El Paso Electric Asked New Mexico to Approve a Large-Load Rate Class With No Qualifying Customer

The New Mexico Public Regulation Commission spent the past two weeks hearing evidence on a rate class that, by the utility’s own testimony, currently serves nobody.

El Paso Electric’s application in Case No. 25-00082-UT would raise New Mexico base rates by $70.4 million. Among the items before the commission is a new large-load rate class. Per company testimony, no existing customer qualifies for it. One prospective New Mexico customer has requested 80 megawatts of firm load.

The evidentiary hearing ran September 21 through October 2.

The case. The increase is structured in two steps rather than one: a first increase effective January 1, 2027 and a second effective October 1, 2027. Together they amount to roughly $41.82 a month on an average residential bill. EPE filed the application in March 2026.

That phasing is the part worth attention, and not for the reason a residential bill illustration would suggest.

The ratchet. Under EPE’s New Mexico General Service Rate No. 04, which covers customers between 50 and 799 kilowatts, billing demand is the highest of measured maximum demand, 50 kilowatts, or “the demand ratchet of 65% of the Maximum Demand established during the billing months of June through September in the preceding twelve (12) month period.”

A peak set in July 2027 therefore establishes a billing floor that persists into the following summer. From October 1, 2027, that floor would be priced at the second-step demand charge.

This is interpretation, not a claim EPE has made: a commercial customer in Las Cruces who takes no action would pay the higher of the two steps against a billing demand fixed during the months before it took effect. A single-step increase on January 1 would have repriced a ratchet already established and already visible to the customer. The two-step version reprices one that gets set in the interval between the steps, when the customer has no way to know which rate the peak will eventually be billed at.

The mechanic matters beyond El Paso. Commercial demand ratchets that reset off summer peaks are standard across the Southwest. A phased increase with an autumn second step compounds against them in a way that a flat annual escalator assumption, the kind that sits inside most payback models, does not capture.

The reset. The same New Mexico tariff sheet carries a provision that has drawn no attention in coverage of the rate case.

“The Company will reset the demand ratchet for customers installing Distributed Generation (DG) and/or storage following interconnection of the DG and/or storage, restarting the historical demand used for purposes of applying (b) above.”

Demand ratchets are ordinarily among the harder obstacles in a behind-the-meter storage payback model. A battery commissioned in October cuts the measured peak immediately but continues to pay against the prior summer’s ratchet until the lookback window rolls forward, which defers the first full year of savings. EPE has already written that delay out of its New Mexico commercial tariff.

That provision is on the books today. It is not among the items the commission is weighing in 25-00082-UT, and nothing in the filing proposes to remove it.

The national picture. Edison Electric Institute’s September 2026 list of large customer projects and tariffs records 25 states with at least one approved large-load tariff and seven states with filings pending. The underlying project list covers publicly announced loads of roughly 20 megawatts and above, chiefly data centers and large manufacturers, totaling more than $950 billion of investment and more than 61 gigawatts of connected load. Proposed and approved tariffs grew from 41 in July 2025 to 104 in July 2026, a count that more than doubled in twelve months.

Most of that activity sits with utilities facing hyperscale interconnection requests measured in hundreds of megawatts. EPE is not one of them. What the New Mexico filing demonstrates is that the drafting practice has propagated to utilities with no such load in hand: write the class, set the terms, and have the rate on the books before a customer arrives to negotiate against its absence.

That sequencing is defensible on its own terms. A tariff written under time pressure, with a specific counterparty at the table and a construction schedule running, tends to favor the counterparty. A tariff written in the abstract does not.

The asymmetry. The two proceedings inside this one case run at very different speeds.

What is being litigated in Santa Fe is a rate class for customers who do not yet exist, subject to months of hearings, briefing and commission deliberation. What is already settled, without argument, is that a customer in EPE’s existing commercial classes who installs storage gets the historical demand clock restarted on interconnection.

The first question will occupy the commission into 2027. The second is a sentence in a tariff sheet that no party has moved to change.

Commercial customers in EPE’s New Mexico territory watching the headline number, $70.4 million, and the residential illustration, $41.82 a month, are watching the part of the case that applies least to them. The two-step structure and the June-through-September ratchet window interact in ways that no residential bill illustration captures, and the provision that most changes storage economics in that territory is not on the agenda at all.

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