................................................................. 227

FERC FORM NO. 1 (ED. 12-90) Index 4

INDEX (continued)

Schedule Paqe No.Taxes

accrued and prepaid ......................................................................... 262-263

charged during year ......................................................................... 262-263

on income, deferred and accumulated ............................................................. 234

272-277reconciliation of net income with taxable income for ............................................ 261

Transformers, line - electric ....................................................................... 429

Transmission

lines added during year ..................................................................... 424-425

lines statistics ............................................................................ 422-423

of electricity for others ................................................................... 328-330

of electricity by others ........................................................................ 332Unamortized

debt discount ............................................................................... 256-257debt expense ................................................................................ 256-257

premium on debt ............................................................................. 256-257

Unrecovered Plant and Regulatory Study Costs ........................................................ 230

FERC FORM NO. 1 (ED. 12-90) Index 5