SETTLEMENT AGREEMENT



 EXHIBIT 10.08 
 PUC DOCKET NO. 32289 
  

					
	 JOINT PETITION OF EL PASO
 ELECTRIC COMPANY AND
THE
 CITY OF EL PASO FOR APPROVAL
 OF FUEL-RELATED
PROVISIONS
 OF RATE AGREEMENT
	  	§
§
§
§
§	  	 PUBLIC UTILITY
 COMMISSION
 OF TEXAS


 SETTLEMENT AGREEMENT BETWEEN THE STATE OF TEXAS 
 AND EL PASO ELECTRIC COMPANY 
 The State of Texas (“State”), by and through the Office of the Attorney General, Consumer Protection and Public Health Division, Public Agency Representation Section (“OAG”), and El Paso Electric Company
(“EPE”), through its counsel, agree to the following terms in full settlement of the above-captioned proceeding. This settlement is a compromise of the positions either party would take in a fully litigated proceeding, and is not intended
to express either party’s agreement with any ratemaking principle. Except as may be necessary to carry out the terms of this settlement, this agreement of the parties may not be used in any other proceeding as an admission or a characterization
of the position of either party. 
 Terms of Settlement 
 1. The State agrees not to oppose the 2005 Rate Agreement between City of El Paso and EPE, and not to oppose the 2006 Stipulation among City, EPE, Border Steel and Public Utility Commission (“PUC”) Staff.
The State’s testimony and motion for partial summary decision are to be withdrawn, and no ruling on the State’s motion is required. The State’s notice of intent to disclose confidential data becomes moot. 
 2. On March 31, 2010, EPE will present to the PUC Staff, the State (by and through the OAG), OPC and the City of El Paso its cost and revenue data, in accordance
with the PUC’s earnings monitoring requirements, for the rate year ending on December 31, 2009. These parties 
  

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 may conduct reasonable informal discovery seeking further information, and EPE will answer all such questions with
dispatch and in good faith. Within 30 days of EPE’s initial filing of earnings monitoring data, EPE, the Staff, the State, OPC and the City of El Paso shall decide whether a full base rate case is necessary. If any one of these parties notifies
the others, in writing, that it wants to conduct a base rate case, the Company will file such a case in the cities with original jurisdiction and with the PUC, on or before July 1, 2010. 
 3. EPE agrees that, no later than July 1, 2010, it will begin crediting 90% of off-system sales margins to reconcilable fuel, for the benefit of customers, and
agrees to continue crediting 90% of off-system sales margins to reconcilable fuel, at least through June 2015. 
 4. EPE agrees that, no later than
July 1, 2010, it will begin treating its wheeling expenses and revenues associated with non-native load in accordance with then-existing PUC Rules and other substantive and procedural law. 
 5. Within 45 days of this agreement being adopted by the PUC, EPE will enter into good faith negotiations with UTEP regarding its existing supply contract(s).

 6. EPE and the State, by and through the OAG, agree that paragraphs 3 and 4, above, shall be incorporated in the Commission’s final Order in this
proceeding as findings of fact, solely for the purpose of memorializing that these two parties have agreed upon these matters. Neither the Commission nor its Staff shall be bound by EPE’s and the State’s agreement with respect to the
proper treatment of off-system sales margins. If the Commission enters an order in this proceeding that is materially inconsistent with this Settlement Agreement, then the State or EPE may withdraw from the Agreement. If either party withdraws
pursuant to this term, it shall not be deemed to have waived any procedural right or taken any substantive position on any fact or 
  

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 issue by virtue of its entry into the Agreement or its subsequent withdrawal, and the withdrawing party reserves the
right to litigate the fuel-related provisions of the 2005 Rate Agreement. 
 Dated: October 17, 2006

  

			
	FOR EL PASO ELECTRIC COMPANY	 	FOR THE STATE OF TEXAS
		
	 /s/ Gary Hedrick
	 	GREG ABBOTT
	 GARY HEDRICK
 President & Chief Executive
Officer
 El Paso Electric Company
 P.O. Box 982
 El Paso, TX 79960
 Voice: (915) 543-4020
 FAX: (915) 521-4728
	 	Attorney General of Texas
	 	  
 KENT C. SULLIVAN
 First Assistant Attorney General
  

	 	 EDWARD D. BURBACH
 Deputy Attorney General for
Litigation
  

	 	 PAUL D. CARMONA
 Chief, Consumer Protection and Public
Health Division
  

	 	 MARY T. HENDERSON
 Deputy Chief, Consumer Protection and
Public Health Division

		
		 	 MARION TAYLOR DREW
 Public Agency Representation Section
Chief

		
		 	 /s/ Bryan L. Baker

		 	 Bryan L. Baker
 State Bar No. 00790256
 Assistant Attorney General
 Office of the Attorney General
 P.O. Box 12548
 Austin, Texas 78711
 Voice: (512) 475-4237
 FAX: (512) 322-9114
 E-mail: bryan.baker@oag.state.tx.us


  

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