Principles Of Preparation

9 Months Ended

Sep. 30, 2011

Accounting Policies [Abstract]

Principles Of Preparation

Principles of Preparation

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Annual Report of El Paso Electric Company on Form 10-K for the year ended December 31, 2010 (the “2010 Form 10-K”). Capitalized terms used in this report and not defined herein have the meaning ascribed for such terms in the 2010 Form 10-K. In the opinion of the Company’s management, the accompanying consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company at September 30, 2011 and December 31, 2010; the results of its operations and comprehensive operations for the three, nine and twelve months ended September 30, 2011 and 2010; and its cash flows for the nine months ended September 30, 2011 and 2010. The results of operations and comprehensive operations for the three and nine months ended September 30, 2011 and the cash flows for the nine months ended September 30, 2011 are not necessarily indicative of the results to be expected for the full calendar year.

Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), certain financial information has been condensed and certain footnote disclosures have been omitted. Such information and disclosures are normally included in financial statements prepared in accordance with generally accepted accounting principles. Certain prior period amounts have been reclassified to conform to the current period presentation.

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

Revenues. Revenues related to the sale of electricity are generally recorded when service is rendered or electricity is delivered to customers. The billing of electricity sales to retail customers is based on the reading of their meters, which occurs on a systematic basis throughout the month. Unbilled revenues are estimated based on monthly generation volumes and by applying an average revenue/kWh to the number of estimated kWhs delivered but not billed. Accrued unbilled revenues included in accounts receivable are presented below (in thousands):

	September 30, 2011		December 31, 2010
Accrued unbilled revenues	$	22,985	$	16,644

The Company presents revenues net of sales taxes in its consolidated statements of operations.

Extraordinary Item. As a regulated electric utility, the Company prepares its financial statements in accordance with the FASB guidance for regulated operations. FASB guidance for regulated operations requires the Company to show certain items as assets or liabilities on its balance sheet when the regulator provides assurance that these items will be charged to and collected from its customers or refunded to its customers. In the final order for PUCT Docket No. 37690, the Company was allowed to include the previously expensed loss on reacquired debt associated with the refinancing of first mortgage bonds in 2005 in its calculation of the weighted cost of debt to be recovered from its customers. The Company recorded the impacts of the re-application of FASB guidance for regulated operations to its Texas jurisdiction in 2006 as an extraordinary item. In order to establish this regulatory asset, the Company recorded an extraordinary gain, in its statements of operations for the quarter ended September 30, 2010 as noted below (in thousands):

Extraordinary gain, net of income tax expense	$	10,286
Income tax expense related to extraordinary gain	5,769

This item was recorded as a regulatory asset at September 30, 2010 pursuant to the final order received from the PUCT and will be amortized over the remaining life of the Company’s 6% Senior Notes due in 2035.

Supplemental Cash Flow Disclosures (in thousands)
	Nine Months Ended
	September 30,
	2011			2010
Cash paid for:
Interest on long-term debt and borrowing under the revolving credit facility	$	34,110		$	33,474
Income taxes paid (refund)	(3,031		)	5,778
Non-cash financing activities:
Grants of restricted shares of common stock	3,231			2,057
Issuance of performance shares	628			662
Acquisition of treasury stock for options exercised	500			—
Unsettled repurchases of common stock	12,491			—